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EXHIBIT 4.14
THIS PARTICIPATION AGREEMENT
AS OF THE 17TH DAY OF JULY, 2000
AMONG
Queen Sand Resources, Inc., a Delaware corporation
(herein called the "Company")
AND
Queen Sand Resources, Inc., a Nevada corporation, Queen Sand
Operating Co. (formerly known as Northland Operating Co.), a
Nevada Corporation and Corrida Resources Inc., a Nevada
Corporation
(herein collectively called the "Subsidiary
Guarantors")
AND
MacKay Shields LLC (on behalf of various holders of the 1998
Notes holding, in the aggregate, $48,270,000 original
principal amount of 1998 Notes (collectively, "MacKay
Signatory Funds") and not individually; and, with respect to
Section 5.4 only, individually), AIM High Yield Fund, AIM
Capital Strategic Income Fund, AIM Global Income Fund, AIM VI
Diversified Income Fund (collectively the "AIM Funds"), and
Alliance Capital Management Corporation (on behalf of various
holder of the 1998 Notes holding in the aggregate,
$16,950,000, (collectively the "Alliance Signatory Funds")
and not individually; and with respect to Section 5.5 only,
individually)
(hereinafter collectively called the "Participating
Holders")
WHEREAS:
a. Harris Trust And Savings Bank was appointed as trustee for the holders
of certain 12.5% Senior Notes due 2008 (the "1998 Notes") issued by
the Company pursuant to the Indenture dated as of July 1, 1998 (the
"1998 Indenture"); and
b. There are $125 million in aggregate principal amount of 1998 Notes
outstanding as of the date hereof; and
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c. The Participating Holders own $94 million in aggregate principal
amount of the Notes (the "Participating Holder Amount"); and
d. The Company wishes to issue a tender or exchange offer to effect the
repurchase of $75 million aggregate principal amount of 1998 Notes and
the Participating Holders wish to participate in the tender or
exchange offer upon the terms set out below.
THEREFORE in consideration of the mutual covenants contained herein, the
payment of $1.00 by the Company to each of the Participating Holders and other
good and valuable consideration the receipt and adequacy of which is hereby
acknowledged the parties agree as follows.
1. TENDER/EXCHANGE OFFER
As soon as practicable hereafter the Company shall issue a tender or exchange
offer on terms and conditions described herein (the "Offer") to all holders of
the 1998 Notes to effect the repurchase of not less than $75 million of
original principal amount of the 1998 Notes for an aggregate purchase price of
$48.75 million inclusive of interest accrued from July 1, 2000 (or $0.65 for
each dollar of original principal amount) provided that if payment is made
after October 31, 2000, the aggregate purchase price shall be increased by an
amount equivalent to the accrued interest on the 1998 Notes being repurchased
from July 1, 2000 until payment. The Offer shall close not later than 5:00 p.m.
(ET) October 31, 2000 and shall be conditional on the tender by the holders of
an aggregate of not less than $110 million original principal amount of the
1998 Notes. Pursuant to the Offer, the Company shall take up and pay for the
1998 Notes tendered on a pro rata basis in accordance with Rule 14d-8 of the
Securities Exchange Act of 1934 (whether or not such Rule applies to the
Offer). In the event that the Company elects to proceed by way of an exchange
offer, any new notes or debt instruments to be issued as part of the exchange
for any 1998 Notes shall be on substantially the same terms and subject to an
indenture on substantially the same terms as the 1998 Notes and 1998 Indenture
as same may be amended as set out in Schedule 1 hereto.
2. PARTICIPATING HOLDERS AGREE TO TENDER
The Participating Holders hereby irrevocably agree to participate in the Offer
and tender or exchange thereto, as the case may be, their respective portions
of the Participating Holder Amount as set out in paragraph 5 hereof. Until such
time as the Offer is consummated or abandoned, the Participating Holders agree
not to sell or transfer the legal or beneficial ownership of any 1998 Notes
unless the purchaser or transferee becomes a party to this Agreement upon the
purchase or transfer as the case may be.
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3. EXIT CONSENT
The Participating Holders shall, on or before the closing of Offer, provide
their written consent to amend the 1998 indenture as set out in Schedule 1
hereto. In the event that the Company elects to issue an exchange offer as
contemplated by paragraph 1 hereof, the Participating Holders shall provide
such additional consents as the Company may reasonably require to effect such
Exchange Offer. Any such consents shall only become effective upon the
consummation of the Offer.
