SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)
Filed by the registrant X
Filed by a party other than the registrant
Check the appropriate box:
X Preliminary proxy statement
Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or Rule
14a-12.
INLAND RESOURCES INC.
(Name of Registrant as Specified in Its Charter)
INLAND RESOURCES INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
X $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
$500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
Fee computed on table below per Exchange Act Rules
14a-(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
___________________________________________________________
(2) Aggregate number of securities to which transactions
applies:
________________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
_________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________
Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
_________________________________________________________________
(2) Form, schedule or registration statement no.:
_________________________________________________________________
(3) Filing party:
_________________________________________________________________
(4) Date filed:
_________________________________________________________________
<PAGE>
Preliminary Copy
INLAND RESOURCES INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
May 22, 1996
This proxy statement is furnished in connection with a
solicitation of proxies by the Board of Directors of Inland
Resources Inc. ("Inland" or the "Company"). The proxies
solicited in connection with this proxy statement will be used at
the annual meeting of stockholders of the Company to be held on
Wednesday, May 22, 1996, at 9:00 a.m., local time, at the Denver
Petroleum Club located at 555 17th Street, Suite 3700, Denver,
Colorado 80202, and at any adjournment thereof, for the purposes
set forth in the foregoing notice of the meeting. Properly
executed proxies received in time for the meeting will be voted
as specified therein. If either of the enclosed forms of proxy
is executed and returned, it may nevertheless be revoked by
written notice to either of the persons named as a proxy or the
Secretary of the Company at any time before it is exercised, by
voting in person at the meeting or by giving a later proxy. This
proxy statement and the enclosed forms of proxy are being mailed
on or about April 23, 1996.
The Company's principal executive office is located at 475
17th Street, Suite 1500, Denver, Colorado 80202, and its
telephone number is (303) 292-0900.
At the close of business on April 19, 1996 (the "Record
Date"), the Company had outstanding and entitled to vote -
40,927,999 shares of Common Stock, $.001 par value (the "Common
Stock"), and 106,850 shares of Series A Convertible Preferred
Stock, $.001 par value (the "Series A Preferred Stock"). The
holders of record of such shares on such date will be entitled to
one vote at the annual meeting for each share held by them. The
holders of Common Stock are entitled to elect four of the
directors nominated for election, and the holders of Series A
1<PAGE>
Preferred Stock are entitled to elect three directors. The
presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock and a majority of the outstanding shares
of Series A Preferred Stock entitled to vote at the annual
meeting will constitute a quorum of the Common Stock and Series A
Preferred Stock, respectively.
The Annual Report to Stockholders for the year ended
December 31, 1995, including financial statements, is enclosed
with this proxy statement.
MATTERS TO BE ACTED UPON
Proposal 1 - Election of Directors - Holders of Common Stock and
Series A Preferred Stock
Both The Holders Of Common Stock And The Holders Of
Series A Preferred Stock Will Be Entitled To Vote On The
Election Of Directors, As Described Below.
At the annual meeting, the holders of Common Stock will be
asked to consider and act upon a resolution to elect four members
of the Board of Directors and the holders of Series A Preferred
Stock will be asked to consider and act upon a resolution to
elect three members of the Board of Directors. As of the date of
this proxy statement, the Board of Directors of the Company knows
of no other matters which are likely to be presented for
consideration at the annual meeting, except for the reverse stock
split and amendments to the Company's Articles of Incorporation
described below. However, if any other matters should properly
come before the meeting or any adjournment thereof, the persons
named in the enclosed proxy will have discretionary authority to
vote such proxy in accordance with their best judgment on such
matters and with respect to matters incident to the conduct of
the meeting; provided, however, that under the Company's Articles
of Incorporation, as amended, holders of Series A Preferred Stock
are not entitled to vote on all matters that may be voted upon by
holders of Common Stock. Votes will be counted at the meeting by
an election judge to be appointed by the Company prior to the
meeting. An abstention or non vote on a matter will not be
counted for purposes of determining whether the required vote
2<PAGE>
necessary to approve such matter was received.
