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EXHIBIT 10.13
FIRST AMENDMENT
TO
LOAN AGREEMENT
AMONG
QUEEN SAND RESOURCES, INC.
AS BORROWER,
ENRON CAPITAL & TRADE RESOURCES CORP.
AS AGENT,
AND
THE LENDERS SIGNATORY HERETO
Effective as of June 30, 1998
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FIRST AMENDMENT TO LOAN AGREEMENT
This FIRST AMENDMENT TO LOAN AGREEMENT (this "First Amendment")
executed effective as of June 30, 1998 (the "Effective Date") is among Queen
Sand Resources, Inc., a Nevada corporation (the "Borrower"), Northland
Operating Co., a Nevada corporation ("Northland"), Corrida Resources, Inc., a
Nevada corporation ("Corrida"), Queen Sand Resources, Inc., a Delaware
corporation (the "Parent Company"; the Borrower, Northland, Corrida, and the
Parent Company being collectively referred to herein as the "Obligors"), the
undersigned lenders who are parties to the Loan Agreement referred to below
(the "Lenders") and Enron Capital & Trade Resources Corp., a Delaware
corporation, as agent for the Lenders (in such capacity, together with its
successors in such capacity, the "Agent").
RECITALS
A. The Borrower, the Agent and the Lenders are parties to that
certain Subordinated Revolving Credit Loan Agreement dated as of December 29,
1997 (the "Loan Agreement"), pursuant to which the Lenders have made certain
credit available to and on behalf of the Borrower.
B. The Borrower has requested and the Agent and the Lenders have
agreed to amend certain provisions of the Loan Agreement.
C. NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Defined Terms. All capitalized terms which are defined in the
Loan Agreement, but which are not defined in this First Amendment, shall have
the same meanings as defined in the Loan Agreement. Unless otherwise
indicated, all section references in this First Amendment refer to the Loan
Agreement.
Section 2. Amendments to Credit Agreement.
2.1 New and Replaced Definitions. Section 1.1 of the Loan
Agreement is hereby amended by replacing or inserting the following definitions
as appropriate:
"Bridge Loan Documents" shall mean, collectively, (i) Equity
Bridge Note Purchase Agreements dated as of April 17, 1998, among the
Parent Company, the Borrower and the initial purchasers named therein,
(ii) the $30,000,000 Variable Rate Senior Third Secured Equity Bridge
Notes sold pursuant to the terms thereof, (iii) Note Purchase
Agreements dated as of April 17, 1998, among the Parent Company, the
Borrower and the initial purchasers named therein, (iv) the
$30,000,000 Variable Rate Senior Second Secured Notes sold pursuant to
the terms thereof, and (v) any and all other agreements or instruments
now or hereafter executed and delivered in connection with any of the
foregoing or as security for the payment or performance thereof.
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"Bridge Loans" shall mean collectively the Debt Bridge Loan
and the Equity Bridge Loan.
"Consolidated Subsidiaries" shall mean each Subsidiary of the
Parent Company or other Person owned by the Parent Company, whether
now existing or hereafter created or acquired which are not
Non-Recourse Subsidiaries and the financial statements of which shall
be (or should have been) consolidated with the financial statements of
the Parent Company in accordance with GAAP.
"Debt Bridge Loan" shall mean the sale by the Borrower of
$30,000,000 Variable Rate Senior Second Secured Notes due 2003
pursuant to those certain Note Purchase Agreements dated as of April
17, 1998, among the Parent Company, the Borrower and the initial
purchasers named therein.
"Equity Bridge Loan" shall mean the sale by the Borrower of
$30,000,000 Variable Rate Senior Third Secured Equity Bridge Notes due
2004 pursuant to those certain Equity Bridge Note Purchase Agreements
dated as of April 17, 1998, among the Parent Company, the Borrower and
each initial purchaser named therein.
