EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
DATED AS OF SEPTEMBER 21, 1999
BY AND AMONG
INLAND HOLDINGS LLC,
TCW PORTFOLIO NO. 1555 DR V SUB-CUSTODY PARTNERSHIP, L.P.
AND
INLAND RESOURCES INC.,
JOINT ENERGY DEVELOPMENT INVESTMENTS II
LIMITED PARTNERSHIP,
AND
▇▇▇▇▇ MANAGEMENT LLC
PENGO SECURITIES CORPORATION
▇▇▇▇▇ ENERGY PARTNERSHIP
and their affiliates
TABLE OF CONTENTS
Page
Section 1. Definitions....................................................................... 1
Section 2. Demand Registration Rights........................................................ 2
Section 3. Shelf Registration................................................................ 3
Section 4. Piggy-back Registration........................................................... 3
Section 5. Restrictions on Dispositions and Demand Registrations............................. 5
Section 6. Registration Procedures........................................................... 5
Section 7. Registration Expenses............................................................. 9
Section 8. Indemnification; Contribution..................................................... 9
Section 9. Rule 144.......................................................................... 11
Section 10. Remedies.......................................................................... 11
Section 11. Binding Effect; Transferees; Termination.......................................... 11
Section 12. Amendments and Waivers............................................................ 12
Section 13. Notices........................................................................... 12
Section 14. Counterparts...................................................................... 12
Section 15. Headings.......................................................................... 12
Section 16. Governing Law..................................................................... 12
Section 17. Severability...................................................................... 12
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
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entered into as of the 21st day of September, 1999, by and between Inland
Resources Inc., a Washington corporation (the "Company"), Inland Holdings LLC, a
California limited liability company ("Holdings"), TCW Portfolio No. 1555 DR V
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Sub-Custody Partnership, L.P., a California limited partnership ("Portfolio"),
Joint Energy Development Investments II Limited Partnership, a Delaware limited
partnership ("JEDI" together with Holdings, the "Purchasers") and Pengo
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Securities Corporation ("Pengo"), ▇▇▇▇▇ Energy Partnership ("SEP"), ▇▇▇▇▇▇▇ ▇.
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▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (collectively, the "▇▇▇▇▇ Individuals") (Pengo, SEP, and the ▇▇▇▇▇
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Individuals, together with any of their respective affiliates, the "▇▇▇▇▇
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Group").
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This Agreement is being entered into in connection with the Exchange
Agreement dated as of September 21, 1999 (the "Exchange Agreement"), between the
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Company, the Purchasers and certain other parties (such transaction being the
"Exchange Transaction"). To induce either of the Purchasers to enter into the
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Exchange Agreement and the ▇▇▇▇▇ Group to participate in the Exchange
Transaction, the Company has agreed to provide the registration and other rights
set forth in this Agreement. The execution and delivery of this Agreement is a
condition to the closing under the Exchange Agreement.
The parties hereby agree as follows:
Section 1. Definitions.
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As used in this Agreement, the following terms have the meanings indicated:
"Commission" means the Securities and Exchange Commission or any
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similar agency having jurisdiction to enforce the Securities Act.
"Common Stock" means the common stock, par value $.001 per share, of
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the Company.
"Demand Registration" has the meaning ascribed to such term in Section
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2(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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and the rules and regulations promulgated thereunder.
"Person" means any individual, corporation, partnership, joint
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venture, association, joint-stock company, trust, unincorporated organization or
governmental or political subdivision, agency or instrumentality thereof or
other entity or organization of any kind.
"Piggy-back Registration" has the meaning ascribed to such term in
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Section 4.
"Purchaser Adjustment Options" has the meaning ascribed to such term
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in the Exchange Agreement.
"Register," "registered" and "registration" refer to a registration
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effected by preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of effectiveness of such
registration statement.
