Exhibit 10.9
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
by and among
INLAND RESOURCES INC.,
as Issuer,
INLAND PRODUCTION COMPANY,
as Guarantor
and
SOLVation Inc.,
as Note Purchaser
$5,000,000
Dated as of August 2, 2001
SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT
THIS SENIOR SUBORDINATED NOTE PURCHASE 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"; the Guarantor, together with Inland, the
"Companies") and SOLVation Inc., a Delaware corporation (the "Note Purchaser").
RECITALS:
A. Issuer desires that the Note Purchaser purchase one or more Senior Sub
Notes (as hereinafter defined) in the aggregate principal amount of Five
Million Dollars ($5,000,000) for the purposes described herein.
B. Each Note Purchaser desires to purchase the Senior Sub Notes on the
terms and conditions set forth herein.
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, hereby agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.1 Defined Terms. As used in this Agreement, each
capitalized term has the meaning ascribed to it in this Section 1.1 or in Annex
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A attached hereto:
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"Agreement" shall have the meaning set forth in the preamble hereto.
"Closing" has the meaning ascribed to such term in Section 2.3 hereof.
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"Companies" has the meaning set forth in the preamble hereto.
"Event of Default" has the meaning ascribed to such term in Section
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7.1.
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"Guarantor" has 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 Senior Sub Notes from time to time.
"Indemnified Party" has the meaning set forth in Section 7.3 hereto.
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"Inland" has the meaning set forth in the preamble hereto.
"IPC" has the meaning set forth in the preamble hereto.
"Issuer" has the meaning set forth in the preamble hereto.
"Majority Holder" means a Holder which, together with any Affiliate
thereof which is a Holder, holds Senior Sub Notes evidencing more than fifty
percent (50%) of the outstanding amount of Senior Sub Notes.
"Maturity Date" means July 1, 2007, or the immediately succeeding
Business Day.
"Note Purchase Documents" means this Agreement, the Senior Sub Notes,
the Bank Subordination Agreement and all other agreements, certificates,
documents, instruments and writings at any time delivered by Issuer in
connection with the purchase and sale of the Senior Sub Notes (exclusive of the
term sheets, commitment letters, correspondence and similar documents used in
the negotiation thereof).
"Note Purchaser" has the meaning set forth in the preamble hereto.
"Obligation" means any part of the Obligations.
"Obligation(s)" means the sum of all Debt from time to time owing by
the Issuer to the Holders under or pursuant to any of the Note Purchase
Documents.
"Order" means any order, writ, injunction, decree, judgment, award,
determination, direction or demand.
"Payment Date" means: (1) any date on which the maturity of the Senior
Sub Notes is accelerated in accordance with Section 7.1; (2) any date on which
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any interest on or principal of the Senior Sub Notes is optionally prepaid in
accordance with Section 2.10; and (3) the Maturity Date.
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"Quarterly Accrual Date" means each March 31, June 30, September 30
and December 31 commencing September 30, 2001.
"Register" shall have the meaning ascribed to such term in Section
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8.7.
"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 Senior 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 Senior 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 2.6 below,
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Holder(s) holding one hundred percent (100%) of the outstanding principal amount
of all Senior Sub Notes; and (iii) with respect to all other actions, Holder(s)
holding fifty-one percent (51%) of the outstanding principal amount of all
Senior Sub Notes.
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"Restricted Securities" shall have the meaning set forth under Rule
144 promulgated under the Securities Act.
"Senior Sub Note(s)" shall have the meaning ascribed to such term in
Section 2.1.
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Section 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 4.1 and 4.2, Issuer will not change the last day of its fiscal year
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from December 31 of each year.
Section 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
PURCHASE AND SALE OF NOTES
Section 2.1 Authorization of Senior Sub Notes. Issuer has duly
authorized the issuance and sale of its unsecured senior subordinated notes due
July 1, 2007 in the aggregate original principal amount of Five Million Dollars
($5,000,000) (collectively with any such notes issued in substitution therefor
pursuant to Section 8.7 of this Agreement, the "Senior Sub Notes"). The Senior
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.
