EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made
and entered into as of the 31st day of July, 1996 by and between
INLAND RESOURCES INC., a Washington corporation (the "Issuer"),
and ARTHUR J. PASMAS ("Pasmas").
W I T N E S S E T H:
WHEREAS, the Issuer and Purchaser 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
Purchaser 50,000 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 Purchaser's
obligation to purchase the Preferred Shares that the Issuer and
the Purchaser 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 Purchaser with regard to the Underlying Common Shares,
file a shelf registration statement (the "Shelf Registration
Statement") on Form S-3 covering the Underlying Common Shares 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 Purchaser nor any of his assignees own
any Registerable Securities (as defined in Section 4). Purchaser
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 Purchaser proposes to dispose of any of the
Registerable Securities pursuant to an underwritten offering the
Purchaser 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 Purchaser against any
losses, claims, expenses, damages or liabilities
(including reasonable attorney's fees) to which the
Purchaser becomes 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 Purchaser for any legal or other expenses
reasonably incurred by him 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) Purchaser's Indemnification. 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
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 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
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 Purchaser 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.
Purchaser will be responsible for any expenses incurred by him,
including for his own counsel, accountants, underwriters and
representatives.
4. Registerable Securities. For purposes of this
Agreement, the term "Registerable Securities" shall mean (i) the
Underlying Common Shares and any Underlying Common Shares sold by
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 Purchaser owns 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 Purchaser, 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 Pasmas may assign all or any portion of his
rights under this Agreement to a party to which he 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
/s/ Arthur J. Pasmas
Arthur J. Pasmas