EXHIBIT 1
EXCHANGE AGREEMENT
Among
INLAND RESOURCES INC.
INLAND PRODUCTION COMPANY
INLAND REFINING, INC.
and
TRUST COMPANY OF THE WEST,
a California trust company,
as Sub-Custodian for Mellon Bank
for the benefit of Account No. CPFF 873-3032
INLAND HOLDINGS LLC,
a California limited liability company
TCW PORTFOLIO NO. 1555 DR V
SUB-CUSTODY PARTNERSHIP, L.P.,
a California limited partnership
and
JOINT ENERGY DEVELOPMENT INVESTMENTS II LIMITED PARTNERSHIP
Dated as of September 21, 1999
TABLE OF CONTENTS
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 2. EXCHANGE OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . .6
2.1 Authorization and Issuance of the Preferred Stock and Common
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.2 Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.3 The Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.4 Consent to Exchange.. . . . . . . . . . . . . . . . . . . . . . . . .7
2.5 Simultaneous Transactions . . . . . . . . . . . . . . . . . . . . . .8
SECTION 3. WARRANTIES, REPRESENTATIONS AND COVENANTS OF THE COMPANIES. . . . . .8
3.1 Organization and Authorization of the Issuer. . . . . . . . . . . . .8
3.2 Capital Stock.. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
3.3 Information Regarding the Issuer. . . . . . . . . . . . . . . . . . 10
3.4 Independent Engineering Report. . . . . . . . . . . . . . . . . . . 10
3.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Absence of Undisclosed Liability. . . . . . . . . . . . . . . . . . 11
3.7 Governmental Consent. . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Compliance with Laws and Other Instruments of the Companies . . . . 11
3.9 No Affiliate Ownership. . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 12
3.11 Hedging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.12 Absence of Certain Changes or Events. . . . . . . . . . . . . . . . 12
3.13 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . . . . 12
3.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.15 ERISA Plans and Liabilities . . . . . . . . . . . . . . . . . . . . 13
3.16 Private Offering. . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.17 Investment Companies Act and Public Utility Holding
Companies Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.18 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . 14
3.19 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.20 No Broker's or other Fees . . . . . . . . . . . . . . . . . . . . . 15
3.21 Bona Fide Debt Work-out . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4. WARRANTIES, REPRESENTATIONS AND COVENANTS OF PURCHASERS and
TCW.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 Acquisition for Purchaser's Account . . . . . . . . . . . . . . . . 15
4.2 Investment Experience . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Securities not Registered . . . . . . . . . . . . . . . . . . . . . 15
4.4 Qualified Institutional Buyer; Accredited Investor. . . . . . . . . 15
4.5 Acknowledgement of Risk . . . . . . . . . . . . . . . . . . . . . . 15
4.6 No Public Market. . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.7 Reliance by the Issuer. . . . . . . . . . . . . . . . . . . . . . . 16
4.8 No Public Solicitation. . . . . . . . . . . . . . . . . . . . . . . 16
4.9 Legal Holder. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.10 Consent to Farmout. . . . . . . . . . . . . . . . . . . . . . . . . 16
4.11 Bona Fide Debt Work-out . . . . . . . . . . . . . . . . . . . . . . 16
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4.12 Value of JEDI New Securities. . . . . . . . . . . . . . . . . . . . 16
SECTION 5. PURCHASER AND TCW CONDITIONS TO CLOSING.. . . . . . . . . . . . . . 16
5.1 TCW's and Holdings' Conditions to Closing . . . . . . . . . . . . . 16
5.2 JEDI's Conditions to Closing. . . . . . . . . . . . . . . . . . . . 18
5.3 Closing Deliveries of the Companies . . . . . . . . . . . . . . . . 20
SECTION 6. ISSUER'S CONDITIONS TO CLOSING; REQUIRED DELIVERIES . . . . . . . . 21
SECTION 7. TRANSFERABILITY OF NEW SECURITIES.. . . . . . . . . . . . . . . . . 21
7.1 Restrictive Legend. . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Rule 144 and 144A . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 8. AFFIRMATIVE COVENANTS OF THE COMPANIES. . . . . . . . . . . . . . . 22
8.1 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 22
8.2 Management's Discussion and Results of Operations . . . . . . . . . 23
8.3 Certificates; Other Information . . . . . . . . . . . . . . . . . . 23
8.4 Independent Engineering Report. . . . . . . . . . . . . . . . . . . 23
8.5 Inspection of Property; Books and Records; Discussions. . . . . . . 23
8.6 Conduct of Business and Maintenance of Existence. . . . . . . . . . 23
8.7 Maintenance of Property; Insurance. . . . . . . . . . . . . . . . . 23
8.8 Directors' and Officers' Insurance. . . . . . . . . . . . . . . . . 24
8.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.10 Replacement of Instruments. . . . . . . . . . . . . . . . . . . . . 24
8.11 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 24
8.12 Contingent Issuance of Options to Holdings and JEDI . . . . . . . . 24
8.13 Bank Compliance Certificates. . . . . . . . . . . . . . . . . . . . 25
8.14 Management Controls . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.2 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.3 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 28
10.4 Amendment and Waiver, etc . . . . . . . . . . . . . . . . . . . . . 28
10.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.9 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . 29
10.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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TABLE OF EXHIBITS AND SCHEDULES
[Intentionally omitted. Copies on file with the Issuer]
Schedule 3.1 - Subsidiaries and Liens thereon
Schedule 3.2(b) - Convertible Securities and Options
Schedule 3.2(c) - Registration Rights
Schedule 3.4 - Initial Independent Engineering Report
Schedule 3.5 - Litigation
Schedule 3.6 - Liabilities
Schedule 3.7 - Governmental Consents
Schedule 3.8 - Required Consents
Schedule 3.10 - Compliance with Oil and Gas Laws
Schedule 3.12 - Hedging
Schedule 3.15 - ERISA
Schedule 3.18 - Environmental Laws
Schedule 5.1 - Deferred Trade Payables
Schedule 8.12 - Contingent Issuance of Options
Exhibit A - Preferred Stock Designation
Exhibit B - Form of Shareholders Agreement
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Opinion of Washington counsel to the Issuer
Exhibit E - Form of Opinion of New York counsel to the Companies
Exhibit F - Amendment to Farmout Agreement
Exhibit G - Form of Opinion of Utah counsel to the Companies
Exhibit H - [Intentionally Omitted]
Exhibit I - Form of Purchaser Adjustment Option
Exhibit J - Form of JEDI Release Agreement
Exhibit K - Form of TCW Release Agreement
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EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "AGREEMENT") is dated as of September
21, 1999 among INLAND RESOURCES INC., a Washington corporation (the
"ISSUER"), INLAND PRODUCTION COMPANY, a Texas corporation ("IPC"), INLAND
REFINING, INC., a Utah corporation ("REFINING" and together with Issuer and
IPC, the "COMPANIES"), TRUST COMPANY OF THE WEST, a California trust company,
as Sub-Custodian for Mellon Bank for the benefit of Account No. CPFF 873-3032
("FUND V"), TCW PORTFOLIO NO. 1555 DR V SUB-CUSTODY PARTNERSHIP, L.P., a
California limited partnership ("PORTFOLIO," and collectively with Fund V,
"TCW"), INLAND HOLDINGS LLC, a California limited liability company
("HOLDINGS") and Joint Energy Development Investments II Limited Partnership,
a Delaware limited partnership ("JEDI", and together with Holdings, the
"PURCHASERS").
WHEREAS, Fund V is presently the holder of $75 million in principal
amount of junior secured debt of IPC (plus accrued and unpaid interest to the
Closing Date, the "FUND V DEBT") and Portfolio is the holder of warrants (the
"PORTFOLIO WARRANTS," and together with the Fund V Debt, the "TCW
SECURITIES") to purchase 158,512 shares of the Issuer's common stock, $.001
par value per share (the "COMMON STOCK");
WHEREAS, JEDI is presently the holder of 100,000 shares of Series C
Preferred Stock (as defined below), plus accumulated dividends to the Closing
Date;
WHEREAS, Fund V and Portfolio are members of Holdings;
WHEREAS, the Companies, TCW, Holdings and JEDI desire to consummate
a transaction (the "EXCHANGE") whereby (i) TCW will exchange its entire
interest in the TCW Securities for the issuance to Holdings of (a) 10,757,747
shares (the "D PREFERRED SHARES NUMBER") of Series D Redeemable Preferred
Stock of the Issuer, (b) 5,882,901 shares (the "Z PREFERRED SHARES NUMBER")
of Series Z Preferred Stock of the Issuer and (c) 11,642,949 shares of the
Issuer's Common Stock and (ii) JEDI will exchange its entire interest in
100,000 shares of the Series C Preferred Stock (and any accumulated dividends
thereon, if any) for (a) 121,973 shares (the "E PREFERRED SHARES NUMBER") of
the Series E Redeemable Preferred Stock of the Issuer and (b) 2,920,975
shares of the Issuer's Common Stock, all subject to the terms and conditions
set forth below.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, conditions and agreements contained
herein, the parties hereto, intending to be legally bound by the terms
hereof, agree as follows:
SECTION 1. DEFINITIONS
As used herein, the following terms shall have the following meanings.
"10-Q FILING DATE" shall have the meaning set forth in Section 3.3(a)
hereof.
"1935 ACT" shall have the meaning set forth in Section 3.17 hereof.
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"AGREEMENT" shall have the meaning set forth in the preamble hereto.
"ANNUAL BUDGET PLAN" shall have the meaning ascribed to such term
in SECTION 8.14 hereof.
"APPROVED ANNUAL BUDGET" shall have the meaning ascribed to such
term in SECTION 8.14 hereof.
"APPROVED BUDGETS" shall have the meaning ascribed to such term in
SECTION 8.14 hereof.
"APPROVED UPDATED BUDGET" shall have the meaning ascribed to such
term in SECTION 8.14 hereof.
"AKIN OPINION" shall have the meaning set forth in Section 5.1(m)
hereof.
"ARTICLES OF INCORPORATION" shall mean the Articles of
Incorporation of the Issuer, as amended from time to time.
"BOARD OF DIRECTORS" shall mean, with respect to a party, the board
of directors of such party.
"CLOSING" shall have the meaning ascribed to such term in Section
2.3 hereof.
"CLOSING DATE" shall have the meaning ascribed to such term in
Section 2.3(c) hereof.
"COMMISSION" shall mean the United States Securities and Exchange
Commission or any other similar or successor agency of the federal government
administering the Securities Act.
"COMMON STOCK" shall have the meaning set forth in the recitals
hereto.
"COMPANIES" shall have the meaning set forth in the preamble hereto.
"CREDIT AGREEMENT" shall mean the Second Amended and Restated
Credit Agreement, among IPC, the Issuer, ING, as agent, and U.S. Bank
National Association and MeesPierson Capital Corp., as lenders party thereto,
dated as of the date hereof.
