Exhibit 4.1
Sixth Amendment to
Second Amended and
Restated Credit Agreement
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July 31, 0000
Xxxxxx Production Company
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Gentlemen:
This Sixth Amendment to the Second Amended and Restated Credit Agreement
(the "Amendment") will serve to set forth the amended terms of the financing
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transaction by and between INLAND PRODUCTION COMPANY, a Texas corporation
("Borrower"), FORTIS CAPITAL CORP., a Connecticut corporation as Agent ("Agent")
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and as a Lender, and the other Lenders.
WHEREAS, Borrower and ING (U.S.) Capital LLC, as Agent, entered into the
Second Amended and Restated Credit Agreement, dated as of September 15, 1999, as
amended, (the "Credit Agreement"); and
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WHEREAS, ING (U.S.) Capital LLC has assigned its position as Agent and
Lender under the Credit Agreement to Fortis Capital Corp.,
WHEREAS, the Borrower has requested that the Lenders make certain
amendments to the Credit Agreement, and the Lenders are willing to do so subject
to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. Defined Terms. All capitalized terms used but not otherwise defined in
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this Amendment shall have the meaning ascribed to them in the Credit Agreement.
Unless otherwise specified, all section references herein refer to sections of
the Credit Agreement.
2. Amendments to Credit Agreement. The Credit Agreement is hereby amended
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as follows:
2.1 Section 1.1. Definitions.
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(a) The term "Change of Control" is amended to read as follows:
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"`Change of Control' means the occurrence of either of the
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following events: (a) any Person or two or more Persons acting as a
group other than a Xxxxx Party or TCW Party shall acquire beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Act of 1934, as amended, and
including holding proxies to vote for the election of directors other
than proxies held by Parent's management or their designees to be
voted in favor of Persons nominated by Parent's Board of Directors) of
35% or more of the outstanding voting securities of Parent, measured
by voting power (including both common stock and any preferred stock
or other equity securities entitling the holders thereof to vote with
the holders of common stock in elections for directors of Parent) or
(b) one-half or more of the directors of Parent shall consist of
Persons not nominated by Parent's Board of Directors (including as
Board nominees any directors which the Board is obligated to nominate
pursuant to shareholders agreements, voting trust arrangements or
similar arrangements which are in place as of the date hereof, but not
those which arise after the date hereof unless they deal with the same
parties or their Affiliates and no one else) or a Xxxxx Party or TCW
Party."
(b) The term "Consolidated Tangible Net Worth" is amended to
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read as follows:
"Consolidated Tangible Net Worth" means the remainder of all
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Consolidated assets of Parent, other than intangible assets (including
as intangible assets such assets as patents, copyrights, licenses,
franchises, goodwill, trade names, trade secrets and leases other than
oil, gas or mineral leases or leases
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required to be capitalized under GAAP), minus Parent's Consolidated
liabilities, provided that for purposes of this definition
Subordinated Debt and accrued unpaid interest thereon shall not be
included as liabilities in the calculation of Parent's Consolidated
liabilities.
(c) The definition of "Eurodollar Margin" is amended to read as
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follows:
"Eurodollar Margin" means the following rate per annum as
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applicable based on the Senior Debt to EBITDA Ratio in effect from
time to time:
Senior Debt to
EBITDA Ratio Eurodollar Margin
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Greater than 4.00
to 1.00 3.25%
Less than or equal to 4.00 to
1.00 but greater than
or equal to 3.00 to 1.00 2.75%
Less than 3.00 to
1.00 2.25%
with each change in the Eurodollar Margin resulting from a change in
the Senior Debt to EBITDA Ratio taking effect at the time of such
change.
(d) For purposes of the Credit Agreement, the term "Maturity
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Date" shall be deleted and shall be replaced by the term "Revolving Termination
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Date" which shall have the same meaning as Maturity Date except that the
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Revolving Termination Date shall be June 30, 2004.
(e) The definition of "TCW Party" is amended to read as follows:
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"TCW Party" means any of Trust Company of the West, TCW Asset
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Management Company, or any of their Affiliates (including but not
limited to Inland Holdings, LLC, a California limited liability
company) or any member, fund participant, holder of a beneficial
interest or successor in or to any of the foregoing, or party to an
investment management or similar agreement with any of the foregoing.
(f) The following Defined Terms shall be added to the Credit
Agreement:
"Senior Debt" means, at any time of determination, the Parent's
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Consolidated Debt minus the aggregate principal amount of Subordinated
Debt.