"Registrable Common Stock" means, collectively, (a) the shares of
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Common Stock issued to JEDI and Holdings pursuant to the Exchange Agreement, (b)
the shares of Common Stock acquirable upon the conversion of the Series Z
Preferred Stock issued to Holdings pursuant to the Exchange Agreement, (c) the
shares of Common Stock issuable upon exercise of any of the Purchaser Adjustment
Options, (d) the shares of Common Stock held by the ▇▇▇▇▇ Group as of the date
hereof and (e) any shares of Common Stock or other securities issued with
respect to the Common Stock described in clauses (a), (b), (c) and (d) of this
definition whether by way of stock
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dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, share exchange, reorganization or
otherwise held by Holdings, JEDI or the ▇▇▇▇▇ Group; provided, however, such
Common Stock or other securities shall cease to be Registrable Common Stock when
(i) a registration statement with respect to the disposition of such Common
Stock or other securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with the plan of
distribution set forth in such registration statement, (ii) such Common Stock or
other securities shall have been sold pursuant to Rule 144 (or any successor
provision) under the Securities Act, (iii) such Common Stock or other securities
shall have ceased to be outstanding or (vi) such Common Stock or other
securities may be sold pursuant to Rule 144 (or a successor provision) under the
Securities Act without being restricted by the volume limitations or method of
sale restrictions thereof.
"Securities Act" means the Securities Act of 1933, as amended, and the
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rules and regulations promulgated thereunder.
"Series Z Preferred Stock" means the Series Z Convertible Preferred
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Stock of the Company, par value $.001 per share.
"Shelf Registration Statement" has the meaning ascribed to such term
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in Section 2(a).
Section 2. Demand Registration Rights.
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(a) Right to Demand Registration. Subject to Section 2(b) and
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Section 5 hereof, any holder of Registrable Common Stock may make a written
request to the Company for registration with the Commission under and in
accordance with the provisions of the Securities Act of the disposition of all
or part of the Registrable Common Stock (a "Demand Registration"). All requests
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made pursuant to this Section 2(a) will specify the aggregate amount of
Registrable Common Stock to be registered, will specify the intended methods of
disposition thereof and will specify whether the registration statement to be
filed is a "shelf" registration statement ("'Shelf Registration Statement")
----------------------------
pursuant to Rule 415 under the Securities Act (or any similar rule that may be
adopted by the Commission). If any holder intends to dispose of any of the
Registrable Common Stock pursuant to an underwritten offering, the holder will
have the right to select the underwriter. No securities other than Registrable
Common Stock may be registered in connection with a Demand Registration without
the consent of the holders of a majority of the outstanding Registrable Common
Stock whose shares are subject to such Demand Registration.
(b) Number of Demand Registrations; Effective Registration;
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Expenses. So long as (i) Holdings holds Registrable Common Stock, it (and its
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transferees), shall be entitled to initiate and have effected an aggregate of
three (3) Demand Registrations; (ii) JEDI holds Registrable Common Stock, it
(and its transferees) shall be entitled to initiate and have effected two (2)
Demand Registrations; and (iii) the ▇▇▇▇▇ Group holds Registrable Common Stock,
it (and its transferees) shall be entitled to initiate and have effected one (1)
Demand Registration. The Company shall pay all Registration Expenses of all
such Demand Registrations in accordance with Section 7 hereof. The Company
shall not be deemed to have effected a Demand Registration unless and until (i)
the Company has filed a registration statement with the Commission and (ii) the
registration statement has been declared effective by the Commission.
(c) Grant of New Registration Rights. From and after the date
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of this Agreement and until this Agreement is terminated, the Company shall not
grant any registration
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rights to any person that could adversely affect the rights of either of the
Purchasers hereunder or are inconsistent with the rights of either of the
Purchasers hereunder without the prior written consent of such Purchasers;
provided, however, that the granting of piggy-back registration rights that are
not superior to the registration rights granted under Section 4 hereof with
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respect to cut-backs or reductions required by underwriters shall not, in and of
itself, be deemed to adversely affect the rights of either of the Purchasers or
be inconsistent with such rights.
(d) Termination of Prior Registration Rights. By entering into this
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Agreement JEDI, Portfolio and each of the members of the ▇▇▇▇▇ Group, on behalf
of themselves and their affiliates, expressly consents to and acknowledges that
any registration right(s) related to any securities of the Company held prior to
the date hereof by it is/are terminated as of the date hereof.
Section 3. Shelf Registration.
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The Company will, as soon as possible following a written request pursuant to
Section 2(a) for the registration of Registrable Common Stock by means of a
Shelf Registration Statement, file a shelf registration statement on Form S-3
covering the Registrable Common Stock and thereafter shall use its best efforts
to cause the Shelf Registration Statement to be declared effective as soon as
practicable following such filing and to take any and all reasonable action
within the Company's control, subject to and in accordance with Section 5, as
may be necessary or appropriate to maintain such effectiveness until such time
as neither any holder nor any of their assignees own any Registrable Common
Stock; provided however that the Company shall not be required to maintain the
effectiveness of any such Shelf Registration Statement for longer than (a) one
hundred and twenty days (120) from the effective date of such registration
statement for a Demand Registration initiated by the ▇▇▇▇▇ Group; and (b) two
years from the effective date of such registration statement for a Demand
Registration initiated by either of the Purchasers.