"Escrow Agreement" shall mean the Escrow Agreement entered
into among Xxxxxx Guaranty Trust Company of New York, as trustee, the
Borrower, and Chase Bank of Texas, National Association, as escrow
agent, pursuant to Section 2.2 of the Purchase and Sale Agreement.
"Equity Offering" shall mean any sale or issuance for cash of
any equity securities of the Parent Company or warrants or options
with respect thereto (whether done by a registered public offering or
an exempt private placement of such securities) occurring after the
Closing Date; provided the foregoing shall not include any warrants or
options granted in connection with the Equity Bridge Loan or any
extensions relating to the Equity Bridge Loan or relating to any other
warrants or class of Preferred Stock or Debt outstanding prior to the
Closing Date or which arise after closing but are attributable to
agreements in effect prior to the date of Closing.
"Hi-Yield Offering" shall mean any sale or issuance of any
hi-yield Debt securities of the Parent Company (whether done by a
registered public offering or an exempt private placement of such
securities) occurring after the Closing Date; provided the foregoing
shall not include the Debt Bridge Loan or the Equity Bridge Loan.
"Loan" shall mean any loan made pursuant to Section 2.1, all
of such Loans being referred to collectively as the "Loans".
"Preferred Stock" shall mean (i) the Parent Company's Series A
Participating Convertible Preferred Stock; (ii) the Parent Company's
Series B Participating Convertible Preferred Stock; and (iii) the
Parent Company's Series C Convertible Preferred Stock issued pursuant
to the Certificate of Designation of Series C Convertible Preferred
Stock adopted as of December 23, 1997, together with any and all
amendments and modifications thereto.
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"Purchase and Sale Agreement" shall mean that certain Purchase
and Sale Agreement dated as of March 19, 1998, among Xxxxxx Guaranty
Trust Company of New York, as Trustee, Investment Royalty Corporation
and Xxxxx Royalty Corporation, as sellers, and the Borrower, as
purchaser.
"Senior Indenture" shall mean the Indenture, dated as of July
1, 1998 among the Parent Company, as issuer, the Borrower, Northland
Operating Co. and Corrida Resources, Inc., as initial subsidiary
guarantors, and Xxxxxx Trust & Savings Bank, as trustee, pursuant to
which the Senior Notes, if any, are to be issued with terms
substantially similar to those contained in the Senior Notes Offering
Memorandum.
"Senior Indenture Indebtedness" shall mean the Senior Notes,
the guarantees thereof and any other Indebtedness of the Borrower, the
Parent Company, the Guarantors under the Senior Indenture, together
with any refinancings thereof permitted by the terms of Section
5.4(a).
"Senior Loan Agreement" shall mean the Amended and Restated
Credit Agreement dated as of April 17, 1998, among the Borrower, the
Bank of Montreal, as agent, and the other lenders signatory thereto
and as the same be further amended and supplemented.
"Senior Note Documents" shall mean the collective reference to
the Senior Notes, the Senior Indenture, the Senior Note Offering
Memorandum and each agreement, instrument and document delivered in
connection therewith or relating thereto.
"Senior Note Offering Memorandum" shall mean the Offering
Memorandum, dated June 30, 1998, related to the issuance of the Senior
Notes, as amended or supplemented from time to time.
"Senior Notes" shall mean the 12 1/2% Senior Notes due 2008 of
the Parent Company issued pursuant to the Senior Indenture.
2.2 Amendment to "Excepted Liens". Section 1.1 of the Loan
Agreement is hereby amended by replacing clause (f) of the definition of
"Excepted Liens" with the following:
(f) Liens securing payment of the Senior Debt and the
Bridge Loans.
2.3 Section 3.4. Section 3.4 is hereby amended by replacing the
reference to "any Governmental Requirement" contained therein with "any material
Governmental Requirement".
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2.4 Section 3.9. Section 3.9 is hereby amended by replacing the
reference to "all United States Federal income tax returns" contained therein
with "all required United States Federal returns that are currently due".