"D PREFERRED SHARES NUMBER" shall have the meaning set forth in the
recitals hereto.
"E PREFERRED SHARES NUMBER" shall have the meaning set forth in the
recitals hereto.
"ENVIRONMENTAL LAWS" shall mean any and all Laws relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface
water, ground water, or land.
2
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all rules and regulations
promulgated with respect thereto.
"ERISA AFFILIATE" shall mean each of the Companies and all members
of a controlled group of corporations and all trades or businesses (whether
or not incorporated) under common control that, together with each of the
Companies, are treated as a single employer under Section 414 of the Internal
Revenue Code of 1986, as amended.
"ERISA PLAN" means any employee pension benefit plan subject to
Title IV of ERISA maintained by any ERISA Affiliate with respect to which any
of the Companies or the Subsidiaries has a fixed or contingent liability.
"EVALUATED PROPERTIES" shall have the meaning set forth in Section
3.4 hereof.
"EXCHANGE" shall have the meaning set forth in the recitals hereto.
"EXCHANGE ACT" shall have the meaning set forth in Section 3.3(a)
hereof.
"FARMOUT AGREEMENT" shall mean that certain Farmout Agreement dated
as of June 1, 1998 between IPC, the Issuer and ▇▇▇▇▇ Management, LLC, as
assigned to ▇▇▇▇▇ Energy Partnership effective October 1, 1998 and as amended
by Amendment No. One dated as of November 25, 1998.
"FARMOUT RESTRUCTURINGS" shall have the meaning set forth in
Section 5.1(f) hereof.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
3.3(a) hereof.
"FUND V" shall have the meaning set forth in the preamble hereto.
"FUND V DEBT" shall have the meaning set forth in the recitals
hereto.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time consistent with those
utilized in preparing the audited Financial Statements.
"GOVERNMENTAL BODY" shall mean any Federal, state, municipal or
other governmental department, commission, court, tribunal, board, bureau,
agency or instrumentality, domestic or foreign (including, without
limitation, any bank regulatory authority).
"HAZARDOUS MATERIALS" shall mean any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"HOLDINGS NEW SECURITIES" shall have the meaning set forth in
Section 2.2(a) hereof.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 9.
3
"INDEPENDENT ENGINEER" shall mean ▇▇▇▇▇ ▇▇▇▇▇ Company or such other
independent engineering consultant firm acceptable to the Purchasers.
"INDEPENDENT ENGINEERING REPORT" shall mean each engineering report
prepared by an Independent Engineer, which shall be (i) effective as of
January 1st of each year, (ii) in a form satisfactory to the Purchasers and
(iii) prepared in accordance with the then existing standards of the Society
of Petroleum Engineers.
"ING" shall mean ING (U.S.) Capital Corporation.
"INITIAL INDEPENDENT ENGINEERING REPORT" shall mean the engineering
report prepared by ▇▇▇▇▇ ▇▇▇▇▇ Company dated as of January 1, 1999 acceptable
to the Purchasers and prepared in accordance with the then existing standards
of the Society of Petroleum Engineers.
"IPC" shall have the meaning set forth in the preamble hereto.
"ISSUER" shall have the meaning set forth in the preamble hereto.
"JEDI" shall have the meaning set forth in the preamble hereto.
"JEDI NEW SECURITIES" shall have the meaning set forth in Section
2.2(b) hereof.
"JEDI RELEASE" shall mean a release of the Companies' obligations
with respect to JEDI's 100,000 shares of Series C Preferred Stock, plus
accumulated dividends thereon to the Closing Date, and any documents related
thereto, including without limitation, that certain Securities Purchase
Agreement dated July 21, 1997 between JEDI and Issuer, that certain
Registration Rights Agreement dated July 21, 1997 between JEDI and Issuer and
that certain Tagalong Agreement dated July 21, 1997 between JEDI and Pengo,
pursuant to the Release Agreement in the form attached hereto as Exhibit J.
"LAW" shall mean any applicable statute, law, regulation,
ordinance, rule, treaty, judgment, order, decree, permit, concession, license
or other governmental restriction of the United States or any state or
political subdivision thereof or of any foreign country or any department,
province or other political subdivision thereof.
"LIABILITY" shall have the meaning set forth in Section 3.6 hereof.
"LIEN" shall mean, with respect to any Person, any mortgage, lien,
pledge, adverse claim, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party to or
of such Person under any conditional sale or other title retention agreement
or capital lease, upon or with respect to any property or asset of such
Person, or the signing or filing by or with the consent of such Person of a
financing statement that names such Person as debtor, or the signing of any
security agreement authorizing any other Person as the secured party to file
any financing statement.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a
material adverse effect on the business, properties, financial condition or
operations of such Person.
"NEW SECURITIES" shall have the meaning set forth in Section 2.2(b)
hereof.
4
"ORDER" means any order, writ, injunction, decree, judgment, award,
determination, direction or demand.
"PERSON" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government or agency or political
subdivision thereof.
"PORTFOLIO WARRANTS" shall have the meaning set forth in the
recitals hereto.
"PREFERRED STOCK DESIGNATION" shall mean the amendment to the
Articles of Incorporation of the Issuer, setting forth the terms of the
Series D Preferred Stock, Series E Preferred Stock and Series Z Preferred
Stock, in the form attached hereto as Exhibit A or with such changes thereto
as approved by the Purchasers and the Issuer.
"PURCHASER ADJUSTMENT OPTIONS" shall have the meaning set forth in
SECTION 8.12 hereof.
"PURCHASERS" shall have the meaning set forth in the preamble
hereto.
"▇▇▇▇▇▇▇ OPINION" shall have the meaning set forth in SECTION
5.1(1) hereof.
"REFINING" shall have the meaning set forth in the preamble hereto.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning set forth in
SECTION 5.1(h) hereof.
"RELATED PERSON" shall mean any of the Companies, their
subsidiaries or affiliates, whether now existing or hereafter formed or
acquired.
"REQUISITE OWNERSHIP" shall have the meaning set forth in SECTION 8
hereof.
"RESPONSIBLE OFFICER" shall mean all officers of the Companies.
"RESTRICTED SECURITIES" shall have the meaning set forth under Rule
144 of the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any successor Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SENIOR CREDITORS" shall mean the lenders under the Credit
Agreement.
"SERIES C PREFERRED STOCK" shall mean the Issuer's Series C
Cumulative Convertible Preferred Stock, par value $.001 per share, all of the
issued and outstanding shares of which are owned by JEDI.
"SERIES D PREFERRED STOCK" shall mean the Series D Redeemable
Preferred Stock of the Issuer, par value $.001 per share, with the terms
described in Exhibit A hereto.
5
"SERIES E PREFERRED STOCK" shall mean the Series E Redeemable
Preferred Stock of the Issuer, par value $.001 per share, with the terms
described in Exhibit A hereto.
"SERIES Z PREFERRED STOCK" shall mean the Series Z Convertible
Preferred Stock of the Issuer, par value $.001 per share, with the terms
described in Exhibit A hereto.
"SHAREHOLDERS AGREEMENT" shall have the meaning set forth in
SECTION 5.1(g) hereof.
"▇▇▇▇▇ GROUP" shall mean Pengo Securities Corp., ▇▇▇▇▇ Energy
Partnership, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and their respective affiliates.
"SUBSIDIARY" shall mean any entity in which any of the Companies
has a 50% or greater direct or indirect equity interest.
"TCW" shall have the meaning set forth in the preamble hereto.
"TCW RELEASE" shall mean a release of the Companies' obligations
under or with respect to the outstanding principal of and accrued interest on
the Fund V Debt and any obligation with respect to the Portfolio Warrants
pursuant to the Release Agreement in the form attached hereto as Exhibit K.
"TCW SECURITIES" shall have the meaning set forth in the recitals
hereto.
"TERMINATION EVENT" shall mean (a) the occurrence with respect to
any ERISA Plan of (i) a reportable event described in Sections 4043(c)(5) or
(6) of ERISA or (ii) any other reportable event described in Section 4043(c)
of ERISA other than a reportable event not subject to the provision for
30-day notice to the Pension Benefit Guaranty Corporation pursuant to a
waiver by the Pension Benefit Guaranty Corporation under Section 4043(a) of
ERISA, or (b) the withdrawal of any ERISA Affiliate from an ERISA Plan during
a plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any
ERISA Plan or the treatment of any ERISA Plan amendment as a termination
under Section 4041 of ERISA, or (d) the institution of proceedings to
terminate any ERISA Plan by the Pension Benefit Guaranty Corporation under
Section 4042 of ERISA, or (e) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any ERISA Plan.
"UPDATED BUDGET" shall have the meaning set forth in SECTION 8.14
hereof.
"UTAH OPINION" shall have the meaning set forth in SECTION 5.1(n)
hereof.
"Z PREFERRED SHARES NUMBER" shall have the meaning set forth in the
recitals hereto.
SECTION 2. EXCHANGE OF SECURITIES
2.1 AUTHORIZATION AND ISSUANCE OF THE PREFERRED STOCK AND COMMON
STOCK. The Issuer has duly authorized the issuance of (a) a number of shares
of the Series D Preferred Stock
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equal to the D Preferred Shares Number, (b) a number of shares of the Series
E Preferred Stock equal to the E Preferred Shares Number, (c) shares of
Series Z Preferred Stock equal to the Z Preferred Shares Number and (d)
14,563,924 shares of Common Stock, pursuant to the terms of this Agreement.
2.2 EXCHANGE.
(a) HOLDINGS. Upon the terms and conditions set forth herein, the
Issuer agrees to issue to Holdings, and Holdings agrees to accept, (i) the D
Preferred Shares Number of Series D Preferred Stock, (ii) the Z Preferred
Shares Number of Series Z Preferred Stock and (iii) 11,642,949 shares of
Common Stock (collectively, the "HOLDINGS NEW SECURITIES") upon delivery to
the Issuer of the TCW Release and the notes and certificates evidencing the
TCW Securities; TCW agrees to deliver and the Issuer agrees to accept the TCW
Release and the notes and certificates evidencing the TCW Securities upon
delivery to Holdings of the Holdings New Securities.
(b) JEDI. Upon the terms and conditions set forth herein, the
Issuer agrees to issue to JEDI, and JEDI agrees to accept, (i) the E
Preferred Shares Number of Series E Preferred Stock and (ii) 2,920,975 shares
of Common Stock (collectively, the "JEDI NEW SECURITIES" and, together with
the Holdings New Securities, the "NEW SECURITIES") upon delivery to the
Issuer of the JEDI Release and certificates evidencing JEDI's entire interest
in 100,000 shares of the Series C Preferred Stock plus accumulated and unpaid
dividends through the Closing Date; JEDI agrees to deliver and the Issuer
agrees to accept the JEDI Release and the certificates evidencing JEDI's
entire interest in 100,000 shares of Series C Preferred Stock, plus
accumulated and unpaid dividends through the Closing Date, upon delivery to
JEDI of the JEDI New Securities.
