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EXHIBIT 10.16
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment") is made as of the 31st day of December, 2000, by and between
PetroQuest Energy, L.L.C., a Louisiana limited liability company formerly known
as PetroQuest Energy One, L.L.C. (the "LLC"), PetroQuest Energy, Inc., a
Delaware corporation ("Parent"), and EnCap Energy Capital Fund III, L.P.
("Lender").
W I T N E S S E T H:
WHEREAS, the LLC, PetroQuest Energy, Inc., a Louisiana corporation (the
"Corporation"), Parent, and Lender have entered into that certain Credit
Agreement dated as of December 21, 2000 (as amended, supplemented, or restated
to the date hereof, the "Original Agreement"); and
WHEREAS, on the date hereof but prior to the execution of this
Amendment, the Corporation merged with and into the LLC with the LLC being the
surviving entity (the "Merger"); and
WHEREAS, subsequent to the Merger but prior to the execution of this
Amendment, the LLC changed its name to "PetroQuest Energy, L.L.C." from
"PetroQuest Energy One, L.L.C."; and
WHEREAS, prior to the Merger the Corporation was the sole member of the
LLC but after giving effect to the Merger Parent is the sole member of the LLC;
and
WHEREAS, each of Parent and the LLC has requested Lender to amend the
Original Agreement as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1 Terms Defined in the Original Agreement. Unless the context
otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
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Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.
"Amendment" means this First Amendment to Credit Agreement.
"Credit Agreement" means the Original Agreement as amended by
this Amendment.
ARTICLE II.
Amendments
Section 2.1. Defined Terms.
(a) The following defined terms are hereby added to Section 1.1 of the
Original Agreement in proper alphabetical order:
"Non-Recourse Indebtedness" means Indebtedness of an
Unrestricted Subsidiary which is not a Liability, in whole or part, of
any Restricted Person and which is not secured by any Lien upon any
property or assets of any Restricted Person, provided that no such
Indebtedness of an Unrestricted Subsidiary shall be considered
"Non-Recourse Indebtedness" if any default with respect to such
Indebtedness would allow or require any Indebtedness which is owed by
one or more of the Restricted Persons to be accelerated or otherwise
made payable in advance of its stated maturity.
"PetroQuest Oil & Gas" means PetroQuest Oil & Gas, L.L.C., a
Louisiana limited liability company the sole member of which is Parent.
"Unrestricted Subsidiary" means (a) any Subsidiary of Parent
which is hereafter designated an Unrestricted Subsidiary of Parent by
Parent's Board of Directors in compliance with the following sentence,
and (b) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors of Parent may at any time and from time to time designate any
Subsidiary of Parent (other than Borrower or any Subsidiary of
Borrower) as an Unrestricted Subsidiary provided that (i) no Default or
Event of Default has occurred or is continuing at the time of such
designation and after giving effect to such designation, (ii)
immediately after such designation, no Restricted Person has any
Liability to pay any Indebtedness of such Subsidiary, has in any way
guaranteed any Indebtedness of such Subsidiary, or has any assets or
properties which are subject to any Lien securing any Indebtedness of
such Subsidiary, and (iii) notice of any such designation is promptly
given to Lender in writing.
(b) The following defined terms contained in Section 1.1. of the
Original Agreement are hereby amended in the entirety as follows:
"Borrower" means, collectively, the Corporation and the LLC,
provided, however that from and after the Borrower Merger "Borrower"
shall mean the LLC.
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"LLC" means PetroQuest Energy, L.L.C., a Louisiana limited
liability company formerly known as PetroQuest Energy One, L.L.C. and
successor in interest by merger to PetroQuest Energy, Inc., a Louisiana
corporation.
"Restricted Person" means each Guarantor, the Corporation, the
LLC, and each other Subsidiary of Parent other than an Unrestricted
Subsidiary, provided, however, that for purposes of Article V and
Article VI (but not Sections 6.13, 6.14, 6.15, and 6.19) each
Unrestricted Subsidiary shall be deemed to be a Restricted Person.
Section 2.2. PetroQuest Oil & Gas. The following section is hereby
added to Article V of the Original Agreement:
"Section 5.17. PetroQuest Oil & Gas. The assets of PetroQuest
Oil & Gas consist solely of beneficial interests in oil and gas
properties, the legal interest of which is owned by Persons other than
Restricted Persons. Parent is the sole member of PetroQuest Oil & Gas."
Section 2.3. Guaranties of Subsidiaries. The parenthetical clause in
Section 6.13 of the Original Agreement that reads "(other than the Corporation
or the LLC)" is hereby amended to read in its entirety as follows:
"(other than the Corporation, the LLC, or PetroQuest Oil & Gas)"
Section 2.4. Perfection and Protection of Security Interests and Liens.