Section 4. Piggy-back Registration.
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(a) If the Company proposes to file a registration statement under the
Securities Act with respect to an offering by the Company for its own account or
for the account of others (the "Initiating Shareholders") of any class of
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security (other than pursuant to a registration statement on Forms S-4 or S-8
(or successor forms) or in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders), including a Demand
Registration Statement or a Shelf Registration Statement, then the Company shall
in each case give written notice of such proposed filing to the holders of
Registrable Common Stock (which notice shall indicate, to the extent then known,
the proposed managing underwriter or underwriters, if such offering is to be
underwritten, and such other terms of the proposed offering that the Company
reasonably believes to be material to the holders of Registrable Common Stock)
and shall include in such registration statement all or a portion of the
Registrable Common Stock owned by such holders which such holders shall request
to be so included by written notice given by such holders to the Company within
10 business days after such holder's receipt of such notice from the Company (a
"Piggy-back Registration"). The Company shall use its best efforts to effect
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the registration of all Registrable Common Stock requested to be so registered
in such offering on the same terms and conditions as any similar securities of
the Company included therein. If the managing underwriter or underwriters of an
underwritten offering, if any, advise the holders of Registrable Common Stock in
writing that
3
in its or their reasonable opinion or, in the case of a Piggyback Registration
not being underwritten, the Company shall reasonably determine (and notify the
holders of Registrable Common Stock of such determination), after consultation
with an investment banker of nationally recognized standing, that the number of
shares of Common Stock or other securities proposed to be sold in such
registration will adversely affect the success of such offering, the Company
will include in such registration the number of securities, if any, which, in
the opinion of such underwriter or underwriters, or the Company, as the case may
be, can be sold as follows: (A) if such registration was initiated by the
Company, (i) first, the shares the Company proposed to sell, (ii) second, the
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Registrable Common Stock and other shares of Common Stock requested to be
included in such registration by the holders thereof entitled to participate in
such registration under this Agreement or under any registration rights
agreement in effect on the date hereof and (iii) third, the Common Stock
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requested to be included in such registration by the holders thereof entitled to
participate in such registration under a registration rights agreement effective
after the date hereof and (B) if such registration was initiated as the result
of the exercise of a demand registration right of holders of Common Stock (i)
first, the shares of Common Stock requested to be included in such registration
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by the demanding holders pro rata among those requesting such registration on
the basis of the number of shares of Common Stock requested to be included),
(ii) second, shares to be issued and sold by the Company and shares held by
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Persons other than the demanding holders and requested to be included in such
registration either pursuant to this Agreement or pursuant to any registration
rights agreement in effect on the date hereof and (iii) third, the Common Stock
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requested to be included in such registration by the holders thereof entitled to
participate in such registration under registration rights agreements effective
after the date hereof. To the extent that the privilege of including
Registrable Common Stock or other shares of Common Stock in any Piggyback
Registration must be allocated among the holders thereof pursuant to clause
(A)(ii) or (B)(ii) above, the allocation shall be made pro rata based on the
number of shares of Common Stock that each such participant shall have requested
to include therein and to the extent that the privilege of including Common
Stock in any Piggyback Registration must be allocated among the holders thereof
pursuant to clause (A)(iii) or (B)(iii) above, the allocation shall be made pro
rata based on the number of shares of Common Stock that each shall such
participant shall have requested to include therein.
(b) The holders of Registrable Common Stock to be distributed by such
underwriters shall be parties to the underwriting agreement between the Company
and such underwriters. The representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of the holders of
Registrable Common Stock to be distributed by such underwriters, and the
conditions precedent to the obligations of such holders of Registrable Common
Stock under such underwriting agreement shall be reasonably satisfactory to such
holders. Such holders shall not be required to make any representations or
warranties to the Company or its underwriters other than representations or
warranties regarding such holder, such holder's interest in the shares to be
distributed and such holder's intended method of distribution. The Company
shall have the right to discontinue any piggy-back registration under this
Section 4 at any time prior to the effective date of such registration if the
registration of the securities giving rise to such registration under this
Section 4 is discontinued by the Company, but no such discontinuation shall
preclude an immediate or subsequent request by the holders of Registrable Common
Stock for registration pursuant to Section
4
2 hereof if otherwise permitted.