2.3 THE CLOSING. At the closing of the transactions described
herein (the "CLOSING"),
(a) (i) TCW shall deliver to the Issuer the notes and certificates
evidencing the TCW Securities, (ii) the Issuer shall accept and cancel the
notes representing the Fund V Debt (including accrued and unpaid interest
through the Closing Date) and the certificates representing the Portfolio
Warrants, (iii) TCW shall deliver to the Issuer the TCW Release and (iv) the
Issuer shall deliver to Holdings certificates representing the Holdings New
Securities, registered in the denominations and names specified by Holdings.
(b) (i) JEDI shall deliver to the Issuer the certificate(s)
evidencing JEDI's entire interest in 100,000 shares of Series C Preferred
Stock and accrued and unpaid dividends through the Closing Date, (ii) the
Issuer shall accept and cancel such certificate(s), (iii) JEDI shall deliver
to the Issuer the JEDI Release and (iv) the Issuer shall deliver to JEDI
certificates representing the JEDI New Securities, registered in the
denominations and names specified by JEDI.
(c) The Closing shall be held at the offices of Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., Houston, Texas, on the business day following
satisfaction of the conditions set forth herein or at such other time and
place as all parties to this Agreement may mutually agree (the "CLOSING
DATE").
2.4 CONSENT TO EXCHANGE.
7
(a) Prior to giving effect to the Exchange, JEDI is the record
holder of 100,000 shares of Series C Preferred Stock, representing all of the
issued and outstanding Series C Preferred Stock of the Issuer. By entering
into this Agreement, JEDI hereby consents and agrees to the transactions
constituting the Exchange as the sole holder of the Issuer's Series C
Preferred Stock. Upon consummation of the transactions constituting the
Exchange, no shares of the Issuer's Series C Preferred Stock will be
outstanding.
(b) Prior to giving effect to the Exchange, Fund V is the holder
of the Fund V Debt and Portfolio is the holder of the Portfolio V Warrants.
By entering into this Agreement, Fund V and Portfolio hereby consent and
agree to the transactions constituting the Exchange. Upon consummation of
such transactions, neither the Fund V Debt nor the Portfolio Warrants will be
outstanding.
2.5 SIMULTANEOUS TRANSACTIONS. All transactions set forth as part
of the Exchange and the transactions contemplated by SECTIONS 5.1(d) AND
5.2(e) hereof shall be deemed to take place simultaneously and each
transaction shall be contingent upon the consummation of all such
transactions.
SECTION 3. WARRANTIES, REPRESENTATIONS AND COVENANTS OF THE
COMPANIES.
Each of the Companies hereby represent, warrant and covenant to
each of the Purchasers that, as of the date hereof;
3.1 ORGANIZATION AND AUTHORIZATION OF THE ISSUER.
(a) Each of the Companies, and their respective Subsidiaries (i)
is a duly organized and validly existing corporation in good standing under
the laws of its jurisdiction of organization, (ii) has all requisite power
and authority to own or hold under lease the property it purports to own or
hold under lease and to transact the business in which it is presently
engaged or presently proposes to engage and (iii) is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
character of the properties owned or held under lease by it or the nature of
the business transacted by it requires such qualification except where
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect on the Companies taken as a whole.
(b) Each of the Companies has all requisite power and authority to
execute and deliver this Agreement, and any other documents or agreements
contemplated hereby and thereby to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereunder and thereunder. The Issuer has all requisite power
and authority to issue the New Securities. The execution and delivery of
this Agreement and the issuance of New Securities, the performance of this
Agreement, and the execution, delivery and performance of any other documents
or agreements to which any of the Companies is a party contemplated hereby
and thereby, and the consummation of the transactions contemplated hereby and
thereby, have been duly authorized and approved by the Board of Directors of
the respective Companies. Each of this Agreement, and any other document or
agreement to which any of the Companies is a party contemplated hereby or
thereby has been (or on the Closing Date will have been) duly authorized,
executed and delivered by, and each is (or, when duly executed and delivered
on the Closing Date, will be) the valid and
8
binding obligation of, such Company, enforceable in accordance with its
terms, except as may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws or by legal or equitable
principles relating to or limiting creditors' rights generally.
(c) SCHEDULE 3.1 hereof contains a true and correct list of the
Subsidiaries and their respective partnership interests. Neither the
Companies nor the Subsidiaries own, directly or indirectly, any capital
stock, joint venture or partnership interests in or other equity interest in
any other Person other than those Subsidiaries set forth on SCHEDULE 3.1
hereof. Except as set forth on SCHEDULE 3.1, each of the Companies has good
and valid title to all the outstanding stock of each of its respective
Subsidiaries, in each case, free and clear of all liens and encumbrances.
3.2 CAPITAL STOCK.
(a) Upon the issuance of the New Securities under this Agreement
and after the filing of the Preferred Stock Designation, the total number of
shares of capital stock which the Issuer will have authority to issue under
the Articles of Incorporation is a maximum of (i) 25,000,000 shares of Common
Stock, of which 23,093,689 will be issued and outstanding, all of which
outstanding shares will have been duly and validly issued and will be fully
paid and nonassessable, and (ii) 20,000,000 shares of Class A preferred
stock, of which the D Preferred Shares Number will be designated as Series D
Preferred Stock, the E Preferred Shares Number will be designated as Series E
Preferred Stock and the Z Preferred Shares Number will be designated as
Series Z Preferred Stock and all of which shares will be issued and
outstanding, duly and validly issued and fully paid and nonassessable.
Immediately prior to the issuance of the New Securities under this Agreement,
25,000,000 shares of Common Stock were authorized, of which 8,529,765 shares
were issued and outstanding, and 20,000,000 shares of Class A preferred stock
were authorized, of which 100,000 shares, designated as Series C Preferred
Stock, were issued and outstanding.
(b) As of the date hereof, the Issuer does not, and as of the
Closing Date, each without giving effect to the Exchange, the Issuer will
not, have outstanding any capital stock or other securities convertible into
or exchangeable for any of its capital stock or any rights to subscribe for
or to purchase, or any options for the purchase of, or any agreements
(contingent or otherwise) providing for the issuance of, or any calls,
commitments or claims of any character relating to, any of its capital stock
or any securities convertible into or exchangeable for any of its capital
stock, other than as set forth on SCHEDULE 3.2(b) hereto (which schedule
shall include the exercise price (except for the warrants of ING, US Bank and
MeesPierson post-Closing) and number of shares on a pre-Closing and
post-Closing basis).
(c) As of the date hereof, the Issuer does not have any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any of
its capital stock or obligation evidencing the right of the holder thereof to
purchase any of its capital stock. There is not in effect on the date hereof
any agreement by the Issuer (other than this Agreement) or any of its
Subsidiaries pursuant to which any holders of securities of the Issuer or any
of its Subsidiaries have a right to cause the Issuer to register such
securities under the Securities Act other than as set forth on SCHEDULE
3.2(c) hereto.
(d) The New Securities will, when issued in accordance with this
Agreement, be duly and validly issued, fully paid and nonassessable and free
from all taxes, liens and charges.
9
3.3 INFORMATION REGARDING THE ISSUER.
(a) The audited consolidated financial statements of the Issuer
and its Subsidiaries as filed with the Commission in accordance with the
reporting requirements of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), for the three most recent fiscal years (and the
unaudited interim periods reported therein and through the date hereof)
(collectively, the "FINANCIAL STATEMENTS") fairly present in all material
respects the financial position of the Issuer and its Subsidiaries as of the
respective dates of such balance sheets and the results of the Issuer and its
Subsidiaries operations for the respective periods covered by such statements
of operations, stockholders' equity and cash flows, and have been prepared in
accordance with GAAP consistently applied throughout the periods involved.
There are no material liabilities, contingent or otherwise, of the Issuer and
its Subsidiaries as of the date hereof and as of the Closing Date required to
be reflected in a balance sheet prepared in accordance with GAAP which are
not reflected in such balance sheets. Since the date of the Issuer's most
recent quarterly report on form 10-Q (the "10-Q FILING DATE"), there have
been no changes in the assets, liabilities or financial position of the
Issuer and its Subsidiaries from that set forth in the balance sheet as of
such date, other than changes in the ordinary course of business which have
not, either individually or in the aggregate, had a Material Adverse Effect
on the Companies taken as a whole.
(b) As of their respective dates, the Financial Statements did not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Since the 10-Q Filing Date,
there has been no change in the business, properties, financial condition or
operations which has had a Material Adverse Effect on the Companies taken as
a whole.
3.4 INDEPENDENT ENGINEERING REPORT. The Companies have delivered
to the Purchasers, in form satisfactory to the Purchasers, results of the
Initial Independent Engineering Report on the fields and properties listed
therein or attached thereto (the "EVALUATED PROPERTIES") in which the
Companies will have interests as of the Closing Date. The Initial
Independent Engineering Report is the latest engineering report available to
the Companies relating to the Evaluated Properties. To the knowledge of the
Responsible Officers, the Companies have provided no materially false or
misleading information to and have not withheld from the engineer preparing
or who prepared the Initial Independent Engineering Report any material
information with respect to the preparation of the Independent Engineering
Report. The Responsible Officers and the officers of Refining are not aware
of any facts or circumstances that should reasonably cause the Companies to
conclude that (i) any of the information that was supplied by the Companies
to the Independent Engineer in connection with its preparation of the
Independent Engineering Report was not correct or (ii) the Independent
Engineering Report is incorrect in any material respect.
3.5 LITIGATION. Except as set forth in SCHEDULE 3.5, (i) there
are no actions, suits, investigations or legal, equitable, arbitrative or
administrative proceedings pending or, to the knowledge of any Responsible
Officer of the Companies, currently threatened against the Companies or the
Subsidiaries before any Governmental Body which could cause a Material
Adverse Effect on the Companies , either individually or in the aggregate;
and (ii) there are no outstanding judgments, injunctions, writs, rulings or
orders by any Governmental Body against
10
any of the Companies, the Subsidiaries or their respective directors or
officers which could have a Material Adverse Effect on the Companies, either
individually or in the aggregate.
3.6 ABSENCE OF UNDISCLOSED LIABILITY. None of the Companies nor
any of the Subsidiaries has any material direct or indirect liability,
indebtedness, obligation, expense, claim, deficiency, guarantee or
endorsement of or by any person (other than endorsements of notes, bills and
checks presented to banks for collection deposit in the ordinary course of
business) of any type, whether accrued, absolute, contingent, matured,
unmatured or otherwise (a "LIABILITY"), other than the Liabilities (i) that
are reflected, accrued or reserved for in the most recent quarterly balance
sheet of the Issuer filed pursuant to the Exchange Act with the Commission,
or (ii) arising in the ordinary course of the Companies' or the Subsidiaries'
businesses consistent with past practice which would not result in a Material
Adverse Effect on the Companies taken as a whole or (iii) that are disclosed
in SCHEDULE 3.6. Except as shown in the notes to the Issuer's most recent
annual and quarterly financial statements filed pursuant to the Exchange Act
with the Commission or disclosed on SCHEDULE 3.6 hereof, none of the
Companies nor any of the Subsidiaries is subject to or restricted by any
franchise, contract, deed, charter restriction or other instrument or
restriction which could reasonably be expected to have a Material Adverse
Effect on the Companies taken as a whole.
