EXHIBIT 5
EXCHANGE AND NOTE ISSUANCE AGREEMENT
by and among
INLAND RESOURCES INC.,
a Washington corporation
INLAND PRODUCTION COMPANY,
a Texas corporation
and
INLAND HOLDINGS, LLC,
a California limited liability company
Dated as of August 2, 2001
TABLE OF CONTENTS
-----------------
SECTION 1. DEFINITIONS..................................................1
1.1 DEFINITIONS..................................................1
1.2 ACCOUNTING TERMS AND DETERMINATIONS..........................4
1.3 INTERPRETATION...............................................4
SECTION 2. EXCHANGE OF SECURITIES.......................................4
2.1 AUTHORIZATION................................................4
2.2 EXCHANGE.....................................................5
2.3 THE CLOSING..................................................5
2.4 CONSENTS.....................................................5
2.5 FURTHER ASSURANCES...........................................5
2.6 USE OF PROCEEDS..............................................6
2.7 RATE OF INTEREST.............................................6
2.8 PAYMENT OF INTEREST..........................................6
2.9 COMPUTATION OF INTEREST......................................6
2.10 PAYMENT OF PRINCIPAL.........................................6
2.11 OPTIONAL PREPAYMENTS.........................................6
2.12 GENERAL PAYMENT PROVISION....................................7
2.13 RANKING......................................................8
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES..............8
SECTION 4. REPRESENTATIONS AND WARRANTIES OF NOTE PURCHASER.............8
4.1 ORGANIZATION OF NOTE PURCHASER...............................8
4.2 AUTHORITY OF NOTE PURCHASER..................................8
4.3 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS...................8
4.4 ACQUISITION FOR PURCHASER'S ACCOUNT..........................9
4.5 INVESTMENT EXPERIENCE........................................9
4.6 SECURITIES NOT REGISTERED....................................9
4.7 QUALIFIED INSTITUTIONAL BUYER; ACCREDITED INVESTOR...........9
4.8 ACKNOWLEDGEMENT OF RISK......................................9
4.9 NO PUBLIC MARKET.............................................9
4.10 NO PUBLIC SOLICITATION.......................................9
4.11 LEGAL HOLDER.................................................9
4.12 DUE DILIGENCE...............................................10
4.13 RELIANCE BY INLAND..........................................10
SECTION 5. AFFIRMATIVE COVENANTS.......................................10
5.1 DEVELOPMENT.................................................10
5.2 BOARD OF DIRECTORS REPRESENTATION...........................10
5.3 INCREASED BOARD OF DIRECTORS REPRESENTATION ARISING FROM
INTEREST NON-PAYMENT .......................................11
SECTION 6. NEGATIVE COVENANTS OF THE COMPANIES.........................11
6.1 INDEBTEDNESS................................................12
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6.2 LIMITATION ON LIENS.........................................12
6.3 NO MERGERS..................................................12
6.4 LIMITATION ON AFFILIATE PAYMENTS............................12
6.5 LIMITATION ON INVESTMENTS AND NEW BUSINESS..................12
6.6 CERTAIN CONTRACTS: AMENDMENTS; MULTIEMPLOYER ERISA PLANS...12
6.7 NO AMENDMENTS...............................................13
6.8 MANAGEMENT CONTROLS.........................................13
SECTION 7. GUARANTY....................................................13
7.1 GUARANTY....................................................13
7.2 OBLIGATIONS UNCONDITIONAL...................................14
7.3 GUARANTEE ENDORSED ON THE TCW SUB NOTES.....................16
SECTION 8. TRANSFERABILITY OF TCW SUB NOTES............................16
8.1 RESTRICTIVE LEGEND..........................................16
8.2 RULE 144 AND 144A...........................................16
SECTION 9. EVENTS OF DEFAULT AND REMEDIES..............................16
9.1 EVENTS OF DEFAULT...........................................16
9.2 REMEDIES....................................................17
SECTION 10. INDEMNITY...................................................18
SECTION 11. MISCELLANEOUS...............................................19
11.1 WAIVERS AND AMENDMENTS; ACKNOWLEDGMENT......................19
11.2 SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE...................20
11.3 NOTICES.....................................................21
11.4 GOVERNING LAW; SUBMISSION TO PROCESS........................21
11.5 LIMITATION ON INTEREST......................................22
11.6 TERMINATION; LIMITED SURVIVAL...............................22
11.7 REGISTRATION, TRANSFER, EXCHANGE AND SUBSTITUTION
OF TCW SUB NOTES ...........................................23
11.8 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC.................24
11.9 EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS..............24
11.10 CONFIDENTIALITY OF HOLDERS..................................25
11.11 REPRODUCTION OF DOCUMENTS...................................25
11.12 SUCCESSORS AND ASSIGNS......................................25
11.13 COUNTERPARTS................................................26
11.14 SEVERABILITY................................................26
11.15 EXPENSES....................................................26
11.16 SPECIFIC PERFORMANCE........................................26
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TABLE OF EXHIBITS AND SCHEDULES
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Schedule 1 TCW Warrants and Options
Schedule B.1 Subsidiaries
Schedule B.2 Convertible Securities
Schedule B.5 Litigation
Schedule B.6 Undisclosed Liabilities
Schedule B.7 Consents/Approvals
Schedule B.10 Compliance with Laws
Schedule B.14 ERISA Plans
Schedule B.17 Environmental
Exhibit A - Form of TCW Sub Note
Exhibit B - Form of Guarantee
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EXCHANGE AND NOTE ISSUANCE AGREEMENT
------------------------------------
This EXCHANGE AND NOTE ISSUANCE AGREEMENT (this "AGREEMENT")
is dated as of August 2, 2001 by and among INLAND RESOURCES INC., a Washington
corporation ("INLAND" or "ISSUER"), INLAND PRODUCTION COMPANY, a Texas
corporation ("IPC" or the "GUARANTOR"; Guarantor, together with Inland, the
"COMPANIES") and INLAND HOLDINGS, LLC, a California limited liability company
("TCW" or "NOTE PURCHASER").
WHEREAS, TCW is presently the holder of 10,757,747 shares of
Inland's Series D Preferred Stock (representing all of the outstanding Series D
Preferred Stock of Inland) (the "EXCHANGED D PREFERRED STOCK");
WHEREAS, TCW is presently the holder of 121,973 shares of
Inland's Series E Preferred Stock (representing all of the outstanding Series E
Preferred Stock of Inland) (the "EXCHANGED E PREFERRED STOCK");
WHEREAS, TCW desires to exchange (i) its entire interest in
the Exchanged D Preferred Stock and accumulated dividends thereon and (ii) its
entire interest in the Exchanged E Preferred Stock and accumulated dividends
thereon for (A) a TCW Sub Note in the original principal amount equal to the
Purchase Amount (as defined herein), and (B) a check for $2,000,000, subject to
the terms and conditions set forth herein; and
WHEREAS, upon its acquisition thereof from TCW, Inland desires
to retire the Exchanged D Preferred Stock, the Exchanged E Preferred Stock and
the TCW Warrants and Options.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
by the terms hereof, agree as follows:
SECTION 1. DEFINITIONS 1.1 DEFINITIONS. As used in this
Agreement, each capitalized term has the meaning ascribed to it in this SECTION
1.1 or in ANNEX A attached hereto.
"AGREEMENT" shall have the meaning set forth in the preamble
hereto.
"CALENDAR QUARTER" means the calendar quarter ending on each
Quarterly Accrual Date.
"CLOSING" shall have the meaning ascribed to such term in
SECTION 2.3 hereof.
"COMMON STOCK" shall mean the common stock, $.001 par value,
of Inland.
"COMPANIES" shall have the meaning set forth in the preamble
hereto.
"CURE EVENT" shall have the meaning set forth in SECTION 5.3.
"DESIGNATE" shall mean the delivery of written notice pursuant
to SECTION 11.3 hereof to Inland by the Requisite Holders stating (i) that the
Requisite Holders wish to exercise their rights pursuant to SECTION 5.2, SECTION
5.3 or SECTION 9.2(B) hereof, as the case may be, and (ii) the identity of the
RH Designee; PROVIDED THAT if, at any time, Inland reasonably determines that it
is required to comply with Rule 14f-1 promulgated under the Exchange Act with
respect to the appointment of such RH Designee, the Requisite Holders shall also
be required to furnish to Inland the information required to be reported
pursuant to Rule 14f-1 with respect to such RH Designee before the Requisite
Holders shall be deemed to have Designated any RH Designee hereunder. The terms
"DESIGNATED, "DESIGNATION" and "DESIGNATING" shall each have synonymous
meanings.
"EVENT OF DEFAULT" has the meaning ascribed to such term in
SECTION 9.1.
"EXCHANGE" shall have the meaning ascribed to such term in
SECTION 2.2(A).
"EXCHANGED D PREFERRED STOCK" shall have the meaning set forth
in the recitals.
"EXCHANGED E PREFERRED STOCK" shall have the meaning set forth
in the recitals.
"GUARANTOR" shall have the meaning set forth in the preamble
hereto.
"HIGHEST LAWFUL RATE" means the maximum nonusurious rate of
interest that the Holders are permitted under applicable law to contract for,
take, charge, or receive with respect to the Obligation in question.
"HOLDERS" means the holders of the TCW Sub Notes from time to
time.
"INDEMNIFIED PARTY" shall have the meaning ascribed to such
term in SECTION 10.
"INITIAL AMORTIZATION DATE" shall mean the earlier to occur of
(i) the first December 30 after the repayment in full of the Senior Bank Debt,
or (ii) December 30, 2007.
"INLAND" shall have the meaning set forth in the preamble
hereto.