"Xxxxx Party" means (a) Hampton Investments LLC, SOLVation Inc.,
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any of their Affiliates, or any member, fund participant, holder of a
beneficial interest, as or the date hereof, in any of the foregoing,
or party to an investment management or similar agreement with any of
the foregoing, as of the date hereof, (b) any immediate family member
of any Person falling within (a) above, (c) any direct lineal
descendant of any Person falling within (a) or (b) above, (d) any
trust established for the benefit of any Person falling within (a) to
(c) above and (e) any Person controlling, controlled by or under
common control with any Person falling within (a) to (d) above.
"Subordinated Debt" means the indebtedness of the Parent under
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the Subordinated Debt Documents.
"Subordinated Debt Documents" means, collectively, the following:
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(i) the Junior Subordinated Notes due March 31, 2010 in the
original aggregate principal amount of $5,000,000, issued pursuant to
the Junior Subordinated Note Purchase Agreement, dated as of August 2,
2001 by and among Parent, as issuer, Borrower, as guarantor, and
SOLVation Inc., as note purchaser, together with all interest accrued
pursuant thereto; and
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(ii) the Senior Subordinated Notes due July 1, 2007, in the
original aggregate principal amount of $5,000,000, issued pursuant to
the Senior Subordinated Note Purchase Agreement, dated as of August 2,
2001, by and among Parent, as issuer, Borrower, as guarantor, and
SOLVation Inc., as note purchaser, together with all interest accrued
pursuant thereto; and
(iii) the unsecured subordinated notes due September 30,
2009, in the original aggregate principal amount of $98,968,964.00,
issued pursuant to the Exchange and Note Issuance Agreement, dated as
of August 2, 2001, by and among Parent, as issuer, Borrower, as
guarantor, and Inland Holdings, LLC, as note purchaser, together with
all interest accrued pursuant thereto; and
(iv) Option Agreement, dated as of the date hereof, by and
between Inland Holdings, LLC and SOLVation Inc.; and
(v) TCW Subordination Agreement dated as of the date hereof
by and among, Inland Resources, Inc., Inland Production Company,
SOLVation Inc. and Inland Holdings, LLC; and
(vi) Junior Sub Note Subordination Agreement dated as of the
date hereof by and among, Inland Resources, Inc., Inland
Production Company, SOLVation Inc. and Inland Holdings, LLC.
2.2 Section 2.16 is added to the Credit Agreement as follows:
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Section 2.16. Term Loan. On the Revolving Termination Date, the
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Borrower's right to request Loans hereunder shall terminate and
the outstanding principal of each of the Loans on such Revolving
Termination Date shall automatically be converted into a single
term loan payable in twelve (12) equal quarterly installments,
each such installment payable, together with accrued interest, on
the last Business Day of each such quarterly period
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beginning on September 30, 2004, provided however, that the
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aggregate unpaid principal balance of the term loan shall mature
and be due and payable on June 30, 2007.
2.3. Borrowing Base. The Borrowing Base on the date hereof is
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$83,500,000. Notwithstanding anything to the contrary in Section
2.9 of the Credit Agreement, the next scheduled determination of
the Borrowing Base shall be made prior to March 31, 2002, which
next determination of the Borrowing Base shall be based on an
Engineering Report dated as of January 1, 2002 and such other
information, reports and data as the Agent and the Lenders deem
relevant. Thereafter, scheduled determinations of the Borrowing
Base shall be made at the times set forth in Section 2.9, with
the first such subsequent scheduled determination to be made
based on an Engineering Report, information, reports and data
submitted to the Agent by October 1, 2002.
2.4 Section 7.10. Working Capital. Section 7.10 of the Credit
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Agreement in its present form is deleted and new Section 7.10 is
added to the Credit Agreement as follows:
"Section 7.10. Current Ratio. The ratio of Parent's
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Consolidated Current Assets to Parent's Consolidated Current
Liabilities will never be less than 1.0 to 1.0. For purposes of
this Section 7.10, Consolidated Current Assets and Consolidated
Current Liabilities shall be determined in accordance with GAAP,
except that (a) Consolidated Current Assets and Consolidated
Current Liabilities will be calculated without including any
amounts resulting from the application of FASB Statement 133, (b)
Consolidated Current Liabilities will be calculated without
including any amounts relating to the Subordinated Debt, and (c)
the unused portion of the commitment under the Credit Agreement
shall be treated as a Consolidated Current Asset."