3.7 GOVERNMENTAL CONSENT. Other than the filing of the Preferred
Stock Designation and filings required by applicable state securities laws
and any other consents or approvals listed in SCHEDULE 3.7 hereof, which
shall be made or obtained prior to Closing by the Companies, neither the
nature of the Companies, the Subsidiaries, their respective businesses or
properties, nor any relationship between the Companies or any Subsidiary and
any other Person, nor (except as expressly provided for in this Agreement)
any circumstance in connection with the offer, issue or sale of the New
Securities, is such as to require consent, approval or authorization of, or
filing, registration or qualification with, any Governmental Body on the part
of the Companies as a condition to the execution, delivery and performance of
this Agreement and any other documents or agreements contemplated hereby.
3.8 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS OF THE COMPANIES.
The consummation of the transactions contemplated by this Agreement and the
execution, delivery and performance of the terms and provisions of this
Agreement, the New Securities, or any other document or agreement
contemplated hereby or thereby will not (i) contravene, result in any breach
of, or constitute a default under, or result in the creation of any Lien in
respect of any property of the Companies or the Subsidiaries under, any
corporate charter or bylaws, or material indenture, mortgage, deed of trust,
bank loan or credit agreement, or other material agreement or instrument to
which the Companies or the Subsidiaries are a party or by which the Companies
or the Subsidiaries or any of their properties may be bound or affected
(taking into consideration the required consents set forth on SCHEDULE 3.8
hereof), (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 Body applicable to the Companies, or (iii) violate any provision
of any statute or other rule or regulation of any Governmental Body
applicable to the Companies or the Subsidiaries.
3.9 NO AFFILIATE OWNERSHIP. Except as set forth in the Issuer's
most recent Annual Report on Form 10-K, as amended, its most recent proxy
statement, or its Quarterly Reports filed on Form 10-Q after such Annual
Report on file with the Commission, no Person controlled by, controlling or
under common control with any of the Companies (other than the Subsidiaries)
11
owns any interest in any of the Evaluated Properties or any other material
asset of the Companies or the Subsidiaries.
3.10 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 3.10,
to the knowledge of the Companies, the Companies and the Subsidiaries have
complied with all applicable laws relating to the production of oil and gas
from their properties, leases or assets and any of their assets, rights or
interests relating thereto, the conduct of drilling and production operations
with respect to their oil and gas properties, leases, or assets and any of
their assets, rights or interests relating thereto and the regulation
thereof, except where the failure to comply could not reasonably be expected
to have a Material Adverse Effect on the Companies taken as a whole.
3.11 HEDGING. Except as set forth in SCHEDULE 3.11, as of the date
of this Agreement, neither the Companies nor any of the Subsidiaries is bound
by futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from or reduce or eliminate the risk
or fluctuations in the price of commodities, including hydrocarbons, or
securities.
3.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for events
contemplated by this Agreement or disclosed in any schedule hereto, since the
filing date of the Issuer's most recent quarterly report on Form 10-Q with
the Commission no event has occurred with respect to the Companies or the
Subsidiaries, or the condition of their material assets or the Evaluated
Properties, that has resulted in or could reasonably be expected to result in
a Material Adverse Effect on the Companies taken as a whole, except as has
been publicly disclosed in the Issuer's filings with the Commission. The
Issuer has reported on the appropriate form all events or happenings with
respect to the Companies or the Subsidiaries or the condition of their
material assets or the Evaluated Properties that are required to be disclosed
under the Exchange Act.
3.13 LICENSES AND PERMITS. The Companies and the Subsidiaries have
obtained and hold in full force and effect all licenses, permits, franchises,
certificates, authorizations, qualifications, accreditations, easements,
rights of way and other rights, patents, copyrights, trademarks and trade
names, or rights thereto, consents and approvals required to conduct their
business substantially as it is now conducted and as it is currently proposed
to be conducted, without known conflict with the rights of others, except as
has been disclosed in the Issuer's filings with the Commission or except for
such failures to obtain or hold or such conflicts as would not have a
Material Adverse Effect on the Companies taken as a whole.
3.14 TAXES. The Companies and the Subsidiaries have (i) filed all
tax returns with all appropriate Federal, state, local and foreign taxing
authorities that are required to have been filed by or with respect to the
Companies and the Subsidiaries as of the date of this Agreement, and such tax
returns are true, correct and complete in all material respects; and (ii)
paid all taxes shown to be due and payable on such returns and all other
taxes and assessments payable by the Companies and the Subsidiaries to the
extent the same have become due and payable and before they have become
delinquent, except for any taxes and assessments the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Companies have set aside on its
books reserves (segregated to the extent required by GAAP) deemed by it to be
adequate. The Companies know of no proposed material tax assessment against
the Companies or the
12
Subsidiaries and in the opinion of the Companies all tax liabilities are
adequately provided for on the books of the Companies.
3.15 ERISA PLANS AND LIABILITIES. All currently existing ERISA
Plans are listed on Schedule 3.15 hereof. Except as disclosed in the
Issuer's most recent annual and quarterly financial statements filed under
the Exchange Act with the Commission or on SCHEDULE 3.15 hereof, no
Termination Event has occurred with respect to any ERISA Plan and all ERISA
Plans are in compliance with ERISA in all material respects. No ERISA
Affiliate is required to contribute to, or has any other absolute or
contingent liability in respect of, any "multiemployer plan" as defined in
Section 4001 of ERISA. Except as set forth in SCHEDULE 3.15: (i) no
"accumulated funding deficiency" (as defined in Section 412(a) of the
Internal Revenue Code of 1986, as amended) exists with respect to any ERISA
Plan, whether or not waived by the Secretary of the Treasury or his delegate,
and (ii) the current value of each ERISA Plan's benefit obligations does not
exceed the current value of such ERISA Plan's assets available for the
payment of such benefits by more than $500,000.
3.16 PRIVATE OFFERING. During the six months prior to the Closing
Date, neither the Companies nor any other Person acting on behalf of the
Companies has offered any of the New Securities or any other securities of
the Companies (excluding options or warrants to employees and shares issuable
upon exercise or conversion of securities outstanding prior to the date
hereof) for sale to, or solicited offers to buy any thereof from, or
otherwise approached or negotiated with respect thereto with, any Person
other than prospective purchasers who are "accredited investors", as defined
in Rule 501 of Regulation D promulgated under the Securities Act. The
Companies agree that neither the Companies nor anyone acting on their behalf
has offered or will offer the New Securities or any part thereof or any
similar securities for issue or sale to, or has solicited or will solicit any
offer to acquire any of the same from, anyone so as to bring the issuance and
sale of the New Securities under Section 5 of the Securities Act. Based in
part on the representations of the Purchasers set forth herein and on the
Preferred Stock Designation, the offer, sale and issuance of the New
Securities in conformity with the terms of this Agreement are exempt from the
registration requirements of the Securities Act and any applicable state
securities laws.
3.17 INVESTMENT COMPANIES ACT AND PUBLIC UTILITY HOLDING COMPANIES
ACT. None of the Companies or the Subsidiaries is considered an "investment
company" or a person directly or indirectly controlled by or acting on behalf
of an "investment company" within the meaning of the Investment Company Act
of 1940, as amended. None of the Companies or the Subsidiaries owns or
operates any facility used for the generation, transmission or distribution
for sale of electrical energy or any facility used for the retail
distribution of natural or manufactured gas, each within the meaning of the
Public Utility Holding Company Act of 1935, as amended (the "1935 ACT").
None of the Companies or the Subsidiaries is an "electrical utility company"
within the meaning of the 1935 Act. None of the Companies or the
Subsidiaries is (i) a "holding company," (ii) a "subsidiary company," an
"affiliate" or "associate company" of a "holding company" or (iii) an
"affiliate" of a "subsidiary company" of a "holding company," each within the
meaning of the 1935 Act. None of the Companies or the Subsidiaries is
subject to regulation as a public utility or public service company (or
similar designation) by any state in the United States, by the United States,
by any foreign country or by any agency or instrumentality of any of the
foregoing.
13
3.18 ENVIRONMENTAL LAWS. The sole representations of the Companies
with respect to environmental matters are set forth in this SECTION 3.18. To
the extent representations in other sections of this Agreement also could
apply to environmental matters, including, but not limited to Environmental
Laws, such representations shall be construed to exclude environmental
matters and to apply only to matters other than environmental matters.
Except (a) as to matters not within the Companies' knowledge, (b) as could
not reasonably be expected to have a Material Adverse Effect on the Companies
taken as a whole, or (c) as set forth on SCHEDULE 3.18 hereto,
(a) The Companies and the Subsidiaries are conducting their
businesses in compliance in all material respects with all applicable
Environmental Laws, and have all permits, licenses and authorizations
required under Environmental Laws in connection with the conduct of their
businesses, and each of the Companies and the Subsidiaries is in compliance
in all material respects with the terms and conditions of all such permits,
licenses and authorizations, and with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law.
(b) No notice, notification, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed, and no investigation or review is pending or to
the knowledge of any of the Companies threatened, by any Governmental Body or
any other Person with respect to (i) any actual or alleged treatment,
storage, transportation, disposal, or release of any Hazardous Materials,
either by any of the Companies or the Subsidiaries or on any property owned
by any of the Companies or the Subsidiaries, (ii) any material remedial
action which might be needed to respond to any such alleged treatment,
storage, transportation, disposal, or release, or (iii) any alleged failure
by any of the Companies or the Subsidiaries to have any permit, license or
authorization required in connection with the conduct of its business or with
respect to any such treatment, storage, transportation, disposal, or release.
(c) No Hazardous Materials have been released or disposed of, in a
quantity or manner required to be reported under or otherwise in violation of
applicable law, by any of the Companies or the Subsidiaries at, on or under
any properties owned or leased by any of the Companies or the Subsidiaries.
(d) There are no Liens existing under or pursuant to any
Environmental Laws on any of the real properties or properties owned or
leased by any of the Companies or the Subsidiaries, and to the knowledge of
the Companies no government actions have been taken or are in process which
could subject any of such properties to such Liens.