"INTEREST PAYMENT COMMENCEMENT DATE" means the earlier of (i)
September 30, 2005 or (ii) the first Quarterly Accrual Date to occur after the
outstanding balance of the Senior Bank Debt shall be reduced to $40 million or
less.
"IPC" shall have the meaning set forth in the preamble hereto.
"ISSUER" shall have the meaning set forth in the preamble
hereto.
"MAJORITY HOLDER" means a Holder which, together with any
Affiliate thereof which is a Holder, holds TCW Sub Notes evidencing more than
fifty percent (50%) of the outstanding amount of all TCW Sub Notes.
"MATURITY DATE" means September 30, 2009, or the immediately
succeeding Business Day.
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"NOTE PURCHASE DOCUMENTS" means this Agreement, the TCW Sub
Notes, the Subordination Agreements and all other agreements, certificates,
documents, instruments and writings at any time delivered by Inland in
connection with the purchase and sale of the TCW Sub Notes (exclusive of the
term sheets, commitment letters, correspondence and similar documents used in
the negotiation thereof).
"NOTE PURCHASER" shall have the meaning set forth in the
preamble hereto.
"OBLIGATION" means any part of the Obligations.
"OBLIGATIONS" means the sum of all Debt from time to time
owing by Issuer to the Holders under or pursuant to any of the Note Purchase
Documents.
"OBSERVER" shall have the meaning set forth in SECTION 5.2
hereof.
"ORDER" means any order, writ, injunction, decree, judgment,
award, determination, direction or demand.
"PAYMENT DATE" means: (1) each Quarterly Payment Date; (2) any
date on which the maturity of the TCW Sub Notes is accelerated in accordance
with SECTION 9; (3) any date on which any interest on or principal of the TCW
Sub Notes is optionally prepaid in accordance with SECTION 2.11; and (4) the
Maturity Date.
"PURCHASE AMOUNT" shall have the meaning set forth in SECTION
2.1 hereof.
"QUARTERLY ACCRUAL DATE" means each March 31, June 30,
September 30 and December 31 commencing September 30, 2001.
"QUARTERLY PAYMENT DATE" means each March 31, June 30,
September 30 and December 31 or the immediately preceding Business Day,
commencing on the Interest Payment Commencement Date.
"REGISTER" shall have the meaning ascribed to such term in
SECTION 11.7.
"REQUISITE HOLDERS" shall mean, depending on the action to be
taken, one (1) or more Holders holding the following percentage of the
outstanding principal amount of the TCW Sub Notes: (i) with respect to the
delivery of notices of Default or Event of Default, Holder(s) holding at least
fifty and one-tenth percent (50.1%) of the outstanding principal amount of all
TCW Sub Notes; (ii) with respect to amending, modifying or waiving the terms of
payment of principal or interest or the rate of interest set forth in SECTION
2.7 below, Holder(s) holding one hundred percent (100%) of the outstanding
principal amount of all TCW Sub Notes; and (iii) with respect to all other
actions, Holder(s) holding fifty-one percent (51%) of the outstanding principal
amount of all TCW Sub Notes.
"RESTRICTED SECURITIES" shall have the meaning set forth under
Rule 144 promulgated under the Securities Act.
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"SERIES D PREFERRED STOCK" shall mean the Series D Redeemable
Preferred Stock of Inland, par value $.001 per share.
"SERIES E PREFERRED STOCK" shall mean the Series E Redeemable
Preferred Stock of Inland, par value $.001 per share.
"SENIOR SUB NOTES" shall mean the unsecured senior
subordinated note(s) of Inland issued pursuant to the Senior Sub Note Purchase
Agreement.
"TCW" shall have the meaning set forth in the preamble hereto.
"TCW CHECK" shall have the meaning ascribed to such term in
SECTION 2.2.
"TCW SUB NOTE(S)" shall have the meaning ascribed to such term
in SECTION 2.1.
1.2 ACCOUNTING TERMS AND DETERMINATIONS. Except as
otherwise expressly provided for in this Agreement, all accounting terms used in
this Agreement shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made and all financial statements and
certificates and reports as to financial matters required to be delivered to the
Holders under this Agreement shall be prepared in accordance with GAAP applied
on a basis consistent with those used in the preparation of the latest financial
statements furnished to the Note Purchaser under this Agreement. To enable the
ready and consistent determination of compliance with the covenants set forth in
SECTIONS 5 and 6, Issuer will not change the last day of its fiscal year from
December 31 of each year.
1.3 INTERPRETATION. In this Agreement, unless otherwise
indicated, the singular includes the plural and conversely; words importing one
gender include the others; references to statutes or regulations are to be
construed as including all statutory or regulatory provisions consolidating,
amending or replacing the statute or regulation referred to; references to
"writing" include printing, typing, lithography and other means of reproducing
words in a tangible visible form; the word "or" shall not be exclusive (i.e.,
shall be deemed to include of and/or"); the words "including," "includes" and
"include" shall be deemed to be followed by the words "without limitation";
references to articles, sections (or subdivisions of sections), exhibits,
annexes or schedules are to such parts of this Agreement; references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to such instruments
(without, however, limiting any prohibition on any such amendments, extensions
and other modifications by the terms of this Agreement); and references to
Persons include their respective permitted successors and assigns and, in the
case of Governmental Persons, Persons succeeding to their respective functions
and capacities.
SECTION 2. EXCHANGE OF SECURITIES
2.1 AUTHORIZATION. Inland has duly authorized the
issuance and sale of its unsecured subordinated notes due September 30, 2009 in
an aggregate original principal amount of $98,968,964 (the "PURCHASE AMOUNT")
(collectively with any such notes issued in substitution therefor pursuant to
SECTION 11.7 of this Agreement, the "TCW SUB Notes"). The TCW Sub Notes shall be
substantially in the form set forth in EXHIBIT A, with such changes therefrom as
may be approved by the Requisite Holders and Inland.
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2.2 EXCHANGE.
(a) TCW EXCHANGE. Upon the terms and conditions set forth
herein, TCW agrees to exchange (the "EXCHANGE") with Inland on the Closing Date,
all of TCW's right, title and interest in (i) the Exchanged D Preferred Stock
and (ii) the Exchanged E Preferred Stock FOR (x) TCW Sub Notes in the original
principal amount equal to the Purchase Amount and (y) a check in the amount of
$2,000,000 payable to the order of TCW (the "TCW CHECK"). Inland agrees to issue
and deliver to TCW the TCW Sub Notes and the TCW Check in exchange for the
Exchanged D Preferred Stock and the Exchanged E Preferred Stock in accordance
with the foregoing.
(b) WARRANTS AND OPTIONS. On the Closing Date and upon
the terms and conditions set forth herein, TCW shall cause Portfolio to execute
and deliver to Inland the TCW Option Termination Agreement.
2.3 THE CLOSING. At the closing of the transactions
described herein (the "CLOSING"): (i) TCW shall deliver to Inland the
certificates evidencing its and its Affiliates' entire interest in the Exchanged
D Preferred Stock and the Exchanged E Preferred Stock and TCW shall cause
Portfolio to deliver to Inland any certificates evidencing the TCW Warrants and
Options; (ii) Inland shall accept the Exchanged D Preferred Stock and the
Exchanged E Preferred Stock; (iii) TCW shall deliver to Inland the TCW Option
Termination Agreement, (iv) Inland shall deliver to TCW one or more notes
representing the TCW Sub Notes, registered in the denominations and names
specified by TCW and the TCW Check and (v) Inland shall cancel the Exchanged D
Preferred Stock, Exchanged E Preferred Stock and the TCW Warrants and Options.
2.4 CONSENTS.
(a) Immediately prior to giving effect to the
transactions contemplated hereby, TCW shall be the record holder of 121,973
shares of Exchanged E Preferred Stock, representing all of the issued and
outstanding Exchanged E Preferred Stock. By entering into this Agreement, TCW
hereby consents and agrees to the transactions contemplated hereby as the sole
holder of Series E Preferred Stock. Upon consummation of the transactions
contemplated hereby, each of the parties hereto agrees that no shares of Series
E Preferred Stock will remain outstanding.
(b) Prior to giving effect to the transactions
contemplated hereby, TCW is the holder of 10,757,747 shares of Exchanged D
Preferred Stock, representing all of the issued and outstanding Exchanged D
Preferred Stock of Inland. By entering into this Agreement, TCW hereby consents
and agrees to the transactions contemplated hereby as the sole holder of
Inland's Series D Preferred Stock. Upon consummation of the transactions
contemplated hereby, each of the parties hereto agree that no shares of Inland's
Series D Preferred Stock will remain outstanding.
2.5 FURTHER ASSURANCES. At any time or from time to time
after the Closing, each of the parties hereto shall execute and deliver to the
other parties hereto such other documents and instruments, provide such
materials and information and take such other actions
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as such other parties may reasonably request to consummate the transactions
contemplated hereby.
2.6 USE OF PROCEEDS. In no event shall any proceeds from
the sale of the TCW Sub Notes be used directly or indirectly by any Person for
personal, family, household or agricultural purposes or for the purpose, whether
immediate, incidental or ultimate, of purchasing, acquiring or carrying any
"margin stock" or any "margin securities" (as such terms are defined
respectively in Regulations T, U and X promulgated by the Board of Governors of
the Federal Reserve System) or to extend credit to others directly or indirectly
for the purpose of purchasing or carrying any such margin stock or margin
securities. Inland represents and warrants to the Note Purchaser that Inland is
not engaged principally, or as one of Inland's important activities, in the
business of extending credit to others for the purpose of purchasing or carrying
such margin stock or margin securities.
2.7 RATE OF INTEREST. The TCW Sub Notes shall bear and
accrue interest on the unpaid principal amount and accrued unpaid interest from
time to time outstanding at the coupon rate of eleven percent (11%) per annum
compounded quarterly on each Quarterly Accrual Date, from and after the Closing
Date until their repayment in full.
