Document:

exv10w1

 

Exhibit 10.1

D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P.

745 5th Avenue, 18th Floor

New York, New York 10151

September 19, 2007

PRC Williston LLC

777 Post Oak Blvd.

Suite 910

Houston, Texas 77056

Attention: Wayne P. Hall, Chief Executive Officer

			
	Re:	 	Credit Agreement dated as of February 16, 2007 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), by and among PRC Williston LLC
(the “Borrower”) D. B. Zwirn Special Opportunities Fund, L.P., as Administrative Agent
(“Administrative Agent”) and the financial institutions that are or may become lenders
thereunder (“Lenders”).

Ladies and Gentlemen:

     Reference is hereby made to the Credit Agreement for all purposes. Any capitalized term used
herein that is not defined herein shall have the meaning attributed to it in the Credit Agreement.
Unless otherwise noted herein, all references to sections herein shall refer to sections in the
Credit Agreement. Borrower has requested that the Lenders and the Administrative Agent extend the
date of the prepayment of the Loans required pursuant to Section 9.23 and has further requested
that the Lenders and Administrative Agents provide an additional $7,400,000 (“Additional
Capital”) of funding, $5,400,000 of which to be used to fund Borrower’s operations in North
Dakota as further described on Schedule 1 attached hereto and 2,000,000 to fund general corporate
purposes. Administrative Agent and the Lenders agree to extend the date that any prepayment
required under Section 9.23 is due until November 30, 2007 (“Repayment Date”) and to
advance the Additional Capital subject to the terms of this Letter Agreement.

     In consideration for extending the prepayment date provided for in Section 9.23 and for
providing the Additional Capital, Borrower agrees to pay to the Administrative Agent for the
ratable benefit of the Lenders fees comprised of $125,000 (“Postponement Fee”) plus
$500,000 (“Bridge Commitment Fee”). Such Postponement Fee and Bridge Commitment Fee shall
be deemed to be earned and payable as of the date of this Letter Agreement. Borrower will pay to
the Administrative Agent the Postponement Fee and the Bridge Commitment Fee on the date of this
Letter Agreement and Lenders agree that they will make an advance to the Borrower under the Credit
Agreement, which will be a Loan for all purposes under the Credit Agreement, in order for the
Borrower to pay the Postponement Fee and the Bridge Commitment Fee. In

 

 

addition to the $5,000,000 Borrower is required to pay under Section 9.23, Borrower also
agrees to prepay an additional $2,000,000 of the Additional Capital pursuant to Section 9.23 (a
total of $7,000,000) as amended by this Letter Agreement. The prepayment of the Loans required
under Section 9.23 shall be made through a payment outside of the waterfall payments provided for
in Article VI of the Credit Agreement. Such prepayment that is required under Section 9.23 will
come from a capital contribution of the holders of the Equity Interest of the Borrower and will be
in addition to and not in substitution of any payments under Article VI of the Credit Agreement.
Failure to make the prepayment required by Section 9.23 by the Repayment Date shall constitute an
Event of Default under Credit Agreement. This Letter Agreement shall be deemed a Loan Document for
all purposes.

     Except for the waivers and extensions as specifically provided for herein, Borrower
acknowledges and agrees that there are no other amendments, modifications or waivers with respect
to the Credit Agreement and that the Credit Agreement remains in full force and effect as
originally entered into. This Letter Agreement shall be deemed a Loan Document for all purposes.

[Remainder of Page Intentionally Left Blank.]

 

 

     If the foregoing is acceptable to you please indicate your acknowledgement and agreement to
the terms and provisions of this Letter Agreement by executing this Letter Agreement in the space
provided below.

