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EXHIBIT 10.21
AMENDMENT NUMBER TWO
AND
WAIVER AND CONSENT
TO
LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER TWO AND WAIVER AND CONSENT TO LOAN AND
SECURITY AGREEMENT (this "Amendment, Consent and Waiver") is entered into as of
June 30, 2000, among QUEEN SAND RESOURCES, INC., a corporation formed under the
laws of the State of Delaware ("QSRD"); QUEEN SAND RESOURCES, INC., a
corporation formed under the laws of the State of Nevada (the "Borrower"); each
of the lenders that is a signatory hereto (individually, a "Lender" and,
collectively, the "Lenders"); FOOTHILL CAPITAL CORPORATION, as administrative
agent for the Lenders (in such capacity, the "Administrative Agent"); and ABLECO
FINANCE LLC, as collateral agent for the Lenders (in such capacity, the
"Collateral Agent"), with reference to the following facts:
A. QSRD, Borrower, the Lenders signatory thereto,
Administrative Agent and Collateral Agent, heretofore have
entered into that certain Amended and Restated Credit
Agreement, dated as of October 22, 1999, as amended by that
certain Amendment Number One to Loan and Security Agreement
dated as of May 23, 2000 (as heretofore amended, supplemented,
or otherwise modified, the "Agreement");
B. QSRD and Borrower have requested that the Lenders (i)
consent to the sale by Borrower for cash of all of its net
profits interest (sometimes referred to as an overriding
royalty interest) in the Lopeno-Volpe properties more
particularly described on Exhibit A attached hereto and by
this reference made a part hereof (the "Sold Properties")
pursuant to the terms of that certain Purchase and Sale
Agreement among Borrower, Choctaw II Oil & Gas, Ltd., a Texas
limited partnership ("Choctaw"), and Cody Texas L.P., a Texas
limited partnership ("Cody") dated June 7, 2000, a copy of
which is attached hereto as Exhibit C-1, and to the
acquisition by Borrower of a working interest and a net
profits interest in certain properties (including, without
limitation, certain of the Sold Properties) to be acquired by
virtue of that certain Assignment, Bill of Sale and Conveyance
being more particularly described on Exhibit B attached hereto
and by this reference made a part hereof (all properties being
described on Exhibit B collectively, the "Acquired
Properties") pursuant to that certain Letter Agreement between
Borrower and Cody Energy, L.L.C., a Texas limited liability
company, dated April 20, 2000, a copy of which is attached
hereto as Exhibit C-2 (the agreements attached as Exhibits C-1
and C-2 being collectively referred to herein as the "Purchase
and Sale Agreements" and the transactions contemplated by the
Purchase and Sale Agreements being herein collectively
referred to as the "Sale Transaction"), (ii) permit the
cancellation by Borrower of the Conveyance of Production
Payment from Choctaw effective as of March 1, 1999 (the
"Production Payment") in connection with the sale of the Sold
Properties, (iii) consent to the release and amendment of the
Lien of the Collateral Agent in the
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Sold Properties, as perfected by that certain Amended,
Restated and Consolidated Mortgage, Deed of Trust, Assignment
of Production, Security Agreement and Financing Statement
executed by the Borrower and Collateral Agent, as successor to
Bank of Montreal, as Agent, and as amended by that certain
Amendment to Amended, Restated and Consolidated Mortgage, Deed
of Trust, Assignment of Production, Security Agreement, and
Financing Statement originally recorded in the official
records of Zapata County, Texas, on April 30, 1998, Volume
593, Page 665 and in the official records of Starr County,
Texas, on April 30, 1998, Volume 805, Page 066 (the
"Mortgage"), so as to release such Lien with respect to the
Sold Properties and to amend the Lien to encumber the Acquired
Properties, (iv) waive compliance with the provisions of
Section 9.14 of the Agreement with respect to the sale of the
Sold Properties as described above, (v) acknowledge and agree
that none of the amounts received or paid by the Borrower
under the Purchase and Sale Agreements shall be applied or
otherwise reduce or limit the Dollar amount available for (a)
asset dispositions under Section 9.14 of the Agreement, (b)
Permitted Acquisitions under paragraph G of the definition
thereof in Section 1.01 of the Agreement, and (c) capital
expenditures under Section 9.22 of the Agreement, and (v)
amend Section 8.07(a) of the Agreement to reverse the
Scheduled Re-determination Dates on which the Borrower is to
furnish to the Agents and the Lenders Reserve Reports prepared
by certified independent petroleum engineers or Reserve
Reports internally prepared under the supervision of the
Borrower's chief engineer; and
C. The Lenders are willing to consent to such requests subject
to the term and conditions set forth herein.