Section 2.2 Sale and Purchase of Senior Sub Notes. Subject to the
terms and conditions of this Agreement, Issuer will issue and the Note Purchaser
will purchase from Issuer, at the Closing, Senior Sub Notes in the aggregate
principal amount equal to Five Million
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Dollars ($5,000,000), at a purchase price equal to 100% of the principal amount
of such Senior Sub Notes.
Section 2.3 Closing. At the closing of the transactions described
herein (the "Closing"), Issuer will deliver to each Note Purchaser the Senior
Sub Notes in denominations of at least $500,000, each dated the Closing Date and
registered in the name of the applicable Note Purchaser (or in the name of a
nominee of such Note Purchaser as designated in writing by such Note Purchaser),
against delivery by such Note Purchaser to Issuer or its order on the Closing
Date of immediately available funds in the amount of the purchase price therefor
by wire transfer of immediately available funds to the account specified by
Issuer.
Section 2.4 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 as such other parties may
reasonably request to consummate the transactions contemplated hereby.
Section 2.5 Use of Proceeds. In no event shall any proceeds from the
sale of the Senior 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.
Section 2.6 Rate of Interest. The Senior 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.
Section 2.7 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 Senior 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.
Section 2.8 Computation of Interest. Interest shall be computed on
the Senior Sub Notes on the basis of a 360-day year consisting of twelve 30-day
months. Interest on the Senior 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 Senior Sub
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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 2.11 hereof).
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Section 2.9 Payment of Principal. Issuer shall not be required to
make payments of principal on the Senior Sub Notes prior to the Maturity Date.
The outstanding principal balance of the Senior Sub Notes shall be due and
payable in full on the Maturity Date to the extent not prepaid pursuant to
Section 2.10 below prior thereto.
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Section 2.10 Prepayments.
(a) Prior to July 1, ▇▇▇▇, ▇▇▇▇▇▇ may, from time to time, upon one
(1) Business Day prior written notice to the Holders, prepay the Senior Sub
Notes, in whole or in part (including all accrued interest thereon), without the
prior consent of the Requisite Holders and without premium or penalty.
(b) A prepayment by the Issuer shall be made on the Senior Sub Notes
on a dollar-for-dollar basis with any payments on the TCW Sub Debt by the Issuer
for so long as the Senior Sub Notes are outstanding (i.e., if any amount is paid
as either interest or principal on the TCW Sub Debt, an equal amount shall be
paid as interest and principal on the Senior Sub Notes until the Senior Sub
Notes have been paid in full).
(c) Each prepayment of principal under this Section 2.10 shall be
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accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal prepaid pursuant to this Section 2.10 shall be in addition to, and
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not in lieu of, all payments otherwise required to be paid under the Note
Purchase Documents at the time of such prepayment. Any prepayments pursuant to
this Section 2.10 shall be applied first, to accrued but unpaid interest on the
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Senior Sub Notes, and second, to outstanding principal on the Senior Sub Notes
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until paid in full.
Section 2.11 General Payment Provision.
(a) Except as may be agreed by Note Purchaser, 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 other
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 Senior 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 2.11(b)
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below.
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(b) Payments or prepayments of principal or interest on the Senior
Sub Notes shall be applied ratably to such Senior Sub Notes. Except for
prepayments pursuant to Section 2.10 (which shall be applied as provided in
Section 2.10), 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 8.15 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 Senior Sub Notes pursuant to Sections
2.7 and 2.10(c);
(iv) to payment of principal on the Senior Sub Notes until
paid in full; and
(v) if all Obligations under the Note Purchase Documents have
been paid in full, to the Issuer.
