EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
and entered into as of the 12th day of June, 1996 by and between
INLAND RESOURCES INC., a Washington corporation (the "Issuer"),
and SMITH MANAGEMENT COMPANY, INC., a New York corporation
("Smith Management"), RANDALL D. SMITH ("R. Smith"), JEFFREY A.
SMITH ("J. Smith") and JOHN W. ADAMS ("Adams"). R. Smith, J.
Smith and Adams are sometimes referred to herein jointly as
"Farmout Stockholders", and the Farmout Stockholders are
sometimes referred to herein jointly with Smith Management as the
"Purchasers".
W I T N E S S E T H:
WHEREAS, the Issuer and Purchasers are parties to that
certain Agreement dated as of June 12, 1996 (the "Purchase
Agreement") pursuant to which the Issuer has agreed to issue to
Farmout Stockholders 1,309,880 shares of common stock, par value
$.001 per share ("Common Stock"), of the Issuer (the "Common
Shares"), and to issue to Smith Management 950,000 shares of the
1,000,000 shares of Class A preferred stock, par value $.001 per
share to be designated as "Series B Convertible Preferred Stock"
("Series B Preferred Stock"), of the Issuer (the "Preferred
Shares"), which are convertible into shares of Common Stock at an
initial conversion price of $6.27 per share of Common Stock (the
"Underlying Common Shares"); and
WHEREAS, it is a condition precedent to the Purchasers'
obligation to purchase the Common Shares and Preferred Shares
that the Issuer and the Purchasers shall have entered into this
Registration Rights Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter set forth, the Issuer and the Purchaser
agree as follows:
1. Shelf Registration Rights.
The Issuer will, as soon as possible following a written
request by Smith Management with regard to the Common Shares, or
the Farmout Stockholders with regard to the Underlying Common
Shares, file a shelf registration statement (the "Shelf
Registration Statement") on Form S-3 covering the Common Shares
or Underlying Common Shares, as applicable, 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
Issuer's control (provided that such Registration Statement may
be unusable during periods (which shall not exceed one hundred
twenty (120) consecutive days or an aggregate of one hundred
eighty days within any three hundred sixty five day period) of
pending acquisitions or other material events which would require
a post-effective amendment or supplement to the Shelf
Registration Statement, it being agreed that the Issuer shall use
its best efforts to file a post-effective amendment at the
earliest practicable date so that the Shelf Registration
Statement will be useable), as may be necessary or appropriate to
maintain such effectiveness until such time as neither the
Purchasers nor any of their assignees own any Registerable
Securities (as defined in Section 4). Purchasers will cooperate
fully with Issuer by filing consents or other documents with the
SEC which may be required by the SEC, or by providing such
documents as may be reasonably required by the Issuer. If the
Purchasers propose to dispose of any of the Registerable
Securities pursuant to an underwritten offering the Purchasers
shall have the right to select the underwriter.
2. Indemnification. In connection with the registration
of any of the Registerable Securities under the Securities Act of
1933, as amended (the "Act"):
(a) Issuer's Indemnification. The Issuer will
indemnify and hold harmless the Purchasers, each person
who controls the Purchasers within the meaning of the
Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act") , and Smith Management's officers
and directors, against any losses, claims, expenses,
damages or liabilities (including reasonable attorney's
fees) , joint or several, to which the Purchasers,
their controlling persons or such officers and
directors become subject under the Act, insofar as such
losses, claims, expenses, damages or liabilities (or
actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement
of any material fact contained in the Shelf
Registration Statement, in any prospectus forming a
part of the Shelf Registration Statement (the
"Prospectus") or any amendment or supplement thereof,
or arise out of or are based upon the omission or
alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse
the Purchasers, each such controlling person or such
officers and directors for any legal or other expenses
reasonably incurred by them in connection with
investigating or defending any such loss, claim,
expense, damage, liability or action; provided,
however, that the Issuer will not be liable in any such
case if but only to the extent that any such loss,
claim, expense, damage or liability arises out of our
is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in
conformity with information furnished in writing to the
Issuer by the Purchaser or Purchaser's underwriter
expressly for inclusion in the Registration Statement.
(b) Purchasers' Indemnification. Each Purchaser
will indemnify and hold harmless the Issuer and each
underwriter of the Registerable Securities and each
person who controls the Issuer or any such underwriter
within the meaning of the Act and the Exchange Act,
each officer of the Issuer who signs the Shelf
Registration Statement and each director of the Issuer,
against all losses, claims, expenses, damages or
liabilities (including reasonable attorneys, fees),
joint or several, to which the Issuer, any such
underwriter or such officer or director or controlling
person become subject under the Act, but only insofar
as such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged
untrue statement of any material fact made in reliance
on and in conformity with information relating to such
Purchaser furnished in writing to the Issuer expressly
for inclusion in the Shelf Registration Statement.