Section 5. Restrictions on Dispositions and Demand Registrations.
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Notwithstanding anything to the contrary contained herein, the Company shall
not be obligated to prepare and file any registration statement pursuant to a
Demand Registration or prepare or file any amendment or supplement thereto and
may suspend, by giving written notice to the holders of Registrable Common
Stock, such holders' rights to make dispositions of Registrable Common Stock
pursuant to a Shelf Registration Statement, at any time when the Company
reasonably believes that the filing thereof at the time requested, or the
offering or sale of securities pursuant thereto, would materially adversely
affect a pending or proposed public offering of the Company's securities, or an
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction or negotiations, discussions or pending proposals with respect
thereto. The rights of holders of Registrable Common Stock to make dispositions
thereof pursuant to a Shelf Registration Statement may similarly be suspended by
the Company upon written notice to the holders of Registrable Common Stock that
the Shelf Registration Statement is unusable as a result of an event requiring a
post-effective amendment or supplement, which has not yet been filed, and will
remain unusable until the supplement is filed or post-effective amendment is
filed and declared effective. The filing of a registration statement, or any
amendment or supplement thereto, by the Company cannot be deferred, and the
holders' rights to dispose of Registrable Common Stock pursuant to a Shelf
Registration Statement cannot be suspended for more than 90 days, may not be so
deferred or suspended more than 180 days during any twelve month period unless
such deferral or suspension is agreed to in writing by the holders of
Registrable Common Stock subject to such suspension or deferral and, with
respect to suspended dispositions, the Company shall be obligated to maintain
the effectiveness of the applicable registration statement for an additional
period of time equal to the period of suspension(s).
Section 6. Registration Procedures.
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(a) Certain Company Obligations. Whenever Registrable Common
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Stock is to be registered pursuant to Sections 2 or 3 of this Agreement, the
Company will use reasonable diligence to effect the registration of such
Registrable Common Stock in accordance with the intended method of disposition
thereof as quickly as practicable, and in connection with any such request and
with the Piggy-back Registration or Demand Registration, the Company will as
expeditiously as possible:
(i) prepare and file with the Commission a registration
statement which includes the Registrable Common Stock and use its best
efforts to cause such registration statement to become effective
(which registration statement, in the case of a Demand Registration,
shall in all events be filed with the Commission within 60 days after
the Company's receipt of the Demand Registration, subject to the
limitations set forth in Section 5); provided that before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the holders of the Registrable
Common Stock covered by such registration statement and the
underwriters, if any, draft copies of all such documents proposed to
be filed at least five (5) business days prior thereto, which
documents will be subject to the reasonable review of such holders and
underwriters, and provided further that if such registration statement
refers to any holder of Registrable Common
3
Stock by name or otherwise as the holder of any securities of the
Company, then such holder shall have the right to require (i) the
insertion therein of language, in form and substance satisfactory to
such holder, to the effect that the holding by such holder of such
securities does not necessarily make such holder a "controlling
person" of the Company within the meaning of the Securities Act and is
not to be construed as a recommendation by such holder of the
investment quality of the Company's securities covered thereby and
that such holding does not imply that such holder will assist in
meeting any future financial requirements of the Company, or (ii) in
the event that such reference to such holder by name or otherwise is
not required by the Securities Act or any rules and regulations
promulgated thereunder, the deletion of the reference to such holder;
(ii) prepare and file as soon as reasonably practicable with
the Commission such amendments and post-effective amendments to the
registration statement as may be necessary to keep the registration
statement effective for the period of time specified in Section 3 with
respect to the Shelf Registration Statement and otherwise for 90 days
(or such shorter period which will terminate when all Registrable
Common Stock covered by such registration statement has been sold or
withdrawn); cause the prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act; and comply with the provisions of
the Securities Act applicable to it with respect to the disposition of
all securities covered by such registration statement during the
applicable period in accordance with the intended methods of
disposition by the holders thereof set forth in such registration
statement or supplement to the prospectus;
(iii) furnish to any holder of Registrable Common Stock
included in such registration statement and to the managing
underwriter or underwriters, if any, without charge, at least one
signed copy of the registration statement and any post-effective
amendment thereto, upon request, and such number of conformed copies
thereof and such number of copies of the prospectus (including each