2.8 PAYMENT OF INTEREST. Interest shall be payable in
arrears in cash on each Payment Date, subject to any restriction on such payment
in the Bank Subordination Agreement. If interest on the TCW Sub Notes is not
paid in full on any Payment Date for any reason in cash, such interest shall be
accrued until and shall be due and payable on the Maturity Date. Inland shall
have the option to accrue interest (in lieu of cash payment thereof) until the
Interest Payment Commencement Date at which time quarterly cash interest
payments on each Payment Date shall be mandatory, subject to any restriction on
such payment in the Bank Subordination Agreement.
2.9 COMPUTATION OF INTEREST. Interest shall be computed
on the TCW Sub Notes on the basis of a 360-day year consisting of twelve 30-day
months. Interest on the TCW Sub Notes shall be computed as the sum of the daily
interest for the period prior to each Payment Date, taking into account the
outstanding principal balance of the TCW Sub Notes and accrued unpaid interest
on each day of the period (where such balance on any given day shall reflect any
payment of principal credited on such date pursuant to SECTION 2.12 hereof).
2.10 PAYMENT OF PRINCIPAL. Inland shall make payments of
principal on the TCW Sub Notes each in an amount equal to one-third of the
aggregate original principal amount of the TCW Sub Notes commencing on the
Initial Amortization Date and on the first and second anniversaries thereof. The
outstanding principal balance of the TCW Sub Notes shall be due and payable in
full on the Maturity Date to the extent not prepaid pursuant to the first
sentence of this SECTION 2.10 or pursuant to SECTION 2.11 below prior thereto.
2.11 OPTIONAL PREPAYMENTS.
(a) Prior to September 30, 0000, Xxxxxx may, from time to
time, upon one (1) Business Day prior written notice to the Holders, prepay the
TCW Sub Notes, in whole or in part
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(including all accrued interest thereon), without the prior consent of the
Requisite Holders and without premium or penalty.
(b) Each prepayment of principal under this SECTION 2.11
shall be accompanied by all interest then accrued and unpaid on the principal so
prepaid. Any principal prepaid pursuant to this SECTION 2.11 shall be (i) in
addition to, and not in lieu of, all payments otherwise required to be paid
under the Note Purchase Documents at the time of such prepayment and (ii)
applied first, to accrued but unpaid interest on the TCW Sub Notes, and second,
to amortization payments of principal due under SECTION 2.10 in the direct order
of maturity.
2.12 GENERAL PAYMENT PROVISION.
(a) Inland shall make each payment which Inland owes
under any of the Note Purchase Documents not later than 1:00 p.m., New York, New
York time, on the date such payment becomes due and payable, without set-off,
deduction or counterclaim, in lawful money of the United States of America, in
immediately available funds sent by wire transfer to the bank accounts specified
with respect to Note Purchaser (or to such bank and accounts and pursuant to
such other directions as the Holders may from time to time specify). Any payment
received by the Holders after such time shall be deemed to have been made on the
next following Business Day. Should any such payment become due and payable on a
day other than a Business Day, the maturity of such payment shall be the
succeeding Business Day. Each payment under a Note Purchase Document shall be
due and payable at the place provided therein and, if no specific place of
payment is provided, shall be due and payable at the place of payment of the TCW
Sub Notes. When the Holders collect or receive money on account of the
Obligations which is insufficient to pay all Obligations then due and payable,
the Holders shall apply such money pursuant to SUBSECTION 2.12(B) below.
(b) Payments or prepayments of principal or interest on
the TCW Sub Notes shall be applied ratably to such TCW Sub Notes. Except for
optional prepayments pursuant to SECTION 2.11 (which shall be applied as
provided in SECTION 2.11), any amount received by any Holder, whether as an
interest payment or principal payment from or on behalf of Inland, shall be
applied as follows in descending order of priority:
(i) to all costs and expenses (including
reasonable attorneys' fees) payable pursuant to SECTION 11.15
hereto or in enforcing any Obligations of, or in collecting
any payments from, any obligor hereunder or under the other
Note Purchase Documents;
(ii) to Obligations (other than principal or
interest) then due and owing Holders under any of the Note
Purchase Documents;
(iii) to interest which has accrued on any amounts
hereunder, including, without limitation, on the TCW Sub Notes
pursuant to SECTION 2.8;
(iv) to principal that is currently due and
payable on the TCW Sub Notes pursuant to SECTION 2.10;
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(v) to payment of principal on the TCW Sub Notes
until paid in full; and
(vi) if all Obligations under the Note Purchase
Documents have been paid in full, to the Issuer.
2.13 RANKING. The TCW Sub Notes are senior to the Junior
Sub Debt pursuant to the terms of the Junior Sub Subordination Agreement and are
junior and subordinated to the Senior Bank Debt and Senior Sub Debt pursuant to
the Bank Subordination Agreement and the TCW Subordination Agreement,
respectively. The TCW Sub Notes shall be senior in all respects to any other
debt of Inland which is subordinated thereto.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANIES.
Each of the Companies hereby represents, warrants and
covenants to TCW, as of the date hereof and as of the Closing Date, that each of
the representations and warranties set forth in ANNEX B is true and correct in
all material respects and by this reference incorporated herein.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF NOTE PURCHASER.
Note Purchaser hereby represents, warrants and covenants to
Inland as follows:
4.1 ORGANIZATION OF NOTE PURCHASER. Note Purchaser
represents and warrants to Inland that Note Purchaser is a limited liability
company duly formed, validly existing and in good standing under the Laws of
California. Note Purchaser has full power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby.
4.2 AUTHORITY OF NOTE PURCHASER. Note Purchaser
represents and warrants to Inland that the execution and delivery by such
parties of this Agreement, and the performance of its obligations hereunder, has
been duly and validly authorized by the all necessary action of Note Purchaser.
This Agreement has been duly and validly executed and delivered by Note
Purchaser and constitutes the legal, valid and binding obligations of Note
Purchaser, respectively, enforceable against Note Purchaser, respectively, in
accordance with its terms, except to the extent such enforceability (a) may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally and (b) is subject to general
principles of equity.
4.3 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. The
consummation of the transactions contemplated by this Agreement and the
execution, delivery and performance of the terms and provisions of the Note
Purchase Documents will not (i) contravene, result in any breach of, or
constitute a default under, any corporate charter or bylaws, or material
agreement or instrument to which Note Purchaser is a party, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any Order
of any court, arbitrator or Governmental Person
8
applicable to the Companies, or (iii) violate any provision of any statute or
other rule or regulation of any Governmental Person applicable to Note
Purchaser.
4.4 ACQUISITION FOR PURCHASER'S ACCOUNT. Note Purchaser
represents and warrants to Inland that it is acquiring and will acquire the TCW
Sub Notes for its own account, with no present intention of distributing or
reselling such securities or any part thereof in violation of applicable
securities laws.
4.5 INVESTMENT EXPERIENCE. Note Purchaser has such
knowledge and experience in financial and business matters, including investing
in securities of new and speculative companies, as to be able to evaluate the
merits and risks of an investment in its TCW Sub Notes.
4.6 SECURITIES NOT REGISTERED. Note Purchaser
acknowledges that its TCW Sub Notes have not been registered under the
Securities Act or the securities laws of any state in the United States or any
other jurisdiction and may not be offered or sold by Note Purchaser unless
subsequently registered under the Securities Act (if applicable to the
transaction) and any other securities laws or unless exemptions from the
registration or other requirements thereof are available for the transaction.
4.7 QUALIFIED INSTITUTIONAL BUYER; ACCREDITED INVESTOR.
Note Purchaser represents that it is a Qualified Institutional Buyer (as defined
in Rule 144A promulgated under the Securities Act) and/or an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act, as presently in effect.
4.8 ACKNOWLEDGEMENT OF RISK. Note Purchaser acknowledges
that an investment in its TCW Sub Notes involves a high degree of risk and
represents that it understands the economic risk of such investment. Note
Purchaser is prepared to bear the economic risk of retaining its TCW Sub Notes
for an indefinite period, all without prejudice, however, to the rights of Note
Purchaser, in accordance with this Agreement, lawfully to sell or otherwise
dispose of all or any part of any TCW Sub Notes held by it.
4.9 NO PUBLIC MARKET. Note Purchaser understands that no
public market now exists for its TCW Sub Notes and that Inland has made no
assurances with respect to any secondary market for such securities.
4.10 NO PUBLIC SOLICITATION. To the best of Note
Purchaser's knowledge, the issuing of the TCW Sub Notes to Note Purchaser was
made through direct, personal communication between Note Purchaser and a
representative of Inland and not through public solicitation and advertising.
4.11 LEGAL HOLDER. TCW is the sole legal and beneficial
holder of the Exchanged D Preferred Stock to be exchanged hereunder and shall
convey such Exchanged D Preferred Stock free and clear of any liens, claims,
interests, charges and encumbrances. TCW shall convey the Exchanged E Preferred
Stock free and clear of any liens, claims, interests, charges and encumbrances
created by or through TCW. TCW has neither previously sold, assigned, conveyed,
transferred or otherwise disposed of, in whole or in part, the Exchanged D
Preferred Stock or the Exchanged E Preferred Stock to be exchanged hereunder,
nor entered into
9
any agreement other than this Agreement to sell, assign, convey, transfer or
otherwise dispose of, in whole or in part, the Exchanged D Preferred Stock or
Exchanged E Preferred Stock to be exchanged hereunder.
