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TAGALONG AGREEMENT
This Agreement is made and entered into as of July 21, 1997, among Joint
Energy Development Investments Limited Partnership ("Purchaser"), Pengo
Securities Corp., a Delaware corporation ("Pengo").
Whereas, Purchaser has agreed to purchase 100,000 shares of Series C
Cumulative Convertible Preferred Stock of Inland Resources Inc. ("Inland"),
which is convertible into shares of common stock of Inland ("Common Stock"),
pursuant to a Securities Purchase Agreement dated as of July 21, 1997 between
Inland and Purchaser (the "Securities Purchase Agreement").
Whereas, as of the date hereof, Pengo owns 2,250,401 shares of Common
Stock before giving effect to the conversion of Series B Preferred Stock into
Common Stock, which conversion will occur concurrently with the issuance of the
Series C Cumulative Convertible Preferred Stock into Common Stock, and
Whereas, in order to induce Purchaser to enter into the Securities
Purchase Agreement, Pengo agreed to entered into this Agreement.
Now, therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties to this
Agreement, Purchaser and Pengo hereby agree as follows:
SECTION 1. TAGALONG. (a) If Pengo or any affiliate of Pengo (a
"Transferor") sells, other than in an offering pursuant to a registration
statement or pursuant to Rule 144 under the Securities Act of 1933, any shares
of Common Stock owned by the Transferor to any individual or entity (a
"Transferee") in one transaction or a series of related transactions which
constitute a majority of the shares of Common Stock owned by Pengo and its
affiliates (collectively, the "Xxxxx Group"), Purchaser shall have the right to
sell to the Transferee, on the same terms and conditions as provided with
respect to the sale by the Transferor to such Transferee, the number of shares
of Common Stock (rounded to the nearest whole share) equal to the product of
(i) the total number of shares of Common Stock which Purchaser then owns that
were acquired upon conversion of the Series C Cumulative Convertible Preferred
Stock and the number of shares Purchaser may acquire upon conversion of the
Series C Cumulative Convertible Preferred Stock Purchaser then owns and (ii) a
fraction with a numerator equal to the number of shares of Common Stock then
being sold by the Transferor and a denominator equal to the total number of
shares of Common Stock owned by the Transferor and the other members of the
Xxxxx Group. The right of the Transferor to sell shall be subject to the
condition that the Transferor shall cause the Transferee that proposes to
purchase the shares of the Transferor to offer to purchase, on such terms
(including closing date), such number of shares from Purchaser; provided,
however, that if the Transferee is for any reason unwilling or unable to
purchase the aggregate number of shares from the Transferor and Purchaser
contemplated by the foregoing, the number of shares to be sold by each shall be
reduced to such number as, when taken with the numbers of shares to be sold by
each other such party, shall be equal to the number
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of shares which such Transferee is willing or able to purchase and shall comply
with the first sentence of this Section 1(a). Purchaser may only sell shares
of Common Stock hereunder that it has acquired upon conversion of Series C
Cumulative Convertible Preferred Stock.
(b) The Transferor shall give written notice to Purchaser at
least 3 business days prior to any proposed sale of Common Stock subject to
this Agreement. The notice shall specify the proposed Transferee, the number
of shares of Common Stock to be sold, the amount and type of consideration to
be received therefor, and the place and date on which the sale is to be
consummated. If Purchaser desires to include shares of Common Stock in such
sale pursuant to Section 1(a), Purchaser shall notify the Transferor not more
than 2 business days after its receipt of the notice from Transferor.
(c) If Pengo proposes to transfer, or an affiliate of Pengo
proposes to transfer, to a Transferee, whether by merger, consolidation, sale
or otherwise, all or substantially all the outstanding equity securities or
assets of Pengo or such affiliate, then Pengo or such affiliate shall, as a
condition to the exercise of such right of transfer, cause such Transferee to
agree to be bound by the provisions hereof.
(d) Pengo agrees that, if any shares of Common Stock owned by
it are transferred to one of its affiliates, it will obtain the agreement of
such affiliate to be bound by the provisions hereof.
(e) If Pengo or any affiliate of Pengo should distribute
Common Stock in kind, as a dividend, a distribution in full or partial
liquidation or otherwise without consideration, Pengo or such affiliate will
require, as a condition to effectuation of such distribution, that each
recipient thereof shall agree to be bound by the provisions of Section 1 of
this Agreement as fully as Pengo and any such affiliate, and, in that regard
and for purposes only of interpretation of such Section 1, each such recipient
shall be deemed to be an affiliate of Pengo.
SECTION 2 MISCELLANEOUS. (a) 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. If Purchaser transfers all the Common
Stock it then owns to any person or entity other than in a public distribution,
such transferee shall be deemed thereafter to be the Purchaser for purposes of
this Agreement.
(b) The provisions of this Agreement may not be amended,
modified or supplemented without the written agreement of Purchaser and Pengo.
(c) 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.
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(d) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas applicable to contracts made and
to be performed wholly within that State.
(e) 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.
(f) For purposes of this Agreement, "affiliate" shall have the
meaning given to such term in Rule 405 under the Securities Act of 1933, as
amended.
(g) This Agreement shall terminate on the earlier of (i) July
21, 2001 and (ii) the first date that the Xxxxx Group's fully diluted ownership
of Common Stock is less than 25%.
(h) Pengo agrees that it will cause all of the other members
of the Xxxxx Group, including Xxxxxxx X. Xxxxx, to abide by the terms of this
Agreement.
(i) Pengo agrees that Purchaser shall have the piggyback
registration rights set forth in the Registration Rights Agreement referred to
in the Securities Purchase Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this Tagalong
Agreement as of the date first written above.
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Management Limited
Partnership, its General Partner
By: Enron Capital Corp., its General
Partner
By: /s/ XXXXXXXX X. XXXXXX
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Name: Xxxxxxxx X. Xxxxxx
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Title: Vice President
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PENGO SECURITIES CORP.
By: /s/ XXXXX X. XXXXXXX
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Xxxxx X. Xxxxxxx
Senior Vice President
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