Section 6.14 of the Original Agreement is hereby amended in its entirety to read
as follows:
"Section 6.14. Perfection and Protection of Security Interests
and Liens. Parent and Borrower will from time to time deliver, and will
cause any other Restricted Person (other than PetroQuest Oil & Gas) to
deliver to Lender any financing statements, continuation statements,
extension agreements and other documents, properly completed and
executed (and acknowledged when required) by such Restricted Persons in
form and substance satisfactory to Lender, which Lender requests for
the purpose of perfecting, confirming, or protecting any Liens or other
rights in Collateral securing any Obligations."
Section 2.5. Agreement to Deliver Security Documents. Section 6.15 of
the Original Agreement is hereby amended in its entirety to read as follows:
"Section 6.15. Agreement to Deliver Security Documents. Parent
and Borrower agree to deliver and to cause each other Restricted Person
(other than PetroQuest Oil & Gas) to deliver, to further secure the
Obligations whenever requested by Lender in its sole and absolute
discretion, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements and other Security Documents in form
and substance satisfactory to Lender for the purpose of granting,
confirming, and perfecting second and prior liens or security interests
in any oil and gas properties and interests, together with all
associated equipment, production, production proceeds and other real or
personal property, hereafter owned or acquired by any such Restricted
Person. Parent and Borrower also agree to
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deliver, whenever requested by Lender in its sole and absolute
discretion, favorable title opinions from legal counsel acceptable to
Lender with respect to any such Restricted Person's properties and
interests designated by Lender, based upon abstract or record
examinations to dates acceptable to Lender and (a) stating that such
Restricted Person has good and defensible title to such properties and
interests, free and clear of all Liens other than Permitted Liens, (b)
confirming that such properties and interests are subject to Security
Documents securing the Obligations that constitute and create legal,
valid and duly perfected deed of trust or mortgage liens in such
properties and interests and assignments of and security interests in
the oil and gas attributable to such properties and interests and the
proceeds thereof, and (c) covering such other matters as Lender may
request."
Section 2.6. PetroQuest Oil & Gas. The following section is hereby
added to Article VI of the Original Agreement:
"Section 6.18. PetroQuest Oil & Gas. Parent shall cause the
assets of PetroQuest Oil & Gas at all times to consist solely of
beneficial interests in oil and gas properties, the legal interest of
which is owned by Persons other than Restricted Persons. Parent shall
remain the sole member of PetroQuest Oil & Gas."
Section 2.7. Unrestricted Subsidiaries. The following section is hereby
added to Article VI of the Original Agreement:
"Section 6.19. Unrestricted Subsidiaries. Parent and Borrower
will insure that each Unrestricted Subsidiary complies with each
indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to
which such Unrestricted Subsidiary is a party or by which it or any of
its properties is bound, and with all Laws, regulations, and orders
applicable to such Unrestricted Subsidiary or its properties, business
and affairs, including Environmental Laws, if such Unrestricted
Subsidiary's failure so to comply would impose any Liability on any
Restricted Person, require any Restricted Person to pay or perform any
Liability owing by any Unrestricted Subsidiary, or could otherwise
cause a Material Adverse Change. Parent and Borrower will insure that
no Unrestricted Subsidiary takes, or omits to take, any action if such
action or omission would cause Parent or Borrower to be unable to
remake its representations and warranties hereunder."
Section 2.8. Indebtedness. Section 7.1 of the Original Agreement is
hereby amended by adding the following sentence thereto as a new paragraph after
subsection (f) thereof:
"No Unrestricted Subsidiary shall create, incur, assume, or
otherwise become liable with respect to any Indebtedness other than
Non-Recourse Indebtedness and no Unrestricted Subsidiary shall have
Non-Recourse Indebtedness in excess of $25,000,000 at any one time
outstanding."
Section 2.9. Limitations on Investments and New Businesses. The last
sentence of Section 7.7 of the Original Agreement is hereby amended in its
entirety to read as follows:
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"As used in this section and the following Section 7.8,
'Permitted Investments' means (i) Cash Equivalents, (ii) loans to
Parent, Borrower, or any Guarantor that is a Subsidiary of Borrower,
(iii) capital contributions or other equity investments in Borrower or
any Guarantor that is a Subsidiary of Parent, and (iv) capital
contributions or other equity investments in any Unrestricted
Subsidiary by Parent which do not exceed the aggregate amount of
$10,000 in any Unrestricted Subsidiary."
ARTICLE III.
Conditions of Effectiveness
Section 3.1. Effective Date. This Amendment shall become effective as
of the date first above written when and only when Lender shall have received,
at Lender's office (i) a counterpart of this Amendment executed and delivered by
each Restricted Person that is a party hereto, and (ii) such supporting
documents as Lender may reasonably request.
ARTICLE IV.
Representations and Warranties
Section 4.1. Representations and Warranties of Parent and the LLC. In
order to induce Lender to enter into this Amendment, each of the LLC and Parent
represents and warrants to Lender that:
(a) The representations and warranties contained in Article V
of the Credit Agreement are true and correct at and as of the time of
the effectiveness hereof.