preliminary prospectus) and any amendments or supplements thereto, and
any documents incorporated by reference therein, as such holder or
underwriter may reasonably request in order to facilitate the
disposition of the Registrable Common Stock being sold by such holder;
(iv) notify in writing each holder of Registrable Common
Stock included in such registration statement, at any time when a
prospectus relating-thereto is required to be delivered under the
Securities Act, when the Company becomes aware of the happening of any
event as a result of which the prospectus included in such
registration statement (as then in effect) contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading and, as
promptly as practicable thereafter, prepare and file with the
Commission and furnish a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Common Stock, such prospectus will not contain any
6
untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(v) use reasonable diligence to cause all Registrable
Common Stock included in such registration statement to be listed, by
the date of the first sale of Registrable Common Stock pursuant to
such registration statement, on each securities exchange on which the
Common Stock of the Company is then listed or proposed to be listed,
if any, and use reasonable diligence to cause all Registrable Common
Stock included in such Registration Statement to be quoted on The
Nasdaq Stock Market (or other national or small-cap market), if the
Common Stock of the Company is then quoted thereon;
(vi) make generally available to its security holders an
earnings statement satisfying the provisions of Section 11(a) of the
Securities Act as soon as practicable, which earnings statement shall
cover the requisite 12-month period, which requirements will be deemed
to be satisfied if the Company timely files complete and accurate
information on Forms 10-Q, 10-K and 8-K under the Exchange Act and
otherwise complies with Rule 158 under the Act as soon as feasible;
(vii) if requested by the managing underwriter or underwriters
or any holder of Registrable Common Stock covered by the registration
statement, promptly incorporate in a prospectus supplement or post-
effective amendment such information as the managing underwriter or
underwriters or such holder reasonably requests to be included
therein, including, without limitation, with respect to the
Registrable Common Stock being sold by such holder to such underwriter
or underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any other terms of the
underwritten offering of the Registrable Common Stock to be sold in
such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;
(viii) on or prior to the date on which the registration
statement is declared effective, use reasonable diligence to register
or qualify, and cooperate with the holders of Registrable Common Stock
included in such registration statement, the underwriter or
underwriters, if any, and their counsel, in connection with the
registration or qualification of the Registrable Common Stock covered
by the registration statement for offer and sale under the securities
or blue sky laws of each state and other jurisdiction of the United
States as any such holder or underwriter reasonably requests in
writing, to use reasonable diligence to keep each such registration or
qualification effective, including through new filings, or amendments
or renewals, during the period such registration statement is required
to be kept effective and to do any and all other acts or things
necessary or advisable to enable the disposition in all such
jurisdictions of the Registrable Common Stock covered by the
applicable registration statement; provided that the Company will not
be required to qualify generally to do business in any jurisdiction
where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction
where it is not then so subject;
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(ix) cooperate with the holders of Registrable Common Stock
covered by the registration statement and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends)
representing securities to be sold under the registration statement,
and enable such securities to be in such denominations and registered
in such names as the managing underwriter or underwriters, if any, or
such holders may request;
(x) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the holders of the Registrable Common Stock being sold or
the underwriters retained by holders participating in an underwritten
public offering, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Common Stock;
(xi) make available for inspection by the holders, by any
underwriter participating in any disposition to be effected pursuant
to such registration statement and by any attorney, accountant or
other agent retained by the holders or any such underwriter, all
pertinent financial and other records, pertinent corporate documents
and properties of the Company, and cause all of the Company's
officers, directors and employees to supply all information,
reasonably requested by the holders or any such seller, underwriter,
attorney, accountant or agent in connection with such registration
statement. In that connection, the Company may require the holders,
such underwriter and such other persons to conduct their investigation
in a manner which does not disrupt the operations of the Company and
to execute such confidentiality agreements as the Company may
reasonably determine to be advisable; and
(xii) notify each holder of Registrable Common Stock of any
stop order issued or threatened by the Commission in connection with
any registration statement covering Registrable Common Stock and take
all reasonable actions required to prevent the entry of such stop
order or to remove it if entered.
(b) Certain Obligations of Holders of Registrable Common Stock.
