-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HaY0QUmBvXqvBsDc1N9rDPZTUjEejffeZsHDdvpq2YNb+nxrvslCVBXH8SvHo7IA EM2GTDscl6dAeolteQd7NA== 0000950129-03-006319.txt : 20031229 0000950129-03-006319.hdr.sgml : 20031225 20031229170904 ACCESSION NUMBER: 0000950129-03-006319 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031229 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031229 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PETROQUEST ENERGY INC CENTRAL INDEX KEY: 0000872248 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 721440714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19020 FILM NUMBER: 031076058 BUSINESS ADDRESS: STREET 1: 400 E KALISTE SALOOM RD SUITE 6000 CITY: LAFAYETTE STATE: LA ZIP: 70508 BUSINESS PHONE: 3372327028 MAIL ADDRESS: STREET 1: 400 E KALISTE SALOOM RD SUITE 6000 CITY: LAFAYETTE STATE: LA ZIP: 70508 FORMER COMPANY: FORMER CONFORMED NAME: OPTIMA PETROLEUM CORP DATE OF NAME CHANGE: 19950726 8-K 1 h11518e8vk.txt PETROQUEST ENERGY, INC. - 12/29/2003 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 29, 2003 (December 23, 2003) PETROQUEST ENERGY, INC. (Exact name of registrant as specified in its charter) Delaware (State of incorporation) 1-9020 76-1440714 (Commission File Number) (IRS Employer Identification No.) 400 E. Kaliste Saloom Road, Suite 6000, Lafayette, Louisiana 70508 (Address of Registrant's principal executive offices) Registrant's telephone number, including area code (337) 232-7028 Not Applicable (Former name or former address, if changed since last report) ITEM 5. OTHER EVENTS AND REQUIRED FD DISCLOSURE On December 23, 2003, PetroQuest Energy, Inc. (the "Company") issued a press release announcing that it has acquired from a private company its interest in the Southeast Carthage Field in east Texas for approximately $23 million (the "Acquisition"). The Acquisition was funded through the Company's existing senior credit facility and subordinated term credit facility. The press release is filed as an exhibit hereto and is incorporated herein by reference. In connection with the Acquisition, the Company amended its $75 million senior credit facility with Bank One, NA to increase the borrowing base under the facility to $20,200,000. The borrowing base under the facility will be subject to monthly reductions of $1 million commencing on March 1, 2004. The Company also amended its $20 million subordinated term credit facility with Macquarie Americas Corp. ("Macquarie") to reflect the increased amount outstanding under the senior credit facility, and issued to Macquarie replacement warrants to purchase up to 2,250,000 shares of the Company's common stock at an exercise price of $2.30 per share. These replacement warrants were issued in substitution of and replacement for the warrants to purchase up to 2,250,000 shares of the Company's common stock that were issued to Macquarie in connection with the closing of the subordinated term credit facility in November 2003. The replacement warrants deleted the requirement that cumulative advances under the facility exceed $5 million, $10 million and $15 million for Macquarie to receive warrants to purchase an additional 250,000 shares, 500,000 shares and 250,000 shares of the Company's common stock, respectively, and otherwise contain the same terms and conditions of the warrants previously issued to Macquarie. The replacement warrants are exercisable at any time through the earlier of 36 months following the repayment in full of the facility or 30 days after the daily volume weighted average price of the Company's common stock as published by Nasdaq is equal to or greater than, for a period of 30 days, the exercise price multiplied by three. The Company has granted Macquarie piggy-back registration rights with respect to the shares of common stock issuable upon exercise of the replacement warrants. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS a. Financial Statement of Business Acquired None. b. Pro Forma Financial Information None. c. Exhibits 4.1 Warrant to Purchase Common Shares of PetroQuest Energy, Inc. 2 10.1 First Amendment To Second Lien Secured Credit Agreement dated December 23, 2003, among PetroQuest Energy, L.L.C., PetroQuest Energy, Inc., each of the Lenders from time to time party thereto, and Macquarie Americas Corp., as administrative agent for the Lenders. 10.2 Second Amendment to Amended and Restated Credit Agreement dated as of December 23, 2003, by and among PetroQuest Energy, L.L.C., PetroQuest Energy, Inc., and Bank One, N.A. 99.1 Press Release. [SIGNATURE PAGE FOLLOWS] 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: December 29, 2003 PETROQUEST ENERGY, INC. By: /s/ Daniel G. Fournerat --------------------------------------- Daniel G. Fournerat Senior Vice President, General Counsel and Secretary 4 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------- ----------- 4.1 Warrant to Purchase Common Shares of PetroQuest Energy, Inc. 10.1 First Amendment To Second Lien Secured Credit Agreement dated December 23, 2003, among PetroQuest Energy, L.L.C., PetroQuest Energy, Inc., each of the Lenders from time to time party thereto, and Macquarie Americas Corp., as administrative agent for the Lenders. 10.2 Second Amendment to Amended and Restated Credit Agreement dated as of December 23, 2003, by and among PetroQuest Energy, L.L.C., PetroQuest Energy, Inc., and Bank One, N.A. 99.1 Press Release. EX-4.1 3 h11518exv4w1.txt WARRANT TO PURCHASE COMMON SHARES EXHIBIT 4.1 NEITHER THIS CERTIFICATE NOR THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. NEITHER THIS CERTIFICATE NOR THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY SUCH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS WARRANT (THIS "WARRANT") IS BEING ISSUED PURSUANT TO THE TERMS OF A $20,000,000 SECOND LIEN SECURED CREDIT AGREEMENT DATED AS OF NOVEMBER 6, 2003 (AS AMENDED, THE "CREDIT AGREEMENT"), BETWEEN PETROQUEST ENERGY, L.L.C., PETROQUEST ENERGY, INC., MACQUARIE AMERICAS CORP. AND THE LENDERS NAMED THEREIN. WARRANTS TO PURCHASE COMMON SHARES OF PETROQUEST ENERGY, INC. NO. 58 DECEMBER 23, 2003 Expiring at 5:00 p.m. Houston, Texas time on the Expiration Date (defined below). THIS CERTIFIES that, for value received, MACQUARIE AMERICAS CORP. (together with its successors and assigns, the "Holder"), is entitled, subject to the terms and conditions set forth below, to subscribe for and purchase from the Company, two million two hundred fifty thousand (2,250,000) fully paid and non-assessable Common Shares, subject to adjustment in accordance with Section 2.7, at a purchase price per Common Share equal to $2.30 (the "Exercise Price"), subject, however, to the provisions and upon the terms and conditions hereinafter set forth. ARTICLE I DEFINITIONS 1.1 Definitions. As used herein, the following terms shall have the meanings set forth below: "Advances" shall have the meaning given to such term in the Credit Agreement. "Cashless Exercise" shall mean an exchange of this Warrant by Holder for that number of Common Shares determined by multiplying the number of Warrant Common Shares issuable hereunder by a fraction, the numerator of which shall be the difference between (x) the Current Market Price of the Warrant Common Shares on the date of exercise and (y) the Exercise Price for such Warrant Common Shares, and the denominator of which shall be the Current Market Price of the Warrant Common Shares on the date of exercise. "Change of Control" shall have the meaning given to such term in the Credit Agreement. "Commission" shall mean the U.S. Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act and/or the Exchange Act. "Common Shares" shall mean and include the Common Stock par value, $.001 per share, of the Company described as "Common Stock" in the Company's Certificate of Incorporation and shall also include: (i) in case of any reorganization, reclassification, consolidation, merger, distribution, securities exchange or sale, transfer or other disposition of assets, the securities provided for herein, and (ii) any other securities into which such shares may be converted. "Company" shall mean PetroQuest Energy, Inc., a Delaware corporation, and shall also include any successor thereto with respect to the obligations hereunder, by merger, consolidation or otherwise. "Convertible Securities" shall mean evidences of indebtedness, units, interests or other securities which are convertible into or exercisable or exchangeable for, with or without payment of additional consideration in cash or property into, Common Shares, either immediately or upon a specified date or the happening of a specified event. "Credit Agreement" shall have the meaning set forth in the legend hereto. "Current Market Price" shall mean the closing price of the Common Shares as published by Nasdaq for the trading day immediately prior to the Exercise Date or if the Common Shares are not traded on Nasdaq, such other exchange, or market where the Common Shares are principally traded. "Demand Notice" shall have the meaning set forth in Section 4.2(b). "Demand Registration" shall have the meaning set forth in Section 4.2(b). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any successor Federal statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time. "Exercise Date" shall have the meaning set forth in Section 2.1. "Exercise Price" shall have the meaning set forth in the preamble hereto. "Expiration Date" shall mean the earlier of (a) thirty-six (36) months following repayment in full of the Obligations and (b) thirty (30) days following the occurrence of a VWAP Event. "Fully Diluted Basis" shall mean, with respect to the Common Shares at any time of determination, the number of Common Shares that would be issued and outstanding at such time, assuming that all outstanding options, rights or warrants to subscribe for Common Shares and all Convertible Securities and all options or rights to acquire Convertible Securities have been exercised, converted or exchanged, including this Warrant. 2 "GAAP" shall mean U.S. Generally Accepted Accounting Principles as in effect from time to time. "Holder" shall have the meaning set forth in the preamble hereto. "Obligations" shall have the meaning given to such term in the Credit Agreement. "Original Issue Date" shall mean the date of the original issuance of this Warrant. "Person" shall be construed as broadly as possible and shall include an individual or natural person, a partnership (including a limited liability partnership), a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a Governmental Authority (as defined in the Credit Agreement). "Reclassification" shall have the meaning set forth in Section 2.7(a). "Securities Act" shall mean the Securities Act of 1933, as amended, or any successor Federal statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time. "VWAP Event" means such time as the daily volume weighted average price of the Common Shares as published by Nasdaq is equal to or greater than, for a period of thirty (30) consecutive trading days, the product of (a) the Exercise Price multiplied by (b) 3. "Warrant" shall have the meaning set forth in the legend hereto. "Warrant Office" shall have the meaning set forth in Section 3.1. "Warrant Common Shares" shall mean the Common Shares into which this Warrant may be exercised. 1.2 Accounting Terms and Determinations. Except as otherwise may be expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Holder hereunder shall be prepared, in accordance with GAAP. All calculations made for the purposes of determining compliance with the terms of this Warrant shall (except as otherwise may be expressly provided herein) be made by application of GAAP. 1.3 Rules of Construction. The title of and the section and paragraph headings in this Warrant are for convenience of reference only and shall not govern or affect the interpretation of any of the terms or provisions of this Warrant. The use herein of the masculine, feminine or neuter forms shall also denote the other forms, as in each case the context may require. Where specific language is used to clarify by example a general statement contained herein, such specific language shall not be deemed to modify, limit or restrict in any manner the construction of the general statement to which it relates. The language used in this Warrant has been chosen by the parties to 3 express their mutual intent, and no rule of strict construction shall be applied against any party. In the case of this Warrant, (a) the meanings of defined terms are equally applicable to the singular and plural forms of the defined terms; (b) Annex, Exhibit, Schedule and Section references are to this Warrant unless otherwise specified; (c) the term "including" is not limiting and means "including but not limited to"; (d) in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including"; (e) unless otherwise expressly provided in this Warrant, (i) references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of the Warrant, and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions amending, replacing, supplementing or interpreting such statute or regulation; (f) this Warrant may use several different limitations, tests or measurements to regulate the same or similar matters, all of which are cumulative and each shall be performed in accordance with its terms; and (g) this Warrant is the result of negotiations among and have been reviewed by counsel to the Company and the other parties thereto and are the products of all parties; accordingly, they shall not be construed against Holder merely because of Holder's involvement in their preparation. ARTICLE II EXERCISE OF WARRANTS 2.1 Method of Exercise. This Warrant may be exercised by the Holder hereof at any time, and from time to time, before 5:00 p.m., Houston, Texas time, on the Expiration Date. To exercise this Warrant, the Holder hereof shall deliver to the Company, at the Warrant Office designated herein, (i) a written notice in the form of the Subscription Notice attached as Exhibit A hereto, stating therein the election of such Holder to exercise this Warrant in the manner provided in the Subscription Notice; (ii) payment in full of the Exercise Price (A) in cash or by certified check or wire transfer for all Warrant Common Shares purchased hereunder, (B) through a Cashless Exercise (the Subscription Notice shall set forth the calculation upon which the Cashless Exercise is based) or (C) a combination of (A) and (B) above; and (iii) this Warrant. This Warrant shall be deemed to be exercised on the date of receipt by the Company of the Subscription Notice, accompanied by payment for the Warrant Common Shares and surrender of this Warrant, and such date is referred to herein as the "Exercise Date." If the Holder exercises this Warrant as set forth herein, then the Company shall, as promptly as practicable and in any event within ten business days after the Exercise Date, issue and deliver to such Holder a certificate or certificates for the full number of Warrant Common Shares. As permitted by applicable law, the person in whose name the certificates for Common Shares are to be issued shall be deemed to have become a holder of record of such Common Shares on the Exercise Date and shall be entitled to all of the benefits of such holder on the Exercise Date, including without limitation the right to receive dividends and other distributions for which the record date falls on or after the Exercise Date and to exercise voting rights. 4 2.2 Warrant Common Shares. The maximum number of Common Shares that Holder is entitled to purchase hereunder shall be two million two hundred fifty thousand (2,250,000), on the terms and conditions set forth herein. 2.3 Expenses and Taxes. The Company shall pay all expenses and taxes (including, without limitation, all documentary, stamp, transfer or other transactional taxes) other than income taxes attributable to the preparation, issuance or delivery of this Warrant and of the Common Shares issuable upon exercise of this Warrant. 2.4 Reservation of Common Shares. So long as this Warrant remains outstanding, the Company shall reserve, free from preemptive or similar rights, out of its authorized but unissued Common Shares, and solely for the purpose of effecting the exercise of this Warrant, a sufficient number of Common Shares to provide for the exercise of this Warrant. 2.5 Valid Issuance. All Common Shares issued upon exercise of this Warrant will, upon payment of the Exercise Price and issuance by the Company, be duly authorized, validly and legally issued, fully paid and nonassessable and free and clear of all taxes, liens, security interests, charges and other encumbrances or restrictions with respect to the issuance thereof and, without limiting the generality of the foregoing, the Company shall take all actions necessary to ensure such result and shall not take any action which will cause a contrary result. 2.6 Acknowledgment of Rights. At the time of the exercise of this Warrant in accordance with the terms hereof and upon the written request of the Holder hereof, the Company will acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant; provided, however, that if the Holder hereof shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights. 2.7 Adjustment of Number of Shares. To prevent dilution of the rights granted under this Warrant, the number of Common Shares issuable upon exercise of this Warrant shall be subject to adjustment from time to time as provided herein. (a) Subdivision of Combination of Shares. If the Company at any time after the date hereof but prior to the date of exercise changes the number of Common Shares as a result of a stock dividend, stock split, reverse stock split or other combination, or a reclassification of securities in which the Company receives no consideration in connection with such transaction (any such transaction being referred to herein as a "Reclassification"), or a record date with respect to a Reclassification shall occur, this Warrant shall entitle the Holder to acquire such number and kind of securities as would have been issuable as a result of such Reclassification with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such Reclassification. 5 (b) Notices. Promptly following any adjustment pursuant to this Section 2.7, the Company will give written notice to the Holder of the new number and/or kind of securities underlying this Warrant. 