Section 2.12 Ranking. The Senior Sub Notes are senior to the TCW Sub
Notes and the Junior Sub Notes pursuant to the TCW Subordination Agreement and
Junior Sub Subordination Agreement, and are junior and subordinated pursuant to
the Bank Subordination Agreement to the Senior Bank Debt. The Senior Sub Notes
shall be senior in all respects to any other debt of Inland which is
subordinated thereto.
SECTION 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Companies. Each of
the Companies hereby represents, warrants and covenants to each Note Purchaser
that, as of the date hereof and as of the Closing Date, 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 3.2 Representations and Warranties of Note Purchaser. Note
Purchaser hereby represents, warrants and covenants to Inland as follows:
(a) Organization of Note Purchaser. Note Purchaser represents and
warrants to Inland that Note Purchaser is a corporation duly formed, validly
existing and in good standing under the Laws of Delaware. 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.
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(b) Authority of Note Purchaser. Note Purchaser represents and
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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,
enforceable against Note Purchaser, 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.
(c) Compliance with Laws and Other Instruments. The consummation of
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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 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.
(d) Acquisition for Purchaser's Account. Note Purchaser represents
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and warrants to Inland that it is acquiring and will acquire the Senior 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.
(e) Investment Experience. Note Purchaser has such knowledge and
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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 Senior Sub Notes.
(f) Securities not Registered. Note Purchaser acknowledges that its
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Senior 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.
(g) Qualified Institutional Buyer; Accredited Investor. Note
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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.
(h) Acknowledgement of Risk. Note Purchaser acknowledges that an
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investment in its Senior 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 Senior 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 Senior Sub Notes held by it.
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(i) No Public Market. Note Purchaser understands that no public
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market now exists for its Senior Sub Notes and that Inland has made no
assurances with respect to any secondary market for such securities.
(j) No Public Solicitation. To the best of Note Purchaser's
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knowledge, the issuing of the Senior Sub Notes to Note Purchaser was made
through direct, personal communication between Note Purchaser, a representative
of TCW, and a representative of Inland and not through public solicitation and
advertising.
(k) Due Diligence. Note Purchaser has performed its own independent
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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.
(l) Reliance by Issuer. Note Purchaser understands and acknowledges
that Inland will be relying upon its respective representations and warranties
set forth in this Agreement in issuing the Senior Sub Notes to Note Purchaser.
SECTION 4
COVENANTS OF ISSUER
Section 4.1 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 Senior Sub Notes, the Companies hereby jointly and severally
warrant, covenant and agree that 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
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attached hereto will be observed and (ii) as follows:
(a) Development. Issuer and IPC will timely develop the oil and gas
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properties of Issuer 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
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Plan") approved in advance by the Majority Holder, if any. In furtherance
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thereof, Issuer 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.
Section 4.2 Negative 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
purchase the Senior Sub Notes, the Companies hereby jointly and severally
warrant, covenant and agree that, until the full and final payment of the
Obligations and the termination of this Agreement, unless the Requisite Holders
otherwise
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approve in writing, (i) all of the covenants contained in Annex C-2 attached
hereto will be observed and (ii) as follows:
(a) Indebtedness. Except for the Obligations and Permitted Debt, the
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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.
(b) Limitation on Liens. Inland will not create, assume or permit to
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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.
(c) No Mergers. Inland will not (a) merge or consolidate with or
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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 Issuer or a wholly-owned Subsidiary of Issuer.
(d) Limitation on Affiliate Payments. Issuer will not declare or
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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.
(e) Limitation on Investments and New Business. Inland will not and
will not permit any Subsidiary to:
(i) engage directly or indirectly in any business or conduct
any operations except in connection with or incidental to its present
businesses and operations;
(ii) 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
(iii) 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.
(f) Certain Contracts: Amendments; Multiemployer ERISA Plans. Inland
will not:
(i) 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;
(ii) 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
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(iii) 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 (iii)
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above.
(g) No Amendments. If designees of TCW shall constitute a majority of
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the Board of Directors of Inland, Inland shall not reissue, modify or supplement
any provision of any TCW Sub Note Purchase Document to which it is a party,
without the prior written consent of the Requisite Holders.