2.5 Section 3.14. Section 3.14 is hereby amended by replacing
such section in its entirety with the following:
Section 3.14 Subsidiaries and Partnerships. Except as set
forth on Schedule 3.14, the Parent Company has no Subsidiaries and has
no interest in any partnerships; and the Borrower has no Subsidiaries
and has no interest in any partnerships. Schedule 3.14 sets forth the
principal place of business of each such Subsidiary and the ownership
interest of QSRD and the Borrower in such Subsidiary.
2.6 Section 3.15. Section 3.15 is hereby amended by replacing
such section in its entirety with the following:
Section 3.15 Location of Business and Offices. The
Borrower's principal place of business and chief executive offices are
located at the address stated on its signature page of this Agreement.
The principal place of business and chief executive office of each
Subsidiary are located at the addresses stated on Schedule 3.14.
2.7 Section 3.19. Section 3.19 is hereby amended by replacing
the reference to "companies engaged in the same or a similar business"
contained therein with "similarly situated companies engaged in the same or a
similar business".
2.8 Section 3.21. Section 3.21 is hereby amended by replacing
such section in its entirety with the following:
Section 3.21 Restriction on Liens. Neither the Parent
Company, the Borrower nor any of its Subsidiaries (other than
Non-Recourse Subsidiaries) is a party to any agreement or arrangement
(other than this Agreement and the Security Instruments), or subject to
any order, judgment, writ or decree, which either restricts or purports
to restrict its ability to grant Liens to other Persons on or in
respect of their respective assets or Properties, except for such
restrictions as are contained in the documents and agreements
evidencing the DEM Subordinated Debt, the Senior Debt, the Bridge
Loans, any High Yield Offering, or any Equity Offering; provided that
such restrictions do not impair the ability of the Parent Company, the
Borrower, or any of its Subsidiaries (other than Non-Recourse
Subsidiaries) to grant Liens to the Agent and the Banks except as
provided in the Senior Loan Agreement and the Subordination Agreement.
2.9 Section 4.1. Section 4.1 is hereby amended by replacing
Section 4.1(a) in its entirety with the following:
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(a) As soon as available and in any event within 120 days
after the end of each fiscal year of the Parent Company, the audited
consolidated statements of operations, stockholders' equity, changes
in financial position and cash flow of the Parent Company and its
Consolidated Subsidiaries for such fiscal year, and the related
consolidated and consolidating balance sheets of the Parent Company
and its Consolidated Subsidiaries as at the end of such fiscal year,
and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related
audit report of an independent public accountant of recognized
national standing acceptable to the Agent which audit report shall
state that said financial statements fairly present, in all material
respects, the consolidated financial condition and results of
operations of the Parent Company and its Consolidated Subsidiaries as
at the end of, and for, such fiscal year and that such financial
statements have been prepared in accordance with GAAP except for such
changes in such principles with which the independent public
accountants shall have concurred and such audit report shall be
consistent with the standard audit report format promulgated by the
relevant regulatory authorities governing such reports and shall not
contain a "going concern" or like qualification or exception.
2.10 Section 4.3. Section 4.3 is hereby amended by replacing
Section 4.3(a) with the following Section 4.3(a) and inserting the following
new Section 4.3(e) after Section 4.3(d):
(a) The Borrower and the Parent Company shall, and the
Parent Company shall cause each of its Subsidiaries to: preserve and
maintain its corporate existence and all of its material rights,
privileges and franchises (except for mergers or dissolutions upon
transfer of all or substantially all assets permitted pursuant to
Section 5.9); keep books of record and account in which full, true and
correct entries will be made of all dealings or transactions in
relation to its business and activities in accordance with GAAP;
comply with all Governmental Requirements if failure to comply with
such requirements will have a Material Adverse Effect; pay and
discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property
prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which
adequate reserves are being maintained; upon reasonable notice, permit
representatives of the Agent or any Lender, during normal business
hours, to examine, copy and make extracts from its books and records,
to inspect its Properties, and to discuss its business and affairs
with its officers, all to the extent reasonably requested by such
Lender or the Agent (as the case may be); and keep, or cause to be
kept, insured by financially sound and reputable insurers all Property
of a character usually insured by Persons engaged in the same or
similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such Persons
and carry such other insurance as is usually carried by such Persons
including, without limitation, environmental risk insurance to the
extent reasonably available.