4.12 DUE DILIGENCE. Note Purchaser has performed its own
independent investigation and evaluation of the Companies and the transactions
contemplated hereby and has not, in connection with the transactions
contemplated hereby, relied upon any representations or warranties of any kind
whatsoever, whether express or implied, by the Companies or any of their
respective officers, directors, employees, representatives or agents, except for
such representations and warranties expressly set forth herein.
4.13 RELIANCE BY INLAND. Note Purchaser understands and
acknowledges that Inland will be relying upon its respective representations and
warranties set forth in this Agreement in issuing the TCW Sub Notes to such Note
Purchaser.
SECTION 5. AFFIRMATIVE COVENANTS.
To conform with the terms and conditions under which the Note
Purchaser is willing to have credit outstanding to Inland, and to induce the
Note Purchaser to enter into this Agreement and to purchase the TCW Sub Notes,
the Companies hereby jointly and severally warrant, covenant and agree, until
the full and final payment of the Obligations and the termination of this
Agreement, unless the Requisite Holders have previously agreed otherwise, (i)
all of the covenants contained in ANNEX C-1 attached hereto will be observed and
(ii) as follows:
5.1 DEVELOPMENT. Inland and IPC will timely develop the
oil and gas properties of Inland and its Subsidiaries in accordance with an
annual plan of development and annual budget (as may be amended from time to
time as long as the overall development objectives are met, collectively, the
"DEVELOPMENT PLAN") approved in advance by the Majority Holder, if any. In
furtherance thereof, Inland shall provide to the Majority Holder, if any, on or
before December 1 of each year, for approval or disapproval, the proposed
Development Plan for the following January through December period. The Majority
Holder, if any, shall provide notice of approval or disapproval thereof within
20 days of receipt of the proposed Development Plan and failure to disapprove in
writing within such 20 day period shall constitute approval.
5.2 BOARD OF DIRECTORS REPRESENTATION. From and after the
date hereof until the Obligations are repaid in full, the Requisite Holders
shall have the right to Designate, upon written notice to Inland, either (a) one
member to each Board of Directors and one observer entitled to receive all
notices and distributions to members of each Board of Directors and to attend
all meetings thereof (including committees thereof) (an "OBSERVER") or (b) one
or two Observers to each Board of Directors. Any such person Designated by the
Requisite Holders that is elected to any Board of Directors pursuant to this
SECTION 5.2 shall have a term that automatically expires at such time as the
Obligations have been repaid in full. Only one member of each Board of Directors
(whether serving on the board of directors of Inland or any Subsidiary) so
Designated by the Requisite Holders pursuant to this SECTION 5.2, as long as
such Designated member is an independent member (I.E., not an employee or
Affiliate of TCW or an employee or Affiliate of such Affiliate), shall be
entitled to receive compensation, and only one
10
Designated member of each Board of Directors and one Observer shall be entitled
to receive reimbursement of reasonable travel and other expenses as provided in
the Shareholders Agreement.
5.3 INCREASED BOARD OF DIRECTORS REPRESENTATION ARISING
FROM INTEREST NON-PAYMENT. If any cash payment of interest is not made on any
Quarterly Payment Date on or after the Interest Payment Commencement Date,
solely by reason of a restriction or prohibition on such payment in the Bank
Subordination Agreement which is not waived by the Banks (an "INTEREST
NON-PAYMENT"), in addition to their rights under SECTION 5.2 hereof, the
Requisite Holders shall have the right to Designate one or more individuals ("RH
DESIGNEE(S)") to become a member of the Board of Directors and, cause such RH
Designee(s) to become a member of each Board of Directors as provided herein.
Subject to SECTION 9.2(D), such right shall accrue at the rate of one director
on every Board of Directors for each two Calendar Quarter period in which
interest is not paid in full commencing on the first day of the Calendar Quarter
in which the Interest Non-Payment occurs, until all interest accrued from the
first day of the Calendar Quarter in which the first Interest Non-Payment
occurred is paid in full in cash. Subject to SECTION 9.2(D), so long as an
Interest Non-Payment has occurred and is continuing, such right to cause RH
Designees to become a member of every Board of Directors will accumulate and the
Requisite Holders shall keep and retain such right even if not exercised at the
end of any two Calendar Quarter period and shall have the right to have
additional RH Designees to become additional member(s) of every Board of
Directors pursuant to the foregoing sentence. By way of example, if an Interest
Non-Payment shall occur on September 30, 2005 and shall be continuing on
December 31, 2005, on and after January 1, 2006, so long as any Interest
Non-Payment is continuing, the Requisite Holders shall have the right to have
one RH Designee become a member of every Board of Directors and if any Interest
Non-Payment is continuing as of June 30, 2006, the Requisite Holders shall have
the right to have two RH Designees become members of every Board of Directors on
and after July 1, 2006. The right of the Requisite Holders to have one or more
RH Designees become a member of every Board of Directors pursuant to this
SECTION 5.3 shall be the sole remedy of the Holders with respect to any Interest
Non-Payment that has occurred and is continuing, unless such RH Designee(s) is
for any reason does not become a member of every Board of Directors as set forth
in SECTION 9.1(A)(II), and the Requisite Holders shall not have the right to
deliver the notice of Subordinated Payment Event of Default to the Agent
pursuant to SECTION 2(B)(3)(A) of the Bank Subordination Agreement so long as
any RH Designee(s) has become a member of every designated Board of Directors as
provided herein. Any RH Designee that becomes a member of any Board of Directors
pursuant to this SECTION 5.3 may be replaced by the holder(s) of a majority of
Inland's Common Stock upon the payment (the "CURE EVENT") in full in cash of
interest unpaid and accrued from the first day of the Calendar Quarter in which
the Interest Non-Payment occurred, or as an alternate to such replacement, shall
resign if requested by TCW and the vacancy shall be filled by the remaining
Board of Directors. Any RH Designee that becomes a member of any Board of
Directors pursuant to this SECTION 5.3 shall have a term that shall
automatically expire upon the occurrence of the Cure Event.
SECTION 6. NEGATIVE COVENANTS OF THE COMPANIES.
To conform with the terms and conditions under which the Note
Purchaser is willing to have credit outstanding to Inland, and to induce the
Note Purchaser to enter into this
11
Agreement and purchase the TCW Sub Notes, the Companies hereby warrant, covenant
and agree, until the full and final payment of the Obligations and the
termination of this Agreement, unless the Requisite Holders otherwise approve in
writing, (i) all of the covenants contained in ANNEX C-2 attached hereto will be
observed and (ii) as follows:
6.1 INDEBTEDNESS. Except for the Obligations and
Permitted Debt, the Companies will not in any manner owe, be liable for, incur,
create or suffer any Debt or issue preferred stock which is subject to mandatory
redemption prior to the Maturity Date.
6.2 LIMITATION ON LIENS. Inland will not create, assume
or permit to exist any Lien upon any of the Properties or assets which Inland,
respectively, now owns or hereafter acquires, except (i) Liens which secure the
obligations under the Senior Bank Debt only, (ii) Liens for taxes, assessments
or governmental charges not yet due or Liens that are being contested in good
faith and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of Inland or (iii) Permitted Liens.
6.3 NO MERGERS. Inland will not (a) merge or consolidate
with or into any other business entity other than IPC; PROVIDED, that Inland
shall be the surviving entity, (b) sell all or substantially all of the assets
of the Companies, taken as a whole, or (c) permit any Subsidiary to issue any
stock other than to Inland or a wholly owned Subsidiary of Inland.
6.4 LIMITATION ON AFFILIATE PAYMENTS. Inland will not
declare or make, without the Requisite Holders' prior written consent, which the
Requisite Holders may withhold in their sole and absolute discretion, any
Affiliate Payment, except Permitted Distributions, and reimbursements of
expenses in connection with the administration of Inland.
6.5 LIMITATION ON INVESTMENTS AND NEW BUSINESS. Inland
will not and will not permit any Subsidiary to:
(a) engage directly or indirectly in any business or
conduct any operations except in connection with or incidental to its present
businesses and operations;
(b) acquire any equity interest of, or make any other
acquisitions of, or capital contributions to, or investments in (including
extensions of credit, advances or loans), any Person, other than Permitted
Investments; or
(c) make any acquisitions of, or investments in, any
material properties, except for Permitted Investments and pursuant to existing
lease commitments, and except as otherwise contemplated from time to time in the
Development Plan.
6.6 CERTAIN CONTRACTS: AMENDMENTS; MULTIEMPLOYER ERISA
PLANS. Inland will not:
(a) enter into any "take-or-pay" contract or other
contract or arrangement for the purchase of goods or services which obligates
Inland, to pay for such goods or service regardless of whether they are
delivered or furnished to it;
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(b) incur any obligation to contribute to any
"multiemployer plan" as defined in Section 4001 of ERISA other than those
existing as of the Closing Date; or
(c) amend or permit any change to any contract or lease
which has a Material Adverse Effect.
Furthermore, Inland will ensure that no other Related Person
controlled by Inland makes or permits any amendment described in clause (c)
above.
6.7 NO AMENDMENTS. Inland shall not reissue, modify or
supplement any provision of any Senior Sub Note Purchase Document or Junior Sub
Note Purchase Document to which it is a party, without the prior written consent
of the Requisite Holders.
6.8 MANAGEMENT CONTROLS Inland shall not hire or
terminate its Chief Executive Officer, President, or Chief Financial Officer,
without the prior written consent of the Majority Holder, if any.
SECTION 7. GUARANTY.
7.1 GUARANTY.
(a) The Guarantor, for valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, effective as of the
Closing, hereby unconditionally and irrevocably guarantees to each Holder of the
TCW Sub Notes at any time outstanding (a) the prompt, indefeasible payment in
full, in dollars, when due (whether at stated maturity, by acceleration, by
prepayment or otherwise) of the Obligations and (b) the prompt performance and
observance by Inland of all covenants, agreements and conditions on its part to
be performed and observed hereunder, in each case strictly in accordance with
the terms thereof (such payments and other obligations being herein collectively
called the "GUARANTEED OBLIGATIONS").