Proposal 2 - Reverse Split and Amendments to Articles of
Incorporation - Holders of Common Stock Only
Only The Holders Of Common Stock Are Entitled To Vote
On The Proposed Reverse Split and Amendments To The
Company's Articles Of Incorporation, As Described Below.
At the annual meeting, the holders of Common Stock will be
asked to consider and act upon the approval of the Board of
Directors' recommendation to (i) amend the Company's Articles of
Incorporation to decrease the number of authorized shares of
Common Stock from 100,000,000 shares to 10,000,000 shares
(without affecting par value), (ii) effect a 1-for-10 reverse
stock split of the Company's presently issued and outstanding
shares of Common Stock (the "Reverse Split"), and (iii) amend the
Company's Articles of Incorporation, following the effective date
of the Reverse Split, to increase the post-split number of
authorized shares of Common Stock from 10,000,000 shares to
25,000,000 shares (without affecting par value), all of which
shall be considered as one proposal (the "Proposal") submitted to
a vote of the holders of Common Stock. The vote will be taken
for or against the Proposal so that all three elements are
considered in one vote. HOLDERS OF SERIES A PREFERRED STOCK ARE
NOT ENTITLED TO VOTE ON THE PROPOSAL AND THE COMPANY IS NOT
ASKING FOR A PROXY FROM HOLDERS OF SERIES A PREFERRED STOCK IN
CONNECTION WITH THE PROPOSAL. As of the date of this proxy
statement, the Board of Directors of the Company knows of no
other matters which are likely to be presented for consideration
at the annual meeting, except for the election of directors
described above. However, if any other matters should properly
come before the meeting or any adjournment thereof, the persons
named in the enclosed proxy will have discretionary authority to
vote such proxy in accordance with their best judgment on such
matters and with respect to matters incident to the conduct of
the meeting; provided, however, that under the Company's Articles
of Incorporation, as amended, holders of Series A Preferred Stock
are not entitled to vote on all matters that may be voted upon by
holders of Common Stock. Votes will be counted at the meeting by
an election judge to be appointed by the Company prior to the
meeting. The affirmative vote, either in person or by proxy, of
the holders of more than 50% of the shares of Common Stock
3<PAGE>
outstanding as of the Record Date is necessary to approve the
Proposal. Accordingly, if a stockholder abstains from voting
certain shares on the approval of the Proposal, or a beneficial
owner fails to deliver written instructions to his nominee holder
of shares so that the nominee holder is not able to vote such
shares, it will have the effect of a negative vote.
PROPOSAL 1
ELECTION OF DIRECTORS
At the meeting, seven directors are to be elected to hold
office until the 1997 annual meeting of stockholders or until
their successors are elected and qualified. The Company's
Articles of Incorporation, as amended, provides that the number
of directors shall be seven unless an increase is approved by at
least five members of the Board of Directors, including two of
the members elected by the holders of Series A Preferred Stock.
The Board of Directors is now comprised of seven members, as
fixed by the Board of Directors. Four members of the Board of
Directors are to be elected by the holders of Common Stock and
three members of the Board of Directors are to be elected by the
holders of Series A Preferred Stock.
Holders of Common Stock
Holders of Common Stock are entitled to elect four of the
seven nominees for election to the Board of Directors. The
nominees for consideration by holders of Common Stock are
identified below under "Management".
Proxies for shares of Common Stock may not be voted for a
greater number of persons than the number of Common Stock
nominees named in this proxy statement. It is the intention of
the persons named in the enclosed form of proxy to vote such
proxy FOR the election of the Common Stock nominees named below
unless authorization is withheld on the proxy. Management does
not contemplate that any Common Stock nominee will be unable or
unwilling to serve as a director or become unavailable for any
reason, but if such should occur before the meeting, a proxy
voted for any such individual will be voted for another Common
Stock nominee to be selected by management.