SECTION 5
GUARANTY
Section 5.1 Guaranty.
(a) Inland will use the proceeds from the issuance of the Senior Sub
Notes for the general corporate purposes of the group of companies comprised of
Inland and the Subsidiaries, Guarantor being a part of such corporate group. For
such valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, effective as of the Closing, Guarantor hereby, unconditionally and
irrevocably guarantees to each Holder of the Senior 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) Guarantor hereby further agrees that if Inland shall default in
the payment or performance of any of the Guaranteed Obligations, 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 Senior 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 Senior Sub Notes.
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(c) All obligations of the Guarantor under this Section shall survive
any transfer of any Senior Sub Note, and any obligations of the Guarantor under
this Section with respect to which the underlying obligation of Issuer is
expressly stated to survive payment of any Senior Sub Note shall also survive
payment of such Senior Sub Note.
Section 5.2 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 Senior Sub Notes or any assignment or transfer
thereof, including without limitation the renewal or extension of the time
of payment of any of the Senior 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 Senior 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 Senior 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 Senior 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 of Inland, or any change whatsoever in
the objects, capital structure, constitution or business of Inland;
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(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 Senior 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 Senior 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) Guarantor hereby unconditionally waives diligence, presentment,
demand of payment, protest and all notices whatsoever and any requirement that
any Holder of a Senior Sub Note exhaust any right, power or remedy against
Inland under this Agreement or the Senior 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 Senior 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 Issuer, 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 Senior 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 Issuer is rescinded or must be otherwise restored by any Holder of a
Senior 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.
12
Section 5.3 Guarantees Endorsed on the Senior Sub Notes. Each Senior
Sub Note shall have endorsed thereon a Guarantee executed by the Guarantor in
the form of Exhibit B attached hereto.
SECTION 6
TRANSFERABILITY OF SENIOR SUB NOTES
Section 6.1 Restrictive Legend. Each note evidencing the Senior Sub
Notes issued by Inland shall be stamped or otherwise imprinted with a legend in
substantially the following form: "THE SECURITIES EVIDENCED BY THIS SENIOR 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 Senior Sub Note bearing such restrictive
legend no longer constitute Restricted Securities, and upon the request of the
holder of such Senior Sub Note, and subject to the last sentence of Section 6.2,
-----------
Inland, without expense to the holder, shall issue a new Senior Sub Note not
bearing the restrictive legend otherwise required to be borne thereby.
Section 6.2 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 Senior 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 Senior 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 7
EVENTS OF DEFAULT and REMEDIES
Section 7.1 Events of Default.
13
(a) If any of the events listed on Annex D attached hereto shall
occur and be continuing 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 TCW 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 7.2), 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.
Section 7.2 Remedies. (b) 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 7.1 above or this
-----------
Section 7.2, 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 while the Senior
-------------
Bank Debt is still outstanding, the Holders shall not be entitled to take any
action including without limitation acceleration of the Senior Sub Notes or the
exercise of other remedies under Section 7.1 or this Section 7.2, unless there
----------- -----------
has been an acceleration of the Senior Bank Debt as a result thereof.
Section 7.3 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 or 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 Senior Sub Notes or (iii) this Agreement 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).
14
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 the Note Purchaser (and each of its
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 8
MISCELLANEOUS
Section 8.1 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:
15
(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 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 Issuer, 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 Senior Sub Notes.
Section 8.2 Survival of Agreements; Cumulative Nature. All of the
Companies' various representations, warranties, covenants and agreements in the
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 Senior Sub Notes
and the delivery of the Senior Sub Notes and the other Note Purchase Documents,
and shall further survive until all of the Obligations are paid in full to the
Holders
16
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 those exceptions which are expressly made applicable to it by
the terms of the various Note Purchase Documents.
Section 8.3 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):
If to Issuer or IPC: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Glast, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.4 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. 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
17
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.