	 	 	 	 	 	 	 
	 	 	 	 	Sincerely,
	 
	 	 	 	 	 	 
	 	 	 	 	D.B. ZWIRN SPECIAL OPPORTUNITIES

FUND, L.P., as Administrative Agent
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	D.B. Zwirn Partners, LLC, its

general partner
	 
	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ David C. Lee
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	David C. Lee
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Authorized Signatory
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	AGREED TO AND ACCEPTED

THIS 19th DAY OF SEPTEMBER, 2007:	 	 	 	 
	 
	 	 	 	 	 	 
	PRC WILLISTON LLC	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Donald L. Kirkendall	 	 	 	 
	 

	 	 	 	 	 	 
	Name:

	 	Donald L. Kirkendall	 	 	 	 
	 

	 	 	 	 	 	 
	Title:

	 	President	 	 	 	 
	 

	 	 	 	 	 	 

 

 

Schedule 1

	 	 	 
	Amount	 	Purpose
	 
	 	 
	$1,320,000

	 	Completion of water injection wells
	 
	 	 
	1,760,000

	 	Shorter term capital for development of Borrower’s Oil and Gas Properties
	 
	 	 
	1,820,000

	 	Longer term capital for development of Borrower’s Oil and Gas Properties
	 
	 	 
	500,000

	 	Payment of development costs incurred by Borrower but not funded by Lendersexv10w1

 

EXHIBIT 10.1

AMENDMENT NO. 4

TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDMENT NO. 4 to the SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the “Amendment”)
is dated September 19, 2007, by and among PETROQUEST ENERGY, L.L.C., a Louisiana limited liability
company (“Borrower”); JPMORGAN CHASE BANK, N.A. (individually as a lender and as agent,
“Agent”); each of the Guarantors set forth on the signature pages hereto and the financial
institutions set forth on the signature pages hereto, (“Lenders”).

R E C I T A L S:

     WHEREAS, Borrower, PetroQuest Energy, Inc., a Delaware corporation (“Parent”), Agent,
Calyon New York Branch, as Syndication Agent; J.P. Morgan Securities, Inc., as Sole Lead Arranger
and Sole Book Runner, and the Lenders have entered into a Second Amended and Restated Credit
Agreement dated November 18, 2005 (as the same may have been and may hereafter be amended from time
to time, the “Credit Agreement”), pursuant to which Borrower amended and restated a
previously existing credit facility dated May 13, 2003; and

     WHEREAS, Borrower, Parent, Agent and the Lenders desire to amend the Credit Agreement as
herein set forth.

     NOW THEREFORE, in consideration of the premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     1. Definitions. Except as otherwise provided below, unless the context hereof
indicates otherwise, all capitalized terms used herein shall have the same meaning as such
capitalized terms are defined in the Credit Agreement. A new definition of “Convertible Preferred
Stock” is hereby added to the Credit agreement as follows:

          “Convertible Preferred
Stock” shall mean up to $75,000,000 in shares of convertible preferred
stock of the Parent issued in an offering in which JP Morgan Securities, Inc. or one of its
Affiliates is the sole bookrunner to be completed on or before
October 31, 2007.”

     2. Amendments to the Credit Agreement. The Credit Agreement is, subject to the
satisfaction of the conditions precedent set forth in Section 3 hereof, hereby amended as follows:

          (a) Section 6.10, Dividends; Repurchase of Capital Stock; etc. of the Credit
Agreement is hereby amended by deleting the section in its entirety and substituting the following:

          “6.10. Dividends; Repurchase of Capital Stock; etc.. Neither the
Parent
nor the Borrower will, nor will they permit any Subsidiary to, declare or pay
any dividends or make any distributions on its capital stock or membership interests

 

 

(other than dividends payable in its own capital stock or membership interests, as
applicable) or redeem, repurchase or otherwise acquire or retire any of its capital
stock or membership interests at any time outstanding, except (i) that the Borrower
or any Subsidiary may declare and pay dividends or make distributions to its members
or shareholders on a pro rata basis; (ii) the Parent may repurchase, repay, defease,
redeem or otherwise acquire or retire any capital stock with the proceeds of the
contemporaneous issuance of the capital stock of the Parent; (iii) with the prior
approval of the Required Lenders, the Parent may repurchase its capital stock upon
the termination of employment of any officer or employee of the Parent, the Borrower
or any of their Subsidiaries or upon the termination of the services of any director
of such Persons; provided further that, the Parent may repurchase up to $1,000,000
of capital stock in the aggregate from one or more officers or employees of such
Persons upon the termination of the employment of such officers or employees; and
(iv) so long as no Unmatured Default or Default exists, the Parent may declare and
pay cash dividends on the Convertible Preferred Stock.”