3.19 LABOR RELATIONS. No material unfair labor practice complaint
or sex, age, race or other discrimination claim has been brought during the
five years prior to the Closing Date against the Companies or any of the
Subsidiaries before the National Labor Relations Board, the Equal Employment
Opportunity Commission or any other Governmental Body. During that period,
each of the Companies and the Subsidiaries has complied in all material
respects with all applicable laws, ordinances, regulations, statutes, rules
and restrictions relating to the employment of labor, including, without
limitation, those relating to hiring, promotion, employment and pay
practices, terms and conditions of employment, federal and state wages and
hours laws, immigration, and collective bargaining. During the five years
prior to the Closing Date, no strike, slowdown, picketing or work stoppage by
any union or other group of employees
14
against the Companies, any Subsidiary or any of their properties wherever
located, and no secondary boycott with respect to their products, lockout by
them of any of their employees or any other labor trouble or other
occurrence, event or condition of a similar character, has occurred or, to
the knowledge of the Responsible Officers, been threatened which has had or
could be expected to have a Material Adverse Effect on the Companies taken as
a whole.
3.20 NO BROKER'S OR OTHER FEES. Other than with respect to the
fairness opinion required pursuant to SECTION 5.1(i), no broker, finder or
investment banker is entitled to any fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf
of the Companies.
3.21 BONA FIDE DEBT WORK-OUT. Within the meaning of 16 C.F.R. sec
802.63(a), the acquisition by Holdings of the voting securities of the Issuer
pursuant to the Exchange will be an acquisition of voting securities in
connection with a bona fide debt work-out by a creditor of the Companies.
SECTION 4. WARRANTIES, REPRESENTATIONS AND COVENANTS OF PURCHASERS
AND TCW.
Other than with respect to Sections 4.10, 4.11 and 4.12 (which
provisions apply only to the parties specified), each of the Purchasers and TCW,
severally and not jointly, hereby represents, warrants and covenants to the
Issuer with respect to such party, as follows:
4.1 ACQUISITION FOR PURCHASER'S ACCOUNT Each Purchaser, severally
and not jointly, represents and warrants to the Issuer that it is acquiring
and will acquire its New Securities for its own account, with no present
intention of distributing or reselling such securities or any part thereof in
violation of applicable securities laws.
4.2 INVESTMENT EXPERIENCE. Each Purchaser and TCW 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 New Securities.
4.3 SECURITIES NOT REGISTERED. Each Purchaser acknowledges that
its New Securities 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 such 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.
4.4 QUALIFIED INSTITUTIONAL BUYER; ACCREDITED INVESTOR. Each
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.
4.5 ACKNOWLEDGEMENT OF RISK. Each Purchaser acknowledges that an
investment in its New Securities involves a high degree of risk and
represents that it understands the economic risk of such investment. Each
Purchaser is prepared to bear the economic risk of retaining its New
Securities for an indefinite period, all without prejudice, however, to the
rights
15
of such Purchaser, in accordance with this Agreement, lawfully to sell or
otherwise dispose of all or any part of any New Securities held by it.
4.6 NO PUBLIC MARKET. Each Purchaser understands that no public
market now exists for its New Securities and that the Issuer has made no
assurances with respect to any secondary market for such securities.
4.7 RELIANCE BY THE ISSUER. Each Purchaser understands and
acknowledges that the Issuer will be relying upon its respective
representations and warranties set forth in this Agreement in issuing
Purchaser's New Securities to such Purchaser.
4.8 NO PUBLIC SOLICITATION. The issuing of each Purchaser's New
Securities to such Purchaser was made through direct, personal communication
between such Purchaser and a representative of the Issuer and not through
public solicitation and advertising.
4.9 LEGAL HOLDER. Each of JEDI and TCW is the sole legal and
beneficial holder of its Securities to be exchanged by such party hereunder
and is conveying its Securities to the Issuer, free and clear of any liens,
claims, interests, charges and encumbrances. Each of JEDI and TCW has
neither previously sold, assigned, conveyed, transferred or otherwise
disposed of, in whole or in part, its securities to be exchanged hereunder,
nor entered into any agreement to sell, assign, convey, transfer or otherwise
dispose of, in whole or in part, its securities to be exchanged hereunder.
4.10 CONSENT TO FARMOUT. TCW and each Purchaser consents to the
terms of the restructuring or amendment to the terms of the existing Farmout
Agreement described in Sections 5.1(f) and 5.2(g) below.
4.11 BONA FIDE DEBT WORK-OUT. TCW and Holdings each warrant and
represent that, within the meaning of 16 C.F.R. sec 802.63(a), Holding's
acquisition of voting securities pursuant to the Exchange will be an
acquisition in connection with a bona fide debt work-out by a creditor in a
bona fide credit transaction entered into in the ordinary course of the
creditor's business.
4.12 VALUE OF JEDI NEW SECURITIES. JEDI represents and warrants
that it has determined that the fair market value of the JEDI New Securities
is less than $15,000,000.
SECTION 5. PURCHASER AND TCW CONDITIONS TO CLOSING.
5.1 TCW 'S AND HOLDINGS' CONDITIONS TO CLOSING. As a condition to
the obligations of TCW and Holdings hereunder and prior to the issuance of
the New Securities, the following conditions precedent shall be satisfied (in
form and substance reasonably satisfactory to TCW, Holdings and their
counsel):
(a) Each of the representations and warranties of the Companies
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date, as though made on
and as of the Closing. TCW and Holdings shall have received one or more
certificates of the Companies signed by the Chief Executive Officer or President
and the Chief Financial Officer or Secretary of such Company to that effect.
16
(b) The internal Investment Committee of TCW shall have approved
the terms of this Agreement, the Exchange, the New Securities and any other
transactions related hereto or thereto.
(c) Since the date of this Agreement, there shall not have
occurred any event or events which, individually or in the aggregate, would
have, or could be reasonably expected to have a Material Adverse Effect on
the financial condition, business or prospects of the Companies, the
Subsidiaries, or any of them or their properties.
(d) The Senior Creditors shall have agreed to a restructuring
and commitment with respect to the outstanding indebtedness of the Companies
under the Credit Agreement on terms acceptable to TCW and Holdings including,
but not limited to, a restructuring of the amortization of such debt and a
provision for additional borrowing capacity under the Credit Agreement.
(e) Creditors of the Companies listed on SCHEDULE 5.1 hereto
shall either (i) if such debt is evidenced by a promissory note, deferral
agreement, or other similar document providing for extended payment terms,
not be in default under such promissory note, deferral agreement, or other
similar document or (ii) if such debt is not evidenced by such a document,
the holder of such debt has not commenced any action for the collection of
such debt or in respect of any lien or encumbrance securing such debt.
(f) The Companies and ▇▇▇▇▇ Management LLC (and its affiliates
party thereto) shall have agreed to a restructuring or amendment to the terms
of the existing Farmout Agreement (the "FARMOUT RESTRUCTURINGS"), such
amendment substantially in the form attached hereto as Exhibit F.
(g) The ▇▇▇▇▇ Group and the Purchasers shall have executed a
shareholders agreement (the "SHAREHOLDERS AGREEMENT") substantially in the
form attached hereto as Exhibit B.
(h) The Issuer, the ▇▇▇▇▇ Group and the Purchasers shall have
executed a registration rights agreement (the "REGISTRATION RIGHTS
AGREEMENT"), in the form attached hereto as Exhibit C.
(i) The Board of Directors of the Issuer and each of IPC's and
Refining's Boards of Directors shall have approved, as applicable, the terms
of this Agreement, the Exchange, the New Securities and any other
transactions related thereto, and the Board of Directors of the Issuer shall
have received an opinion of an investment bank that the Exchange is fair,
from a financial point of view, to the existing public holders of the
Issuer's Common Stock.
(j) All consents, approvals and authorizations, including
shareholder, regulatory and other approvals shall have been obtained in form
and in substance reasonably satisfactory to TCW and Holdings.
(k) All other documents required by this Agreement, relating to
the Exchange, the New Securities or any transaction related thereto or as may
be requested by TCW and Holdings, shall have been prepared and shall contain
representations, warranties, and indemnities in form and in substance
reasonably satisfactory to TCW, Holdings and their counsel.
17
(l) TCW and Holdings shall have received the opinion of ▇▇▇▇▇▇▇
& Danskin P.S., counsel to the Issuer, substantially in the form attached
hereto as Exhibit D (the "▇▇▇▇▇▇▇ OPINION") as to matters of Washington law.
(m) TCW and Holdings shall have received the opinion of Akin,
Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel to the Companies, substantially
in the form attached hereto as Exhibit E (the "AKIN OPINION").
(n) TCW and Holdings shall have received the opinion of Van
Cott, ▇▇▇▇▇▇, Cornwall & ▇▇▇▇▇▇▇▇, counsel to Refining, substantially in the
form attached hereto as Exhibit G (the "UTAH OPINION") as to matters of Utah
law.
(o) Each of the Closing Conditions of JEDI set forth in SECTION
5.2 hereof shall have been satisfied or waived by JEDI.
(p) Each of the Companies, at Closing, shall have executed the
TCW Release.
(q) Holdings shall have received certificates representing the
Holdings New Securities.
5.2 JEDI'S CONDITIONS TO CLOSING. As a condition to the
obligations of JEDI hereunder and prior to the issuance of the New
Securities, the following conditions precedent shall be satisfied (in form
and substance reasonably satisfactory to JEDI and its counsel):
(a) Each of the representations and warranties of the Companies
contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date, as
though made on and as of the Closing. JEDI shall have received one or more
certificates of the Companies signed by the President or Chief Executive
Officer and the Chief Financial Officer or Secretary of such Company to that
effect.
(b) JEDI shall have completed a satisfactory due diligence
review of the Companies including, but not limited to, a review of the
engineering, economics and projections of all properties owned or leased by
the Companies, including the refinery, all environmental documents, financial
projections and accounting and control systems of the Companies.
(c) The general partner of JEDI shall have approved the terms of
this Agreement, the Exchange, the New Securities and any other transactions
related hereto or thereto.
(d) Since the date of this Agreement, there shall not have
occurred any event or events which, individually or in the aggregate, would
have, or could be reasonably expected to have a Material Adverse Effect on
the financial condition, business or prospects of the Companies, the
Subsidiaries or any of them or their properties.
(e) The Senior Creditors shall have agreed to a restructuring
and commitment with respect to the outstanding indebtedness of the Companies
under the Credit Agreement on terms acceptable to JEDI including, but not
limited to, a restructuring of the amortization of such debt and a provision
for additional borrowing capacity under the Credit Agreement.
18
(f) Creditors of the Companies listed on SCHEDULE 5.1 hereto
shall either (i) if such debt is evidenced by a promissory note, deferral
agreement, or other similar document providing for extended payment terms,
not be in default under such promissory note, deferral agreement, or other
similar document or (ii) if such debt is not evidenced by such a document,
the holder of such debt has not commenced any action for the collection of
such debt or in respect of any lien or encumbrance securing such debt.
(g) The Companies and ▇▇▇▇▇ Management LLC (and its affiliates
party thereto) shall have agreed to a restructuring or amendment to the terms
of the Farmout Agreement, such amendment substantially in the form attached
hereto as Exhibit F.