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(e) In the event that all or any portion of any Oil and
Gas Property owned by the Parent Company or its Subsidiaries is
comprised of interests in the Hydrocarbon Property which are not
working interests or which are operated by a Person or Persons other
than the Parent Company or one of its Subsidiaries, then, with respect
to such interests and Properties, the Borrower and the Parent Company
shall, and shall cause such Subsidiary to, use reasonable efforts
consistent with usual and customary industry practice to obtain
compliance with the foregoing covenants contained in this Section 4.3
by the working interest owners or the operator or operators of such
interests or Properties.
2.11 Section 4.7. Section 4.7 is hereby amended by replacing
Section 4.7(a) in its entirety with the following:
(a) No later than 30 days prior to each Scheduled
Redetermination Date, commencing with the Scheduled Redetermination
Date to occur on September 15, 1998, the Borrower shall furnish to the
Agent a Reserve Report. The June 30 Reserve report of each year shall
be prepared by certified independent petroleum engineers or other
independent petroleum consultant(s) acceptable to the Agent and the
December 31 Reserve Report of each year shall be prepared by or under
the supervision of the chief engineer of the Borrower who shall
certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately
preceding June 30 Reserve Report.
2.12 Section 4.9. Section 4.9 is hereby amended by inserting the
following new Section 4.9(d):
(d) Notwithstanding anything to the contrary in this
Section 4.9, compliance with the requirements of Sections 4.9(a), (b),
and (c) shall not be required if no Loans are outstanding, provided
that prior to the making of any Loan hereunder it shall be a condition
precedent to making such Loan that all requirements and deliveries
required under Sections 4.9 (a), (b), and (c) shall have been complied
with and made prior to the making of such Loan.
2.13 Article 5. The introductory sentence of Article 5 is hereby
amended by replacing the reference to "Loan" with a reference to "the Loans".
2.14 Section 5.1. Section 5.1 is hereby amended by deleting "and"
at the end of Section 5.1(j), replacing the period (".") at the end of Section
5.1(k) with "; and", and inserting the following new Section 5.1(l):
(l) Debt of the Parent Company and its Subsidiaries
incurred pursuant to (i) the Senior Note Documents and (ii) any
subsequent Hi-Yield Offering; provided that (A) such Debt under this
Section 5.1(l)(ii) is issued on terms satisfactory to the Agent and
the Majority Lenders with respect to principal amount, maturity,
interest rate, covenants and, if applicable, subordination language,
and (B) in connection with the issuance of any such Debt under this
Section 5.1(l)(ii), the Majority Lenders may cause the Borrowing Base
to be redetermined.
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2.15 Section 5.2. Section 5.2 is hereby amended by deleting "and"
at the end of Section 5.2(e), replacing the period (".") at the end of Section
5.2(f) with a semicolon (";"), and inserting the following Sections 5.2(g) and
5.2(h):
(g) Liens on Property of a Non-Recourse Subsidiary to
secure Debt permitted by Section 5.1(k) and Liens on stock or other
equity interests of any Non-Recourse Subsidiary; and
(h) Liens that secured the Bridge Loans which have yet
not been released.