2.8 No Fractional Common Shares. The Company shall not be required to issue fractional Common Shares on the exercise of this Warrant. The number of full Common Shares which shall be issuable upon such exercise shall be computed on the basis of the aggregate number of whole Common Shares purchasable on exercise of this Warrant so presented. If any fraction of a Common Shares would, except for the provisions of this Section 2.8, be issuable on the exercise of this Warrant, the Company shall round up the total number of Common Shares purchasable hereunder to the next whole Common Share. ARTICLE III TRANSFER 3.1 Warrant Office. The Company shall maintain an office for certain purposes specified herein (the "Warrant Office"), which office shall be the Company's principal executive offices, and may subsequently be such other office of the Company or of any transfer agent of the Common Shares in the continental United States as to which written notice has previously been given to the Holder. The Company shall maintain, at the Warrant Office, a register for this Warrant in which the Company shall record (i) the name and address of the person in whose name this Warrant has been issued (as well as the name and address of each permitted assignee of the rights of the registered owner hereof) and (ii) the number of Warrant Common Shares issuable upon the exercise or exchange hereof. 3.2 Ownership of Warrant. The Company may deem and treat the person in whose name this Warrant is registered as the Holder and owner hereof until provided with written notice to the contrary. This Warrant may be exercised by an assignee for the purchase of Warrant Common Shares without having a new Warrant issued upon evidence satisfactory to the Company that such assignee is the true owner of this Warrant. 3.3 Restrictions on Transfer of Warrant; Legends. The Warrant and the Warrant Common Shares are not transferable directly or indirectly, in whole or in part, except in the case of any transfer (a) which is in compliance with applicable federal and state securities laws, including the Securities Act, (b) for which the Company is provided with an opinion of counsel to the Holder, reasonably satisfactory to the Company, to the effect that such transfer is not in violation of any of said securities laws, and (c) which is to a transferee who acquires Warrants to purchase at least 200,000 Warrant Shares. Any transfers of the Warrant will be without charge to the Holder except that any securities transfer taxes due on transfer of the Warrant will be paid by Holder. Restrictive legends setting forth the above restrictions on transfer will be set forth on any Warrant Common Shares issued on exercise of the Warrant. 6 ARTICLE IV COVENANTS 4.1 Notices of Certain Actions. In case the Company proposes to (i) pay any dividend or make any distribution payable in Common Shares, evidences of indebtedness, cash or other property or assets to the holders of Common Shares, (ii) offer to the holders of Common Shares rights or warrants to subscribe for or purchase any Common Shares or any other rights or options, (iii) effect any reclassification of the Common Shares (other than a reclassification involving merely the subdivision or combination of outstanding Common Shares), or any capital reorganization or any consolidation or merger (other than a merger in which no distribution of securities or other property is to be made to holders of Common Shares), or any sale, transfer or other disposition of its property, assets and business as an entirety or substantially as an entirety, or the liquidation, dissolution or winding up of the Company, (iv) effect a transaction constituting a Change of Control, or (v) commence a voluntary (or becomes subject to an involuntary) dissolution, liquidation or winding up, then, in each such case, the Company shall mail (by first class mail, postage prepaid) to the Holder, notice of such proposed action, which shall specify the material terms thereof and the date on which the books of the Company shall close, or a record to be taken, for determining holders of Common Shares entitled to receive such dividends, distributions or issuances of such rights, or the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition or transaction constituting a Change of Control or such liquidation, dissolution, winding up shall take place or commence, as the case may be, and the date as of which it is expected that holders of Common Shares of record shall be entitled to receive securities or other property deliverable upon such action, if any such date is to be fixed. Such notice shall be mailed in the case of any action covered by clause (i) or (ii) above at least 10 days prior to the record date for determining holders of Common Shares for purposes of receiving such payment or offer, and in the case of any action covered by clause (iii) through (v) above at least 30 days prior to the date upon which such action takes place and 30 days prior to any record date to determine holders of Common Shares entitled to receive such securities or other property. 4.2 Piggy-Back Registration Rights. If at any time the Company proposes to file a registration statement under the Securities Act, covering securities of the Company, whether for the Company's own account or for the account of selling security holders (other than a registration statement relating to an acquisition or merger or a registration statement on Form S-4 or S-8 or subsequent similar forms or pursuant to a registration under Section 4.2(b)), it shall advise the Holder by written notice at least twenty (20) days prior to the filing of such registration statement and will upon the request of the Holder given within 15 calendar days after the receipt of any such notice (which request shall include the number of such Warrant Common Shares intended to be disposed of by the Holder), use its commercially reasonable best efforts to effect the registration under the Securities Act of all such Warrant Common Shares that the Company has been requested to so register and to include in any such registration statement such information as may be required to permit a public offering of such Warrant Common Shares. The Company is not required to include such Warrant Common Shares in a registration statement relating to an offering of securities if the managing underwriter has advised the Company in good faith that the inclusion of such Warrant Common Shares should be limited due to market conditions, in which case the number of 7 Warrant Common Shares determined by such underwriter to be the maximum number capable of being included in such registration shall be allocated as follows: (a) first, to the Common Shares (if any) sought to be issued by the Company; and (b) second, to the Warrant Common Shares sought to be included by the Holder and any other securities holders on a pro rata basis based on the number of shares proposed to be sold by each of them. The Company shall keep any such registration statement current for a period of nine months from the effective date of such registration statement or until such earlier date as all of the registered Warrant Common Shares have been sold. In connection with such registration, the holders will execute and deliver such customary underwriting documents as are required by the managing underwriter as a condition to the inclusion of the Warrant Common Shares in the registration statement; provided, however, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register such securities, the Company may, at its election, give written notice of such determination to the Holder and thereupon the Company shall be relieved of its obligation to register any such securities. 4.3 Additional Provisions Concerning Registration. The following provisions of this Section 4.3 are applicable to any registration statement filed pursuant to Section 4.2 of this Warrant: (a) Costs and Expenses. The Company shall bear the entire cost and expense of any registration of securities initiated under Section 4.2 of this Warrant. Notwithstanding the foregoing, the Holder shall, however, bear the fees of its own counsel and accountants and any transfer taxes or underwriting discounts or commissions applicable to Warrant Common Shares sold by the Holder pursuant thereto. (b) Indemnification. The Company shall indemnify and hold harmless the Holder and each underwriter, within the meaning of the Securities Act, who may purchase from or sell for the Holder any Warrant Common Shares from and against any and all losses, claims, damages and liabilities (including reasonable fees and expenses of counsel, which counsel may, if the Holder requests, be separate from counsel for the Company) caused by any untrue statement or alleged untrue statement of material fact contained in the registration statement or any post-effective amendment thereto or any registration statement under the Securities Act or any prospectus included therein required to be filed or furnished by reason of Section 4.3 or any application or other filing under any state securities law caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading to which the Holder or