4<PAGE>
The enclosed form of Common Stock proxy provides a means for
holders of Common Stock to vote for all of the Common Stock
nominees listed therein, to withhold authority to vote for one or
more of such nominees or to withhold authority to vote for all
such nominees. Each properly executed proxy received in time for
the meeting will be voted as specified therein. If a holder of
Common Stock does not specify otherwise, the shares represented
by such stockholder's proxy will be voted for the Common Stock
nominees listed therein or, as noted above, for other Common
Stock nominees selected by management. The withholding of
authority or abstention will have no effect upon the election of
directors by holders of Common Stock because under Washington law
directors are elected by a plurality of the votes cast, assuming
a quorum is present. The presence of a majority of the
outstanding shares of Common Stock will constitute a quorum. The
shares held by each holder of Common Stock who signs and returns
the enclosed form of Common Stock proxy will be counted for
purposes of determining the presence of a quorum at the meeting.
The Board of Directors recommends a vote FOR the four Common
Stock nominees to the Board of Directors identified below.
Holders of Series A Preferred Stock
Holders of Series A Preferred Stock are entitled to elect
three of the seven nominees for election to the Board of
Directors. The nominees for consideration by holders of Series A
Preferred Stock are identified below under "Management".
Proxies for shares of Series A Preferred Stock may not be
voted for a greater number of persons than the number of Series A
Preferred Stock nominees named in this proxy statement. It is
the intention of the persons named in the enclosed form of proxy
to vote such proxy FOR the election of the Series A Preferred
Stock nominees named below unless authorization is withheld on
the proxy. Management does not contemplate that any Series A
Preferred Stock nominee will be unable or unwilling to serve as a
director or become unavailable for any reason, but if such should
occur before the meeting, a proxy voted for any such individual
will be voted for another Series A Preferred Stock nominee to be
selected by management.
The enclosed form of Series A Preferred Stock proxy provides
5<PAGE>
a means for holders of Series A Preferred Stock to vote for all
of the Series A Preferred Stock nominees listed therein, to
withhold authority to vote for one or more of such nominees or to
withhold authority to vote for all such nominees. Each properly
executed proxy received in time for the meeting will be voted as
specified therein. If a holder of Series A Preferred Stock does
not specify otherwise, the shares represented by such
stockholder's proxy will be voted for the Series A Preferred
Stock nominees listed therein or, as noted above, for other
Series A Preferred Stock nominees selected by management. The
withholding of authority or abstention may have an effect upon
the election of directors by holders of Series A Preferred Stock
because under the Company's Articles of Incorporation, as
amended, a majority of the outstanding shares of Series A
Preferred Stock must vote for the election of each Series A
Preferred Stock nominee for such nominee to be elected to the
Board of Directors. The presence of a majority of the
outstanding shares of Series A Preferred Stock will constitute a
quorum. The shares held by each holder of Series A Preferred
Stock who signs and returns the enclosed form of Series A
Preferred Stock proxy will be counted for purposes of determining
the presence of a quorum at the meeting, but such holder must
also vote for the election of each Series A Preferred Stock
nominee for such proxy to be counted for purposes of determining
whether a majority of the outstanding shares of Series A
Preferred Stock were cast for the election of each such nominee.
The Board of Directors recommends a vote FOR the three
Series A Preferred Stock nominees to the Board of Directors
identified below.
PROPOSAL 2
REVERSE SPLIT AND AMENDMENTS TO ARTICLES OF INCORPORATION
(For Consideration by Holders of Common Stock Only)
Introduction
The Board of Directors of the Company has adopted a
resolution approving, and recommends to the holders of Common
Stock that they approve, (i) an amendment to the Company's
Articles of Incorporation to decrease the number of authorized
6<PAGE>
shares of Common Stock from 100,000,000 shares to 10,000,000
shares (without affecting par value) ("Amendment No. One", a copy
of which is attached hereto as Annex A), (ii) a 1-for-10 reverse
stock split of the Company's presently issued and outstanding
shares of Common Stock (the "Reverse Split"), and (iii) an
amendment to the Company's Articles of Incorporation, following
the effective date of the Reverse Split, to increase the
post-split number of authorized shares of Common Stock from
10,000,000 shares to 25,000,000 shares (without affecting par
value) ("Amendment No. Two", a copy of which is attached hereto
as Annex B), all of which shall be considered as one proposal
(the "Proposal") submitted to a vote of the holders of Common
Stock. The vote will be taken for or against the Proposal so that
all three elements are considered in one vote. The Proposal was
adopted by the Company's Board of Directors and is subject to
approval by the holders of Common Stock. HOLDERS OF SERIES A
PREFERRED STOCK ARE NOT ENTITLED TO VOTE ON THE PROPOSAL AND THE
COMPANY IS NOT ASKING FOR A PROXY FROM HOLDERS OF SERIES A
PREFERRED STOCK IN CONNECTION WITH THE PROPOSAL.