(b) The Guarantor hereby further agrees that if Inland
shall default in the payment or performance of any of the Guaranteed
Obligations, the Guarantor will (x) promptly pay or perform the same, without
any demand or notice whatsoever, and that in the case of any extension of time
of payment or renewal of any of the Guaranteed Obligations, the same will be
promptly paid in full when due (whether at extended maturity, by acceleration,
by prepayment or otherwise) in accordance with the terms of such extension or
renewal and (y) pay to the Holder of any TCW Sub Note such amounts, to the
extent lawful, as shall be sufficient to pay the costs and expenses of
collection or of otherwise enforcing any of such Holder's rights under this
Agreement, including, without limitation, reasonable counsel fees. Anything in
any Note Purchase Document to the contrary notwithstanding, the maximum
liability of the Guarantor under this Agreement shall in no event exceed the
amount which can be guaranteed by the Guarantor under applicable Laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in the following paragraph). the Guarantor further agrees that the
Guaranteed Obligations may at any time and from time to time exceed the amount
of the liability of the Guarantor under this Agreement without impairing the
guarantee contained in this Section or affecting the rights and remedies of any
Holder of any TCW Sub Notes.
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(c) All obligations of the Guarantor under this Section
shall survive any transfer of any TCW Sub Note, and any obligations of the
Guarantor under this Section with respect to which the underlying obligation of
Inland is expressly stated to survive payment of any TCW Sub Note shall also
survive payment of such TCW Sub Note.
7.2 OBLIGATIONS UNCONDITIONAL.
(a) Upon effectiveness, the obligations of the Guarantor
hereunder constitute a present and continuing guaranty of payment and not of
collectibility and are absolute and unconditional, irrespective of the value,
genuineness, validity, regularity or enforceability of the Obligations, or any
substitution, release or exchange of any other guarantee of or security for any
of the Guaranteed Obligations, and, to the fullest extent permitted by
applicable Law, irrespective of any other circumstance whatsoever which might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section that the obligations of the
Guarantor hereunder shall, upon effectiveness, be absolute and unconditional,
under any and all circumstances. Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Guarantor hereunder which shall
remain absolute and unconditional as described above:
(i) any amendment or modification of any
provision of this Agreement or any of the TCW Sub Notes or any
assignment or transfer thereof, including without limitation
the renewal or extension of the time of payment of any of the
TCW Sub Notes or the granting of time in respect of such
payment thereof, or of any furnishing or acceptance of
security or any additional guarantee or any release of any
security or guarantee so furnished or accepted for any of the
TCW Sub Notes;
(ii) any waiver, consent, extension, granting of
time, forbearance, indulgence or other action or inaction
under or in respect of this Agreement or the TCW Sub Notes, or
any exercise or non-exercise of any right, remedy or power in
respect hereof or thereof;
(iii) any bankruptcy, receivership, insolvency,
reorganization, arrangement, readjustment, composition,
liquidation or similar proceedings with respect to Inland or
any other Person or the Properties or creditors of any of
them;
(iv) the occurrence of any Default or Event of
Default under, or any invalidity or any unenforceability of,
or any misrepresentation, irregularity or other defect in,
this Agreement, the TCW Sub Notes or any other Note Purchase
Document;
(v) any transfer of any assets to or from
Inland, including without limitation any transfer or purported
transfer to Inland from any Person, any invalidity, illegality
of, or inability to enforce, any such transfer or purported
transfer, any consolidation or merger of Inland with or into
any Person, any change in the ownership of any shares of
capital stock or similar equity interests
14
of Inland, or any change whatsoever in the objects, capital
structure, constitution or business of Inland;
(vi) any default, failure or delay, willful or
otherwise, on the part of Inland or any other Person to
perform or comply with, or the impossibility or illegality of
performance by Inland or any other Person of, any term of this
Agreement, the TCW Sub Notes or any other Note Purchase
Document;
(vii) any suit or other action brought by, or any
judgment in favor of, any beneficiaries or creditors of,
Inland or any other Person for any reason whatsoever,
including without limitation any suit or action in any way
attacking or involving any issue, matter or thing in respect
of this Agreement, the TCW Sub Notes or any other Note
Purchase Document;
(viii) any lack or limitation of status or of
power, incapacity or disability of Inland or any trustee or
agent thereof; or
(ix) any other thing, event, happening, matter,
circumstance or condition whatsoever, not in any way limited
to the foregoing.
(b) The Guarantor hereby unconditionally waives
diligence, presentment, demand of payment, protest and all notices whatsoever
and any requirement that any Holder of a TCW Sub Note exhaust any right, power
or remedy against Inland under this Agreement or the TCW Sub Notes or any other
Note Purchase Document, or against any other Person under any other guarantee
of, or security for, any of the Guaranteed Obligations.
(c) In the event that the Guarantor shall at any time pay
any amount on account of the Guaranteed Obligations or take any other action in
performance of its obligations hereunder, the Guarantor shall not exercise any
subrogation or other rights hereunder or the TCW Sub Notes and the Guarantor
hereby waives all rights it may have to exercise any such subrogation or other
rights, and all other remedies that it may have against Inland, in respect of
any payment made hereunder unless and until the Guaranteed Obligations shall
have been indefeasibly paid in full. If any amount shall be paid to the
Guarantor on account of any such subrogation rights or other remedy,
notwithstanding the waiver thereof, such amount shall be received in trust for
the benefit of the Holders of the TCW Sub Notes and shall forthwith be paid to
such Holders to be credited and applied upon the Guaranteed Obligations, whether
matured or unmatured, in accordance with the terms hereof. The Guarantor agrees
that its obligations under this Section shall be automatically reinstated if and
to the extent that for any reason any payment (including payment in full) by or
on behalf of Inland is rescinded or must be otherwise restored by any Holder of
a TCW Sub Note, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such amount had not been paid.
(d) The guarantee in this Section is a continuing
guarantee and shall apply to the Guaranteed Obligations whenever arising. Each
default in the payment or performance of any of the Guaranteed Obligations shall
give rise to a separate claim and cause of action hereunder, and separate claims
or suits may be made and brought, as the case may be, hereunder as each such
default occurs.
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7.3 GUARANTEE ENDORSED ON THE TCW SUB NOTES. Each TCW Sub
Note shall have endorsed thereon a Guarantee executed by the Guarantor in the
form of EXHIBIT B attached hereto.
SECTION 8. TRANSFERABILITY OF TCW SUB NOTES.
8.1 RESTRICTIVE LEGEND. Each note evidencing the TCW Sub
Notes issued by Inland shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES EVIDENCED BY THIS TCW SUB NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION."
PROVIDED, that such restrictive legend shall not be required after the date on
which the securities evidenced by a TCW Sub Note bearing such restrictive legend
no longer constitute Restricted Securities, and upon the request of the holder
of such certificate and subject to the last sentence of SECTION 8.2, Inland,
without expense to the Holder, shall issue a new TCW Sub Note not bearing the
restrictive legend otherwise required to be borne thereby.
8.2 RULE 144 AND 144A. At any time when Inland is subject
neither to Section 13 nor Section 15(d) of the Exchange Act, Inland will, with
reasonable promptness upon the request of any Holder, in order to permit such
Holders to transfer if they so desire, pursuant to Rule 144 or 144A promulgated
by the Commission (or any successor to such rule), comply with all rules and
regulations of the Commission applicable in connection with use of Rule 144 and
144A (or any successor rules thereto), including the provision of information
concerning Inland to such Holders and the timely filing of all reports with the
Commission in order to enable such Holders, if they so elect, to utilize Rule
144 or 144A, and Inland will cause any restrictive legends to be removed and any
transfer restrictions to be rescinded with respect to any sale of TCW Sub Notes
which is exempt from registration under the Securities Act pursuant to Rule 144
or 144A. If the Note Purchaser shall request that the restrictive legend on the
TCW Sub Note be removed, the Note Purchaser, if requested by Inland, will have
the obligation in connection with such request, at the Note Purchaser's expense,
of delivering an opinion of counsel in form and substance reasonably
satisfactory to Inland, in connection with such request, to the effect that the
removal of such restrictive legend would not be in violation of the Securities
Act or any applicable state securities laws.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
9.1 EVENTS OF DEFAULT.
(a) If (i) any of the events listed on ANNEX D attached
hereto (other than with respect to the failure to comply with SECTION 5.3
hereof), shall occur and be continuing it shall
16
constitute an "Event of Default" under this Agreement, or (ii) any RH Designee
Designated by the Requisite Holders pursuant to SECTION 5.3 to any Board of
Directors shall not become a member of such Board of Directors for any reason
whatsoever on or before the fifteenth (15th) day (or thirtieth (30th) day if
Rule 14f-1 promulgated under the Exchange Act is applicable) after the date the
Requisite Holders give notice to Inland of the Designation of such RH
Designee(s) to become a member of each Board of Directors, it shall constitute
an "Event of Default" under this Agreement.
(b) Subject to the restrictions in the Bank Subordination
Agreement, upon the occurrence and continuation of an Event of Default described
in clauses (e)(i) - (iii) of SECTION D-1 of ANNEX D or the acceleration of the
Senior Bank Debt, the Senior Sub Debt or the Junior Sub Debt, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Inland. Subject to the restrictions in the Bank
Subordination Agreement, during the continuance of any other Event of Default
(except as provided below in SECTION 9.2), the Requisite Holders at any time and
from time to time may without notice to Inland declare any or all of the
Obligations immediately due and payable, and all such obligations shall
thereupon be immediately due and payable, without demand, presentment, notice of
demand or of dishonor and nonpayment, protest, notice of protest, notice of
intention to accelerate, declaration or notice of acceleration, or any other
notice or declaration of any kind, all of which are hereby expressly waived by
Inland.