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Each holder of Registrable Common Stock shall provide the Company in writing
such information as the Company reasonably requests in order to effectuate the
registration and disposition of such holder's Registrable Common Stock pursuant
to this Agreement and such holder shall execute all consents, powers of
attorney, registration statements and other documents reasonably required to be
signed by such holder in order to effectuate the registration or disposition of
Registrable Common Stock by such holder.
Section 7. Registration Expenses.
----------------------
The Company shall pay all expenses incident to the Company's performance of or
compliance with its obligations hereunder, including, without limitation, all
registration, filing and National Association of Securities Dealers, Inc. fees,
all fees and expenses of complying with securities or blue sky laws, all word
processing, duplicating and printing expenses, messenger and delivery expenses,
and the reasonable fees and disbursements of the Company's independent public
accountants, of the Company's counsel and of one law firm acting as counsel to
the holders requesting registration of all or a portion of their Registrable
Common Stock. Holders of Registrable Common Stock requesting registration will
be responsible for any other expenses incurred by them, including for their own
accountants and representatives, as well as any
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underwriting discounts and commissions on the sale of the Registrable Common
Stock.
Section 8. Indemnification; Contribution.
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(a) Indemnification by the Company.
-------------------------------
The Company agrees to indemnify and hold harmless each holder of Registrable
Common Stock, its officers, directors, partners and members (and officers and
directors of such partners and members) and each person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages
or liabilities arising out of or based upon any untrue or alleged untrue
statement of material fact contained in any registration statement registering
the disposition of Registrable Common Stock, any amendment or supplement
thereto, any prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same arise out of or are based upon, any such untrue statement or omission based
upon information furnished in writing to the Company by such indemnified person
expressly for use therein and will reimburse, as incurred, such holder, officer,
director, partner or controlling person for any legal or other expenses incurred
by such holder, officer, director, partner or controlling person in connection
with investigating, defending or appearing as a third party witness in
connection with any such loss, claim, damage, or liability. In connection with
an underwritten offering, the Company will indemnify, and reimburse for
expenses, the underwriters thereof, their officers and directors and each person
who controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to holders of Registrable Common
Stock.
(b) Indemnification by Holders of Registrable Common Stock. In
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connection with any registration statement in which a holder of Registrable
Common Stock is participating, such holder will furnish to the Company in
writing such information with respect to the name and address of such holder and
the amount of Registrable Common Stock held by such holder and such other
information as the Company shall reasonably request, for use in connection with
any such registration statement or prospectus and agrees to indemnify the
Company, its directors and officers, any underwriter (within the meaning of the
Securities Act) for the Company or other persons selling securities pursuant to
such registration statement, and each person who controls the Company, against
any losses, claims, damages, liabilities and expenses resulting from any untrue
statement of a material fact or any omission of a material fact required to be
stated in the registration statement or prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein not misleading,
to the extent, but only to the extent, that such untrue statement or omission is
contained in any information with respect to such holder so furnished in writing
by such holder expressly for inclusion in any prospectus or registration
statement. In no event shall the liability of any selling holder of Registrable
Common Stock hereunder be greater in amount than the dollar amount of the
proceeds received by such holder upon the sale of the Registrable Common Stock
giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled
--------------------------------------
to indemnificaiton hereunder agrees to give prompt written notice to the
indemnifying party after the receipt by such person of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing as to which such person will claim indemnification or
contribution pursuant to this Agreement and, unless in the reasonable judgment
of such indemnified
9
party a conflict of interest may exist between such indemnified party and the
indemnifying party with respect to such claim, permit the indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to such
indemnified party. The failure to notify the indemnifying party promptly of such
commencement or threat shall not relieve the indemnifying party of its
obligation to indemnify the indemnified party, except to the extent that the
indemnifying party is actually prejudiced by such failure. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party will not be
subject to any liability for any settlement made without its consent (but such
consent will not be unreasonably withheld). No indemnifying party will consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation. If the indemnifying party is not entitled to, or elects not to,
assume the defense of a claim, it will not be obligated to pay the fees and
expenses of more than one counsel for the indemnified party or parties with
respect to such claim, unless in the reasonable judgment of any indemnified
party an actual conflict of interest exists between such indemnified party and
any other of such indemnified parties with respect to such claim, in which event
the indemnified party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) Contribution. If the indemnification provided for in this
------------
Section 8 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
expenses in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact, has been made by, or related to
information supplied by, such indemnifying party or indemnified parties, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
Section 8(b), any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), no underwriter shall be
required to contribute any amount in excess of the amount by which the
underwriting discount applicable to the Registrable Common Stock purchased by it
and distributed to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no selling holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Common Stock of such selling holder was
offered to the public exceeds the amount of any damages which such selling
holder has otherwise been required to pay by reason of such untrue
10
statement or omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
The obligations of the Company pursuant to this Section 8 shall be
further subject to such additional express agreements of the Company as may be
required to facilitate an underwritten offering, provided that no such agreement
shall in any way limit the rights of the holders of Registrable Common Stock
under this Agreement, or create additional obligations of such holders not set
forth herein, except as otherwise expressly agreed in writing by any such
holders. The obligations of the Company pursuant to this Section 8 shall be in
addition to any liability or obligation the Company may have at common law or
otherwise.
