.
.
.
EXHIBIT 10.2
MACQUARIE BANK LIMITED
ABN 46 008 583 542
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No. 1 Martin Place Telephone (612)8232 3333 Treasury 8232 3600 Facsimile 8232 Facsimile 8232 4227
Sydney NSW 2000 Facsimile (612)8232 6926 Foreign Exchange 8232 3666 Facsimile 8232 3019
GPO Box 4294 Telex 122246 Metals and Mining 8232 3444 Facsimile 8232 3590
Sydney NSW 1164 Internet http://www.macquarie.com.au Futures 8232 3555 Facsimile 8232 9743
DX 10287 SSE Debt Markets 8232 8569 Facsimile 8232 8341
SWIFT MACQAU2S Agricultural Commodities 8232 7672 Facsimile 8232 3533
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27 July 2004
Petro Quest Energy, L.L.C.
Attn: Michael O. Aldridge
400 E. Kaliste Saloom Rd.
Suite 6000
Lafayette, Louisiana 70508
Re: Second Amendment to the Second Lien Secured Credit Agreement dated
as of November 6, 2003 (as amended, the "Credit Agreement")
between PetroQuest Energy, L.L.C. ("PetroQuest"), and Macquarie
Bank Limited (in its individual capacity and as Administrative
Agent, "Macquarie"), as assignee of Macquarie Americas Corp.
Dear Mike:
The purpose of this letter is to document the adjustment to the G & A
Expenses of the Borrower and the Guarantor. As such, the following modification
is made to the Credit Agreement:
Section 7.14 General and Administrative Expenses Permit Borrower's and
Guarantor's consolidated G&A Expenses to exceed
(a) for each of the three calendar quarters commencing April
1, 2004, July 1, 2004 and October 1, 2004 the lesser of (i) three
million two hundred and fifty thousand dollars ($3,250,000) or (ii)
thirty-one percent (31%) of the Tax Adjusted Gross Margin; provided,
however, if Borrower's and Guarantor's consolidated G&A Expenses for
any quarter exceed 31% of the Tax Adjusted Gross Margin, the maximum
allowable consolidated G&A Expenses for Borrower and Guarantor during
the immediately succeeding quarter will be 18% of the Tax Adjusted
Gross margin; and provided further that a breach of clause (ii) of this
Section 7.14 can only form the basis of an Event of Default if
Borrower's and Guarantor's consolidated G&A Expenses exceed (x) 31% of
the Tax Adjusted Gross Margin during any quarter and (y) 18% of the Tax
Adjusted Gross Margin during the immediately succeeding quarter and
provided further that,
MACQUARIE BANK LIMITED 2
notwithstanding anything in this Section 7.14 to the contrary, the
consolidated G&A Expenses of Borrower and Guarantor shall not exceed
35% of the Tax Adjusted Gross Margin; and
(b) for each calendar quarter commencing January 1, 2005 the
lesser of (i) three million dollars ($3,000,000) or (ii) thirty-one
percent (31%) of the Tax Adjusted Gross Margin; provided, however, if
Borrower's and Guarantor's consolidated G&A Expenses for any quarter
exceed 31% of the Tax Adjusted Gross Margin, the maximum allowable
consolidated G&A Expenses for Borrower and Guarantor during the
immediately succeeding quarter will be 18% of the Tax Adjusted Gross
margin; and provided further that a breach of clause (ii) of this
Section 7.14 can only form the basis of an Event of Default if
Borrower's and Guarantor's consolidated G&A Expenses exceed (x) 31% of
the Tax Adjusted Gross Margin during any quarter and (y) 18% of the Tax
Adjusted Gross Margin during the immediately succeeding quarter; and
provided further that, notwithstanding anything in this Section 7.14 to
the contrary, the consolidated G&A Expenses of Borrower and Guarantor
shall not exceed 35% of the Tax Adjusted Gross Margin.
Upon your acknowledgment of this letter, this modification will be
effective as of June 30, 2004. Except as expressly modified by the terms of this
letter, however, nothing in this letter will be construed as an amendment to or
waiver of any provision in the Credit Agreement or any of the other Loan
Documents.
To confirm your agreement to modify the Credit Agreement as described
in this letter, please execute the enclosed copy of this letter in the space
provided and return a fully executed original for our files. If you have any
questions, please contact Paul Beck at (713) 986-3601.
Very truly yours,
MACQUARIE BANK LIMITED,
an Australian incorporated bank
By: /s/ NICHOLAS O'KANE
--------------------------
Name: NICHOLAS O'KANE
------------------------
Title: EXECUTIVE DIRECTOR
-----------------------
By: /s/ THOMAS CULLINAN
--------------------------
Name: Thomas Cullinan
------------------------
Title: Attorney
-----------------------
Agreed on this 27 day of July, 2004.
MACQUARIE BANK LIMITED 3
PETROQUEST ENERGY, L.L.C.,
a Louisiana limited liability company
/s/ MICHAEL O. ALDRIDGE
- -----------------------
Michael O. Aldridge
Treasurer
Acknowledged this 27th day of July, 2004.
BANK ONE, N.A.
a national banking association
By: /s/ Jo LINDA PAPADAKIS
-------------------------
Name: Jo Linda Papadakis
-----------------------
Title: Associate Director
----------------------