9.2 REMEDIES.
(a) Subject to the restrictions in the Bank Subordination
Agreement, if any Event of Default shall occur, the Requisite Holders may
protect and enforce their rights under the Note Purchase Documents by any
appropriate proceedings, including proceedings for specific performance of any
covenant or agreement contained in any Note Purchase Document, and the Requisite
Holders may enforce the payment of any Obligations due or enforce any other
legal or equitable right. Notwithstanding SECTION 9.1 above or this SECTION 9.2,
if any Event of Default shall occur as a result of a breach of the working
capital covenant set forth in SECTION C-1.9 of ANNEX C hereto while the Senior
Bank Debt is still outstanding, the Holders shall not be entitled to take any
action including without limitation acceleration of the TCW Sub Notes or the
exercise of other remedies under SECTION 9.1 or this SECTION 9.2, unless there
has been an acceleration of the Senior Bank Debt as a result thereof.
(b) Upon the occurrence and continuation of any Event of
Default (other than pursuant to SECTION 9.1(A)(II) of this Agreement), the
Requisite Holders shall have the unqualified right to Designate RH Designees for
election and cause such RH Designees to become members of each Board of
Directors as provided herein. Such right shall accrue immediately upon the
occurrence of such Event of Default and thereafter at the rate of one director
for each ninety day period after the date on which such Event of Default occurs
until all Events of Default are cured or waived. So long as any Event of Default
(other than pursuant to SECTION 9.1(A)(II) of this Agreement) shall be
continuing, the Requisite Holders shall keep and retain such right even if not
exercised and shall have the right to have additional RH Designees become
additional member(s) of every Board of Directors which shall become exercisable
every
17
ninety (90) days thereafter. The foregoing right and remedy of Holders shall not
be an exclusive remedy with respect to any Event of Default (other than pursuant
to SECTION 9.1(A)(II) of this Agreement) and shall be cumulative with all other
remedies. Any RH Designee that becomes a member of any Board of Directors
pursuant to this SECTION 9.2(B) shall have a term that shall automatically
expire upon the date such Event of Default is cured or waived.
(c) Any RH Designee elected to any Board of Directors
pursuant to SECTION 9.2(B) may be replaced by the holder(s) of a majority of
Inland's Common Stock upon the cure of all outstanding Events of Default (other
than pursuant to SECTION 9.1(A)(II) of this Agreement), or as an alternate to
such replacement, shall resign if requested by TCW and the vacancy shall be
filled by the remaining Board of Directors.
(d) Notwithstanding any provision of SECTION 5, SECTION
9, or any Transaction Document which might be construed to the contrary, as long
as each Board of Directors has no more than six members, the Requisite Holders
shall not be entitled to Designate or elect more than four of the six members at
any time that Hampton shall own more than 50% of the outstanding Common Stock of
Inland.
SECTION 10. INDEMNITY.
The Companies jointly and severally agree to indemnify each
Indemnified Party, upon demand, from and against any and all liabilities,
obligations, claims, losses, damages, penalties, fines, actions, judgments,
suits, settlements, costs, expenses or disbursements (including reasonable fees
of attorneys, accountants, experts and advisors) of any kind or nature
whatsoever (in this section collectively called "LIABILITIES AND COSTS") which
to any extent (in whole or in part) may be imposed on, incurred by, or asserted
against such Indemnified Party arising out of, resulting from or in any other
way associated with (i) the Note Purchase Documents or any transaction
contemplated thereby, (ii) any matter, event or occurrence with respect to the
Note Purchaser and its Affiliates as shareholders and the Holders as noteholders
of the TCW Sub Notes or (iii) this Agreement, the Exchange or any of the
transactions and events (including the enforcement or defense thereof) at any
time associated therewith or contemplated therein (including any violation or
noncompliance with any Environmental Laws by any Related Person or any
liabilities or duties of any Related Person or of any Indemnified Party with
respect to Hazardous Materials found in or released into the environment).
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART,
UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR ARE IN ANY EXTENT CAUSED, IN
WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
INDEMNIFIED PARTY,
provided only that no Indemnified Party shall be entitled under this section to
receive indemnification for that portion, if any, of any liabilities and costs
which is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. As used in this section, the term
"INDEMNIFIED PARTY" refers to each of TCW Asset Management Company, a California
corporation, Trust Company of the West, a California trust company and
18
the Note Purchaser, (and each of their respective Affiliates) and each director,
officer, agent, trustee, manager, member, partner, shareholder, principal,
attorney, employee, representative and Affiliate of any such Person acting in
such capacity.
SECTION 11. MISCELLANEOUS.
11.1 WAIVERS AND AMENDMENTS; ACKNOWLEDGMENT.
(a) WAIVERS AND AMENDMENTS. No failure or delay (whether
by course of conduct or otherwise) by the Holders in exercising any right, power
or remedy which either may have under any of the Note Purchase Documents shall
operate as a waiver thereof or of any other right, power or remedy, nor shall
any single or partial exercise by the Holders of any such right, power or remedy
preclude any other or further exercise thereof or of any other right, power or
remedy. No waiver of any provision of any Note Purchase Document and no consent
to any departure therefrom shall ever be effective unless it is in writing and
signed by the Requisite Holders, or, if so specified, by the Majority Holder, if
any, and may be given or withheld in its sole and absolute discretion and then
such waiver or consent shall be effective only in the specific instances and for
the purposes for which given and to the extent specified in such writing. This
Agreement and the other Note Purchase Documents set forth the entire
understanding and agreement of the parties hereto and thereto with respect to
the transactions contemplated herein and therein and supersede all prior
discussions and understandings with respect to the subject matter hereof and
thereof, and no modification or amendment of or supplement to this Agreement or
the other Note Purchase Documents shall be valid or effective unless the same is
in writing and signed by the party against whom it is sought to be enforced.
THIS WRITTEN AGREEMENT AND THE OTHER NOTE PURCHASE DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. This Agreement
may be amended, but only with the written consent of each of the Companies and
the Requisite Holders. The remedies provided for herein are cumulative and are
not exclusive of any remedies that may be available to the Holders at Law or in
equity or otherwise.
(b) ACKNOWLEDGMENTS AND ADMISSIONS. Inland hereby
represents, warrants, acknowledges and admits that:
(i) it has been advised by counsel in the
negotiation, execution and delivery of the Note Purchase
Documents to which it is a party;
(ii) it has made an independent decision to enter
into this Agreement and the other Note Purchase Documents to
which it is a party, without reliance on any representation,
warranty, covenant or undertaking by the Note Purchaser,
whether written, oral or implicit, other than as expressly set
out in this Agreement or in another Note Purchase Document
delivered on or after the date hereof,
(iii) there are no representations, warranties,
covenants, undertakings or agreements by the Note Purchaser as
to the Note Purchase Documents except as
19
expressly set out in this Agreement or in another Note
Purchase Document delivered on or after the date hereof,
(iv) The Note Purchaser, in its capacity as Note
Purchaser or a Holder, does not owe any fiduciary duty to
Inland with respect to any Note Purchase Document or the
transactions contemplated thereby;
(v) the relationship pursuant to the Note
Purchase Documents between Inland, on the one hand, and the
Note Purchaser, on the other hand, is and shall be solely that
of debtor and creditor, respectively;
(vi) no partnership or joint venture exists with
respect to the Note Purchase Documents between Inland and the
Note Purchaser;
(vii) should an Event of Default or Default occur
or exist, the Note Purchaser will determine in its sole
discretion and for its own reasons what remedies and actions
it will or will not exercise or take at that time;
(viii) without limiting any of the foregoing,
Inland is not relying upon any representation or covenant by
the Note Purchaser, or any representative thereof, and no such
representation or covenant has been made, that the Note
Purchaser will, at the time of an Event of Default or Default,
or at any other time, waive, negotiate, discuss, or take or
refrain from taking any action permitted under the Note
Purchase Documents with respect to any such Event of Default
or Default or any other provision of the Note Purchase
Documents; and
(ix) the Note Purchaser has relied upon the
truthfulness of the acknowledgments in this Section in
deciding to execute and deliver this Agreement and to purchase
the TCW Sub Notes.
11.2 SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. All of the
Companies' various representations, warranties, covenants and agreements in this
Agreement and the Note Purchase Documents shall survive the execution and
delivery of this Agreement and the other Note Purchase Documents and the
performance hereof and thereof, including the purchase of the TCW Sub Notes and
the delivery of the TCW Sub Notes and the other Note Purchase Documents, and
shall further survive until all of the Obligations are paid in full to the
Holders and all of the Holders' obligations to Inland hereunder are terminated
or otherwise satisfied. Except as expressly provided herein, the
representations, warranties, and covenants made by Inland in the Note Purchase
Documents, and the rights, powers and privileges granted to the Holders in the
Note Purchase Documents, are cumulative, and, except for expressly specified
waivers and consents, no Note Purchase Document shall be construed in the
context of another to diminish, nullify, or otherwise reduce the benefit to the
Holders of any such representation, warranty, covenant, right, power or
privilege. In particular and without limitation, no exception set out in this
Agreement to any representation, warranty or covenant herein contained shall
apply to any similar representation, warranty or covenant contained in any other
Note Purchase Document, and each such similar representation, warranty or
covenant shall be subject only to
20
those exceptions which are expressly made applicable to it by the terms of the
various Note Purchase Documents.