(c) Notification. Promptly after receipt by an
indemnified party hereunder of notice of the
commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made
against the indemnifying party hereunder, notify the
indemnifying party in writing thereof; provided,
however, that any failure to give such notice will not
waive any rights of the indemnified party except to the
extent the rights of the indemnifying party are
materially prejudiced. In case any such action shall
be brought against any indemnified party and it shall
notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to
participate in the defense thereof.
(d) If the indemnification provided for in this
Section 2 is unavailable or insufficient to hold
harmless an indemnified party in respect of any losses,
claims, expenses, damages or liabilities or actions in
respect thereof, then each indemnifying party shall in
lieu of indemnifying such indemnified party contribute
to the amount paid or payable by such indemnified party
as a result of such losses, claims, expenses, damages,
liabilities or actions in such proportion as is
appropriate to reflect the relative fault of the
Issuer, on the one hand, and the applicable Purchaser,
on the other, in connection with the statements or
omissions which resulted in such losses, claims,
expenses, damages, liabilities or actions as well as
any other relevant equitable considerations, including
the failure to give any required notice. The relative
fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission
to state a material fact relates to information
supplied by the Issuer, on the one hand, or the
applicable Purchaser, on the other, and the parties,
relative intent, knowledge, access to information and
opportunity to correct or present such statement or
omission. The Issuer and the Purchasers agree that it
would not be just and equitable if contribution
pursuant to this Section 2 (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 above in this Section 2 (d)
. The amount paid or payable to an indemnified party as
a result of the losses, claims, expenses, damages,
liabilities or actions in respect thereof referred to
above in this Section 2(d) shall be deemed to include
any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or
defending any such action or claim. No person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation.
3. Expenses. In connection with the Shelf Registration
Statement, Issuer shall pay all expenses incident to the Issuer'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 Issuer's counsel and of its independent public accountants.
Purchasers will be responsible for any expenses incurred by them,
including for their own counsel, accountants, underwriters and
representatives.
4. Registerable Securities. For purposes of this
Agreement, the term "Registerable Securities" shall mean (i) the
Common Shares and Underlying Common Shares and any Common Shares
and Underlying Common Shares sold by any Purchaser to a permitted
assignee pursuant to Section 8 and (ii) any shares of Common
Stock issued or issuable with respect to the shares of Common
Stock described in (i) above, by way of a stock dividend or stock
split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganizations.
Registerable Securities shall cease to be Registerable Securities
when they have been disposed of pursuant to the Shelf
Registration Statement or pursuant to Rule 144 under the Act.
5. Rule 144 Covenants. The Issuer agrees that for so long
as the Purchasers own any Registerable Securities to (i) file
with the SEC, in a timely manner, all reports required to be
filed by the Issuer under the Exchange Act and (ii) to provide
the Purchasers, upon request, information regarding the number of
shares of Common Stock outstanding as shown by the most recent
report or statement published by the Issuer.
6. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of
the State of New York, without regard to the conflict of law
principles thereof.
7. Binding Effect. The obligations of this Agreement
shall be binding upon the parties, their heirs, successors and
legal representatives.
8. Assignment. This Agreement may not be assigned by any
party without the prior written consent of the other party
hereto, except that Smith Management and the Farmout Stockholders
may assign all or any portion of their rights under this
Agreement to a party to which it sells or transfers Registerable
Securities in a private transaction exempt from the registration
and prospectus delivery requirements of the Act, provided, at
such time, Purchaser furnishes an opinion of counsel to such
effect reasonably acceptable to the Issuer.
9. Amendment. Amendments to this Agreement may only be
made in writing signed by each of the parties.
10. Entire Agreement. This Agreement contains the entire
understanding of the parties and there are no other agreements,
written or oral, regarding the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INLAND RESOURCES INC.
By: /s/ Kyle R. Miller
Kyle R. Miller, President
SMITH MANAGEMENT COMPANY,
INC.
By: /s/ David Persing
Its: Senior Vice
President
/s/ Randall D. Smith
Randall D. Smith, Individually
/s/ Jeffrey A. Smith
Jeffrey A. Smith, Individually
/s/ John W. Adams
John W. Adams, Individually