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3. Waivers and Consents. The Lenders hereby agree, approve and consent
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as follows:
3.1 Warrants. The Warrants to Purchase Common Stock of Inland
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Resources Inc., dated as of March 5, 1999 (the "Warrants") issued
to each of the Lenders are hereby cancelled and such Lenders
shall have no further rights thereunder; it being represented and
warranted to Borrower and Guarantor by Lender that Lender has all
right, title and interest in and to its Warrants and has not
assigned, conveyed or otherwise transferred its Warrants (or any
part thereof) to any Person any time prior to the cancellation
referenced in this Section 3.1.
3.2 Inland Working Capital Company. The Lenders consent to the
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dissolution and liquidation of Inland Working Capital Company and
the transfer of its assets and liabilities to Parent.
3.3 Redemption of Preferred Stock.
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Parent may redeem all of its Series D Preferred Stock and Series
E Preferred Stock in exchange for (i) unsecured subordinated notes due
September 30, 2009, to be issued to Inland Holdings, LLC , pursuant to
the Exchange and Note Issuance Agreement dated as of August 2, 2001
and (ii) $2,000,000 in cash.
3.4 Change of Control. The acquisition by Hampton Investments LLC
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of the Common Stock of Parent from the Xxxxx Party and TCW Party
concurrently with the effectiveness of this Amendment, and the
nomination by Hampton Investments LLC of one-half or more of the
members of Parent's Board of Directors will not be considered a
change of control within the meaning of the Credit Agreement.
3.5 Subordinated Debt Documents. The incurrence of the indebtedness
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under the Subordinated Debt Documents.
3.6 Chairman Payments. Payment to Xxxxxx X. Xxxxxx of a fee of
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$200,000 annually (payable in equal monthly
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installments) so long
as he is and remains Chairman of the Board of Directors of
Borrower and/or Guarantor.
3.7 Working Capital. Compliance with Section 7.10 of the Credit
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Agreement for the period April 1, 2001 through the effectiveness
of this Amendment is hereby waived.
4. Effectiveness of Amendment. This Amendment shall be effective upon
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receipt by Agent of:
(a) Execution and receipt of the documentation relating to the
issuance by the Parent of the Subordinated Debt on terms and conditions
satisfactory to the Agent;
(b) The receipt by the Parent of proceeds from the issuance of the
Subordinated Debt issued under the Subordinated Debt Documents described in
clauses (i) and (ii) of the definition thereof;
(c) Execution of a Subordination Agreement by the holders of the
Subordinated Debt, the Parent, the Borrower and the Agent on terms and
conditions satisfactory to the Agent;
(d) Delivery by the Borrower to the Agent of replacement Promissory
Notes reflecting the terms of this Amendment;
(e) Receipt by the Agent of a Budget and Development Plan for Parent
and Borrower taking into account the effect of the issuance of the Subordinated
Debt;
(f) Receipt by the Agent, on behalf of the Lenders, of an amendment
fee equal to 0.375% of the Borrowing Base;
(g) A Consent and Agreement executed by Inland Resources Inc. as
guarantor, and
(h) A Compliance Certificate executed by Borrower.
5. Ratifications, Representations and Warranties.
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(a) The terms and provisions set forth in this Amendment shall modify
and supersede all inconsistent terms and provisions set forth in the Credit
Agreement and, except as expressly modified and superseded by this Amendment,
the terms and provisions of the Credit Agreement are ratified and confirmed and
shall continue in full force and effect. The Borrower and Lenders agree that the
Credit Agreement and the Loan Documents, as amended hereby, shall continue to be
legal, valid, binding and enforceable in accordance with their respective terms.
(b) In order to induce Lenders to enter into this Amendment, each of
Borrower and Parent represents and warrants to Lenders that:
(i) The representations and warranties contained in Article V of
the Credit Agreement are true and correct at and as of the time of the
effectiveness hereof.
(ii) Each Restricted Person is duly authorized to execute and
deliver each Loan Document to the extent a party thereto and Borrower
is and will continue to be duly authorized to borrow and to perform
its obligations under the Credit Agreement as amended hereby. Each
Restricted Person has duly taken all action necessary to authorize the
execution and delivery of each Loan Document to which it is a party
and to authorize the performance of the obligations of each Restricted
Person thereunder.
