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EXHIBIT 10.26
AMENDMENT NUMBER FOUR
AND
WAIVER AND CONSENT
TO
LOAN AND SECURITY AGREEMENT
This AMENDMENT NUMBER FOUR AND WAIVER AND CONSENT TO LOAN AND SECURITY
AGREEMENT (this "Amendment, Consent and Waiver") is entered into as of October
24, 2000, among DEVX ENERGY, INC., formerly known as Queen Sand Resources,
Inc., a corporation formed under the laws of the State of Delaware ("DEVX");
DEVX ENERGY, INC., formerly known as 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. DEVX, 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 further amended by that certain Amendment Number Two to
Loan and Security Agreement dated as of June 21, 2000, and as
further amended by that certain Amendment Number Three to
Amended and Restated Credit Agreement dated as of September
19, 2000 (as heretofore amended, supplemented, or otherwise
modified, the "Agreement");
B. DEVX has entered into the Recapitalization Agreement (as
defined herein) with the holders of DEVX's Series A preferred
stock, Series C preferred stock and common stock repricing
rights in which these holders have agreed to exchange all
their current holdings of DEVX equity for 732,500 shares of
DEVX common stock after giving effect to a 156 to 1 reverse
split (the "Share Exchange"). The Recapitalization Agreement
is subject to, among other things, (i) DEVX completing an
Equity Offering generating net proceeds to DEVX of not less
than $50 million on or before October 31, 2000 and (ii) DEVX
repurchasing at least $75 million of original principal
amount of its Senior Notes. DEVX intends to use a portion of
the proceeds of the Equity Offering to finance the repurchase
of the Senior Notes.
C. The Share Exchange and Equity Offering contemplated by the
Recapitalization Agreement may, upon implementation, each
constitute a Change of Control as defined under Article I,
Section 1.02 of the Agreement. Article IX, Section 9.21 of
the Agreement prohibits the repayment of the principal
portion of the Senior Notes.
D. Accordingly, DEVX and the Borrower have requested that the
Lenders (i) waive any non-compliance with the terms and
provisions of the Agreement as a result of the repurchase of
the Senior Notes from the proceeds of the Equity Offering and
the implementation of the Share Exchange as contemplated by
the Recapitalization Agreement, (ii) amend the definition in
the Agreement of the term Change of Control to permit
implementation of the Share Exchange and the Equity Offering
as contemplated by the Recapitalization Agreement without
triggering
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a default under the Agreement, (iii) acknowledge and agree
that the amounts received by DEVX under the Equity Offering
contemplated by the Recapitalization Agreement will be
applied first to the repurchase of the Senior Notes and
second to the prepayment of any of the Loans or other amounts
payable under the Agreement (provided that (i) no reduction
in the Aggregate Commitments shall result solely from any of
the foregoing events and transactions, and (ii) any such
prepayment of Loans may be reborrowed during the Revolving
Credit Period subject to the then effective Aggregate
Commitments in accordance with Section 2.07(d) of the
Agreement), and (iv) waive any non-compliance with the terms
of the Loan Documents as a result of certain corporate name
changes of the Obligors as more particularly described
herein.
E. The Lenders are willing to consent to such requests subject
to the terms 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, DEVX 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:
"Share Exchange" has the meaning set forth in Recital B
hereof.
2. Amendments to the Agreement.
a. The following is added to Section 1.02 of
the Agreement between the terms Rating Agencies and
Reference Bank.
"Recapitalization Agreement" shall mean the
agreement dated as of July 17, 2000 and
entered into by and among QSRD and Joint
Energy Development Investments Limited
Partnership, Xxxxxxxx Capital Management,
Inc. (fka as "Proprietary Convertible
Investment Group, Inc."), Xxxxx
International, Shepherd Investments
International, Ltd., Xxxxxxxx Investments
L.P., Montrose Investments L.P., Palisades
Capital, Inc., JNC Opportunity Fund Ltd.,
Diversified Strategies Fund L.P., KA
Investments, LDC, Sovereign Partners, L.P.,
Advantage (Bermuda) Fund, Ltd., Canadian
Advantage, L.P., and Dominion Capital Fund
Ltd., in the form of Exhibit RA-1 attached
hereto.
b. The Definition of Change of Control in
Section 1.02 of the Agreement is amended by
inserting, immediately after subparagraph (c)
thereof the following proviso:
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"; provided that no Change of
Control shall be deemed to have occurred
under any of the foregoing subparagraphs
(a) or (b) as a result of or in
connection with the exchange of all
outstanding shares of Series A preferred
stock, Series C preferred stock and
common stock repricing rights of QSRD for
shares of common stock of QSRD or the
Equity Offering as contemplated by the
Recapitalization Agreement or any change
in the composition of the Board of
Directors of QSRD resulting therefrom."
c. The exhibits to the Agreement are hereby
amended by adding immediately after Exhibit T-1
thereto a new Exhibit RA-1, such Exhibit RA-1 to
read as Exhibit RA-1 attached to this Agreement,
Consent and Waiver.
d. The Agreement and the other Loan Documents
are hereby modified and amended such that all
references contained therein to (i) Queen Sand
Resources, Inc., a Delaware corporation shall be and
be deemed to be references to DevX Energy, Inc., a
Delaware corporation, (ii) Queen Sand Resources,
Inc., a Nevada corporation shall be and be deemed to
be references to DevX Energy, Inc., a Nevada
corporation, and (iii) Queen Sand Operating Co., a
Nevada corporation shall be and be deemed to be
references to DevX Operating Company, a Nevada
corporation.