2.16 Section 5.3. Section 5.3 is hereby amended by (i) inserting
", the Parent Company," after the first reference to the Borrower in the first
sentence and (ii) replacing Sections 5.3 (h), 5.3(i), 5.3(j), 5.3(k), and
5.3(l) in their entirety with the following:
(h) investments by the Borrower or any Guarantor related
to its direct ownership interests in additional Oil and Gas Properties
in an amount not to exceed 10% of the amount of the Senior Borrowing
Base at the time of such investment;
(i) advances to operators under operating agreements
entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business;
(j) [intentionally deleted];
(k) investments, loans or advances made by (i) the
Borrower or any Guarantor to any Non-Recourse Subsidiary not to exceed
at any one time outstanding $100,000 in the aggregate, or (ii) a
Non-Recourse Subsidiary to any other Non-Recourse Subsidiary; provided
that the Parent Company may make loans, advances or investments to
Queen Sand Resources (Canada), Inc. to satisfy its obligations under
any employment agreements to which it is a party and for (A) fixtures,
furniture and equipment, provided that the aggregate amount spent
under this clause (A) shall not exceed $150,000 in the aggregate
during any twelve-month period and (B) normal general and
administrative expenses incurred in the ordinary course of its
business and for which Queen Sand Resources (Canada), Inc. is
ultimately entitled to reimbursement from the Parent Company and/or
its Subsidiaries; and
(l) loans or advances to officers and employees of the
parent Company or any of its Subsidiary in the ordinary course of
business not to exceed (i) while the Bridge Loans are outstanding (and
whether or not all or any of the Bridge Loans have been extended to be
long-term obligations), $100,000 in the aggregate outstanding at any
time, and (ii) after repayment in full of the Bridge Loans, $250,000
in the aggregate outstanding at any time.
2.17 Section 5.4. Section 5.4 is hereby amended by replacing such
section in its entirety with the following:
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Section 5.4 Repayment of Other Debt.
(a) The Parent Company and the Borrower shall not, and
shall not permit any Subsidiary to, amend, supplement or modify any
Senior Note Document or repay the principal of, or make any other
payment in relation to, the Senior Notes; provided, so long as no
Borrowing Base deficiency then exists under Section 2.10 and no
Default or Event of Default has occurred and is continuing, the
foregoing shall not prohibit (i) the payment of interest on the Senior
Notes, or (ii) the repayment of the Senior Notes with the proceeds of
any refinancing thereof (provided that such refinancing Debt is on
terms substantially similar to the Senior Notes).
(b) The Parent Company and the Borrower shall not, and
shall not permit any Subsidiary to, amend, supplement, modify or
prepay the DEM Subordinated Debt in any material respect, except that
all or any part of the DEM Subordinated Debt may be prepaid so long as
no Loans are outstanding under this Agreement.
2.18 Section 5.8. Section 5.8 is hereby amended by replacing such
section in its entirety with the following:
Section 5.8 Dividends, Distributions and Redemptions.
Without the written approval of the Majority Lenders, the Parent
Company shall not declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its capital stock now or hereafter
outstanding, return any capital to its stockholders or make any
distribution of its assets to its stockholders, except for (i)
dividends or distributions payable solely in capital stock of the
Parent Company and (ii) the repurchase or redemption of any shares of
the Series C Preferred Stock with the aggregate net cash proceeds in
excess of $50,000,000 of any Equity Offering(s) occurring after April
17, 1998 provided that (A) no Default or Event of Default has occurred
at the time such shares are repurchased or redeemed or would result
from such repurchase or redemption and (B) no Loan is outstanding
immediately prior and after giving effect to such repurchase or
redemption. Notwithstanding anything to the contrary in this Section
5.8 and without limiting the Agent's and Lenders' rights under
Sections 6.1(k) and 6.2, the Parent Company may, after giving the
Agent 5 Business Days' prior written notice thereof, effect mandatory
redemptions and cash payments payable upon Parent Company defaults
pursuant to the Certificate of Designation governing the Series C
Preferred Stock.