11.3 NOTICES. All notices, requests, consents, demands and
other communications required or permitted under any Note Purchase Document
shall be in writing, unless otherwise specifically provided in such Note
Purchase Document, and shall be deemed sufficiently given or furnished upon
delivery, when delivered by personal delivery, by telecopy, by delivery service
with proof of delivery, or three days after being deposited in the United States
mail as registered or certified United States mail, postage prepaid, to Issuer
or the Note Purchaser at the addresses set forth on the signature pages hereto
(unless changed by similar notice in writing given by the particular Person
whose address is to be changed) and:
If to Issuer or IPC: 000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx XxxXxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Glast, Xxxxxxxx, Xxxxxx & Co.
00000 Xxxx Xxxx, X.X. 00
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
11.4 GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE
EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A NOTE
PURCHASE DOCUMENT, THE NOTE PURCHASE DOCUMENTS, INCLUDING THIS AGREEMENT, SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW; PROVIDED, THAT
THE PROVISIONS OF SECTIONS 5.2, 5.3 AND 9.2 SHALL BE GOVERNED BY THE LAW OF THE
STATE OF WASHINGTON. INLAND HEREBY IRREVOCABLY SUBMITS ITSELF AND EACH OTHER
RELATED PERSON TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT OR ANY OF ITS SUBSIDIARIES
IN ANY LEGAL PROCEEDING RELATING TO THE NOTE PURCHASE DOCUMENTS OR THE
OBLIGATIONS BY ANY MEANS ALLOWED UNDER NEW YORK OR FEDERAL LAW. INLAND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
21
11.5 LIMITATION ON INTEREST.
(a) The Holders, Inland and any other parties to the Note
Purchase Documents intend to contract in strict compliance with applicable usury
law from time to time in effect. In furtherance thereof such Persons stipulate
and agree that none of the terms and provisions contained in the Note Purchase
Documents shall ever be construed to create a contract to pay, for the use,
forbearance or detention of money, interest in excess of the maximum amount of
interest permitted to be charged by applicable law from time to time in effect.
Neither Inland nor any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable for
unearned interest thereon or shall ever be required to pay interest thereon in
excess of the maximum amount that may be lawfully charged under applicable law
from time to time in effect, and the provisions of this Section shall control
over all other provisions of the Note Purchase Documents which may be in
conflict or apparent conflict herewith.
(b) The Holders expressly disavow any intention to
contract for, charge or collect unearned interest or finance charges in the
event the maturity of any Obligation is accelerated. If (i) the maturity of any
Obligation is accelerated for any reason, (ii) any Obligation is prepaid and as
a result any amounts held to constitute interest are determined to be in excess
of the legal maximum, or (iii) the Holders or any other holder of any or all of
the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the obligations to an amount in excess of that permitted to be charged by
applicable Law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then-outstanding principal of the related Obligations or,
at the Holders' option, promptly returned to Inland or the other payor thereof
upon such determination.
(c) In determining whether or not the interest paid or
payable under any specific circumstances exceeds the maximum amount permitted
under applicable Law, the Holders and the Related Persons (and any other payors
thereof) shall, to the greatest extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest, (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the Highest Lawful Rate from time to time in effect under
applicable Law in order to lawfully charge the maximum amount of interest
permitted under applicable Law.
11.6 TERMINATION; LIMITED SURVIVAL. Inland may, in its
sole and absolute discretion at any time that no Obligation is owing under the
Note Purchase Documents, elect in a notice delivered to the Holders to terminate
this Agreement. Upon receipt by the Holders of such a notice, if no such
Obligation is then owing, then this Agreement and all other Note Purchase
Documents shall thereupon be terminated and the parties thereto released from
all prospective obligations thereunder. Notwithstanding the foregoing or
anything herein to the contrary, any waivers or admissions made by Inland in any
Note Purchase Documents and any obligations which any Person may have to
indemnify or compensate the Holders shall survive any termination of this
Agreement or any other Note Purchase Document. At Inland's request
22
and expense, the Holders shall prepare and execute all necessary instruments to
reflect and effect such termination of the Note Purchase Documents. All
representations and warranties and covenants made herein by the Companies or in
any certificate or other instrument delivered by them or on their behalf under
this Agreement shall be considered to have been relied upon by TCW and shall
survive the issuance of the TCW Sub Notes regardless of any investigation made
by or on behalf of TCW.
11.7 REGISTRATION, TRANSFER, EXCHANGE AND SUBSTITUTION OF
TCW SUB NOTES. Inland shall keep at its principal executive office a register
for the registration and registration of transfers of TCW Sub Notes (the
"Register"). The name and address of each Holder, each transfer thereof and the
name and address of each transferee of one or more TCW Sub Notes shall be
registered in such Register. Prior to due presentment for registration of
transfer, the Person in whose name any TCW Sub Notes shall be registered shall
be deemed and treated as the owner and Holder thereof for all purposes hereof,
and Inland shall not be affected by any notice or knowledge to the contrary.
Inland shall give to any Holder, promptly upon request therefor, a complete and
correct copy of the names and addresses of all registered Holders of TCW Sub
Notes.
(a) TRANSFER AND EXCHANGE OF TCW SUB NOTES. Upon
surrender of any TCW Sub Note at the principal executive office of Inland for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered Holder of such TCW Sub Note or its
attorney duly authorized in writing and accompanied by the address for notices
of each transferee of such TCW Sub Note or part thereof), Inland shall execute
and deliver, at Inland's expense, one or more new TCW Sub Note (as requested by
the Holder thereof) of the same series in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered TCW Sub
Note; provided, however, that no transfer of TCW Sub Notes may be made (i) to a
transferee who is not an accredited institutional investor or a qualified
institutional buyer and (ii) unless such transfer is made pursuant to an
exemption from registration under the securities laws of the United States
including without limitation any resale of any TCW Sub Notes under Rule 144A of
the Securities Act. Any purported transfer of a TCW Sub Notes or an interest
therein which is prohibited hereby shall be null and void ab initio and of no
force or effect whatever. Each such new TCW Sub Note shall be payable to such
Person as such holder may request and shall be substantially in the form of
Exhibit A. Each such new TCW Sub Note shall be dated and bear interest from the
date to which interest shall have been paid on the surrendered TCW Sub Note or
dated the date of the surrendered TCW Sub Note if no interest shall have been
paid thereon. TCW Sub Notes shall not be transferred in denominations of less
than $1,000,000 provided that if necessary to enable the registration of
transfer by a Holder of its entire holding of TCW Sub Notes, one TCW Sub Note
may be in a denomination of less than $1,000,000. If the Note Purchaser shall
request that the restrictive legend on the TCW Sub Note be removed, the Note
Purchaser, if requested by Inland, will have the obligation in connection with
such request, as applicable, at the Note Purchaser's expense, of delivering an
opinion of counsel in form and substance reasonably satisfactory to Inland, in
connection with such request to the effect that the removal of such restrictive
legend would not be in violation of the Securities Act or any applicable state
securities laws.
23
(b) REPLACEMENT OF TCW SUB NOTES. Upon receipt by Inland
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any TCW Sub Notes, and (i) in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to it (provided
that if the Holder of such TCW Sub Note is, or is a nominee for, the Note
Purchaser or another Holder of a TCW Sub Note with a minimum net worth of at
least $5,000,000, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or in the case of mutilation, upon surrender and
cancellation thereof, Inland at its own expense shall execute and deliver, in
lieu thereof, a new TCW Sub Note of the same series, dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated TCW Sub Note or dated the date of such lost, stolen,
destroyed or mutilated TCW Sub Note if no interest shall have been paid thereon.
11.8 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF
INLAND AND THE HOLDERS HEREBY:
(a) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH
THE NOTE PURCHASE DOCUMENTS OR THE PURCHASE AND SALE OF ANY TCW SUB NOTES
CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY;
(b) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES
OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES;
(c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE
OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS; AND
(d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT, THE OTHER NOTE PURCHASE DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS CONTAINED IN THIS SECTION.
11.9 EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. All
Exhibits and Schedules to this Agreement are a part hereof for all purposes.
24
11.10 CONFIDENTIALITY OF HOLDERS.
(a) Notwithstanding the termination of this Agreement and
except as otherwise provided herein or in subsection (a) or (b) below, Inland
shall maintain the confidentiality of the identities of (i) any Holder or any
holder of any Obligation other than the TCW Sub Notes; and (ii) any owner of a
beneficial interest in the TCW Sub Notes (collectively, "CONFIDENTIAL
INFORMATION") and shall not, without the Requisite Holders' prior written
consent, disclose any such information to another Person or use such information
for purposes other than those contemplated herein.
(b) Inland may disclose Confidential Information to its
directors, officers, members, employees, and agents (including attorneys,
accountants, and consultants) to whom such disclosure is reasonably necessary
for the execution or effectuation hereof, provided Inland notifies all such
Persons that the Confidential Information disclosed to them is subject to this
section and requires them not to disclose or use such information in breach of
this Section. Inland may also disclose Confidential Information in filings with
the Commission to the extent required to be disclosed therein.
(c) If Inland is requested or required by legal process
(including law or regulation, oral questions, interrogatories, request for
information or documents, subpoena, and civil investigative demand) to disclose
any Confidential Information, Inland shall promptly notify the Holders of such
request prior to complying with such process so that the Holders may seek an
appropriate protective order or waive the respondent's compliance with this
section. If, after such notice and after providing the Holders a reasonable
opportunity to obtain a protective order or to grant such waiver (so long as the
granting of such time does not put Inland in breach of its obligations to
disclose), Inland is nonetheless legally compelled to disclose such information,
Inland may do so without liability under this Section.
(d) Any Confidential Information which becomes publicly
available through no breach by Inland of its obligations hereunder or a breach
by a third party of a confidential obligation to the Holders shall no longer be
deemed to be Confidential Information.