(h) The ▇▇▇▇▇ Group and the Purchasers shall have executed the
Shareholders Agreement.
(i) The Issuer, the ▇▇▇▇▇ Group and the Purchasers shall have
executed the Registration Rights Agreement.
(j) The Board of Directors of the Issuer and each of IPC's and
Refining's Boards of Directors shall approve, as applicable, the terms of
this Agreement, the Exchange, the New Securities and any other transactions
related thereto, and the Board of Directors of the Issuer shall receive an
opinion of an investment bank that the Exchange is fair, from a financial
point of view, to the existing public holders of the Issuer's Common Stock.
(k) All consents, approvals and authorizations, including
shareholder, regulatory and other approvals shall have been obtained in form
and in substance reasonably satisfactory to JEDI.
(l) All other documents required by this Agreement, relating to
the Exchange, the New Securities or any transaction related thereto or as may
be requested by JEDI, shall have been prepared and shall contain
representations, warranties, and indemnities in form and in substance
reasonably satisfactory to JEDI and its counsel.
(m) JEDI shall have received the ▇▇▇▇▇▇▇ Opinion.
(n) JEDI shall have received the Akin Opinion.
(o) JEDI shall have received the Utah Opinion.
(p) Each of the Closing Conditions of TCW and Holdings under
SECTION 5.1 hereof shall have been satisfied or waived by TCW and Holdings
and the closing of the TCW and Holdings transactions in the Exchange shall
occur simultaneously with the closing of the JEDI transactions.
(q) Each of the Companies, at Closing, shall have executed the
JEDI Release.
(r) JEDI shall have received certificates representing the JEDI
New Securities.
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5.3 CLOSING DELIVERIES OF THE COMPANIES. As a condition to the
obligations of TCW and the Purchasers hereunder and prior to the issuance of
the New Securities, the Companies shall have delivered to the Purchasers (in
form and substance satisfactory to TCW, the Purchasers and their counsel):
(a) A certificate, dated as of the Closing Date, of the
Secretary or an Assistant Secretary of each of IPC and Refining,
(i) attaching a true and complete copy of the resolutions of
the Boards of Directors of each of IPC and Refining, and of all
documents evidencing other necessary corporate or shareholder action
taken by each of IPC and Refining in connection with the matters
contemplated by this Agreement;
(ii) attaching a true and complete copy of the bylaws of each
of IPC and Refining; and
(iii) setting forth the incumbency of the officer or officers
of IPC and Refining who sign this Agreement or any other documents
related hereto, including therein a signature specimen of such
officer or officers.
(b) A certificate, dated as of the Closing Date, of the
Secretary or an Assistant Secretary of the Issuer,
(i) attaching a true and complete copy of the resolutions of
the Board of Directors of the Issuer, and of all documents evidencing
other necessary corporate or shareholder action (in form and
substance reasonably satisfactory to the Purchasers and to their
counsel) taken by the Issuer in connection with the matters
contemplated by this Agreement;
(ii) attaching a true and complete copy of the Preferred Stock
Designation;
(iii) attaching a true and complete copy of the bylaws of the
Issuer; and
(iv) setting forth the incumbency of the officer or officers
of IPC and Refining who sign this Agreement, the New Securities or any
other document related hereto or thereto, including therein a
signature specimen of such officer or officers.
(c) Certificates of good standing (including tax status, if
applicable) of the each of the Companies under the laws of their respective
states of incorporation and as foreign corporations in every state in which
their ownership of property or their conduct of business requires
qualification or registration as a foreign corporation, except for
jurisdictions wherein the failure to be so qualified would not have a
Material Adverse Effect on the Companies and the Subsidiaries, taken as a
whole.
(d) A copy of the Initial Independent Engineering Report,
certified or otherwise approved by the engineer preparing such report.
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(e) Such other documents, agreements, instruments, certificates
and evidence relating to the matters necessary to undertake the Exchange as
contemplated by this Agreement as the Purchasers or their counsel shall
reasonably require.
SECTION 6. ISSUER'S CONDITIONS TO CLOSING; REQUIRED DELIVERIES.
As a condition to the obligations of the Companies hereunder and prior to the
issuance of the New Securities, the following conditions precedent shall be
satisfied (in form and substance reasonably satisfactory to the Companies and
their counsel):
(a) Each of the representations and warranties of TCW, Holdings
and JEDI contained in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing
Date, as though made on and as of the Closing. The Companies shall have
received a certificate from each of TCW, Holdings, Portfolio and JEDI to that
effect.
(b) All consents, approvals and authorizations, including
shareholder, regulatory and other approvals shall have been obtained in form
and in substance reasonably satisfactory to the Companies.
(c) TCW shall, at Closing, execute and deliver the TCW Release
and JEDI shall, at Closing, execute and deliver the JEDI Release.
(d) The Senior Creditors shall have released all security
interests or similar interests with respect to the property or assets under
or related to the Farmout Agreement.
(e) The Board of Directors of the Issuer shall have received an
opinion of an investment bank that the Exchange is fair, from a financial
point of view, to the existing public holders of the Issuer's Common Stock.
(f) The Issuer shall have received from Fund V cancelled notes
representing the Fund V Debt.
(g) The Issuer shall have received from Portfolio cancelled
certificates representing the Portfolio Warrants.
(h) The Issuer shall have received from JEDI cancelled
certificates evidencing JEDI's entire interest in 100,000 shares of Series C
Preferred Stock.
(i) The Senior Creditors shall have agreed to a restructuring
and commitment with respect to the outstanding indebtedness of the Companies
under the Credit Agreement on terms acceptable to the Issuer and IPC
including, but not limited to, a restructuring of the amortization of such
debt and a provision for additional borrowing capacity under the Credit
Agreement.
SECTION 7. TRANSFERABILITY OF NEW SECURITIES.
7.1 RESTRICTIVE LEGEND. Each certificate for Series D Preferred
Stock, Series E Preferred Stock, Series Z Preferred Stock and Common Stock
issued under this Agreement shall be stamped or otherwise imprinted with a
legend in substantially the following form:
21
"The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may be transferred only if registered pursuant to the
provisions of such Securities Act or if an exemption from
registration is available."
PROVIDED, that such restrictive legend shall not be required after the date
on which the securities evidenced by a certificate bearing such restrictive
legend no longer constitute Restricted Securities, and upon the request of
the holder of such certificate, the Issuer, without expense to the holder,
shall issue a new certificate not bearing the restrictive legend otherwise
required to be borne thereby. In addition, each New Security shall bear the
legends required under the Shareholders Agreement.
7.2 RULE 144 AND 144A. At all times, in order to permit the
holders of Series D Preferred Stock, Series E Preferred Stock, Series Z
Preferred Stock and Common Stock, to transfer if they so desire, pursuant to
Rule 144 or 144A promulgated by the Commission (or any successor to such
rule), the Issuer will 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
the Issuer 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 the Issuer will cause any restrictive legends to be removed
and any transfer restrictions to be rescinded with respect to any sale of
Series D Preferred Stock, Series E Preferred Stock, Series Z Preferred Stock
or Common Stock which is exempt from registration under the Securities Act
pursuant to Rule 144 or 144A.
SECTION 8. AFFIRMATIVE COVENANTS OF THE COMPANIES
The Companies hereby warrant, covenant and agree that, so long as a
Purchaser beneficially owns either (i) five percent (5%) of the outstanding
Common Stock and Series Z Preferred Stock or (ii) 10% of the outstanding
shares of Series D Preferred Stock or Series E Preferred Stock, as
applicable, acquired under this Agreement (except with respect to SECTIONS
8.9, 8.10, 8.11, 8.12 and 8.14 below for which no threshold or different
ownership thresholds as specified therein shall apply) (the "REQUISITE
OWNERSHIP"):
8.1 FINANCIAL STATEMENTS. The Companies shall furnish and
deliver to the Purchasers, at the Companies' expense:
(a) as soon as available, but in any event within one hundred
twenty (120) days after the end of each fiscal year, a copy of the
consolidated balance sheet of the Companies and its consolidated Subsidiaries
as at the end of such year and the related consolidated statements of income
and retained earnings and of cash flows for such year, audited by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP or another independent certified public accountants of
nationally recognized standing reasonably acceptable to the Purchasers; and
(b) as soon as available, but in any event within fifty (50)
days after the end of each of the first three quarterly periods of each
fiscal year, the unaudited consolidated balance sheet of the Companies and
their consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows for such quarter and the portion of the fiscal year through the end of
such quarter, certified by the chief financial officer of the Issuer as being
fairly stated in all material respects when considered
22
in relation to the consolidated financial statements of the Companies and
their consolidated Subsidiaries (subject to normal year-end adjustments).
(c) The requirements of this SECTION 8.1 shall be satisfied
without further action on the part of the Companies if the Issuer is timely
filing all reports with the Commission under the Exchange Act.
8.2 MANAGEMENT'S DISCUSSION AND RESULTS OF OPERATIONS. The
Companies shall furnish and deliver to the Purchasers, at the Companies'
expense, as soon as available, but in any event within fifty (50) days after
the end of each calendar quarter, a quarterly management's discussion and
results of operations as compared to the budget for such quarter. The
requirements of this SECTION 8.2 shall be satisfied without further action on
the part of the Companies if the Issuer is timely filing all reports with the
Commission under the Exchange Act.
8.3 CERTIFICATES; OTHER INFORMATION. The Issuer shall deliver,
not more than thirty (30) days prior to the end of each fiscal year of the
Companies, a copy of the projections by the Companies of the monthly
operating budget and cash flow budget of the Companies and the Subsidiaries
for the succeeding fiscal year, such projections to be accompanied by a
certificate of the chief financial officer to the effect that such
projections have been prepared on the basis of sound financial planning
practice and that such officer has no reason to believe they are incorrect or
misleading in any material respect.
8.4 INDEPENDENT ENGINEERING REPORT. As soon as available after
the end of each calendar year, but in any event no later than March 1 of each
such year, the Companies, at their expense, shall promptly furnish, or cause to
be promptly furnished, to the Purchasers, an annual Independent Engineering
Report.
8.5 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Companies shall keep proper books of records and account in which full, true
and correct entries in conformity with GAAP and all requirements of law shall
be made of all dealings and transactions in relation to their business and
activities; and permit representatives of the Purchasers to visit and inspect
any of its properties and examine and make abstracts from any of their books
and records at any reasonable time and as often as may reasonably be desired
and to discuss the business, operations, properties and financial and other
condition of the Companies and the Subsidiaries with officers and employees
of the Companies and the Subsidiaries and with their independent certified
public accountants and attorneys.
8.6 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Companies shall continue to engage in business of the same general type as
now conducted by it and preserve, renew and keep in full force and effect its
corporate existence and take all reasonable action to maintain all rights,
privileges and franchises necessary or desirable in the normal conduct of its
business. Each of the Companies shall perform all material obligations it is
required to perform under the terms of each indenture, mortgage, deed of
trust, security agreement, lease, franchise, agreement, contract or other
instrument or obligation to which it is a party or by which it or any of its
properties is bound.