3. Consent to Repurchase of Senior Notes and
Application of Proceeds. The Lenders hereby waive any non-compliance with the
terms and provisions of Sections 9.04, 9.16, 9.20 and 9.21 of the Agreement,
Section 5.1 of the Security Agreement and any similar provision in any Loan
Document limiting or restricting the ability of any Obligor to change its name
and any Default resulting from any of the foregoing or under Section 10.01(k)
of the Agreement with respect to, and hereby acknowledge and consent to (i) the
repurchase of the Senior Notes as contemplated by the Recapitalization
Agreement provided that such repurchase is financed entirely by the proceeds of
the Equity Offering described in the Recapitalization Agreement, (ii) the Share
Exchange as contemplated by the terms of the Recapitalization Agreement, and
(iii) the change of the corporate name of (a) Queen Sand Resources, Inc., a
Delaware corporation to DevX Energy, Inc., a Delaware corporation, (b) Queen
Sand Resources, Inc., a Nevada corporation to DevX Energy, Inc., a Nevada
corporation, and (c) Queen Sand Operating Co., a Nevada corporation to DevX
Operating Company, a Nevada corporation. The Lenders hereby also consent,
acknowledge and agree that the net proceeds received by DEVX under the Equity
Offering contemplated by the Recapitalization Agreement shall be applied first
to the repurchase of the Senior Notes and second to the prepayment of any of
the Loans or other amounts payable under the Agreement (provided that (i) no
reduction in the Aggregate Commitments shall result solely from any of the
foregoing events and transactions, and (ii) any such prepayment of Loans may be
reborrowed during the Revolving Credit Period subject to the then effective
Aggregate Commitments in accordance with Section 2.07(d) of the Agreement).
Such waiver, consent and agreement as provided herein 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
except as expressly set out herein. Such waiver does not preclude any exercise
or further exercise of any other right, power, or privilege under any Loan
Document.
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4. Conditions Precedent to the Effectiveness of this
Amendment and Waiver.
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. Completion of the Share Exchange and Equity
Offering contemplated by the Recapitalization
Agreement on or before October 31, 2000 or such
extended date as may be agreed to by the parties to
the Recapitalization Agreement; provided that any
extension of the completion of such Share Exchange
and Equity Offering beyond January 31, 2001 shall
require the written consent of the Agents.
b. 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); and
(iii) a certificate executed by a Responsible
Officer of Borrower certifying that no
Event of Default has occurred and is
continuing.
(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,
DEVX, any Subsidiary Guarantor, any Lender,
Collateral Agent, Administrative Agent, or
any of their Affiliates;
(f) No material adverse change shall have
occurred in the financial condition of
Borrower, DEVX, any Subsidiary Guarantor, or
in the value of the Collateral; and
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(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, Warranties and Covenants. Each of
DEVX 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 DEVX and the Borrower, enforceable against
each of DEVX and the Borrower in accordance with their terms. Promptly upon
request by Collateral Agent, DevX and Borrower shall, and shall cause each
current Subsidiary Guarantor to execute and deliver such financing statement
amendments and other modifications, amendments and supplements to the Security
Instruments reasonably required to maintain the perfection and priority of the
Liens of the Lenders on the Collateral in light of the corporate name changes
of certain of the Obligors described herein.
6. Reaffirmation and Consent. Concurrently herewith,
DEVX 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, Consent and Waiver by
telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this
Amendment, Consent and Waiver.
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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.
d. The parties hereto agree that the
transactions contemplated by the Recapitalization
Agreement, including, without limitation, the
repurchasing of all or a portion of the Senior Notes
in accordance therewith, do not constitute
transactions governed by the Side Letter and (i) no
further consent or approval by any Agent or Lender
shall be required and (ii) no fees or other
obligations of any Obligor shall be due and payable,
under the terms of the Side Letter as a result
thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed as of the date first written above.
DEVX ENERGY, INC., formerly known as Queen Sand
Resources, Inc., a Delaware corporation
By:
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Xxxxxx X. Xxxxxxx
Chief Operating Officer
DEVX ENERGY, INC., formerly known as Queen Sand
Resources, Inc., a Nevada corporation
By:
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Xxxxxx X. Xxxxxxx
Chief Operating Officer
Address for Notices for DEVX and the Borrower:
DevX Energy, Inc.
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
DevX Energy, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxx XXX 5L4
Attention: Xx. Xxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
And
Xxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Boeing
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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COLLATERAL AGENT: ABLECO FINANCE LLC, as Collateral Agent
By:
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Xxxxx X. Genda
Senior Vice President and
Chief Credit Officer
Address for Notices:
000 Xxxx Xxxxxx.
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Genda
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
XXXXXXX PHLEGER & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx Xxxxxxx Hilson, Esq.
ADMINISTRATIVE AGENT: FOOTHILL CAPITAL CORPORATION
By:
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Address for Notices:
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Business Finance Division Manager
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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LENDER: ABLECO FINANCE LLC
By:
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Xxxxx X. Genda
Senior Vice President and
Chief Credit Officer
LENDER: FOOTHILL CAPITAL CORPORATION
By:
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Name:
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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 Four and Consent and Waiver to Credit Agreement, dated as of October 24,
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 transactions
contemplated by the Recapitalization Agreement 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 are 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.
DEVX ENERGY, INC., formerly known as Queen Sand
Resources, Inc., a Delaware corporation
By:
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Xxxxxx X. Xxxxxxx
Vice President
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DEVX Operating Company, formerly known as
Queen Sand Operating Co., a Nevada corporation
By:
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Xxxxxx X. Xxxxxxx
Vice President
CORRIDA RESOURCES, INC.,
a Nevada corporation
By:
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Xxxxxx X. Xxxxxxx
Vice President
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