6. Benefits. This Amendment shall be binding upon and inure to the
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benefit of the Lenders and Borrower, and their respective successors and
assigns; provided, however, that Borrower may not, without the prior written
consent of the Lenders, assign any rights, powers, duties or obligations under
this Amendment, the Credit Agreement or any of the other Loan Documents.
7. Construction. This Amendment shall be governed by and construed in
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accordance with the laws of the State of New York.
8. Invalid Provisions. If any provision of this Amendment is held to be
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illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable and the remaining provisions of this Amendment shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
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9. Entire Agreement. The Credit Agreement, as amended by this Amendment,
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contains the entire agreement among the parties regarding the subject matter
hereof and supersedes all prior written and oral agreements and understandings
among the parties hereto regarding same.
10. Reference to Credit Agreement. The Credit Agreement and any and all
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other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms hereof or pursuant to the terms of the Credit
Agreement, as amended hereby, are hereby amended so that any reference in the
Credit Agreement to the Credit Agreement shall mean a reference to the Credit
Agreement as amended hereby.
11. Counterparts. This Amendment may be separately executed in any number
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of counterparts, each of which shall be an original, but all of which, taken
together, shall be deemed to constitute one and the same agreement.
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If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Amendment to the undersigned.
Very truly yours,
FORTIS CAPITAL CORP., as Agent and Lender
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
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Title: Vice President
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U. S. BANK NATIONAL ASSOCIATION, as LC Issuer and a Lender
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: Vice President
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ACCEPTED as of the date
first written above.
BORROWER:
INLAND PRODUCTION COMPANY
By: /s/ Xxxx X. Xxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxx
Title: President
CONSENT AND AGREEMENT
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Inland Resources Inc. hereby consents to the provisions of this Sixth
Amendment to Second Amended and Restated Credit Agreement and the transactions
contemplated herein, and hereby ratifies and confirms its Guaranty dated as of
September 15, 1999, as amended, supplemented, or restated to the date hereof,
made by it for the benefit of Agent and Lenders, and agrees that its obligations
and covenants thereunder are unimpaired hereby and shall remain in full force
and effect.
INLAND RESOURCES INC.
By: /s/ Xxxx X. Xxxxxxxxxx
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Name: Xxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
Dated: July 31, 2001
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COMPLIANCE CERTIFICATE
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July 31, 2001
Reference is made to (i) that certain Second Amended and Restated Credit
Agreement dated as of September 15, 1999 (as amended, supplemented, or restated
to the date hereof, the "Original Agreement"), between Inland Production
Company, a Texas corporation ("Borrower"), Inland Resources Inc., a Washington
corporation ("Parent"), and ING (U.S.) Capital LLC, as Agent, and certain other
financial institutions, as Lenders and (ii) that certain Sixth Amendment to
Second Amended and Restated Credit Agreement dated as of July 31, 2001 between
Borrower, Fortis Capital Corp. and Lenders (the "Amendment"; the Original
Agreement as amended by the Amendment is herein referred to as the "Credit
Agreement"). Terms which are defined in the Credit Agreement and which are used
but not defined herein shall have the meanings given them in the Credit
Agreement. The undersigned, Xxxx XxxXxxxx and Xxxx Xxxxxxxxxx, do hereby certify
in the name, and on behalf, of Borrower that Borrower has made a thorough
inquiry into all matters certified herein and based upon such inquiry,
experience, and the advice of counsel, do hereby further certify that:
1. Xxxx XxxXxxxx and Xxxx Xxxxxxxxxx are the duly elected, qualified, and
acting Chief Executive Officer and Chief Financial Officer, respectively of
Borrower.
2. All representations and warranties made by any Restricted Person in
any Loan document delivered on or before the date hereof (including, without
limitation, the representations and warranties contained in Section 4 of the
Amendment) are true in all material respects on and as of the date hereof
(except to the extent that the facts upon which such representations are based
have been changed by the transactions contemplated in the Credit Agreement) as
if such representations and warranties had been made as of the date hereof.
3. No Default exists on the date hereof.
4. Each Restricted Person has performed and complied with all agreements
and conditions required in the Loan Document to be performed or complied with by
it on or prior to the date hereof.
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IN WITNESS WHEREOF, this instrument is executed by the undersigned as of
the date first above written.
INLAND PRODUCTION COMPANY
By: /s/ Xxxx XxxXxxxx
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Xxxx XxxXxxxx
Chief Executive Officer
By: /s/ Xxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxxxxxxx
Chief Financial Officer