8.7 MAINTENANCE OF PROPERTY; INSURANCE. The Companies shall
keep all property useful and necessary in its business in good working order
and condition; maintain with financially sound and reputable insurance
companies insurance on all their property in at least
23
such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or
a similar business; and furnish to the Purchasers, upon written request, full
information as to the insurance carried.
8.8 DIRECTORS' AND OFFICERS' INSURANCE. The Companies shall
maintain, with financially sound and reputable insurance companies, insurance
on all their directors and officers in at least such amounts and against at
least such risks as are in effect as of the date hereof and on or before
October 1, 1999, the Companies shall have increased the amount of such policy
to an amount not less than $10 million and furnish to the Purchasers, upon
written request, full information as to the insurance carried.
8.9 TAXES. The Companies will pay all taxes (other than
Federal, State or local income taxes) which may be payable in connection with
the execution and delivery of this Agreement or the issuance and sale of the
New Securities hereunder or in connection with any modification of the New
Securities and will save the Purchasers harmless without limitation as to
time against any and all liabilities with respect to or resulting from any
delay in paying, or omission to pay such taxes. The obligations of the
Companies under this Section 8.9 shall survive any redemption, repurchase or
acquisition of the New Securities by the Companies and the termination of
this Agreement.
8.10 REPLACEMENT OF INSTRUMENTS. Upon receipt by the Issuer of
evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any certificate or instrument evidencing
any of the New Securities, and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (provided that, if the owner of the same is a
commercial bank or an institutional lender or investor, its own agreement of
indemnity shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof, the Issuer, at its expense, will execute, register and deliver, in
lieu thereof, a new certificate or instrument for (or covering the purchase
of) an equal number of shares of the New Securities.
8.11 COSTS AND EXPENSES. So long as Holdings holds any shares of
Series D Preferred Stock, the Companies shall pay the reasonable legal,
engineering and other out-of-pocket costs and expenses of Holdings and its
affiliates relating to their dealings with, for or on behalf of the
Companies. So long as JEDI holds any shares of Series E Preferred Stock, the
Companies shall pay the reasonable legal costs and expenses of JEDI and its
affiliates relating to their dealings with, for or on behalf of the Companies
8.12 CONTINGENT ISSUANCE OF OPTIONS TO HOLDINGS AND JEDI. The
parties hereto acknowledge and agree that the numbers of shares of Series Z
Preferred Stock and Common Stock of Issuer to be issued to Holdings and JEDI
in the Exchange have been agreed to by Holdings and JEDI based upon certain
understandings and agreements that such shares would represent certain
percentages of the fully diluted ownership of the Series Z Preferred Stock
and Common Stock of the Issuer which percentages would change if any of the
options or warrants listed on Schedule 8.12 (individually, a "SCHEDULE 8.12
OPTION" and collectively, the "SCHEDULE 8.12 OPTIONS") are exercised. In
consideration of the agreement of Holdings and JEDI not to require an
increase in the number of shares of Series Z Preferred Stock and Common Stock
to be
24
issued in the Exchange, the parties hereto agree that if at any time any
Schedule 8.12 Option is exercised by the holder thereof (an "EXERCISED 8.12
OPTION"), then within twenty (20) days after the date notice of such exercise
is received by the Issuer, the Issuer shall issue to Holdings and JEDI
options to purchase shares of Common Stock in the form attached hereto as
Exhibit I (the "PURCHASER ADJUSTMENT OPTIONS") having the same per share
exercise price and termination date as the Exercised 8.12 Option, except that
(a) the Purchaser Adjustment Option issued to Holdings shall be for a number
of shares equal to 200% of the number of shares issued with respect to the
Exercised 8.12 Option, (b) the Purchaser Adjustment Option issued to JEDI
shall be for a number of shares equal to 33.33% (rounding to the nearest
whole number of shares) of the number of shares issued with respect to the
Exercised 8.12 Option, and (c) the Purchaser Adjustment Options shall have a
minimum term of not less than sixty (60) days. In the event that any Schedule
8.12 Option is hereafter amended or otherwise modified, then the Purchaser
Adjustment Options issuable upon the exercise thereof shall be similarly
amended or modified; provided, that no amendments to the Schedule 8.12
Options or the Purchaser Adjustment Options may be made as to per share
exercise price or shares issuable upon conversion thereof. In addition, the
voluntary cancellation or termination of any Schedule 8.12 Option either
concurrently with or substantially contemporaneously with the issuance to the
holders of such cancelled or terminated Schedule 8.12 Options of new options
or rights to purchase securities of Issuer hereafter approved by the Issuer's
Board shall not be deemed or construed to be an amendment or modification of
the Schedule 8.12 Options for purposes of this section.
8.13 BANK COMPLIANCE CERTIFICATES. The Companies shall deliver
to Purchasers at the same time as the Companies deliver to the agent under
the Credit Agreement or the agent under any replacement credit agreement all
compliance certificates pursuant to Section 6.13 of the Credit Agreement
delivered to the agent under the Credit Agreement and any other similar
notices or reports pursuant to the Credit Agreement or a replacement credit
agreement.
8.14 MANAGEMENT CONTROLS. The failure by the Issuer to comply
with any of the covenants set forth below, unless specifically waived in
writing by Holdings, shall entitle Holdings to a right to specific
performance, other equitable remedies or damages available under applicable
law. The holders of the Series E Preferred Stock shall have no rights or
remedies under this SECTION 8.14 other than the right to receive copies of
the Annual Budget Plan, Approved Annual Budget, Updated Budget and Approved
Updated Budget pursuant to subsections (a) and (b) hereof.
(a) The Issuer hereby agrees that, so long as Holdings controls
or holds Series D Preferred Stock with a liquidation preference of $25
million or more, the Issuer shall within thirty (30) days prior to the fiscal
year end deliver to Holdings, a proposed detailed budget plan (the "ANNUAL
BUDGET PLAN"), on both a consolidated and consolidating basis, for the
operations of the Companies and the Subsidiaries for the next fiscal year,
prepared by the Issuer's officers and employees and certified by the chief
financial officer of the Issuer, which Holdings shall have the right, in its
sole discretion to approve, modify or disapprove in whole or in part,
including on a "line item" basis. Any Annual Budget Plan (or any portion
thereof) approved in writing by Holdings is herein referred to as an
"APPROVED ANNUAL BUDGET". A copy of the Annual Budget Plan and the Approved
Annual Budget shall be provided to holders of the Series E Preferred Stock
holding in excess of 49% of the outstanding Series E Preferred Stock, unless
such holders request not to receive copies of such budgets.
25
(b) The Issuer hereby agrees that, so long as Holdings controls
or holds Series D Preferred Stock with a liquidation preference of $25
million or more, the Issuer shall deliver on or immediately prior to June 10
of each year to Holdings, an update of the Approved Annual Budget for that
year (the "UPDATED BUDGET"), on both a consolidated and consolidating basis,
for the operations of the Companies and the Subsidiaries for that year,
prepared by the Issuer's officers and employees and certified by the chief
financial officer of the Issuer, which Holdings shall have the right, in its
sole discretion to approve, modify or disapprove in whole or in part,
including on a "line item" basis. Any Updated Budget (or any items therein
or portion thereof) approved in writing by Holdings is herein referred to as
an "APPROVED UPDATED BUDGET" and together with the Approved Annual Budget,
the "APPROVED BUDGETS." A copy of the Updated Budget and the Approved
Updated Budget shall be provided to the holders of the Series E Preferred
Stock holding in excess of 49% of the outstanding Series E Preferred Stock,
unless such holders request not to receive copies of such budgets. No
actions on the part of the Issuer's Board or its officers or employees shall
be permitted without prior approval of Holdings after June 30 of each year
for which an Updated Budget for such year has not been approved (until such
time as an Updated Budget for such year has been approved in accordance
herewith).
(c) The Issuer hereby agrees that, so long as Holdings controls
or holds Series D Preferred Stock with a liquidation preference of $25
million, without the prior written approval of Holdings, the Issuer shall
not, and shall not permit any of its subsidiaries to, directly or indirectly:
(i) Make or commit to make any individual expenditures over
$25,000 for any purpose that is not set forth or otherwise expressly
contemplated in the latest Approved Budget;
(ii) Convey, sell, lease, assign, transfer or otherwise
dispose of any property, business or assets (including, without
limitation, receivables and leasehold interests) with a value that
exceeds $25,000 individually whether now owned or hereafter acquired;
(iii) Approve the annual or other compensation for any officer
or director, or any salary increases or bonus payments, benefit
packages, form of employment agreements, expense reimbursement
guidelines (and exceptions thereto) or any other adjustment to the
compensation for any officer or director;
(iv) Change any of its accounting practices or procedures;
(v) Create, incur, assume or suffer to exist any
indebtedness for borrowed money or any other indebtedness in an
individual amount in excess of $25,000, except indebtedness under
hedging contracts approved by the Board in compliance with the
senior debt of the Issuer;
(vi) Assume any liabilities or issue any guarantees for any
amount, except in the case of any liabilities or guarantees in an
individual amount that does not exceed $25,000;
(vii) Commence or settle any litigation where the amount in
controversy exceeds $25,000 or injunctive relief is sought;
26
(viii) Transfer, loan, assign or otherwise convey any assets
or monies to subsidiaries of the Companies;
(ix) Amend or alter the Credit Agreement or any documents
relating to other indebtedness in an individual amount in excess of
$25,000;
(x) Approve any reimbursements to the senior officers of
the Companies for expense accounts, travel expenses or any other
reimbursable out-of-pocket expenses in excess of $3,000 in any
calendar month with respect to any officer; and
(xi) Approve the hiring or termination of management
employees.
PROVIDED, HOWEVER, that nothing in this SECTION 8.14 shall be
construed to require the approval of Holdings for, or otherwise render
invalid, any action by any Company, taken or directed by an officer or
other employee of any Company in good faith in or in response to
explosion, fire, flood or other emergency or exigent circumstances to
prevent loss of life or injury to persons or property or to comply
with applicable governmental or regulatory requirements including
without limitation Environmental Laws, but the Companies shall, as
promptly as possible, report such emergency or exigent circumstances
and the actions taken with respect thereto to Holdings.
SECTION 9. 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 growing
out of, resulting from or in any other way associated with 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 Fund V, Portfolio, TCW Asset Management
Company, a California corporation, Trust Company of the West, a California trust
company, Holdings, JEDI (and each of their affiliates) and each director,
officer, agent,
27
trustee, manager, member, partner, shareholder, principal, attorney,
employee, representative and affiliate of any such Person.