11.11 REPRODUCTION OF DOCUMENTS This Agreement and all
documents relating hereto may be reproduced by you and by any photographic,
photostatic, microfilm, microcard, miniature photographic or other similar
process and you may destroy any original documents so produced. Each of the
parties hereto agrees and stipulates that, to the extent permitted by applicable
law, any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the original
is in existence and whether or not such reproduction was made by you in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
11.12 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties whether so expressed or
not.
25
11.13 COUNTERPARTS. Two or more duplicate originals of this
Agreement may be signed by the parties, each of which shall be an original but
all of which together shall constitute one and the same instrument.
11.14 SEVERABILITY. In the event that any one or more of
the provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
11.15 EXPENSES. The Companies will pay all reasonable costs
and expenses incurred by TCW and any other Holders (a) relating to the
negotiation, preparation, execution and delivery of this Agreement and the other
Note Purchase Documents and the issuance of the TCW Sub Notes (including,
without limitation, reasonable fees, office charges and expenses of counsel to
TCW and Portfolio, Milbank, Tweed, Xxxxxx & XxXxxx LLP), (b) relating to
printing the instruments evidencing the TCW Sub Notes, (c) relating to any
amendments, waivers or consents under this Agreement to the same extent as set
forth in clause (a) and (b) above, (d) relating to the filing, recording,
refiling and re-recording of any Note Purchase Documents and any other documents
or instruments or further assurances required to be filed or recorded or refiled
or re-recorded by the terms of any Note Purchase Document, or any other event
with respect to which Inland shall have the right to recover from any party
expenses or costs paid or reimbursed to Holders, (e) incident to the enforcement
by the Holders of, or the protection or preservation of any right or remedy of
the Holders under, this Agreement and the other Note Purchase Documents, or any
other document or agreement furnished pursuant hereto or thereto or in
connection herewith or therewith (including, without limitation, reasonable fees
and expenses of counsel) and (f) relating to any bankruptcy, insolvency or other
similar action or proceeding in any jurisdiction involving any of the Companies.
The Companies shall pay such costs and expenses, to the extent then payable, on
the date of issuance of the TCW Sub Notes or, with respect to those matters
described in clauses (b) through (f) above, thereafter from time to time upon
demand by TCW upon presentation, in each such case, of a reasonably detailed
statement thereof. The Companies' obligations under this SECTION 11.15 shall
survive the payment of the TCW Sub Notes, but only with respect to expenses
incurred prior to payment in full of the TCW Sub Notes and any other obligations
under the Note Purchase Documents.
11.16 SPECIFIC PERFORMANCE. The Companies recognize that
money damages may be inadequate to compensate the Holders for a breach by the
Companies of their obligations hereunder, and the Companies irrevocably agree
that the Holders shall be entitled to the remedy of specific performance or the
granting of such other equitable remedies as may be awarded by a court of
competent jurisdiction in order to afford the Holders the benefits of this
Agreement and that the Companies shall not object and hereby waive any right to
object to such remedy or such granting of other equitable remedies on the
grounds that money damages will be sufficient to compensate the Holders.
26
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first above written.
ISSUER:
INLAND RESOURCES INC.,
a Washington corporation
By: /s/ Xxxx XxxXxxxx
---------------------------------------
Xxxx XxxXxxxx
Chief Executive Officer
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx XxxXxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Glast, Xxxxxxxx, Xxxxxx & Co.
00000 Xxxx Xxxx, X.X. 00
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
GUARANTOR:
INLAND PRODUCTION COMPANY,
a Texas corporation
By: /s/ Xxxx X. Xxxxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President/Chief Financial
Officer
Address for Notices:
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention:
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Glast, Xxxxxxxx, Xxxxxx & Co.
00000 Xxxx Xxxx, X.X. 00
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
INLAND HOLDINGS, LLC,
a California limited liability company,
By: TRUST COMPANY OF THE WEST, a
California trust company, as
Sub-Custodian for Mellon Bank for the
benefit of Account No. CPFF 873-3032,
Member
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxx
Managing Director
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
Managing Director
By: TCW PORTFOLIO NO. 1555 DR V SUB-CUSTODY
PARTNERSHIP, L.P., a California limited
partnership, Member
By: TCW ROYALTY COMPANY, a California
corporation, Managing General Partner
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxx
Vice President
Address for Notices:
000 X. Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
000 X. Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
EXHIBIT A
[Form of TCW Sub Note]
SUBORDINATED NOTE
$_________ August 2, 2001
R-[________]
FOR VALUE RECEIVED, the undersigned, Inland Resources Inc., a
Washington corporation (the "INLAND"), hereby promises to pay to Inland
Holdings, LLC ("NOTE PURCHASER") or its registered assigns (the "Holder"), in
the manner provided in Exchange and Note Issuance Agreement referred to below,
the principal sum of __________________ (or so much thereof as shall not have
been prepaid) in lawful money of the United States of America and in immediately
available funds, on or before September 30, 2009. The undersigned also promises
to pay to the Holder hereof interest on the unpaid principal amount of this TCW
Sub Note, in like money and funds, at the rate set forth in, and payable in
accordance with SECTIONS 2.7, 2.8, 2.9, 2.10, 2.11 and 2.12 of that certain
Exchange and Note Issuance Agreement, dated as of August 2, 2001 (the
"AGREEMENT")(capitalized terms used herein without definition shall have the
meanings ascribed to them in the Agreement), among Inland, IPC, and the Note
Purchaser.
This TCW Sub Note is one of the TCW Sub Notes issued pursuant
to the Agreement. Payments of interest shall be computed on the basis set forth
in the Agreement and shall be payable on the unpaid principal amount of this TCW
Sub Note in arrears on each Payment Date as provided in the Agreement, until
this TCW Sub Note shall be paid in full. Payments of principal and interest are
to be made in lawful money of the United States of America.
The Agreement provides for the acceleration of the maturity of
this TCW Sub Note upon the occurrence of certain events and for prepayments of
this TCW Sub Note upon the terms and conditions specified therein.
This TCW Sub Note and entitled to the benefits provided in,
the Note Purchase Documents, in each case to the extent provided in said
agreements.
THE SECURITIES EVIDENCED BY THIS TCW SUB NOTE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
ALL INDEBTEDNESS EVIDENCED BY THIS TCW SUB NOTE IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN,
AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE SUBORDINATION AGREEMENT DATED AS
OF AUGUST 2, 2001 (THE "BANK
SUBORDINATION AGREEMENT"), AS THE SAME MAY BE AMENDED, MODIFIED OR OTHERWISE
SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG INLAND PRODUCTION COMPANY, AS
BORROWER, INLAND RESOURCES INC., AS GUARANTOR, AND FORTIS CAPITAL CORP., AS
AGENT FOR THE LENDERS PARTIES TO THE SENIOR CREDIT AGREEMENT REFERRED TO IN THE
BANK SUBORDINATION AGREEMENT, AND THE HOLDERS FROM TIME TO TIME OF THE
OBLIGATIONS ARISING UNDER THE SUBORDINATED LOAN AGREEMENT REFERRED TO IN THE
BANK SUBORDINATION AGREEMENT, INCLUDING, WITHOUT LIMITATION, THIS TCW SUB NOTE.
ALL INDEBTEDNESS EVIDENCED BY THIS TCW SUB NOTE IS
SUBORDINATED TO OTHER INDEBTEDNESS PURSUANT TO, AND TO THE EXTENT PROVIDED IN,
AND IS OTHERWISE SUBJECT TO THE TERMS OF, THE SUBORDINATION AGREEMENT DATED AS
OF AUGUST 2, 2001 (THE "TCW SUBORDINATION AGREEMENT"), AS THE SAME MAY BE
AMENDED, MODIFIED OR OTHERWISE SUPPLEMENTED FROM TIME TO TIME, BY AND AMONG
INLAND RESOURCES INC., AS BORROWER, INLAND PRODUCTION COMPANY, AS GUARANTOR, AND
THE HOLDERS FROM TIME TO TIME OF THE OBLIGATIONS ARISING UNDER THE SUBORDINATED
NOTE AGREEMENT REFERRED TO IN THE TCW SUBORDINATION AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THIS TCW NOTE.
This Sub Note is a registered Sub Note and, as provided in the
Agreement, upon surrender of this Sub Note for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly
endorsed or accompanied by a written instrument of transfer duly executed by the
registered Holder of this Sub Note or such Holder's attorney duly authorized in
writing pursuant to SECTION 11.7 of the Agreement), one or more new TCW Sub
Notes for a like aggregate principal amount will be issued to, and registered in
the name of, the transferee. Prior to the due presentment for registration and
transfer, Inland may treat the Person in whose name this Sub Note is registered
as the Holder and the owner of this Sub Note for the purpose of receiving
payment and for all other purposes of this Sub Note and the Agreement.
Notwithstanding anything to the contrary herein, the right to receive payments
of interest and principal under this Sub Note shall be transferable only upon
surrender for cancellation of this Sub Note, and the issuance of a new Sub Note
registered in the name of the transferee. In addition, Inland shall maintain a
register in which it shall record the name of the Note Purchaser or any
transferee, and no transfer shall be valid unless so registered.
This Sub Note shall be governed by, and construed in
accordance with, the laws of the State of New York (without giving effect to the
conflict of laws provisions thereof).
INLAND RESOURCES INC.,
a Washington corporation
By: _______________________________________
Xxxx XxxXxxxx
Chief Executive Officer
EXHIBIT B
FORM OF GUARANTEE
For value received, the undersigned hereby unconditionally and
irrevocably, guarantees to the Holder of the foregoing Sub Note the due and
punctual payment of the principal and interest on said Sub Note, as more fully
provided in the Agreement referred to in said Sub Note.