Section 9. Rule 144.
---------
The Company covenants that for so long as any Holder owns any Registrable
Common Stock that it will file, in a timely manner, the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder, and it will take such further
action as any holder of Registrable Common Stock may reasonably request, all to
the extent required from time to time to enable such holder to sell Registrable
Common Stock without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Common Stock, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
Section 10. Remedies.
---------
Each holder of Registrable Common Stock in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
Section 11. Binding Effect; Transferees; Termination.
-----------------------------------------
Except to the extent otherwise provided herein, the provisions of this
Agreement shall be binding upon and accrue to the benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns. A
transferee of Registrable Common Stock, which acquires such securities from a
holder of Registrable Common Stock in a transfer, whether in a public
distribution or otherwise, which results in such transferred securities not
being Registrable Common Stock in the hands of such transferee, shall not be a
holder of Registrable Common Stock hereunder and shall not have any rights or
obligations hereunder as a result of such transfer of Registrable Common Stock.
Except as provided in the preceding sentence, a transferee of a holder of
Registrable Common Stock, whether becoming such by sale, transfer, assignment,
operation of law or otherwise, shall be deemed to be a holder of Registrable
Common Stock hereunder and such transferee shall be entitled to the rights, and
subject to the obligations, of such a holder hereunder. This Agreement shall
terminate at such time as there are no outstanding shares of Registrable Common
Stock.
11
Section 12. Amendments and Waivers.
-----------------------
Except as otherwise provided herein, the provisions of this Agreement may not
be amended, modified or supplemented without the written agreement of each of
the Company, Holdings, JEDI and the ▇▇▇▇▇ Group; provided, however, at such time
as any of Holdings, JEDI or any member of the ▇▇▇▇▇ Group no longer holds
Registrable Common Stock, this Agreement (other than Section 8) may be amended,
modified or supplemented without consent of the party no longer holding
Registrable Common Stock.
Section 13. Notices.
--------
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 a holder of Registrable Common Stock at the most current
address given by such holder to the Company in writing;
(ii) if to the Company at its address set forth in the Exchange
Agreement.
Section 14. Counterparts.
-------------
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
Section 15. Headings.
---------
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.
Section 16. Governing Law.
--------------
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York.
Section 17. Severability.
-------------
In the event that any one or more of the provisions contained herein, or the
application thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be in any way impaired thereby, it being
intended that all of the rights and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
[REMAINDER OF PAGE LEFT BLANK]
12
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
INLAND RESOURCES INC.,
a Washington corporation
By: \s\ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Co-Chief Executive Officer
INLAND HOLDINGS LLC, a California
limited liability company,
By: TRUST COMPANY OF THE WEST, a
California trust company, as Sub-
Custodian for Mellon Bank for the
benefit of Account No. CPFF 873-
3032, Member
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
By: \s\ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
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: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Vice President
TCW PORTFOLIO NO. 1555 DR V SUB-CUSTODY
PARTNERSHIP, L.P.,
a California limited partnership
By: TCW ROYALTY COMPANY V,
a California corporation,
as Managing General Partner
By: \s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
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: \s\ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇
Vice President
PENGO SECURITIES CORP., a Delaware
corporation
By: \s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ENERGY PARTNERSHIP, a New York
general partnership
By: ▇▇▇▇▇ Management LLC,
a New York limited liability company,
its General Partner
By: \s\ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
\s\ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
\s\ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
\s\ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual
\s\ ▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇, an individual
\s\ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, an individual