On the Record Date, Woodstead Associates II, L.P. and Pengo
Securities Corp., affiliates of Randall D. Smith, owned
20,600,188 shares of Common Stock, presenting approximately 50.3%
of the shares of Common Stock outstanding, and such entities have
indicated to Management of the Company that they intend to vote
their shares for the approval of the Proposal, which will ensure
such approval by the holders of Common Stock.
Upon approval of the Proposal at the annual meeting, the
following actions will take place:
1. Amendment No. One will be filed with the State of
Washington on June 3, 1996 (the "Effective Date") and the number
of authorized shares of Common Stock will be reduced from
100,000,000 shares to 10,000,000 shares (without affecting par
value) as of the Effective Date.
2. The Reverse Split of the Company's existing issued and
outstanding Common Stock will occur and such issued and
outstanding shares will automatically be divided by 10, and each
current holder of 10 shares of Common Stock will automatically
become the holder of one post-split share of Common Stock. No
fractional shares will be deemed issued in connection with the
7<PAGE>
Reverse Split, and any fractional shares that may result will be
rounded up to the nearest whole post-split share. The
certificates representing the existing pre-split outstanding
shares of Common Stock will not be required to be exchanged for
new certificates representing post-split shares. Rather, the
existing certificates shall be deemed to automatically constitute
and represent the correct number of post-split shares without
further action by the stockholders, and new certificates will
only be issued as old certificates are delivered to the Company's
transfer agent as transfers of shares occur after the Effective
Date. As a result of the Reverse Split, the number of
outstanding shares of Common Stock on the Effective Date will be
reduced from 40,927,999 shares to approximately 4,092,800 shares
(subject to minor adjustments due to the rounding up of
fractional shares).
3. Immediately following the Effective Date, Amendment No.
Two will be filed with the State of Washington and the number of
post-split authorized shares of Common Stock will be increased
from 10,000,000 post-split shares to 25,000,000 post-split shares
(without affecting par value). Immediately after filing
Amendment No. Two with the State of Washington, the Company will
have authorized 25,000,000 shares of Common Stock, of which
approximately 4,092,800 shares will be issued and outstanding
(subject to minor adjustments due to the rounding up of
fractional shares).
The enclosed form of Common Stock proxy provides a means for
holders of Common Stock to vote for or against the Proposal, or
to withhold authority to vote for the Proposal. Each properly
executed Proxy received in time for the meeting will be voted as
specified thereon. If a holder of Common Stock does not specify
otherwise, the shares represented by such stockholder's proxy
will be voted for the Proposal. The affirmative vote, either in
person or by proxy, of the holders of more than 50% of the shares
of Common Stock outstanding as of the Record Date is necessary to
approve the Proposal. Accordingly, if a stockholder abstains
from voting certain shares on the approval of the Proposal, or a
beneficial owner fails to deliver written instructions to his
nominee holder of shares so that the nominee holder is not able
to vote such shares, it will have the effect of a negative vote.
However, as noted above, Woodstead Associates II, L.P. and Pengo
Securities Corp. have advised Management that they intend to vote
8<PAGE>
for the Proposal and, as a result, approval of the Proposal is
assured.
The voting rights and other rights attributable to Common
Stock will not be altered by the Proposal. Except for the
rounding up of fractional shares (which will result in only minor
adjustments), the proposed Reverse Split will not affect any
stockholder's proportionate equity interest in the Company. The
Proposal will not change the par value of Common Stock. The only
effect on the Company's consolidated financial statements will be
a reclassification of the capital accounts on the Company's
balance sheet and a recalculation of loss per share and weighted
average shares outstanding as if the Reverse Split had occurred
on the first day of each period presented.