any such underwriter or any of them may become subject under the Securities Act or other Federal or state statutory law or regulation, at common law or otherwise, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or alleged untrue statement or omission or alleged omission based upon information furnished to the Company by the Holder or underwriter expressly for use therein, which indemnification includes each person, if any, who controls any such underwriter within the meaning of the Securities Act. 8 (c) Blue Sky. The Company shall use its best efforts to qualify the Warrant Common Shares for sale in such states as it is otherwise qualifying its securities for sale, or in respect of a Demand Registration, in such states as are reasonably requested by the Holder. However, in no event is the Company required to submit to the jurisdiction of any state other than for the limited consent of service of process relating to the offering or subject itself to taxation in any such jurisdiction. The Company shall also provide the Holder with a reasonable number of prospectuses upon request. (d) Withdrawal. Neither the giving of any notice by the Holder nor the making of any request for prospectuses imposes any obligation upon the Holder to sell any Warrant Common Shares or exercise or exchange this Warrant but only if the Holder elects, in writing, prior to the effective date of the registration statement filed in connection with such registration, not to register such Warrant Common Shares, and if no such election shall be timely so filed, then the Holder shall sell such Warrant Common Shares in such registration on the same terms and conditions as apply to the Company and, if the Warrant with respect to such Warrant Common Shares requested to be so registered has not been exercised, shall exercise the Warrant prior to the effective date of such registration statement. 4.4 Continuation. THE COMPANY'S AGREEMENTS WITH RESPECT TO THIS WARRANT OR SUCH WARRANT COMMON SHARES IN SECTIONS 4.2 THROUGH 4.9 SHALL CONTINUE IN EFFECT FOR THE WARRANT COMMON SHARES REGARDLESS OF THE EXERCISE OR EXCHANGE AND SURRENDER OF THIS WARRANT. 4.5 Rule 144. The Company will continue to file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the Commission thereunder and, during any period in which the Company is subject to Section 13 or 15(d) of the Exchange Act, will take such further action as any holder of this Warrant may reasonably request, all to the extent required from time to time to enable such holder to sell the securities underlying this Warrant without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any holder of this Warrant, the Company will deliver to such holder a written statement as to whether it has complied with such requirements. 4.6 Listing Rights. The Company will, at its expense, list on Nasdaq, or such other exchange or market where its Common Shares are primarily traded, an official notice of issuance upon the exercise or exchange of this Warrant, and maintain such listing of, all Warrant Common Shares or other securities from time to time issuable upon the exercise or exchange of this Warrant. 4.7 Contribution. If the indemnification provided for in Section 4.3(b) from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or 9 expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 4.7 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 4.8 Market Stand-Off Agreement. The Holder agrees (the "Market Stand-Off Agreement") that it shall not, if required and reasonably requested by an underwriter of securities of the Company, sell or otherwise transfer or dispose of the Warrant Common Shares for up to 180 days following the effective date of a registration statement of the Company filed under the Securities Act. These provisions shall not apply to an employee benefit plan on Form S-1 or Form S-8 or similar forms or a Form S-4 or similar form. 4.9 No Inconsistent Agreements. THE COMPANY HAS NOT ENTERED INTO AND WILL NOT ENTER INTO ANY REGISTRATION RIGHTS AGREEMENT OR SIMILAR ARRANGEMENTS THE PERFORMANCE BY THE COMPANY OF THE TERMS OF WHICH WOULD IN ANY MANNER CONFLICT WITH, RESTRICT OR BE INCONSISTENT WITH THE PERFORMANCE BY THE COMPANY OF ITS OBLIGATIONS UNDER THIS AGREEMENT. ARTICLE V MISCELLANEOUS 5.1 Entire Agreement. This Warrant and the Credit Agreement contain the entire agreement between the Holder hereof and the Company with respect to the Warrant Common Shares purchasable upon exercise hereof and the related transactions and supersede all prior arrangements or understandings with respect thereto. 5.2 Governing Law. This Warrant shall be a contract made under and governed by the internal laws of the State of Delaware applicable to contracts made and to be performed entirely within such state, without regard to conflict of law principles. 5.3 Waiver and Amendment. Any term or provision of this Warrant may be waived at any time by the party which is entitled to the benefits thereof. Any term or provision of this Warrant may be amended or supplemented at any time by agreement of the Holder hereof and the Company. Any waiver of any term or condition, or any amendment or supplementation, of this Warrant shall be in writing. A waiver of any breach or failure to enforce any of the terms or 10 conditions of this Warrant shall not in any way affect, limit or waive a party's rights hereunder at any time to enforce strict compliance thereafter with every term or condition of this Warrant. 5.4 Severability. In the event that any one or more of the provisions contained in this Warrant shall be determined to be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in any other respect and the remaining provisions of this Warrant shall not, at the election of the party for whom the benefit of the provision exists, be in any way impaired. 5.5 Copy of Warrants. A copy of this Warrant shall be filed among the records of the Company. 5.6 Notice. Any notice or other document required or permitted to be given or delivered to the Holder hereof shall be in writing and delivered at, or sent by certified or registered mail or by facsimile to such Holder at, the last address shown on the books of the Company maintained at the Warrant Office for the registration of this Warrant or at any more recent address of which the Holder hereof shall have notified the Company in writing. Any notice or other document required or permitted to be given or delivered to the Company, other than such notice or documents required to be delivered to the Warrant Office, shall be delivered at, or sent by certified or registered mail or by facsimile to, the Warrant Office. 5.7 Limitation of Liability; Rights as a Stockholder. No provision hereof, in the absence of affirmative action by the Holder hereof to purchase Common Shares, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the purchase price of any Common Shares or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. Except as otherwise provided herein, this Warrant does not confer upon the Holder any right to vote or consent to or to receive notice as a stockholder of the Company, in respect of any matters whatsoever. 5.8 Exchange, Loss, Destruction, etc. of Warrant. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, mutilation or destruction of this Warrant, and in the case of any such loss, theft or destruction upon delivery of an appropriate affidavit in such form as shall be reasonably satisfactory to the Company and include reasonable indemnification of the Company, or in the event of such mutilation upon surrender and cancellation of this Warrant, the Company will make and deliver a new Warrant of like tenor, in lieu of such lost, stolen, destroyed or mutilated Warrant. Any Warrant issued under the provisions of this Section 5.8 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in lieu of any mutilated Warrant, shall constitute an original contractual obligation on the part of the Company. This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement. The Company shall pay all taxes (other than securities transfer taxes or income taxes) and all other expenses and charges payable in connection with the preparation, execution and delivery of Warrants pursuant to this Section. 