4. CONDITION PRECEDENT TO CLOSING
Notwithstanding anything in this Agreement to the contrary, the obligation of
the Company to complete the Offer and acquire any 1998 Notes from the
Participating Holders is conditional upon the Company receiving, on or before
closing of the Offer, (i) all regulatory approvals which the Company deems
necessary, including any that may be required by the Securities and Exchange
Commission and any applicable State authorities, and (ii) net proceeds of not
less than $50 million from a public offering or private placement of equity.
5. PARTICIPATING HOLDER REPRESENTATIONS
Each Participating Holder represents and warrants on behalf of itself only
that:
5.1. Accredited Investor Status. Such Participating Holders is an
"accredited investor" as that term is defined in Rule 501(a)
of Regulation D.
5.2. No Governmental Review. Such Participating Holder understands
that no United States federal or state agency or any other
government or governmental agency has passed on or made any
recommendation or endorsement of the terms of this Agreement.
5.3. Authorization; by AIM Funds. The AIM Funds represent and
warrant that, among themselves, they are the legal and
beneficial owners (in the aggregate) of $13,735,000 original
principal amount of 1998 Notes. Each of the AIM Funds
represent and warrant that this Agreement has been duly and
validly authorized, executed and delivered by such AIM Fund
and is a valid and binding agreement of such AIM Fund and is
enforceable against such AIM Fund in accordance with its
terms.
5.4. Authorization by MacKay Shields LLC. MacKay Shields LLC
("MacKay") represents and warrants that it has the requisite
power and authority to execute this Agreement for and on
behalf of the MacKay Signatory Funds and that such parties
are the legal or beneficial owners (in the aggregate) of
$48,270,000 original principal amount of 1998 Notes. MacKay:
(A) further represents and warrants that (i) it is investment
advisor to various funds (in addition to the MacKay Signatory
Funds) who are the legal or beneficial owners of (in the
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aggregate) an additional $14,395,000 original principal amount
of 1998 Notes (the "Other MacKay Funds"), and (ii) as such
investment advisor, MacKay has the requisite investment
discretion over the Other MacKay Funds' 1998 Notes to cause
compliance with the following covenants and agreements of
MacKay; and (B) covenants and agrees that it shall exercise
such investment discretion so as to cause the Other MacKay
Funds to take the actions contemplated by paragraphs 2 and 3
of this Agreement and to comply with the provisions thereof.
5.5. Authorization by Alliance Capital Management, Corporation
Alliance Capital Management Corporation ("Alliance")
represents and warrants that it has the requisite power and
authority to execute this Agreement for and on behalf of the
Alliance Signatory Funds and that such parties are the legal
or beneficial owners of (in the aggregate) $16,950,000
original principal amount of 1998 Notes. Alliance: (A)
further represents and warrants that (i) it is investment
advisor to various funds (in addition to the Alliance
Signatory Funds) who are the legal or beneficial owners of
(in the aggregate) an additional $1,000,000 original
principal amount of 1998 Notes (the "Other Alliance Funds"),
and (ii) as such investment advisor, Alliance has the
requisite investment discretion over the Other Alliance
Funds' 1998 Notes to cause compliance with the following
covenants and agreements of Alliance; and (B) covenants and
agrees that it shall exercise such investment discretion so
as to cause the Other Alliance Funds to take the actions
contemplated by paragraphs 2 and 3 of this Agreement and to
comply with the provisions thereof.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
6.1. Organization and Qualification. Each of the Company and the
Subsidiary Guarantors are duly organized and validly existing
in good standing under the laws of the jurisdiction it is
incorporated, and has the requisite corporate power and
authorization to execute this Agreement and carry out its
obligations hereunder.
6.2. Authorization; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the
Company and each of the Subsidiary Guarantors and is a valid
and binding agreement of the Company and each of the
Subsidiary Guarantors enforceable against the Company and
each of the Subsidiary Guarantors in accordance with its
terms.
7. MISCELLANEOUS
7.1. Indenture to Remain Effective. Notwithstanding anything in
this Agreement to the contrary, the 1998 Indenture shall
remain effective in accordance with its present terms until
amended as contemplated by this Agreement.
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7.2. Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement
shall be governed by and interpreted in accordance with the
laws of the State of New York without regard to the
principles of conflict of laws. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and
federal courts sitting in the City of New York, New York for
the adjudication of any dispute hereunder or under the 1998
Indenture or in connection herewith or therewith or with any
transaction contemplated hereby or thereby or discussed
herein or therein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any
such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents
to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party in
accordance with Section 105 of the 1998 Indenture and agrees
that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.
7.3. Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to
the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the
signature were an original, not a facsimile signature.
7.4. Headings. The headings of this Agreement are for convenience
of reference and shall not form part of, or affect the
interpretation of, this Agreement.