2.19 Section 5.13. Section 5.13 is hereby amended by replacing
such section in its entirety with the following:
Section 5.13 Current Ratio and Net Worth.
(a) Consolidated Current Ratio. The Parent Company's ratio
of (i) consolidated current assets plus unused availability under the
"Aggregate Commitments" under the Senior Loan Agreement to (ii)
consolidated current liabilities (excluding (A) current maturities of
the Senior Debt, (B) the Bridge Loans unless the Bridge Loans have been
extended to be long-term obligations as contemplated by the terms of
the Bridge Loan Documents and (C) the Indebtedness so long as the
indebtedness does not mature within one year of the date of
calculation) shall not be less than 1.0 to 1.0 at any time.
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(b) Consolidated Tangible Net Worth. On and after April
17, 1998, the Parent Company will not permit its Consolidated Tangible
Net Worth to be less than $18,500,000 plus the amount equal to
seventy-five percent (75%) of the aggregate net proceeds of all Equity
Offerings by the Parent Company after April 17, 1998.
For the purposes of this Section 5.13, "Consolidated Tangible Net
Worth" shall have the meaning specified in the Senior Loan Agreement.
2.20 Section 5.15. Section 5.15 is hereby amended by replacing
such section in its entirety with the following:
Section 5.15 Fixed Charge Coverage Ratio.
(a) The Parent Company's Fixed Charge Coverage Ratio
shall be not less than 1.5 to 1.0 for the three-month period ending
June 30, 1998.
(b) If the aggregate net cash proceeds to the Parent
Company from Hi-Yield Offerings are greater than $75,000,000, the
Parent Company's Fixed Charge Coverage Ratio as of the end of any full
fiscal quarter occurring after the completion of the first such
Hi-Yield Offering shall not be less than the following for the period
then applicable:
(i) for the six month period ending on
September 30, 1998, 1.5 to 1.0;
(ii) for the nine month period ending on
December 31, 1998, 1.5 to 1.0;
(iii) for each rolling period of four fiscal
quarters thereafter, 1.5 to 1.0.
(c) If no Hi-yield Offering has been completed or the
aggregate net cash proceeds to the Parent Company from one or more
Hi-Yield Offerings are less than or equal to $75,000,000, the Parent
Company's Fixed Charge Coverage Ratio as of the end of any fiscal
quarter shall not be less than the following for the period then
applicable:
(i) for the six month period ending on
September 30, 1998, 1.75 to 1.0;
(ii) for the nine month period ending on
December 31, 1998, 2.0 to 1.0;
(iii) for each rolling period of four fiscal
quarters thereafter, 2.2 to 1.0.
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For the purposes of this Section 5.15, "Fixed Charge Coverage Ratio"
shall have the meaning specified in the Senior Loan Agreement.
2.21 Section 5.16. Section 5.16 is hereby amended by replacing
such section in its entirety with the following:
Section 5.16 Sale of Oil and Gas Properties. The Parent
Company and the Borrower will not, and will not permit any Subsidiary
to, sell, assign, farm-out, convey or otherwise transfer any Oil and
Gas Property or any interest in any Oil and Gas Property except for
(i) sales of Hydrocarbons in the ordinary course of business, (ii)
sales of assets which are worn-out or obsolete and are not material to
the continuation of its business, (iii) intercompany sales or other
dispositions by the Parent Company or any Guarantor to the Borrower or
by any Guarantor to another Guarantor (provided the foregoing shall
not permit dispositions to Non-Recourse Subsidiaries, except to the
extent permitted by Section 5.3(k)), (iv) dispositions of equipment
when substantially similar equipment has been or will be acquired, and
(v) sales or other dispositions of Oil and Gas Properties or other
assets which shall not exceed $2,500,000 in the aggregate in any
fiscal year.