NOW, THEREFORE, in consideration of the above recitals and the
mutual premises contained herein, the Lenders signatory hereto, the
Administrative Agent, the Collateral Agent, QSRD and Borrower hereby agree as
follows:
1. DEFINITIONS FOR THIS AMENDMENT.
Any and all initially capitalized terms used herein shall have
the meanings ascribed thereto in the Agreement, as amended hereby. For purposes
of this Amendment, Consent and Waiver only, the following initially capitalized
terms shall have the following meanings:
"Acquired Properties" has the meaning set forth in Recital B
hereof.
"Choctaw" has the meaning set forth in Recital B hereof.
"Cody" has the meaning set forth in Recital B hereof.
"Mortgage" has the meaning set forth in Recital B hereof.
"Production Payment" has the meaning set forth in Recital B
hereof.
"Purchase and Sale Agreements" has the meaning set forth in
Recital B hereof.
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"Sale Transaction" has the meaning set forth in Recital B
hereof.
"Sold Properties" has the meaning set forth in Recital B
hereof.
2. AMENDMENTS TO THE AGREEMENT.
a. Section 8.07(a) of the Agreement is amended and
restated in its entirety to read as follows:
(a) No later than 30 days prior to each Scheduled
Re-determination Date, commencing with the Scheduled
Re-determination Date to occur on March 15, 2000 the
Borrower shall furnish to the Agents and the Lenders
a Reserve Report. The June 30 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 proceeding December 31
Reserve Report and the December 31 Reserve Report of
each year (commencing with the Reserve Report dated
as of December 31, 1999) shall be prepared by
certified independent petroleum engineers or other
independent petroleum consultant(s) acceptable to the
Administrative Agent.
b. Section 9.14 of the Agreement is amended and restated
in its entirety to read as follows:
SECTION 9.14. Sale of Oil and Gas Properties.
QSRD 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 any Obligor to the Borrower or by any
Subsidiary Guarantor to another Subsidiary Guarantor,
provided the foregoing shall not permit dispositions
to Non-Recourse Subsidiaries, except to the extent
permitted by Section 9.03(j)), (iv) dispositions of
equipment when substantially similar equipment has
been or will be acquired, (v) any transfer or
conveyance required pursuant to the terms of the
Escrow Agreement, and (vi) so long as no Event of
Default has occurred and is continuing, and no
Overadvance would result therefrom, sales or other
dispositions of Oil and Gas Properties or other
assets which shall not exceed $1,000,000 in the
aggregate in any fiscal year; provided that the
amount determined pursuant to paragraph (b) of the
definition of Borrowing Base in Section 1.02 shall be
adjusted by an amount equal to the value, if any,
assigned such Property or asset in the most recently
determined Borrowing Base; and provided, further, at
or prior to the effective date of any such sale,
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assignment, farm-out, conveyance or other transfer of
any Oil and Gas Properties, and as a condition to
Borrower's authority to do so, Borrower shall deliver
to the Administrative Agent a certificate executed by
a Responsible Officer of Borrower certifying (i) that
no Event of Default has occurred and is continuing,
(ii) to the valuation of the Oil and Gas Properties
involved utilizing the NYMEX Swap Price for valuation
purposes, (iii) that the disposition proposed will
not violate any of the Dollar limitations or other
conditions set forth in this Section 9.14, (iv) that
the disposition will not result in an Overadvance,
and (v) the consideration and manner of the payment
thereof to be received by Borrower for the
disposition of the Oil and Gas Properties involved.