Reasons for Proposed Reverse Split
The Board of Directors of the Company is of the opinion that
the current price per share of the Company's Common Stock has a
tendency to diminish the effective marketability of such stock
because of the reluctance of many leading brokerage firms to
recommend lower-priced stocks to their clients. Additionally,
the policies and practices of a number of brokerage houses tend
to discourage individual brokers within those firms from dealing
in lower-priced stocks. Some of such policies and practices
pertain to the payment of broker's commissions and to time
consuming procedures that operate to make the handling of
lower-priced stocks unattractive to brokers from an economic
perspective. The structure of trading commissions also tends to
have an adverse impact upon holders of lower-priced stocks since
the brokerage commission payable on the sale of a lower-priced
stock generally represents a higher percentage of the sales price
than the commission on a relatively higher-priced stock. The
foregoing factors adversely affect the price and liquidity of the
Common Stock, and could also affect the Company's ability to
raise additional capital through a sale of equity securities.
While the Company may pursue attempts to raise additional equity
capital through a sale of equity securities at some future time
following the Reverse Split, there are no current plans to raise
such additional capital and there can be no assurance that
additional capital can be raised on terms acceptable to the
Company, even if the Reverse Split is approved.
9<PAGE>
The Board of Directors is hopeful that the decrease in the
number of shares of Common Stock outstanding as a consequence of
the proposed Reverse Split, and the anticipated corresponding
increased price per share, will stimulate interest in the
Company's post-split Common Stock and possibly promote greater
liquidity for the Company's stockholders with respect to those
shares held by them. However, the possibility does exist that
such liquidity could be adversely affected by the reduced number
of shares which would be outstanding after the proposed Reverse
Split.
The Board of Directors is also hopeful that the proposed
Reverse Split will result in a price level for the shares that
would mitigate the present reluctance, policies and practices on
the part of brokerage firms referred to above and diminish the
adverse impact of trading commissions on the potential market for
the Company's stock. However, there can be no assurance that the
proposed Reverse Split will achieve the desired results which
have been outlined above, nor can there be any assurance that the
Reverse Split will not adversely impact the market price of the
Common Stock or, alternatively, that any increased price per
share of the Common Stock immediately after the proposed Reverse
Split will be sustained for any prolonged period of time. In
addition, the Reverse Split may have the effect of creating odd
lots of stock for some stockholders and such odd lots may be more
difficult to sell or have higher brokerage commissions associated
with the sale of such odd lots.
Management of the Company is not aware of any present
efforts by any person or persons to accumulate Common Stock in
order to obtain control of the Company and the proposed Reverse
Split is not intended to be an anti-takeover device. The
approval of the Proposal is being sought simply to enhance the
image of the Company and to price the Common Stock in a price
range more acceptable to the brokerage community and to
investors.
Reasons for Increase of Post-Split Number of Authorized Shares
Amendment No. Two will be filed immediately after the
Effective Date in order to increase the post-split number of
authorized shares of Common Stock from 10,000,000 shares to
25,000,000 shares. After giving effect to the Reverse Split on
10<PAGE>
the Effective Date, the Company will have approximately 4,092,800
shares (subject to minor adjustments due to rounding of
fractional shares) outstanding, which would represent
approximately 41% of the authorized shares if Amendment No. Two
was not implemented. In order to provide the Company with
flexibility to engage in financing and other acquisition
transactions with Common Stock, and to otherwise have sufficient
shares of Common Stock available for issuance from time to time
by the Board of Directors upon its determination that such
issuance is appropriate and in the best interest of the Company,
the Board has approved, and recommends that the holders of Common
Stock approve as part of the Proposal, Amendment No. Two
increasing the number of post-split authorized shares of Common
Stock to 25,000,000 shares. Other than various options and
warrants representing approximately 469,711 post-split shares,
the Series A Preferred Stock of the Company convertible into
approximately 1,004,337 post-split shares, and the Option
Agreement with Randall D. Smith described below under "Management
- - Certain Transactions", the Company is not presently a party to
any agreement, letter of intent or understanding with any other
party respecting any additional Common Stock. However, the
Company plans to continue to aggressively pursue acquisition
opportunities in the oil and gas industry as they become
available and otherwise pursue financing transactions determined
to be suitable by the Board.
