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EXHIBIT 10.12
[Execution Version]
SECOND 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 November 24, 1998
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SECOND AMENDMENT TO LOAN AGREEMENT
This SECOND AMENDMENT TO LOAN AGREEMENT (this "Second Amendment")
executed effective as of November 24, 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, as
amended by that certain First Amendment to Loan Agreement dated as of June 30,
1998 (such agreement as amended 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 Second Amendment, shall have the
same meanings as defined in the Loan Agreement. Unless otherwise indicated, all
section references in this Second Amendment refer to the Loan Agreement.
Section 2. Amendments to Credit Agreement.
2.1 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
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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;
(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; and
(iii) the one time repurchase or redemption of shares of the
Series C Preferred Stock from one or more of Xxxxx International,
Xxxxxxx Investments International Ltd., and Palisades Holdings, Inc.,
provided that (A) such repurchase or redemption shall be made only
with the cash proceeds of a common stock Equity Offering, (B) the
aggregate amount paid for such repurchase or redemption shall not
exceed $2,300,000, including the payment of accrued dividends, (C) the
maximum price per share (including accrued dividends) paid for such
purchase or redemption shall not exceed $7.35, (D) such repurchase or
redemption shall occur on or before December 31, 1998, (E) 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 (F) 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.
2.2 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. The Parent
Company's Fixed Charge Coverage Ratio as of the end of any full fiscal
quarter shall not be less than the following for the period then
applicable:
(i) for the three month period ending on December 31,
1998, 1.5 to 1.0;
(ii) for the six month period ending on March 31, 1999,
1.5 to 1.0;
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(iii) for the nine month period ending on June 30, 1999,
1.5 to 1.0; and
(iv) for each rolling period of four fiscal quarters
thereafter, 1.5 to 1.0.
For the purposes of this Section 5.15, "Fixed Charge Coverage Ratio"
shall have the meaning specified in the Senior Loan Agreement.
Section 3. Waiver. The Agent and each Lender hereby agree to waive any Default
and Event of Default associated with the failure to comply with Section 5.15
(Fixed Charge Coverage Ratio) of the Loan Agreement for the fiscal quarters
ending June 30, 1998 and September 30, 1998, provided that the foregoing
waivers are granted only with respect to and shall be limited precisely to the
Defaults and Events of Default relating solely to the failure to comply with
Section 5.15 for the fiscal quarters ending June 30, 1998 and September 30,
1998. Nothing contained herein (i) shall be deemed to constitute a consent or
waiver with respect to any other term, provision, or condition of the Loan
Agreement or any other Loan Document or (ii) shall prejudice any present or
future right or remedy that the Agent and/or any Lender may now have or may
have in the future in connection with the Loan Agreement or the Loan Documents.
Section 4. Representations and Warranties; Etc. Each Obligor hereby affirms:
(a) that as of the date of execution and delivery of this Second 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
Second Amendment and to the transactions and waivers contemplated hereby, no
Defaults exist under the Loan Documents or will exist under the Loan Documents.
Section 5. Conditions Precedent. The effectiveness of this Second Amendment
(including the waiver contained in Section 3) 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:
5.1 Loan Documents. The Agent shall have received multiple
counterparts as requested of this Second Amendment.
5.2 No Default. No Default or Event of Default shall have occurred and
be continuing as of the Effective Date.
Section 6. Miscellaneous.
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6.1 Confirmation. The provisions of the Loan Agreement (as amended by
this Second Amendment) shall remain in full force and effect in accordance with
its terms following the effectiveness of this Second Amendment.
6.2 Ratification and Affirmation of Obligors. Each of the Obligors
hereby expressly (i) acknowledges the terms of this Second 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.
6.3 Counterparts. This Second 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.
6.4 No Oral Agreement. THIS WRITTEN SECOND AMENDMENT, THE LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND
THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND 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.
6.5 GOVERNING LAW. THIS SECOND 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Second
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
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Xxxxxx X. Xxxxxxx
Vice President
PARENT COMPANY: QUEEN SAND RESOURCES, INC.,
a Delaware corporation
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Chief Operating Officer
and Executive Vice President
GUARANTORS: NORTHLAND OPERATING CO.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Vice President
CORRIDA RESOURCES, INC.
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
Vice President
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AGENT: ENRON CAPITAL & TRADE RESOURCES CORP.,
as Agent
By: /s/ AUTHORIZED SIGNATORY
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Name:
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Title:
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LENDERS: ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ AUTHORIZED SIGNATORY
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Name:
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Title:
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