3. CONSENT TO SALE TRANSACTION. The Lenders hereby consent to
(i) the Sale Transaction to be effected pursuant to the Purchase and Sale
Agreements, (ii) the cancellation of the Production Payment, (iii) the release
of the Lien of the Collateral Agent in the Sold Properties subject to the
Mortgage provided that Borrower subject to the Lien of the Collateral Agent the
working interest and net profits interest in the Acquired Properties acquired by
the Borrower, and (iv) waiver of compliance of the Sale Transaction with the
requirements of Section 9.14 of the Agreement. The Lenders hereby also consent,
acknowledge and agree that none of the amounts paid or received by Borrower
under the Purchase and Sale Agreements shall be considered in calculating, or
shall otherwise reduce or limit, the aggregate Dollar amount available to QSRD,
Borrower, or any Subsidiary for (i) asset dispositions under Section 9.14 of the
Agreement, (b) Permitted Acquisitions under paragraph G of the definition
thereof in Section 1.01 of the Agreement, and (iii) capital expenditures under
Section 9.22 of the Agreement. Such waiver, consent and agreement is specific in
time and in intent and does not constitute, nor should it be construed as
constituting, except to the extent expressly set forth herein, a waiver or
modification of any term of, or right, power, or privilege under, the Agreement,
the other Loan Documents, or any agreement, contract, indenture, documents, or
instrument mentioned therein. Nothing herein constitutes a waiver of any Event
of Default. Such waiver does not preclude any exercise or further exercise of
any other right, power, or privilege under any Loan Document.
4. CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
AMENDMENT.
The effectiveness of this Amendment, Consent and Waiver is
subject to the fulfillment, to the satisfaction of Agents and their counsel, of
each of the following conditions:
a. Collateral Agent shall have received each of the
following documents, in form and substance
satisfactory to Collateral Agent and its counsel,
duly executed, and each such document shall be in
full force and effect:
(i) this Amendment, Consent and Waiver;
(ii) the Reaffirmation and Consent (as hereinafter
defined);
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(iii) an amendment to the Mortgage satisfactory to
Collateral Agent and its counsel releasing the
Lien of the Mortgage in the Sold Properties and
bringing under the encumbrance of the Mortgage
the Acquired Properties; and
(iv) the certificate required by Section 9.14(vi)
executed by a Responsible Officer of Borrower
certifying (a) that no Event of Default has
occurred and is continuing, (b) to the
valuation of the Oil and Gas Properties
involved in the Subject Transaction utilizing
the NYMEX Swap Price for valuation purposes,
(c) that the Subject Transaction will not
violate any of the Dollar limitations or other
conditions set forth in Section 9.14 with the
exception of the $1,000,000 overall fiscal year
limitation on the sale or other disposition of
Oil and Gas Properties which requirement has
been waiver by this Amendment, Consent and
Waiver, (d) that the Subject Transaction will
not result in an Overadvance, and (e) the
consideration and manner of the payment thereof
to be received by Borrower with respect to the
Subject Transaction.
b. Administrative Agent shall have received, for the
ratable benefit of the Lenders, an amendment, consent
and waiver fee of $35,000, which fee is earned in
full by the Lenders, due and payable by Borrower to
the Lenders on the date hereof, and non-refundable
when paid;
c. The representations and warranties in Section 5 of
this Amendment, Consent and Waiver, the Agreement as
amended by Section 2 of this Amendment, Consent and
Waiver, and the other Loan Documents shall be true
and correct in all material respects on and as of the
date hereof, as though made on such date (except to
the extent that such representations and warranties
relate solely to an earlier date);
d. After giving effect hereto, no Event of Default or
event which with the giving of notice or passage of
time would constitute an Event of Default shall have
occurred and be continuing on the date hereof, nor
shall result from the consummation of the
transactions contemplated herein;
e. No injunction, writ, restraining order, or other
order of any nature prohibiting, directly or
indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain
in force by any governmental authority against
Borrower, QSRD, any Subsidiary Guarantor, any Lender,
Collateral Agent, Administrative Agent, or any of
their Affiliates;
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f. No material adverse change shall have occurred in the
financial condition of Borrower, QSRD, any Subsidiary
Guarantor, or in the value of the Collateral; and
g. All other documents and legal matters in connection
with the transactions contemplated by this Amendment,
Consent and Waiver shall have been delivered or
executed or recorded and shall be in form and
substance reasonably satisfactory to Collateral Agent
and its counsel.