General Effect of Proposal
The effect of the Proposal on the aggregate number of shares
of the Company's Common Stock is as follows:
<TABLE>
<CAPTION>
Prior to After
Number of shares Proposal Proposal
- ----------------- -------- ---------
<S> <C> <C>
Common Stock
Authorized 100,000,000 25,000,000
Outstanding 40,927,999 4,092,800<F1>
Available for issuance 44,331,530 4,433,153<F1>
Par value per share $.001 $.001
11<PAGE>
Preferred Stock
Authorized 20,000,000 20,000,000
Outstanding Series A 106,850 106,850
Financial data<F2>
Stockholders' equity
Preferred Stock $ 107 $ 107
Common Stock 40,928 4,093<F1>
Additional paid-in
capital 23,246,545 23,283,380<F1>
Accumulated deficit ( 9,308,171) (9,308,171)
----------- -----------
Total stockholders'
equity $13,979,409 $13,979,409
=========== ===========
_________________________
<FN>
<F1> Subject to minor adjustment due to rounding of fractional
shares.
<F2> Based upon audited financial information at December 31,
1995.
</FN>
</TABLE>
_________________________
Effect Upon Outstanding Options and Warrants
In connection with the Proposal, all outstanding options and
warrants will be adjusted so that the number of shares issuable
upon the exercise of such outstanding options or warrants will be
decreased in proportion to the 1-for-10 Reverse Split, and the
exercise price per share under such outstanding options and
warrants will be proportionately increased. Outstanding options
and warrants will be rounded up to the nearest whole share and no
cash payment will be made in respect of any fractional share.
The Company's Amended 1988 Option Plan (the "Plan") presently
provides for 2,128,000 shares, which will be decreased
12<PAGE>
proportionately so that the number of post-split shares
authorized under the Plan will equal 212,800 shares.
Effect on Series A Preferred Stock
The Company also has outstanding 106,850 shares of Series A
Preferred Stock which are convertible into Common Stock of the
Company. Under the terms of the Company's Articles of
Incorporation, the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock will be decreased in
proportion to the 1-for-10 Reverse Split, and the conversion
price per share will be proportionately increased.
No Exchange of Stock Certificates
As noted above under "Introduction", each current
certificate representing issued and outstanding shares of Common
Stock prior to the Reverse Split shall be deemed to automatically
constitute and represent the correct number of post-split shares
after the Effective Date without further action by the
stockholders, and it will not be necessary for any stockholder to
surrender the existing certificates representing such Common
Stock.
Federal Income Tax Consequences
A summary of the federal income tax consequences of the
proposed Reverse Split is set forth below. The following
discussion is based upon present federal tax law and does not
purport to be a complete discussion of such consequences.
Accordingly, STOCKHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS FOR MORE DETAILED INFORMATION REGARDING THE EFFECTS OF
THE PROPOSED REVERSE SPLIT ON THEIR INDIVIDUAL TAX STATUS.
1. The proposed Reverse Split will not be a taxable
transaction to the Company.
2. A stockholder will not recognize any gain or loss as a
result of the Reverse Split.
3. The aggregate tax basis of a stockholder's post-split
shares of Common Stock (including any fractional shares issued in
connection with the rounding up of fractional shares) will equal
13<PAGE>
the aggregate tax basis of the stockholder's shares of pre-split
Common Stock. The holding period of the post-split Common Stock
generally will include the holding period of the stockholder's
pre-split Common Stock, provided the pre-split shares of Common
Stock were capital assets in the hands of such stockholder.
No Dissenters' Rights
Under Washington law, stockholders are not entitled to
dissenters' rights with respect to the Reverse Split or any other
element of the Proposal.
The Board of Directors recommends a vote FOR approval of the
Proposal.