2.22 Section 5.19. Section 5.19 is hereby amended by replacing
such section in its entirety with the following:
Section 5.19 Subsidiaries and Partnerships. Without the
prior written consent of the Majority Lenders, the Parent Company and
the Borrower shall not, and shall not permit any of its respective
Subsidiaries to, create any additional Subsidiaries or partnerships,
unless such Subsidiary or partnership becomes a Guarantor hereunder or
is designated by the Parent Company to be a Non-Recourse Subsidiary.
Neither the Parent Company nor the Borrower shall or shall permit any
of its Subsidiaries to sell or issue any shares of stock of any class
of one of its Subsidiaries or any interest in a partnership except to
the Parent Company or any of its Subsidiaries (other than Non-Recourse
Subsidiaries). In connection with the execution of any Guaranty
hereunder, the Borrower shall provide corporate documentation and
opinion letters reasonably satisfactory to the Agent reflecting the
corporate status of such new Subsidiary and the enforceability of such
Guaranty.
2.23 Section 5.20. Section 5.20 is hereby amended by replacing
such section in its entirety with the following:
Section 5.20 Negative Pledge Agreements. Neither the
Parent Company, the Borrower nor any of its Subsidiaries will create,
incur, assume or suffer to exist any contract, agreement or
understanding (other than this Agreement, the Security Instruments, and
the documents and agreements evidencing the Senior Debt, the DEM
Subordinated Debt, the Bridge Loans, any Hi-Yield Offering, or any
Equity Offering) which in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property or
restricts any of its Subsidiaries from paying dividends to the
Borrower, or which requires the consent of other Persons in connection
therewith.
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2.24 Section 6.1. Section 6.1 is hereby amended by replacing the
reference to "$100,000" contained in Section 6.1(h) with a reference to
"$500,000".
2.25 Section 7.2. Section 7.2 is hereby amended by inserting the
following Sections 7.2(h) and 7.2(i) after Section 7.2(g):
(h) Bridge Loans. The Bridge Loans shall have been
repaid in full and all mortgages, deeds of trusts, and other
agreements or instruments creating Liens securing the Bridge Loans
shall have been released in a manner that is satisfactory to the
Agent.
(i) Certificate Regarding Incurrence of Debt under Senior
Indenture. The Borrower shall have delivered a certificate from an
authorized officer, in form and substance reasonably satisfactory to
the Agent, certifying that, as of the date of incurrence, the Parent
Company and the Borrower are permitted to incur such Indebtedness
under the Senior Indenture (because either (i) such Indebtedness will
constitute "Permitted Indebtedness" under the Senior Indenture or (ii)
such Indebtedness may be incurred without violation of the then
applicable Consolidated Interest Coverage Ratio set forth in the
Senior Indenture) and setting forth in reasonable detail calculations
to support the certification.
2.26 Section 9.2. Section 9.2 is hereby amended by replacing the
reference to "$1,000,000" contained therein with "$2,500,000".
2.27 Schedules. Schedules 3.2(Liabilities), 3.14(Subsidiaries and
Partnerships), 3.17(Environmental Matters), 3.19(Insurance), and 3.23 (Material
Contracts) are hereby amended by replacing such schedules in their entirety
with Schedules 3.2(Liabilities), 3.14(Subsidiaries and Partnerships),
3.17(Environmental Matters), 3.19(Insurance), and 3.23 (Material Contracts)
attached hereto.
Section 3. Representations and Warranties; Etc. Each Obligor hereby
affirms: (a) that as of the date of execution and delivery of this First
Amendment, all of the representations and warranties contained in each Loan
Document to which such Obligor is a party are true and correct in all material
respects as though made on and as of the Effective Date; and (b) that after
giving effect to this First Amendment and to the transactions and waivers
contemplated hereby, no Defaults exist under the Loan Documents or will exist
under the Loan Documents.
Section 4. Conditions Precedent. The effectiveness of this First
Amendment (including Section 5.1 hereof) is subject to the receipt by the Agent
of the following documents and the satisfaction of the other conditions
provided in this Section 4, each of which shall be reasonably satisfactory to
the Agent in form and substance:
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4.1 Loan Documents. The Agent shall have received multiple
counterparts as requested of this First Amendment.