5. REPRESENTATIONS AND WARRANTIES. Each of QSRD and the
Borrower hereby represents and warrants to the Agents and the Lenders that: (a)
the execution, delivery, and performance of this Amendment, Consent and Waiver
and of the Agreement, as amended by this Amendment, are within its corporate
powers, have been duly authorized by all necessary corporate action, and are not
in contravention of any law, rule, or regulation, or any order, judgment,
decree, writ, injunction, or award of any arbitrator, court, or governmental
authority, or of the terms of its charter or bylaws, or of any contract or
undertaking to which it is a party or by which any of its properties may be
bound or affected; and (b) this Amendment, Consent and Waiver and the Agreement,
as amended by this Amendment, constitute the legal, valid, and binding
obligation of each of QSRD and the Borrower, enforceable against each of QSRD
and the Borrower in accordance with their terms.
6. REAFFIRMATION AND CONSENT. Concurrently herewith, QSRD and
the Borrower shall cause each current Subsidiary Guarantor to execute and
deliver to the Agents the Reaffirmation and Consent attached hereto as Exhibit D
(the "Reaffirmation and Consent").
7. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. Section 12.13
of the Agreement is incorporated herein by this reference as though fully set
forth herein.
8. MISCELLANEOUS.
a. Upon the effectiveness of this Amendment, Consent and
Waiver, each reference in the Agreement to "this
Agreement", "hereunder", "herein", "hereof" or words
of like import referring to the Agreement shall mean
and refer to the Agreement as amended by this
Amendment, Consent and Waiver.
b. Upon the effectiveness of this Amendment, Consent and
Waiver, each reference in the Loan Documents to the
"Agreement", "thereunder", "therein", "thereof" or
words of like import referring to the Agreement shall
mean and refer to the Agreement as amended by this
Amendment, Consent and Waiver.
c. This Amendment, Consent and Waiver may be executed in
any number of counterparts, all of which taken
together shall constitute one and the same instrument
and any of the parties hereto may execute this
Amendment, Consent and Waiver by signing any such
counterpart. Delivery of an executed counterpart of
this Amendment,
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Consent and Waiver by telefacsimile shall be equally
as effective as delivery of a manually executed
counterpart of this Amendment, Consent and Waiver.
Any party delivering an executed counterpart of this
Amendment, Consent and Waiver by telefacsimile also
shall deliver a manually executed counterpart of this
Amendment, Consent and Waiver but the failure to
deliver a manually executed counterpart shall not
affect the validity, enforceability, and binding
effect of this Amendment, Consent and Waiver.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first written above.
QUEEN SAND RESOURCES, INC.,
a Delaware corporation
By: /s/ ROBERT P. LINDSAY
-----------------------------------
Robert P. Lindsay
Chief Operating Officer
By: /s/ RONALD I. BENN
-----------------------------------
Ronald I. Benn
Chief Financial Officer
QUEEN SAND RESOURCES, INC.,
a Nevada corporation
By: /s/ ROBERT P. LINDSAY
-----------------------------------
Robert P. Lindsay
Chief Operating Officer
By: /s/ RONALD I. BENN
-----------------------------------
Ronald I. Benn
Chief Financial Officer
Address for Notices for QSRD and the
Borrower:
Queen Sand Resources, Inc.
13760 Noel Road, Suite 1030
Dallas, Texas 75240
Attention: Robert P. Lindsay
Telephone: (972) 233-9906
Facsimile: (972) 233-9575
with a copy to:
Queen Sand Resources, Inc.
30 Metcalfe Street
Ottawa, Canada KIP 5L4
Attention: Mr. Ronald Benn
Telephone: (613) 230-7211
Facsimile: (613) 230-6055
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and
Haynes & Boone LLP
901 Main Street, Suite 3100
Dallas, Texas 75202-3789
Attention: Mr. William L. Boeing
Telephone: (214) 651-5553
Facsimile: (214) 651-5940
COLLATERAL AGENT: ABLECO FINANCE LLC, as Collateral Agent
By: /s/ KEVIN P. GENDA
-----------------------------------
Kevin P. Genda
Senior Vice President and
Chief Credit Officer
Address for Notices:
450 Park Avenue.
New York, New York 10022
Attention: Kevin P. Genda
Telephone: (212) 891-2117
Facsimile: (212) 755-3009
with a copy to:
BROBECK PHLEGER & HARRISON LLP
550 South Hope Street, Suite 2100
Los Angeles, California 90071
Telephone: (213) 489-4060
Facsimile: (213) 745-3345
Attention: John Francis Hilson, Esq.