MANAGEMENT
Director Nominees and Executive Officers
The following table provides information as of March 1,
1996, with respect to each of the Company's directors and
executive officers:
<TABLE>
Served as
Executive
Officer or
Name Age Position Director Since
------------------ --- ---------------- --------------
Directors
<CAPTION>
<S> <C> <C> <C>
Common Stock Nominees:
Kyle R. Miller 43 President, Chief Executive
Officer and Director 1992
James F. Etter<F1><F2> 60 Director 1985
Richard F. Conway<F1> 42 Director 1995
Arthur J. Pasmas<F1><F2> 61 Director 1994
Series A Preferred
Stock Nominees:
John D. Lomax 71 Director (Chairman) 1994
14<PAGE>
Bill I. Pennington 44 Director, Vice President
and Chief Financial
Officer 1994
T Brooke Farnsworth
<F1><F2> 50 Director 1994
Other Executive Officers
John E. Dyer 33 Vice President and
Chief Operating Officer 1993
Michael J. Stevens 30 Secretary and Treasurer 1993
__________________________________
<FN>
<F1> Member of the Audit Committee.
<F2> Member of the Compensation Committee.
</FN>
</TABLE>
Kyle R. Miller. Mr. Miller has served as President, Chief
Executive Officer and a Director of the Company since December
10, 1992. He was Chairman of the Board of Directors from
December 10, 1992 until September 21, 1994. For the five years
prior to becoming President and Chief Executive Officer of the
Company, Mr. Miller was engaged in oil and gas exploration
through his own company, Miller Oil Company.
James F. Etter. Mr. Etter is a co-founder of the Company
and has served at various times as its Chief Executive Officer
from August 1985 to December 10, 1992. He was a Director of the
Company from 1985 until September 21, 1994, and was reappointed
as a director on November 18, 1994. He is also President of
Broadway Management Corp., a private real estate management
company, and the owner of James F. Etter Enterprises, a privately
held company with real estate, oil and other property holdings.
Richard F. Conway. Mr. Conway has served as Vice President
of Smith Management Company, New York, New York, a private
company engaged in various businesses and investments, including
oil and gas, since August 1994. Prior thereto, he was Senior
15<PAGE>
Vice President of Needham & Company, Inc., a New York - based
investment banking firm, for approximately two and one-half
years, and Vice President of Security Pacific Merchant Bank for
approximately one and one-half years. Mr. Conway also has over
eight additional years of investment banking experience. He is
also a director of Hawaiian Airlines, Inc., a publicly traded
airline.
John D. Lomax. Mr. Lomax has served as Chairman and a
Director of the Company since September 21, 1994, the effective
date of the Company's merger with IPC. He served as Chairman,
Chief Executive Officer and a Director of IPC from its inception
in 1977 until September 21, 1994.
Bill I. Pennington. Mr. Pennington has served as Chief
Financial Officer and a Director of the Company since September
21, 1994, and as Vice President since March 22, 1996. He served
as Treasurer of the Company from September 21, 1994 until March
22, 1996, and served as President, Chief Operating Officer and a
Director of IPC from May 1987 until September 21, 1994. From
March 1986 until May 1987, Mr. Pennington was a manager with the
accounting firm of Coopers & Lybrand in Houston, Texas. From
1983 through 1986, Mr. Pennington was an Executive Vice President
and a director of Texas General Petroleum Corporation, a Texas
corporation. Mr. Pennington is a certified public accountant.
T Brooke Farnsworth. Mr. Farnsworth has practiced law in
Houston, Texas for more than 24 years, where presently he is the
Managing Partner of the law firm of Farnsworth & vonBerg. He
served as Secretary of IPC from 1985 until September 21, 1994 and
as a Director from 1992 until September 21, 1994.
Arthur J. Pasmas. Mr. Pasmas has served as Vice President
of Smith Management Company, New York, New York, a private
company engaged in various businesses and investments, including
oil and gas, since 1987. Prior thereto, he was the founder in
1968, and served as President and Chief Executive Officer, of
Resources Investment Corporation until it was acquired by Smith
Management Company in 1987. He currently manages various oil and
gas investments for Smith Management Company from offices in
Houston, Texas, and also serves as Chairman of the Board of GOEX
International, Inc., Cleburne, Texas, and as a director of
Regency Health Services, Inc., Tustin, California, a publicly
16<PAGE>
traded health care company.