5.9 Accredited Investor Status. The Holder is an "accredited investor" within the meaning of Rule 501 of Regulation D under the Securities Act. The Holder has sufficient 11 knowledge and experience in business, financial and investment matters so as to be able to evaluate the risks and merits of its investment in the Company and it is able financially to bear the risks thereof. The Holder had access to such information regarding the Company and its affairs as is necessary to enable it to evaluate the merits and risks of an investment in restricted securities of the Company and has had a reasonable opportunity to ask questions and receive answers and documents concerning the Company and its current and proposed operations, financial condition, business, business plans and prospects. The Holder has not been offered the Warrants by any means of general solicitation or advertising. The Warrants being issued to and acquired by the Holder are being acquired by it for its account for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof. The Holder understands and acknowledges that none of the offer, issuance or sale of the Warrants has been registered under the Securities Act in reliance on an exemption from the registration requirements of the Securities Act. The Holder understands and acknowledges that the Warrants may be subject to additional restrictions on transfer under state and/or federal securities laws. 5.10 Replacement Warrant. This Warrant is issued in substitution of and replacement for Warrant No. 57 to Purchase Common Shares of PetroQuest Energy, Inc. dated November 6, 2003 (the "Prior Warrant") issued to Holder. Upon issuance of this Warrant, the Prior Warrant shall become null and void and be of no further force and effect. Until the return of the Prior Warrant to the Company, Holder will indemnify the Company from all claims related to the issuance of (or failure to issue) Common Shares to any person who presents the Prior Warrant to the Company and purports to exercise the rights of Holder under the Prior Warrant. Upon the return of the Prior Warrant to the Company, the Company will execute an instrument reasonably acceptable to Holder terminating the indemnification obligation described in the previous sentence and releasing Holder from any further liability in connection with that indemnification obligation. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 12 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its name. Dated: December 23, 2003. PETROQUEST ENERGY, INC. By: /s/ Michael O. Aldridge ---------------------------------- Michael O. Aldridge Treasurer THIS IS A SIGNATURE PAGE TO THE WARRANT EXHIBIT A SUBSCRIPTION NOTICE Date: _______________, 20_ PetroQuest Energy, Inc. 400 E. Kaliste Saloom Road, Suite 6000 Lafayette, LA 70508 Attention: _________________________ Ladies and Gentlemen: [ ] The undersigned (the "Purchaser") hereby elects to exercise this Warrant issued to it by PetroQuest Energy, Inc. (the "Company") and dated as of December ___, 2003 (the "Warrant") and to purchase thereunder __________ shares of Common Stock of the Company (the "Common Shares") at a purchase price of __________ Dollars ($___) per Common Share, or an aggregate purchase price of __________ ($__________) (the "Purchase Price"). [ ] The Purchaser hereby elects to convert the value of the Warrant pursuant to the provisions of Section 2.1 of the Warrant. In connection with the exercise of the Warrant, the Purchaser hereby represents, warrants, covenants and agrees as follows: 1. Accredited Investor. The Purchaser is an "accredited investor" within the meaning of Rule 501 of Regulation D under the Securities Act of 1933, as amended (together with the rules and regulations promulgated by the Securities and Exchange Commission thereunder, the "Securities Act"). 2. Investment Experience. The Purchaser has sufficient knowledge and experience in business, financial and investment matters so as to be able to evaluate the risks and merits of its investment in the Company and it is able financially to bear the risks thereof. 3. Company Information; No General Solicitation. The Purchaser had access to such information regarding the Company and its affairs as is necessary to enable it to evaluate the merits and risks of an investment in restricted securities of the Company and has had a reasonable opportunity to ask questions and receive answers and documents concerning the Company and its current and proposed operations, financial condition, business, business plans and prospects. The Purchaser has not been offered any of the Common Shares by any means of general solicitation or advertising. 13 4. Acquisition for Own Account. The Common Shares being issued to and acquired by the Purchaser are being acquired by it for its account for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof. The Purchaser understands that it must bear the economic risk of such investment indefinitely, and hold the Common Shares indefinitely, unless a subsequent disposition of the Common Shares is registered pursuant to the Securities Act, or an exemption from such registration is available, and that the Company has no present intention of registering the Common Shares. The Purchaser further understands that there is no assurance that any exemption from the Securities Act will be available or, if available, that such exemption will allow it to dispose of or otherwise transfer any or all of the Common Shares under the circumstances, in the amounts or at the times the Purchaser might propose. 5. Restricted Securities. (a) The Purchaser understands and acknowledges that none of the offer, issuance or sale of the Common Shares has been registered under the Securities Act in reliance on an exemption from the registration requirements of the Securities Act. (b) The Purchaser understands and acknowledges that the Common Shares may be subject to additional restrictions on transfer under state and/or federal securities laws. Pursuant to the terms of the Warrant, the undersigned has delivered the Purchase Price herewith in full in cash or by certified check or wire transfer or by delivery of the Warrant pursuant to the provisions thereof. Very truly yours, [HOLDER] By: __________________________________ Name: ________________________________ Title: _______________________________ EX-10.1 4 h11518exv10w1.txt 1ST AMEND. TO 2ND LIEN SECURED CREDIT AGREEMENT EXHIBIT 10.1 FIRST AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT THIS FIRST AMENDMENT TO SECOND LIEN SECURED CREDIT AGREEMENT (this "Amendment") is entered into as of December 23, 2003, among PetroQuest Energy, L.L.C., a Louisiana limited liability company ("Borrower"); PetroQuest Energy, Inc., a Delaware corporation ("Guarantor"); each of the Lenders from time to time party hereto; and Macquarie Americas Corp., a Delaware corporation, (in its individual capacity, "MAC"), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the "Administrative Agent"). Capitalized terms used but not defined in this Amendment have the meaning given them in the Credit Agreement (defined below). Except as noted in this Amendment, all references to sections, exhibits and schedules refer to sections in and exhibits and schedules to the Credit Agreement. BACKGROUND A. Borrower and the Lenders have previously entered into a Second Lien Secured Credit Agreement dated November 6, 2003 (the "Credit Agreement") for the purpose of making available to Borrower a second lien, secured term loan on a non-revolving basis. B. The Borrower has requested that the Lenders amend the Credit Agreement pursuant to the terms and conditions of this Amendment to make certain modifications to the Credit Agreement in connection with Borrower's acquisition of the Carthage Field Property (defined below). AGREEMENTS In consideration of the mutual covenants of Borrower and the Lenders set forth in this Amendment and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by each of the parties, Borrower and the Lenders agree as follows: 1. Amendments to Credit Agreement. (a) Additional Definitions. The Credit Agreement is amended to include each of the following additional definitions in alphabetical order: "Carthage Field Property" means the Leases and all other Real Property described on Exhibit A to the First Amendment. "Carthage Field Purchase Agreement" means the Purchase and Sale Agreement dated December 22, 2003 between Borrower, as buyer, and Carthage, LLC, as seller, together with all documents executed and delivered in connection with the transaction contemplated by that Agreement. "First Amendment" means the First Amendment to Credit Agreement dated December 23, 2003 among Borrower, Guarantor, Administrative Agent and the Lenders party to the Credit Agreement." (b) Modifications to Existing Definitions. The following definitions in the Credit Agreement are deleted in their entirety and replaced with the following: "Property" or "Properties" means, collectively, all real property of Borrower and each of its Subsidiaries, including but not limited to Hydrocarbon Leases, Royalty Interests, overriding royalty interests, production payments or similar interests in real property, in each case whether now owned or later acquired. (c) Additional Modifications to Credit Agreement. (i) Modification Fee. The following new Section 2.11(d) is added to the Credit Agreement: (d) Modification Fee. On or before the date on which the First Amendment becomes effective, Borrower shall pay to the Lenders a non-refundable fee the (the "Modification Fee") equal to two hundred thousand dollars ($200,000). The Modification Fee is for the amendments and other accommodations made in connection with the First Amendment and is fully earned on the date paid. (ii) Bonds. The following new sentence is appended to the existing Section 6.19 of the Credit Agreement: Schedule 6.19 identifies each of the qualifications, bonds and approvals Borrower is required to obtain and maintain in connection with its ownership and operation of the Properties. (iii) Outstanding Debt. Section 7.11 of the Credit Agreement is deleted in its entirety and replaced with the following: Section 7.11 Debt Threshold. Permit the total Outstanding Debt to exceed forty-five million dollars ($45,000,000). (iii) Senior Credit Facility. Section 7.12 of the Credit Agreement is deleted in its entirety. 