     3. Conditions Precedent to Effectiveness of Amendment. This Amendment shall become
effective when, and only when, each of the conditions below has been complied with to the
satisfaction of the Agent and the Lenders and the documents required below have been delivered to
the Agent and the Lenders:

     (a) Counterparts of this Amendment duly executed by Borrower, Guarantors and Lenders;

     (b) A copy of the resolutions approving this Amendment, and authorizing the
transactions contemplated herein duly adopted by the Managers of Borrower, accompanied by a
certificate of the duly authorized Secretary of Borrower, certifying that such copy is a
true and correct copy of the resolutions duly adopted by the Managers of Borrower, and that
such resolutions constitute all the resolutions adopted with respect to such transactions,
and have not been amended, modified or revoked in any respect and are in full force and
effect as of the date hereof;

     (c) A copy of the resolutions approving this Amendment, and authorizing the
transactions contemplated herein duly adopted by the Board of Directors or Members of each
Guarantor, as the case may be, accompanied by a certificate of the duly authorized Secretary
of such Guarantor, certifying that such copy is a true and correct copy of the resolutions
duly adopted by the Board of Directors or Members of such Guarantor, and that such
resolutions constitute all the resolutions adopted with respect to such transactions, and
have not been amended, modified or revoked in any respect and are in full force and effect
as of the date hereof;

     (d) Payment of all fees (to be determined)required to be paid to the Lenders in
connection with this Amendment;

 

 

     (e) Payment by Borrower of the fees and expenses of counsel to Lenders in connection
with the preparation and negotiation of this Amendment and all documents and instruments
contemplated hereby; and

     (f) The execution and delivery of such additional documents and instruments which the
Agent and its counsel may deem necessary to effectuate this Amendment or any document
executed and delivered to Lenders in connection herewith or therewith.

     4. Representations and Warranties of Borrower. Borrower represents and warrants as
follows:

     (a) Borrower and Guarantors are each duly authorized and empowered to execute, deliver
and perform this Amendment and all other instruments referred to or mentioned herein to
which it is a party, and all action on its part requisite for the due execution, delivery
and the performance of this Amendment has been duly and effectively taken. This Amendment,
when executed and delivered, will constitute valid and binding obligations of Borrower and
Guarantors, as the case may be, enforceable against such party in accordance with its terms.
This Amendment does not violate any provisions of the Articles of Organization or limited
liability agreement of Borrower, the Certificate of Incorporation or By-Laws of any
Guarantor, or any contract, agreement, law or regulation to which Borrower or Guarantors are
subject, and does not require the consent or approval of any regulatory authority or
governmental body of the United States or any state;

     (b) After giving affect to this Amendment, the representations and warranties contained
in the Credit Agreement, as amended hereby, and any other Loan Document executed in
connection herewith or therewith, are true, correct and complete on and as of the date
hereof as though made on and as of the date hereof; and

     (c) After giving affect to this Amendment, no event has occurred and is continuing
which constitutes a Default or Unmatured Default.

     5. Delivery of Documents. As soon as such documents become available, Parent will
deliver to the Agent and the Lenders a copy of all documents executed and delivered by Parent,
Borrower or any Guarantor in connection with the offer, sale and issuance of the Convertible
Preferred Stock, accompanied by a certificate of an Authorized Officer of the Parent certifying
that such copy is a true and correct copy of such documents and that such documents have not been
amended, modified or revoked in any respect and are in full force and effect as of the date
thereof.

     6. Reference to and Effect on the Loan Documents.

     (a) Upon the satisfaction of the conditions contained in Section 3 hereof each
reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or
words of like import, and each reference in the Loan Documents shall mean and be a reference
to the Credit Agreement as amended hereby.

 

 

     (b) Except as specifically amended above, the Credit Agreement, the Notes, and all
other instruments securing or guaranteeing Borrower’s obligations to Lenders, including the
Collateral Documents, as amended (collectively, the “Security Instruments”), shall
remain in full force and effect and are hereby ratified and confirmed. Without limiting the
generality of the foregoing, the Security Instruments and all collateral described therein
do and shall continue to secure the payment of all obligations of Borrower and Guarantors
under the Credit Agreement, as amended hereby, and the Notes, and under the other Security
Instruments.