SECTION 10. MISCELLANEOUS
10.1 NOTICES.
(a) All communications under this Agreement shall be in writing
and shall be effective (a) upon hand delivery or delivery by telecopy or
facsimile, if delivered on a business day during normal business hours where
such notice is to be received or the first business day following such delivery
if delivered other than on a business day during normal business hours where
such notice is to be received or (b) on the second business day following the
date of mailing by first class mail, postage prepaid or by express courier
service, fully prepaid or upon actual receipt of such mailing, whichever shall
first occur:
(i) if to any party hereto, at its address for notices
specified beneath its name on the signature page hereof, or at such
other address as it may have furnished in writing to the Issuer, or
(ii) if to any other Person who is the registered holder of
any New Securities, to the address for the purpose of such holder as
it appears in the stock ledger of the Issuer.
10.2 SURVIVAL. All representations and warranties and covenants
made by the Companies herein 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 the Purchasers and shall survive the issuance of the New
Securities regardless of any investigation made by or on behalf of TCW and/or
the Purchasers.
10.3 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; PROVIDED, that the benefits of SECTION 8 shall inure to the benefit of
affiliates of the Purchasers or their transferees holding the Requisite
Ownership.
10.4 AMENDMENT AND WAIVER, ETC. This Agreement may be amended, but
only with the written consent of each of the Companies, TCW and the Purchasers.
No failure or delay on the part of any of TCW, the Purchasers or the Companies
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to TCW and/or the
Purchasers at law or in equity or otherwise. No waiver of or consent to any
departure by the Companies from any provision of this Agreement shall be
effective unless signed in writing by each of the Purchasers who then holds
either five percent (5%) of the outstanding Common Stock and Series Z Preferred
Stock or any Series D Preferred Stock or Series E Preferred Stock.
28
10.5 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.
10.6 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.
10.7 GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the law of the State of New York as applicable
to contracts.
10.8 EXPENSES. Whether or not the transactions contemplated by this
Agreement close, the Companies will pay all costs and expenses incurred by the
Purchasers (a) relating to the negotiation, execution and delivery of this
Agreement and the issuance of the New Securities (including, without limitation,
reasonable fees, office charges and expenses of counsel to TCW, Milbank, Tweed,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, and counsel to JEDI, ▇▇▇▇▇▇ & ▇▇▇▇▇▇), (b) relating to
printing the instruments evidencing the New Securities, (c) relating to any
amendments, waivers or consents under this Agreement to the same extent as set
forth in clause (a) and (b) above incident to the enforcement by the Purchasers
of, or the protection or preservation of any right or remedy of the Purchasers
under, this Agreement, 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), (d) relating to third
party engineering and outside accounting costs, and (e) relating to any future
dealings associated with the transactions relating to this Agreement and the
Exchange (including any engineering, legal, and outside accounting costs). The
Companies shall pay such costs and expenses, to the extent then payable, on the
date of issuance of the New Securities or, with respect to those matters
described in clauses (b), (c), (d) and (e) above thereafter from time to time
upon demand by the Purchasers upon presentation, in each such case, of a
statement thereof. Additionally, the Companies shall pay an additional $25,000
to each of TCW and JEDI (in addition to any payments made for each party's costs
and expenses as set forth herein) at Closing.
10.9 SPECIFIC PERFORMANCE. The Companies recognize that money
damages may be inadequate to compensate the Purchasers for a breach by the
Companies of their obligations hereunder, and the Companies irrevocably agree
that the Purchasers shall be entitled to the remedy of specific performance or
the granting of such other equitable remedies as may be awarded pursuant to the
arbitration described in Section 10.10 below or by a court of competent
jurisdiction after the arbitration in Section 10.10 below in order to afford the
Purchasers 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 not be
sufficient to compensate the Purchasers.
10.10 ARBITRATION. THE PARTIES AGREE THAT IF ANY DISPUTE SHOULD
ARISE UNDER THE TERMS AND PROVISIONS OF THIS AGREEMENT, EACH PARTY WAIVES ANY
RIGHT TO COMMENCE LEGAL ACTION OR ARBITRATION OTHER THAN AS PROVIDED UNDER THE
TERMS OF THIS AGREEMENT, AND THIS AGREEMENT SHALL PROVIDE THE SOLE AND EXCLUSIVE
REMEDY FOR RESOLUTION OF DISPUTES.
29
(a) THE DETERMINATION OF THE ARBITRATOR WILL BE FINAL AND BINDING
UPON EACH PARTY AND EACH PARTY SPECIFICALLY WAIVES ANY RIGHT TO CLAIM THAT THE
ARBITRATOR HAS EXCEEDED THE SCOPE OF THE ARBITRATION, HAS DISREGARDED EVIDENCE
OR PRINCIPLES OF LAW, AND FURTHER WAIVES ANY RIGHT TO DISCLAIM THE QUALIFICATION
OR FUNCTION OF THE ARBITRATOR IN ANY MANNER OR FASHION.
(b) IF SUCH A DISPUTE HAS ONLY TWO PARTIES, EACH PARTY SHALL
SELECT ONE ARBITRATOR, AND THOSE ARBITRATORS SHALL SELECT A THIRD ARBITRATOR.
IF THE PARTIES DISPUTE THE SELECTION OF THE ARBITRATOR(S) AND CANNOT AGREE UPON
THE IDENTIFICATION OF THE ARBITRATOR(S) WITHIN THIRTY (30) DAYS FROM THE MAILING
OF THE OBJECTION, A PETITION FOR APPOINTMENT OF ARBITRATOR SHALL BE FILED WITH
THE SUPERIOR COURT OF THE COUNTY OF LOS ANGELES, CALIFORNIA. IF SUCH A DISPUTE
HAS MORE THAN TWO PARTIES, ALL SUCH PARTIES SHALL WITHIN THIRTY (30) DAYS
(i) APPOINT TWO ARBITRATORS UPON AGREEMENT OF ALL SUCH PARTIES OR IF SUCH
PARTIES CANNOT SO AGREE (ii) APPROVE TWO ARBITRATOR'S SELECTED BY THE AMERICAN
ARBITRATION ASSOCIATION. THE TWO ARBITRATORS SELECTED SHALL THEN SELECT A THIRD
ARBITRATOR. THE ARBITRATION SHALL BE HELD IN LOS ANGELES, CALIFORNIA PURSUANT
TO THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION AND
THE NEW YORK CODE OF CIVIL PROCEDURE.
(c) THE ARBITRATOR'S FEES AND FEES AND COSTS OF PETITIONING FOR
THE APPOINTMENT OF THE ARBITRATOR SHALL BE PAID BY THE COMPANIES. THE
ARBITRATOR, UPON RENDERING ITS AWARD, SHALL DETERMINE THE PARTY THAT PREVAILED
BASED UPON WRITTEN STATEMENTS MADE BY EACH PARTY AT THE COMMENCEMENT OF THE
ARBITRATION AS TO THE POSITION OF THE PARTIES AND THEIR ALTERNATIVES FOR
SETTLING THE MATTER AND THEREAFTER IN ACCORDANCE WITH THE RULES FOR THE FURTHER
PRESENTATION OF EVIDENCE AS SET FORTH BY THE ARBITRATOR. A STATEMENT OF A
PROPOSED SETTLEMENT SHALL NOT BE BINDING UPON ANY PARTY AND SHALL NOT BE
CONSIDERED AS EVIDENCE BY THE ARBITRATOR EXCEPT TO THE EXTENT THAT THE
ARBITRATOR UPON MAKING ITS SOLE AND INDEPENDENT DETERMINATION SHALL DETERMINE
THE PARTY WHICH PREVAILED BASED UPON THE PROPOSALS FOR SETTLEMENT OF THE MATTER
MADE BY EACH PARTY AND SHALL DETERMINE THAT THE NON-PREVAILING PARTY SHALL PAY
SOME OR ALL OF THE COSTS OF ARBITRATION INCLUDING ANY COSTS INCURRED BY THE
ARBITRATOR IN EMPLOYING EXPERTS TO ADVISE THE ARBITRATOR IN REGARD TO SPECIFIC
SUBJECTS OR QUESTIONS. THE ARBITRATOR MAY FURTHER AWARD THE COST OF ATTORNEYS'
FEES OR EXPERT WITNESSES CONSULTED OR EMPLOYED IN THE PREPARATION OR
PRESENTATION OF EVIDENCE TO THE ARBITRATOR BY THE PREVAILING PARTY IF, IN THE
ARBITRATOR'S DETERMINATION, THE POSITION OF THE NONPREVAILING PARTY WAS NOT
REASONABLY TAKEN OR MAINTAINED OR WAS BASED UPON A FAILURE TO PROPERLY EXCHANGE
OR COMMUNICATE INFORMATION WITH THE PREVAILING PARTY IN REGARD TO THE SUBJECT
SUBMITTED TO ARBITRATION.
30
(d) THE ARBITRATOR'S DETERMINATION MAY FURTHER PROVIDE FOR
PROSPECTIVE ENFORCEMENT AND DIRECTIONS FOR THE PARTIES TO COMPLY WITH INCLUDING
WITHOUT LIMITATION PERMANENT INJUNCTIVE RELIEF. UNDER SUCH CIRCUMSTANCES, THE
ARBITRATOR'S AWARD SHALL BE BINDING UPON THE PARTIES AND SHALL BE UNDERTAKEN AND
PERFORMED BY EACH OF THE PARTIES UNTIL SUCH TIME AS THE ARBITRATOR'S DIRECTIONS
TO THE PARTY SHALL LAPSE BY THEIR TERM, OR THE ARBITRATOR SHALL NOTIFY THE
PARTIES THAT THOSE TERMS ARE NO LONGER IN FORCE OR EFFECT OR SHALL MODIFY THOSE
TERMS.
31
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Exchange Agreement as of the date first above written.
INLAND RESOURCES INC.,
a Washington corporation
By: __________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Co-Chief Executive Officer
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
INLAND PRODUCTION COMPANY,
a Texas corporation
By: __________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
INLAND REFINING, INC.,
a Utah corporation
By: __________________________________
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
TRUST COMPANY OF THE WEST, a
California trust company, as Sub-Custodian for
Mellon Bank for the benefit of Account No. CPFF
873-3032,
By: __________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
By: __________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President
Address for Notices:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
TCW Asset Management Company
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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: ________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
By: ________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇
Senior Vice President
By: TCW PORTFOLIO NO. 1555 DR V SUB-CUSTODY
PARTNERSHIP, L.P., a California limited
partnership, Member
By: TCW ROYALTY COMPANY V, a California
corporation, Managing General Partner
By: ________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Address for Notices:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
TCW Asset Management Company
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its General Partner
By: __________________________________
Name:
Title:
Address for Notices:
Enron North America Compliance Department
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇/4946
TCW PORTFOLIO NO. 1555 DR V SUB-CUSTODY
PARTNERSHIP, L.P., a California limited
partnership
By: TCW ROYALTY COMPANY V, a California
corporation, Managing General Partner
By: ________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
Address for Notices:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
TCW Asset Management Company
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