2. Exhibits; Schedules. (a) Modifications to Existing Exhibits and Schedules. The following exhibits and schedules to the Credit Agreement are amended and restated in their entirety as reflected on the respective exhibits and schedules attached to this Amendment: (i) Schedule 4.34(c) - Insurance (ii) Schedule 4.38 - Hedging Agreements 2 (iii) Schedule 4.39 - Marketing Agreements (iv) Schedule 5.12 - Annual Operating Budget (v) Schedule 7.1(x) - Bonds (vi) Schedule 7.13 - Quarterly Production Levels and Net Operating Cash Flows (b) New Exhibits and Schedules. The following new exhibit attached to this Amendment is made a part of the Credit Agreement for all purposes: (i) Exhibit A-1 - Carthage Field Property 3. Conditions to Effectiveness. This Amendment will become effective upon the satisfaction of each of the following conditions: (a) Borrower and Guarantor, as applicable, will execute and deliver to the Administrative Agent the following documents: (i) this Amendment; (ii) a Mortgage covering the Carthage Field Property; (iii) a replacement Warrant acceptable to the Lenders; and (iv) all other agreements, instruments, certificates, financing statements and other documents necessary or convenient, in the sole and absolute discretion of the Lenders, to give effect to the transaction contemplated by this Amendment; (b) Lenders have obtained a report prepared by a consultant acceptable to Lenders confirming (i) Borrower's and Operator's compliance, in all material respects, with all applicable Laws and regulatory requirements and (ii) that Borrower or Operator have all necessary material permits and licenses; (c) an environmental consultant satisfactory to Lenders will investigate Borrower's compliance with all Environmental Laws, the results of which shall be satisfactory to Lenders in their sole discretion; (d) Borrower will deliver to Lenders title opinions or other evidence of title relating to the Properties showing Defensible Title to the Properties vested in Borrower subject only to the Permitted Encumbrances and otherwise satisfactory in form and substance to Lenders, together with a letter from the issuer or issuers of such opinions, if the opinions are not addressed to the Lenders, to the effect that Lenders are authorized to rely on the title opinions; 3 (e) Borrower will deliver to Lenders copies of the Basic Documents and all other documents and instruments as Lenders may reasonably request, all of which will be satisfactory, in form and substance, to Lenders; (f) Borrower will deliver to Lenders a certificate of insurance evidencing the coverages required under this Agreement and the Administrative Agent and the Lenders have been named as additional insureds in respect of such liability insurance policies and the Administrative Agent has been named as loss payee with respect to property loss insurance; (g) no Material Adverse Effect has occurred; (h) except for the obligations listed (or, with the consent of Lenders, summarized) on Schedule 9.2(n), there are no unpaid bills for improvements or services to the Properties that could give rise to mechanic's or materialmen's liens or any other similar encumbrance arising by operation of applicable law; (i) the representations in each of the Loan Documents of Borrower and each other Person are true, complete and correct in all material respects; (j) Lenders are satisfied, in their sole discretion, with the results of its due diligence examination of Borrower, and the Properties, including, Borrower's proposed development of the Properties, satisfactory information regarding existing Hydrocarbon sales, and all aspects of Borrower's existing and contemplated Hydrocarbon marketing activities; (k) no suit or other proceeding is pending or threatened before any court or governmental agency seeking to restrain, enjoin or prohibit or declare illegal, or seeking damages from Borrower in connection with the transactions contemplated in this Agreement (or the operations contemplated as part of those transactions) or alleging the breach of any material contract; (l) Borrower has reimbursed Lenders for all Related Costs for which invoices have been presented; (m) each of the Operating Agreements affecting the Properties will be satisfactory in form and substance to Lenders in their sole and absolute discretion; (n) each of the documents executed and delivered by Borrower or Guarantor in connection with the Senior Credit Facility will be satisfactory in form and substance to Lenders in their sole and absolute discretion; (o) the Senior Lender will have executed and delivered to Lenders an amendment to the Intercreditor Agreement satisfactory in form and substance to Lenders in their sole and absolute discretion; (p) Borrower shall have prepared and submitted to Lenders an eighteen (18) month Annual Operating Budget for the further development of the Properties, and the 4 budget is satisfactory in form and substance to Lenders in their sole and absolute discretion; (q) Lenders will be satisfied in their sole and absolute discretion with Borrower's Hydrocarbon hedging program; (r) the Modification Fee will have been paid to Administrative Agent for the ratable benefit of the Lenders; and 4. Conditions Precedent to Making of Advances. In addition to the conditions set forth in Section 3 above, the making of any additional Advance under the Term Loan shall be subject to the following conditions: (a) no Material Adverse Change has occurred and is continuing; (b) the Senior Credit Facility with a borrowing base of at least twenty million two hundred thousand dollars ($20,200,000) shall have closed prior to or contemporaneously with the funding of the Term Loan; (c) all representations and warranties of Borrower and Guarantor set forth in this Agreement and the other Loan Documents shall be true and correct in all material respects as of the date of the Advance except to the extent such representations and warranties are expressly limited to an earlier date, in which case the representations and warranties shall be true and correct as of such specified earlier date; (d) Borrower shall have delivered an Advance Request to the Administrative Agent in accordance with Section 2.2. Such Advance Request must be accompanied by copies of all approved AFEs included in the Annual Operating Budget as well as other supporting documentation satisfactory to Lenders evidencing the amount to be Advanced. Each AFE previously approved by Lenders in writing or other project description from the Annual Operating Budget delivered to Lender in conjunction with an Advance Request will detail all amounts Advanced to date by Lenders under that AFE or project description and the amount requested under the Advance Request. Notwithstanding anything to the contrary herein, Lenders shall not Advance any amount with respect to any specific activity included in the Annual Operating Budget that exceeds the amount included for such Well or project in the Annual Operating Budget inclusive of any amount included in the "Cost-Overrun" line-item of that Annual Operating Budget. (e) the hedging requirements required by Section 6.17 shall be in full force and effect; (f) no Event of Default has occurred or is continuing and no circumstance exists which but for the lapse of time or notice from the Lenders or both would become an Event of Default; and (g) the Carthage Field Purchase Agreement will be in form and substance satisfactory to Lenders in their sole and absolute discretion, and the transactions contemplated by that agreement will have closed (conditioned only on the payment of the 5 purchase price specified in that agreement) on terms satisfactory to Lenders in their sole and absolute discretion. 5. Return of Original Warrant. Contemporaneous with the delivery of the replacement Warrant described in Section 3(a)(iii) by PQUE to the Lenders, the Lenders will return (or make arrangements satisfactory to PQUE for the return of) the original Warrant issued to Lenders in connection with the Closing of the Credit Agreement. 6. Reaffirmation of Representations and Warranties. To induce the Lenders to enter into this Amendment, Borrower and Guarantor each hereby reaffirms, as of the date hereof, its respective representations and warranties contained in Article IV of the Credit Agreement and in all other documents executed pursuant thereto, and additionally represents and warrants as follows: (a) the execution and delivery of this Amendment and the performance by Borrower and Guarantor of their respective obligations under this Amendment are within such company's power, have been duly authorized by all necessary company action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law or of the Charter Documents of Borrower or Guarantor or of any agreement binding upon either of them; and (b) this Amendment represents the legal, valid and binding obligations of each of Borrower and Guarantor enforceable against each of them in accordance with its terms and subject only to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally. 7. Ratification of Liens and Security Interests. Borrower hereby acknowledges and ratifies the existence and priority of the Liens granted by Borrower in favor of any of the Lenders or the Administrative Agent for the benefit of the Lenders in and to the Collateral and represents, warrants and covenants that such liens and security interests are valid, existing and in full force and effect. 