Section 8.5 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 Issuer 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.
18
Section 8.6 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 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 each Note Purchaser and shall survive the
issuance of the Senior Sub Notes regardless of any investigation made by or on
behalf of any Note Purchaser.
Section 8.7 Registration, Transfer, Exchange, Substitution of Senior
Sub Notes; Acknowledgement of Call Option.
(a) Registration of Senior Sub Notes. Inland shall keep at its
--------------------------------
principal executive office a register for the registration and registration of
transfers of Senior 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 Senior Sub Notes shall be registered in such Register. Prior to due
presentment for registration of transfer, the Person in whose name any Senior
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. Issuer shall give to any Holder, promptly
upon request therefor, a complete and correct copy of the names and addresses of
all registered Holders of Senior Sub Notes.
(b) Transfer and Exchange of Senior Sub Notes. Upon surrender of any
-----------------------------------------
Senior 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 Note or its attorney duly authorized
in writing and accompanied by the address for notices of each transferee of such
Senior Sub Note or part thereof), Inland shall execute and deliver, at Inland's
expense, one or more new Senior Sub Note(s) (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 Senior Sub Note; provided,
--------
however, that no transfer of Senior 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 Senior Sub Notes under Rule 144A of the Securities
Act. Any purported transfer of a Senior 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 Senior 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 Senior Sub Note
19
shall be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Senior Sub
Note if no interest shall have been paid thereon. Senior 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
Senior Sub Notes, one Senior 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 Senior 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.
(c) Replacement of Senior 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 Senior 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 Senior Sub Note is, or is a nominee for, the Note
Purchaser or another Holder of a Senior 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 (ii) in the case of mutilation, upon surrender
and cancellation thereof, Inland at its own expense shall execute and deliver,
in lieu thereof, a new Senior 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 Senior Sub Note or dated the date of such lost,
stolen, destroyed or mutilated Senior Sub Note if no interest shall have been
paid thereon.
(d) Acknowledgement of Call Option. Inland and Note Purchaser
------------------------------
acknowledge that pursuant to that certain Option Agreement dated as of August 2,
2001 between TCW and Note Purchaser, the Note Purchaser have granted to TCW an
option to purchase the Senior Sub Notes and all rights, titles and interests of
Note Purchaser under the Note Purchase Documents on the terms set forth therein.
Inland acknowledges and agrees that any transfer of Senior Sub Notes pursuant to
an exercise of such option shall be a permitted transfer hereunder.
(e) Acknowledgement of Tax Sharing Letter Agreement. Inland and Note
-----------------------------------------------
Purchaser acknowledge that pursuant to that certain Tax Sharing Letter Agreement
dated as of August 2, 2001 between TCW, Inland and Note Purchaser, the parties
thereto have agreed to the terms set forth therein.
Section 8.8 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 SENIOR SUB NOTE PURCHASE
DOCUMENTS OR THE PURCHASE AND SALE OF ANY SENIOR SUB NOTES CONTEMPLATED THEREBY
OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY;
20
(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.
Section 8.9 Exhibits and Schedules; Additional Definitions. All
Exhibits and Schedules to this Agreement are a part hereof for all purposes.
Section 8.10 Confidentiality of Holders.
(a) Notwithstanding the termination of this Agreement and except as
otherwise provided herein or in this subsection (a) or subsection (b) below,
Inland shall maintain the confidentiality of the identities of (i) any Holder or
any holder of any Obligation other than the Senior Sub Notes; and (ii) any owner
of a beneficial interest in the Senior 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
21
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.
Section 8.11 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.
Section 8.12 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.
Section 8.13 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.
Section 8.14 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.