4.2 No Default. No Default or Event of Default shall have
occurred and be continuing as of the Effective Date.
4.3 Issuance of Senior Notes. The Senior Notes shall have been
issued and purchased by the initial holder(s) thereof as contemplated in the
Senior Note Offering Memorandum.
4.4 Repayment of Bridge Loans. The Agent shall have received
evidence that all outstanding principal, accrued and unpaid interest and other
fees and compensation owed in connection with the Bridge Loans shall have been
paid in full.
Section 5. Miscellaneous.
5.1 Suspension Agreement. Reference is made to that certain
Agreement dated as of April 17, 1998 ("Suspension Agreement"), among the
Obligors, the Agent and the Lenders which suspended the Lenders' commitments to
make Loans and contained certain waivers of the Obligors' performance under the
Loan Documents. Each of the parties hereto agrees that (a) the Lenders'
commitments to make Loans under the Loan Agreement (as amended by this First
Amendment) are reinstated under the terms and conditions contained in the Loan
Agreement (as amended by this First Amendment) and (b) the waivers of the
Obligors' performance under the Loan Documents contained in the Suspension
Agreement are hereby terminated as of the date hereof, and each of the Obligors
shall be required to comply with all of the covenants and other provisions of
the Loan Documents (as amended by this First Amendment).
5.2 Confirmation. The provisions of the Loan Agreement (as
amended by this First Amendment) shall remain in full force and effect in
accordance with its terms following the effectiveness of this First Amendment.
5.3 Ratification and Affirmation of Obligors. Each of the
Obligors hereby expressly (i) acknowledges the terms of this First Amendment,
(ii) ratifies and affirms its obligations under its respective Guaranty and the
other Security Instruments to which it is a party, (iii) acknowledges, renews
and extends its continued liability under its respective Guaranty and the other
Security Instruments to which it is a party and agrees that its respective
Guaranty and the other Security Instruments to which it is a party remain in
full force and effect with respect to the Indebtedness as amended hereby.
5.4 Counterparts. This First Amendment may be executed by one or
more of the parties hereto in any number of separate counterparts, and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
5.5 No Oral Agreement. THIS WRITTEN FIRST AMENDMENT, THE LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND
THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
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MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES.
5.6 GOVERNING LAW. THIS FIRST AMENDMENT (INCLUDING, BUT NOT
LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[SIGNATURES BEGIN NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed effective as of the date first written above.
BORROWER: QUEEN SAND RESOURCES, INC.,
a Nevada corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxx
Vice President
PARENT COMPANY: QUEEN SAND RESOURCES, INC.,
a Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxx
Chief Operating Officer
and Executive Vice President
GUARANTORS: NORTHLAND OPERATING CO.
By: /s/ XXXXXX X. XXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxx
Vice President
CORRIDA RESOURCES, INC.
By: /s/ XXXXXX X. XXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxx
Vice President
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AGENT: ENRON CAPITAL & TRADE RESOURCES CORP.,
as Agent
By: /s/ AUTHORIZED SIGNATORY
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
LENDERS: ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ AUTHORIZED SIGNATORY
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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SCHEDULE 3.2
LIABILITIES
[TO BE PROVIDED BY BORROWER]
18
SCHEDULE 3.14
SUBSIDIARIES AND PARTNERSHIPS
[TO BE PROVIDED BY BORROWER]
19
SCHEDULE 3.17
ENVIRONMENTAL MATTERS
[TO BE PROVIDED BY BORROWER]
20
SCHEDULE 3.19
INSURANCE
[TO BE PROVIDED BY BORROWER]
21
SCHEDULE 3.23
MATERIAL CONTRACTS
[TO BE PROVIDED BY BORROWER]