     (c) Each of the Guarantors hereby expressly (i) acknowledges the terms of this
Amendment; (ii) ratifies and affirms its obligations under its Guaranty Agreement dated
November 18, 2005, in favor of the Agent and the Lenders; (iii) acknowledges, renews and
extends its continued liability under its Guaranty Agreement and agrees that its Guaranty
Agreement remains in full force and effect; and (iv) guarantees to the Agent and the Lenders
to promptly pay when due all amounts owing or to be owing by it under its Guaranty Agreement
pursuant to the terms and conditions thereof.

     (d) The execution, delivery and effectiveness of this Amendment shall not operate as a
waiver of any right, power or remedy of Lender under any of the Security Instruments, nor
constitute a waiver of any provision of any of the Security Instruments.

     7. Waiver. As additional consideration for the execution, delivery and performance of
this Amendment by the parties hereto and to induce Lenders to enter into this Amendment, Borrower
and Guarantors each warrants and represents to Lenders that, to the knowledge of Borrower and
Guarantors, no facts, events, statuses or conditions exist or have existed which, either now or
with the passage of time or giving of notice, or both, constitute or will constitute a basis for
any claim or cause of action against Lenders or any defense to (i) the payment of any obligations
and indebtedness under the Notes and/or the Security Instruments, or (ii) the performance of any of
its obligations with respect to the Notes and/or the Security Instruments, and in the event any
such facts, events, statuses or conditions exist or have existed, Borrower and Guarantors each
unconditionally and irrevocably waive any and all claims and causes of action against Lenders and
any defenses to its payment and performance obligations in respect to the Notes and the Security
Instruments arising prior to the date of this Amendment.

     8. Costs and Expenses. Borrower agrees to pay on demand all costs and expenses of
Lenders in connection with the preparation, reproduction, execution and delivery of this Amendment
and the other instruments and documents to be delivered hereunder, including the reasonable fees
and out-of-pocket expenses of counsel for Lenders. In addition, Borrower shall pay any and all
fees payable or determined to be payable in connection with the execution and delivery, filing or
recording of this Amendment and the other instruments and documents to be delivered hereunder, and
agrees to save Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such fees.

     9. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one and the same instrument.

 

 

     10. Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the State of Texas.

     11. Final Agreement. THIS WRITTEN AMENDMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

[Remainder of Page Intentionally Left Blank]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed in
multiple counterparts, each of which is an original instrument for all purposes, all as of the day
and year first above written.

	 	 	 	 	 
	 	“Borrower”

PETROQUEST ENERGY, L.L.C.

 	 
	 	By:  	PetroQuest Energy Inc., its sole member
 	 
	 	 	 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	                        /s/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge 	 
	 	 	Chief Financial Officer 	 
	 

 

 

	 	 	 	 	 
	 	“Guarantors”

PETROQUEST ENERGY, INC.

 	 
	 	By:  	/s/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge 	 
	 	 	Chief Financial Officer 	 
	 

	 	 	 	 	 
	 	PITTRANS, INC.

 	 
	 	By:  	/s/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge, Chief Financial Officer 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	TDC ENERGY, LLC

 	 
	 	By:  	/s/ Michael O. Aldridge
 	 
	 	 	Michael O. Aldridge 	 
	 	 	Chief Financial Officer 	 
	 

 

 

	 	 	 	 	 
	 	“Lenders”

JPMORGAN CHASE BANK, N.A.,

As the Agent, a Lender and LC Issuer

 	 
	 	By:  	/s/ Jo Linda Papadakis
 	 
	 	 	Jo Linda Papadakis, Vice President 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	CALYON NEW YORK BRANCH,

As a Lender and as Syndication Agent

 	 
	 	By:  	/s/ Sharada Manne
 	 
	 	Name:  	Sharada Manne 	 	 
	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	/s/ Darrell Stanley 	 
	 	Name:  	Darrell Stanley 	 
	 	Title:  	Managing Director 	 
	 

	 	 	 	 	 
	 	MACQUARIE BANK LIMITED,

As a Lender

 	 
	 	By:  	/s/ Vanessa Lenthall  	 
	 	Name:  	Vanessa Lenthall  	 
	 	Title:  	Division Director 	 
	 
	 	 	 
	 	By:  	/s/ Robert McRobbie 	 
	 	Name:  	Robert McRobbie  	 
	 	Title:  	Associate Director, Legal Risk Management

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