Section 8.15 Expenses. The Companies will pay all reasonable costs
and expenses incurred by ▇▇▇▇▇ 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 Senior Sub Notes (including,
without limitation, reasonable fees, office charges and expenses of counsel to
Smith, Paul, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇), (b) relating to printing the
instruments evidencing the Senior 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
22
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 Senior Sub Notes or,
with respect to those matters described in clauses (b) through (f) above,
thereafter from time to time upon demand by ▇▇▇▇▇ upon presentation, in each
such case, of a reasonably detailed statement thereof. The Companies'
obligations under this Section 8.15 shall survive the payment of the Senior Sub
Notes, but only with respect to expenses incurred prior to payment in full of
the Senior Sub Notes and any other obligations under the Note Purchase
Documents.
Section 8.16 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 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.
23
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first written above.
ISSUER:
INLAND RESOURCES INC.,
a Washington corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
GUARANTOR:
INLAND PRODUCTION COMPANY,
a Texas corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: President/Chief Financial Officer
NOTE PURCHASER:
SOLVation Inc., a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Title: Senior Vice President
------------------------------------------
Address for Notices:
SOLVation, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
[Form of Senior Subordinated Note]
SENIOR SUBORDINATED NOTE
$_________ August 2, 2001
R-[________]
FOR VALUE RECEIVED, the undersigned, Inland Resources Inc., a
Washington corporation (the "Issuer"), hereby promises to pay to SOLVation Inc.
------
("Note Purchaser") or its registered assigns (the "Holder"), in the manner
-------------- ------
provided in the Senior Sub Note Purchase Agreement referred to below, the
principal sum of Five Million Dollars ($5,000,000) (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 July 1, 2007. The undersigned also
promises to pay to the Holder hereof interest on the unpaid principal amount of
this Senior Sub Note, in like money and funds, at the rate set forth in, and
payable in accordance with Sections 2.6, 2.7, 2.8, 2.9, 2.10 and 2.11 of that
------------------------------------------
certain Senior Subordinated Note Purchase 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 the Issuer, IPC, and the
Note Purchaser.
This Senior Sub Note is one of the Senior 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 Senior
Sub Note in arrears on each Payment Date as provided in the Agreement, until
this Senior 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
Senior Sub Note upon the occurrence of certain events and for prepayments of
this Senior Sub Note upon the terms and conditions specified therein.
This Senior 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 SENIOR 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 SENIOR 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 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 SENIOR SUB
NOTE.
THIS SENIOR SUB NOTE IS ALSO SUBJECT TO THE TERMS, CONDITIONS AND
AGREEMENTS SET FORTH IN (a) THAT CERTAIN AMENDED AND RESTATED SHAREHOLDERS
AGREEMENT DATED AS OF AUGUST 2, 2001 BETWEEN TCW, HAMPTON AND ISSUER AND (b)
THAT CERTAIN OPTION AGREEMENT DATED AS OF AUGUST 2, 2001 BETWEEN TCW AND ▇▇▇▇▇,
AND THE CALL OPTION WITH RESPECT TO THIS AND ANY OTHER SENIOR SUB NOTES GRANTED
THEREIN.
This Senior Sub Note is a registered Senior Sub Note and, as provided
in the Agreement, upon surrender of this Senior 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 Senior Sub Note or such Holder's
attorney duly authorized in writing pursuant to Section 8.7 of the Agreement),
-----------
one or more new Senior 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, the Issuer may treat the Person in
whose name this Senior Sub Note is registered as the Holder and the owner of
this Senior Sub Note for the purpose of receiving payment and for all other
purposes of this Senior Sub Note and the Agreement. Notwithstanding anything to
the contrary herein, the right to receive payments of interest and principal
under this Senior Sub Note shall be transferable only upon surrender for
cancellation of this Senior Sub Note, and the issuance of a new Senior Sub Note
registered in the name of the transferee. In addition, the Issuer 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 Senior 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: __________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT B
FORM OF GUARANTEE
For value received, the undersigned hereby, unconditionally and
irrevocably, guarantees to the Holder of the foregoing Senior Sub Note the due
and punctual payment of the principal and interest on said Senior Sub Note, as
more fully provided in the Agreement referred to in said Senior Sub Note.