7.5. Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or
enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any
provision of this Agreement in any other jurisdiction
provided that if any of paragraphs 1, 2 or 3 are found to be
invalid or unenforceable, then none of them shall be valid or
enforceable.
7.6. Entire Agreement; Amendments. This Agreement supersedes all
other prior oral or written agreements and representations by
or between the Company, the Subsidiary Guarantors, the
Participating Holders and their affiliates and persons acting
on their behalf with respect to the matters discussed herein,
and contains the entire understanding of the parties with
respect to the matters covered herein. No provision of this
Agreement may be amended other than by an instrument in
writing executed by all of the parties hereto.
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7.7. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective
successors and permitted assigns.
7.8. Survival. The representations, warranties, covenants and
agreements of the parties hereto, shall survive the execution
of this Agreement.
7.9. Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things,
and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party
may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the
consummation of the transactions contemplated thereby.
7.10. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict
construction will be applied against any party.
THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF duly authorized representatives of the Company, the
Subsidiary Guarantors and each Participating Holder have executed this
Agreement effective as of the date set out on the top of page 1 hereof.
Queen Sand Resources, Inc.
(Delaware)
/s/ AUTHORIZED SIGNATORY
------------------------
By:
Queen Sand Operating Co. Corrida Resources, Inc.
/s/ AUTHORIZED SIGNATORY /s/ AUTHORIZED SIGNATORY
------------------------ ------------------------
By: By:
Queen Sand Resources, Inc
(Nevada)
/s/ AUTHORIZED SIGNATORY
------------------------
By:
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QUEEN SAND RESOURCES, INC.
PARTICIPATION AGREEMENT
AS OF THE DAY OF JULY, 2000
AIM High Yield Fund AIM Capital Strategic Income Fund,
/s/ AUTHORIZED SIGNATORY /s/ AUTHORIZED SIGNATORY
------------------------ ----------------------------------
By: By:
AIM Global Income Fund AIM VI Diversified Income Fund
/s/ AUTHORIZED SIGNATORY /s/ AUTHORIZED SIGNATORY
------------------------ ----------------------------------
By: By:
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QUEEN SAND RESOURCES, INC.
PARTICIPATION AGREEMENT
AS OF THE DAY OF JULY, 2000
Alliance Capital Management Corporation
/s/ AUTHORIZED SIGNATORY
------------------------
By:
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QUEEN SAND RESOURCES, INC.
PARTICIPATION AGREEMENT
AS OF THE DAY OF JULY, 2000
MacKay Shields LLC, for and on behalf
of the MacKay Signatory Funds and not individually,
and individually with respect to paragraph 5.4 only
By: /s/ AUTHORIZED SIGNATORY
-----------------------
Name:
Title:
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QUEEN SAND RESOURCES, INC.
PARTICIPATION AGREEMENT
AS OF THE DAY OF JULY, 2000
SCHEDULE 1
AMENDMENT TO THE 1998 INDENTURE
Clause (ii) of paragraph (b) of Section 1008 is deleted in its
entirety and the following substituted therefore:
(ii) Indebtedness under the Senior Credit Facilities, to the
extent that the aggregate principal amount of all
Indebtedness under the Senior Credit Facilities at any one
time does not exceed the sum of $35 million plus the amount
by which the net cash proceeds obtained from any Equity
Offering consummated by the Company on or before October 31,
2000 exceeds $50 million; provided, however, that the maximum
amount available to be outstanding under the Senior Credit
Facilities as Permitted Indebtedness pursuant to this clause
(ii) shall at no time exceed $60 million and shall be
permanently reduced by the Net Available Cash from Asset
Sales used to permanently repay Indebtedness under the Senior
Credit Facilities (with a permanent reduction of the related
commitment to lend or the amount available to be refinanced
in the case of a revolving credit facility) and not
subsequently reinvested in Additional Assets or used to
permanently reduce other Indebtedness to the extent permitted
pursuant to Section 1013; provided, however, that the
application of such Net Available Cash form Asset Sales shall
not permanently reduce the amount of Permitted Indebtedness
under this clause (ii) below $10 million in principal amount
plus related accrued interest and costs;
The following shall be inserted at the end of paragraph (b) of Section
1015:
Notwithstanding anything in the foregoing paragraph, no
Change of Control shall be deemed to have occurred as a
result of the exchange of all outstanding shares of Series A
preferred stock, Series C preferred stock and common stock
repricing rights for shares of common stock pursuant to a
recapitalization proposal approved by the stockholders of the
Company, or in connection with any Equity Offering
consummated by the Company, on or before October 31, 2000.