(b) Each Restricted Person is duly authorized to execute and
deliver this Amendment and the other Loan Documents to which it is a
party and is and will continue to be duly authorized to borrow and to
perform its obligations under the Credit Agreement. Each Restricted
Person has duly taken all corporate action necessary to authorize the
execution and delivery of this Amendment and the other Loan Documents
to which it is a party and to authorize the performance of the
obligations of such Restricted Person thereunder.
(c) The execution and delivery by each Restricted Person of
this Amendment and the other Loan Documents to which it is a party, the
performance by each Restricted Person of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby
and thereby do not and will not conflict with any provision of law,
statute, rule or regulation or of the certificate of incorporation and
bylaws of any Restricted Person, or of any material agreement,
judgment, license, order or permit applicable to or binding upon any
Restricted Person, or result in the creation of any Lien, charge or
encumbrance upon any assets or properties of any Restricted Person. No
consent, approval, authorization or order of any court or governmental
authority or third party is required in connection with the execution
and delivery by any Restricted Person of
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this Amendment or the other Loan Documents to which it is a party or to
consummate the transactions contemplated hereby or thereby.
(d) When duly executed and delivered, this Amendment will be a
legal and binding instrument and agreement of each Restricted Person
that is a party hereto, enforceable in accordance with its terms. Each
other Loan Document is and shall continue to be the legal, valid and
binding obligation of each Restricted Person that is a party thereto,
enforceable against such Restricted Person in accordance with their
respective terms.
(e) The Initial Financial Statements fairly present Parent's
Consolidated financial position at such date and the Consolidated
statement of operations and the changes in Consolidated financial
position for the periods ending on such date for Parent. Copies of such
financial statements have heretofore been delivered to Lender. Since
the date of the Initial Financial Statements, no Material Adverse
Change has occurred.
(f) No Default or Event of Default has occurred or is
continuing.
ARTICLE V.
Miscellaneous
Section 5.1. Ratification of Agreements. Each of the Loan Documents as
they may be amended or affected by this Amendment is hereby ratified and
confirmed in all respects. Any reference to the Credit Agreement in any Loan
Document shall be deemed to refer to this Amendment also. The execution,
delivery and effectiveness of this Amendment shall not, except as expressly
provided herein or therein, operate as a waiver of any right, power or remedy of
Lender under the Credit Agreement, the Note, or any other Loan Document nor
constitute a waiver of any provision of the Credit Agreement, the Note or any
other Loan Document. It is the intention of the parties hereto that all of the
Liens, privileges, priorities, and equities existing and to exist under and in
accordance with the terms of the Loan Documents are hereby renewed, extended,
and carried forward as security for the Obligations. The LLC hereby ratifies and
confirms the Note and agrees that its obligations and covenants thereunder are
unimpaired by the Merger and shall remain in full force and effect. The LLC
hereby unconditionally assumes all obligations, duties, and responsibilities of
the Corporation under the Credit Agreement and all other Loan Documents to which
the Corporation was a party. Parent hereby ratifies and confirms that certain
Guaranty dated as of December 21, 2000 made by it in favor of Lender and agrees
that its obligations and covenants thereunder are unimpaired by the Merger or by
this Amendment and shall remain in full force and effect.
Section 5.2. Survival of Agreements. All representations, warranties,
covenants and agreements of Parent and the LLC herein shall survive the
execution and delivery of this Amendment and the performance hereof, including
without limitation the making or granting of the Loan, and shall further survive
until all of the Obligations are paid in full. All statements and agreements
contained in any certificate or instrument delivered by any Restricted Person
hereunder or under
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the Credit Agreement to Lender shall be deemed to constitute representations and
warranties by, or agreements and covenants of, such Restricted Person under this
Amendment and under the Credit Agreement.
Section 5.3. Loan Documents. This Amendment is a Loan Document, and all
provisions in the Credit Agreement pertaining to Loan Documents apply hereto.
Section 5.4. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of Louisiana and any
applicable laws of the United States of America in all respects, including
construction, validity and performance.
Section 5.5. Counterparts. This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT 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 OF THE PARTIES.
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IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
ENCAP ENERGY CAPITAL FUND III, L.P.
By: ENCAP INVESTMENTS, L.L.C., general partner
By: /s/ D. MARTIN PHILLIPS
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D. Martin Phillips
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Managing Director
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PETROQUEST ENERGY, L.L.C.
By: PETROQUEST ENERGY, INC., a Delaware corporation,
sole member
By: /s/ CHARLES T. GOODSON
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Charles T. Goodson
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Chairman of the Board and
Chief Executive Officer
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PETROQUEST ENERGY, INC., a Delaware corporation
By: /s/ CHARLES T. GOODSON
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Charles T. Goodson
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Chairman of the Board and
Chief Executive Officer
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