8. Miscellaneous. This Amendment supersedes all prior agreements (written or oral) between Borrower and the Lenders with regard to the subject matters hereof. This Amendment is a Loan Document. Except as affected by this Amendment, the Loan Documents are unchanged and continue in full force and effect. However, in the event of any inconsistency between the terms of the Credit Agreement as amended by this Agreement and any other Loan Document, the terms of the Credit Agreement will control and the other document will be deemed to be amended to conform to the terms of the Credit Agreement. All references to the Credit Agreement will refer to the Credit Agreement as amended by this Amendment. All references to the Collateral will include, without limitation, the Collateral acquired or to be acquired pursuant to the Carthage Field Purchase Agreement. Borrower agrees that all Loan Documents to which it is a party (whether as an original signatory or by assumption of the Obligations) remain in full force and effect and continue to evidence its legal, valid and binding obligations enforceable in accordance with their terms (as the same are affected by this Amendment or are amended in connection with this Amendment). Borrower releases Administrative Agent and each of the Lenders from any liability for actions or failures to act in 6 connection with the Loan Documents prior to the date of this Amendment. Any course of dealing among Borrower, Administrative Agent, any of the Lenders or any other Person will not be deemed to have altered or amended the Credit Agreement or affected either Borrower's or the Lenders' right to enforce the Credit Agreement as written. This Amendment will be binding upon and inure to the benefit of each of the undersigned and their respective successors and permitted assigns. 9. Form. Each agreement, document, instrument or other writing to be furnished to Administrative Agent or the Lenders under any provision of this Amendment must be in form and substance satisfactory to the Lenders and their respective counsel. 10. Multiple Counterparts. This Amendment may be executed in more than one counterpart, each of which shall be deemed an original, and all of which constitute, collectively, one instrument; but, in making proof of this instrument, it shall not be necessary to produce or account for more than one such counterpart. It shall not be necessary for each of the parties to execute the same counterpart of this Amendment so long as each of them executes a counterpart of this Amendment. 11. Governing Law. This Amendment and all transactions provided for in this Amendment will be governed by, interpreted and construed under and enforced pursuant to the laws of the State of Texas, without regard to its conflicts of laws provisions. 12. Final Agreement. THE LOAN DOCUMENTS, AS AMENDED BY OR IN CONNECTION WITH THIS AMENDMENT, 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 ORAL AGREEMENTS BETWEEN THE PARTIES. [SIGNATURES BEGIN ON THE FOLLOWING PAGE] 7 This Amendment is executed as of the date set forth in the preamble to this Amendment. BORROWER: PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company By: /s/ Michael O. Aldridge ---------------------------------------- Michael O. Aldridge Treasurer GUARANTOR: PETROQUEST ENERGY, INC., a Delaware corporation By: /s/ Michael O. Aldridge ---------------------------------------- Michael O. Aldridge Treasurer LENDERS: MACQUARIE AMERICAS CORP., a Delaware corporation, an Administrative Agent and a Lender By: /s/ Brian B. Huges ---------------------------------------- Brian B. Hughes Division Director By: /s/ Paolo Belfiglio ---------------------------------------- Paolo Belfiglio Lawyer EX-10.2 5 h11518exv10w2.txt 2ND. AMEND. TO CREDIT AGREEMENT DATED 12/23/2003 EXHIBIT 10.2 SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the "Amendment") is made and entered into effective as of December 23, 2003, by and among PETROQUEST ENERGY, L.L.C., a Louisiana limited liability company ("Borrower"); PETROQUEST ENERGY, INC., a Delaware corporation ("Guarantor"); BANK ONE, NA, a national banking association, (individually as a lender and as agent, "Bank One"). R E C I T A L S: WHEREAS, Borrower, Guarantor, Bank One and Union Bank of California entered into an Amended and Restated Credit Agreement dated May 14, 2003 (which as the same may be amended from time to time is herein called the "Credit Agreement"), pursuant to which Borrower amended and restated a previously existing credit facility dated May 11, 2001; and WHEREAS, Union Bank of California has, by Assignment of even date herewith, assigned and conveyed to Bank One all of its interest in the Credit Agreement; and WHEREAS, Borrower, Guarantor and Bank One 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) Definitions. Article I of the Credit Agreement is hereby amended by adding the following new defined terms and their definitions in proper alphabetical sequence as follows: "Acquisition Agreement" means that certain Purchase and Sale Agreement dated December 22, 2003, among Borrower, Guarantor, Carthage, and Addington, regarding the purchase by Borrower of Oil & Gas Properties in the Carthage Field located in Panola County, Texas." "Addington" means Addington Exploration, L.L.C., a Kentucky limited liability company" "Carthage" means Carthage, LLC, a Kentucky limited liability company" (b) Definitions. The following defined terms set forth in Article I of the Credit Agreement are hereby amended as follows: "Borrowing Base Reduction Amount" means (a) for each month commencing March 1, 2004 until the next semi-annual Borrowing Base redetermination pursuant to Section 2.2.2, $1,000,000, and (b) for each month thereafter, such amount as designated by 100% of the Lenders from time to time in connection with each successive scheduled semi-annual Borrowing Base redetermination pursuant to Section 2.2.2 or successive unscheduled Borrowing Base redetermination pursuant to Section 2.2.3.; provided however, if the Required Lenders fail to timely designate a new Borrowing Base Reduction Amount, then the Borrowing Base Reduction Amount most recently in effect will continue in effect until the Required Lenders designate a new Borrowing Base Reduction Amount." "Unutilized Availability" means an amount equal to the sum of (i) the Borrowing Base in effect from time to time; and (ii) the amount available for borrowing by Borrower under the Subordinated Credit Agreement, minus the Aggregate Outstanding Debt." 2. Amendments to the Credit Agreement. The Credit Agreement is, effective the date hereof, and subject to the satisfaction of the conditions precedent set forth in Section 3 hereof, hereby amended as follows: (a) Section 2.2.1 Borrowing Base, of the Credit Agreement is hereby amended by deleting the section in its entirety and substituting the following: "2.2.1 During the period from the date of this Agreement to the date as of which the Borrowing Base is first redetermined pursuant to Section 2.2.2, the Borrowing Base shall be $20,200,000.00." (b) A new Section 5.29 Acquisition Agreement is hereby added to the Credit Agreement as follows: "5.29 Acquisition Agreement. The transactions contemplated by the Acquisition Agreement have or will close as contemplated therein and neither Borrower, Guarantor, Carthage nor Addington has waived nor shall waive, or in any way amend, without the prior consent of the Agent, the terms of the Acquisition Agreement, including any condition to the obligations to close as so set forth therein. A true, correct and complete copy of the Acquisition Agreement (including all exhibits, schedules and amendments thereto) has been delivered to Agent and a true, correct and complete copy of each document and instrument delivered at closing of the Acquisition will be delivered to the Agent on the closing date thereof. Neither Carthage nor Addington is in default under the Acquisition Agreement or any document or instrument to be delivered in connection with the Acquisition Agreement executed in connection therewith. The representations and warranties made by Carthage and/ or Addington in the Acquisition Agreement and any other document or instrument will be true and correct (except for changes expressly provided for therein or herein) on and as of the closing date as though made on and as of such date." Section 6.31.4 to the Credit Agreement is hereby deleted in its entirety. (d) Section 6.32 to the Credit Agreement is hereby amended to read as follows: "6.32. Subordinated Indebtedness. The Borrower will promptly provide the Agent with copies of all documentation, notices and reports provided by or on behalf of the Borrower, Guarantor or any Subsidiary to the Subordinated Lenders. On or before the tenth (10th) day of each calendar month, the Borrower shall deliver to the Agent a certificate, executed by an Authorized Officer of the Borrower, setting forth the outstanding balance of the Subordinated Indebtedness as of the last day of the preceding month. The Borrower will not, and will not permit the Guarantor or any Subsidiary to, make any (i) payments on the principal amount of any Subordinated Indebtedness; (ii) payments of interest on the Subordinated Indebtedness after the occurrence of a Unmatured Default or a Default; (iii) amendment or modification to the Subordinated Credit Agreement or any other agreement evidencing or governing any Subordinated Indebtedness without the prior written consent of the Agent; or (iv) directly or indirectly voluntarily prepay, defease or in substance defease, purchase, redeem, retire or otherwise acquire, any portion of the Subordinated Indebtedness without the prior written consent of the Agent." 