ADMINISTRATIVE AGENT: FOOTHILL CAPITAL CORPORATION
By: /s/ AUTHORIZED SIGNATORY
-----------------------------------
-----------------------------------
-----------------------------------
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Address for Notices:
11111 Santa Monica Boulevard
Los Angeles, California 90025
Attention: Business Finance Division
Manager
Telephone: (310) 996-7000
Facsimile: (310) 478-9788
LENDER: ABLECO FINANCE LLC
By: /s/ KEVIN P. GENDA
-----------------------------------
Kevin P. Genda
Senior Vice President and
Chief Credit Officer
LENDER: FOOTHILL CAPITAL CORPORATION
By: /s/ AUTHORIZED SIGNATORY
-----------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT D
REAFFIRMATION AND CONSENT
All capitalized terms used herein but not otherwise defined
herein shall have the meanings ascribed to them in that certain Amendment Number
Two and Consent and Waiver to Credit Agreement, dated as of June __, 2000 (the
"Amendment, Consent and Waiver"). Each of the undersigned hereby (a) represents
and warrants to the Agents and the Lenders that the execution, delivery, and
performance of this Reaffirmation and Consent are within its corporate powers,
have been duly authorized by all necessary corporate action, and are not in
contravention of any law, rule, or regulation, or any order, judgment, decree,
writ, injunction, or award of any arbitrator, court, or governmental authority,
or of the terms of its charter or bylaws, or of any contract or undertaking to
which it is a party or by which any of its properties may be bound or affected;
(b) consents to the Sale Transaction and the amendment of the Agreement by the
Amendment, Consent and Waiver; (c) acknowledges and reaffirms its obligations
owing to the Agents and the Lenders under its respective Second Amended and
Restated Guaranty Agreement dated as of October 22, 1999 (each a "Guaranty", and
collectively, the "Guaranties") and any other Loan Documents to which it is
party; and (d) agrees that the Guaranty and any other Loan Documents to which it
is a party is and shall remain in full force and effect. Although each of the
undersigned has been informed of the matters set forth herein and has
acknowledged and agreed to same, it understands that the Agents and the Lenders
have no obligation to inform it of such matters in the future or to seek its
acknowledgement or agreement to future amendments, and nothing herein shall
create such a duty. This Reaffirmation and Consent may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same
Reaffirmation and Consent. Delivery of an executed counterpart of this
Reaffirmation and Consent by telefacsimile shall be equally as effective as
delivery of an original executed counterpart of this Reaffirmation and Consent.
Any party delivering an executed counterpart of this Reaffirmation and Consent
by telefacsimile also shall deliver an original executed counterpart of this
Reaffirmation and Consent but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Reaffirmation and Consent. This Reaffirmation and Consent shall be governed
by internal laws of the State of New York as more fully set forth in Section
5.04 of the Guaranties.
QUEEN SAND RESOURCES, INC.,
a Delaware corporation
By: /s/ ROBERT P. LINDSAY
-----------------------------------
Robert P. Lindsay
Chief Operating Officer
By: /s/ RONALD I. BENN
-----------------------------------
Ronald I. Benn
Chief Financial Officer
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QUEEN SAND OPERATING CO.,
a Nevada corporation
By: /s/ ROBERT P. LINDSAY
-----------------------------------
Robert P. Lindsay
Chief Operating Officer
By: /s/ RONALD I. BENN
-----------------------------------
Ronald I. Benn
Chief Financial Officer
CORRIDA RESOURCES, INC.,
a Nevada corporation
By: /s/ ROBERT P. LINDSAY
-----------------------------------
Robert P. Lindsay
Chief Operating Officer
By: /s/ RONALD I. BENN
-----------------------------------
Ronald I. Benn
Chief Financial Officer