3. Conditions Precedent to Effectiveness of Amendment. This Amendment shall become effective when, and only when, the Agent and Lenders shall have received counterparts of this Amendment executed by Borrower and Guarantor and Section 2 hereof shall become effective when, and only when, the Agent and Lenders shall have additionally received all of the following documents, each document (unless otherwise indicated) being dated the date of receipt thereof by Lender (which date shall be the same for all such documents), in form and substance satisfactory to the Lender: (a) Counterparts of this Amendment duly executed by Borrower, Guarantor and Lenders; (b) A copy of the resolutions approving this Amendment, and authorizing the transactions contemplated herein or therein duly adopted by the Managers of Borrower, accompanied by a certificate of the duly authorized Secretary of Borrower, 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 or therein duly adopted by the Board of Directors of Guarantor, accompanied by a certificate of the duly authorized Secretary of Guarantor, that such copy is a true and correct copy of the resolutions duly adopted by the Board of Directors of 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) A certificate, executed by an Authorized Officer of Borrower and Guarantor, stating that attached thereto is a true, correct and complete copy of a fully executed counterpart of the Acquisition Agreement, all exhibits and schedules thereto and all other documents and instruments executed and delivered in connection therewith. Additionally, the Acquisition Agreement shall expressly permit the direct or indirect assignment (collateral or otherwise) to the Lenders of all of the rights, but none of the obligations of Borrower, as a purchaser, under the Acquisition Agreement; (e) Mortgages, executed by the Borrower, in a form satisfactory to the Agent, the Lenders and their counsel with respect to the Properties purchased by Borrower pursuant to the Acquisition Agreement and described therein, which are part of the Collateral, and such other agreements, documents and instruments as may be necessary and appropriate, in form and substance satisfactory to the Agent and the Lenders, executed and delivered by the Borrower, as mortgagor or assignor, in favor of the Agent, ratably for the benefit of the Lenders, in order to create and perfect the Lender Liens in and to all Collateral described therein; (f) There shall not have been, in the sole judgment of Lenders, any material adverse change in the financial condition, business or operations of Borrower or Guarantor; (g) 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; (h) The legal opinion of counsel to Borrower and Guarantor, in form and substance satisfactory to the Agent and its counsel; (i) ISDA documents entered into between Borrower and any of the Lenders evidencing Rate Management Transactions with respect to the Oil and Gas Properties of the Borrower and Guarantor, with confirmations of the transactions thereunder providing satisfactory hedging of natural gas sales in amounts and at prices satisfactory to the Lenders from the date hereof through December, 2005; (j) 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 Guarantor 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 Guarantor, 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 Guarantor, or any contract, agreement, law or regulation to which either Borrower or Guarantor is 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 Documents 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; (c) After giving affect to this Amendment, no event has occurred and is continuing which constitutes a Default or Unmatured Default; and (d) When duly executed and delivered, each of this Amendment and the Credit Agreement will be legal and binding obligations of Borrower, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights and by equitable principles of general application. 5. Reference to and Effect on the Loan Documents. (a) Upon the effectiveness of Section 2 hereof, on and after the date 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 and the Note(s), 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 Guarantor under the Credit Agreement and the Note(s), as amended hereby, and under the other Security Instruments. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, 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. 6. 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 Guarantor each warrants and represents to Lenders that 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 Note(s) and/or the Security Instruments, or (ii) the performance of any of its obligations with respect to the Note(s) and/or the Security Instruments, and in the event any such facts, events, statuses or conditions exist or have existed, Borrower unconditionally and irrevocably waives any and all claims and causes of action against Lenders and any defenses to its payment and performance obligations in respect to the Note(s) and the Security Instruments. 7. 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. 8. 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. 9. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Texas. 10. 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 instrument 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: /s/ Michael O. Aldridge -------------------------------------------- Michael O. Aldridge, Chief Financial Officer "GUARANTOR" PETROQUEST ENERGY, INC. By: /s/ Michael O. Aldridge -------------------------------------------- Michael O. Aldridge, Chief Financial Officer "LENDERS" BANK ONE, NA, As the Agent, a Lender and LC Issuer By: /s/ Charles Kingswell-Smith -------------------------------------------- Charles Kingswell-Smith Director EX-99.1 6 h11518exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [PETROQUEST LOGO] NEWS RELEASE IMMEDIATE RELEASE For further information, contact: Robert R. Brooksher, Vice President - Corporate Communications (337) 232-7028 PETROQUEST ENERGY ACQUIRES EAST TEXAS NATURAL GAS RESERVES Lafayette, Louisiana - December 23, 2003 - PetroQuest Energy, Inc. (NASDAQ: PQUE) today announced that the Company has acquired from a private company its interest in the Southeast Carthage Field in East Texas for approximately $23 million. The Company expects to allocate $1 million of the purchase price to unevaluated acreage. In this transaction, PetroQuest estimates it is acquiring approximately 29 Bcfe of proved reserves of which 57% are proved developed and 69% are natural gas. The acquisition will initially add approximately 5.5 MMcfe per day to the Company's production and 13,500 net developed acres and 8,500 net undeveloped acres to the Company's lease position. The purchase was funded through the Company's existing credit facilities. "This property strengthens our current asset base by adding reserves that have a longer life than our current Gulf Coast reserves. The reserve to production ratio of this property is approximately 14.5 years based on current production," said Charles T. Goodson, Chairman and Chief Executive Officer. "There is also additional probable and possible gas reserve potential which we expect will provide additional upside to this transaction." PetroQuest Energy, Inc. is an independent energy company engaged in the exploration, development, acquisition and production of oil and natural gas reserves in East Texas, South Louisiana and the shallow waters of the Gulf of Mexico. This press release contains "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are our estimate of the sufficiency of our existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, the uncertainties involved in estimating quantities of proved oil and natural gas reserves, in prospect development and property acquisitions and in projecting future rates of production, the timing of development expenditures and drilling of wells, and the operating hazards attendant to the oil and gas business. In particular, careful consideration should be given to cautionary statements made in the various reports PetroQuest has filed with the Securities and Exchange Commission. PetroQuest undertakes no duty to update or revise these forward-looking statements. -----END PRIVACY-ENHANCED MESSAGE-----