John E. Dyer. Mr. Dyer has been Chief Geologist of the
Company since March 1, 1993, Vice President of the Company since
April 28, 1993 and Chief Operating Officer of the Company since
March 22, 1996. From January 1992 until his association with the
Company he was an independent consulting geologist to the oil and
gas industry for various companies including ARCO Oil and Gas
Company. From March 1988 through December 1991, he was the Chief
Geologist for Miller Oil Company.
Michael J. Stevens. Mr. Stevens has been the Controller of
the Company since June 28, 1993 and the Secretary since September
30, 1993. He was the Treasurer of the Company from September 30,
1993 until September 21, 1994, and was reappointed as Treasurer
on March 22, 1996. Prior to his association with the Company,
for the past five years he was an auditor with Coopers & Lybrand
(4.5 years) and senior internal auditor (0.5 years) at
Diversified Energy, Inc., a publicly traded oil and gas company
in Minneapolis, Minnesota. Mr. Stevens is a certified public
accountant.
The Company has an Option Committee and Compensation
Committee. The Company does not have a nominating committee.
The Compensation Committee administers the Company's stock
option plan. Its current members are Messrs. Etter, Farnsworth
and Pasmas. It took three actions by written consent in 1995.
The Audit Committee reviews financial press releases and
earnings reports and recommends to the Board the independent
public accountants to be used by the Company. Its current
members are Messrs. Etter, Farnsworth, Pasmas and Conway. The
Audit Committee held one meeting in 1995.
The Board of Directors of the Company held a total of six
meetings during 1995 and took three actions by written consent.
Prior to August 29, 1994, the Company's directors were paid $500
for each meeting attended, but after August 29, 1994, only the
non-employee directors receive this fee. Directors are also
reimbursed for reasonable expenses incurred in connection with
attendance at Board or committee meetings. Until August 29,
1994, directors were also granted a "formula award" stock option
17<PAGE>
for 2,000 shares of Common Stock for each Board meeting attended.
Effective August 29, 1994, the stockholders of the Company
approved an amendment to the Company's stock option plan to
revise the "formula award" to provide for the grant of an option
for 10,000 shares of Common Stock to each non-employee director
upon the date of initial election and upon the date of each
reelection to the Board.
Based solely upon a review of Forms 3, 4 and 5 furnished to
the Company pursuant to Rule 16a-3(e) promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"), or upon
written representations received by the Company, the Company is
not aware of any failure by any officer, director or beneficial
owner of more than 10% of the Company's Common Stock to timely
file with the Securities and Exchange Commission any Form 3, 4 or
5 relating to 1995, except that Kyle R. Miller failed to timely
file three Form 4s to report three grants of warrants (one in
1993 and two in 1995) which the Company had inadvertently failed
to document under an automatic grant provision contained in a
prior warrant agreement with Mr. Miller, and Richard F. Conway
filed late his Form 3 reporting his appointment as a director of
the Company.
Certain Transactions
On June 1, 1994, John D. Lomax, Bill I. Pennington, T Brooke
Farnsworth and two other former directors of IPC, entered into a
Loan Agreement pursuant to which such directors loaned an
aggregate of $100,000 to IPC. Proceeds of the loan were used by
IPC as working capital. The interest rate of the loan was 10%
per annum and the loan was collateralized by certain inventory
and property of IPC, located in Roosevelt, Utah. The loan was to
be repaid upon the first to occur of the closing of the Merger or
September 1, 1994. The loan was repaid on September 30, 1994.
In July 1993, IPC granted security interests in its Monument
Butte Unit to John D. Lomax and Bill I. Pennington. Such
security interests were granted to Messrs. Lomax and Pennington
in consideration of their personal guarantees of IPC's $250,000
loan from First Interstate Bank of Utah. The release of the
personal guarantees of Messrs. Lomax and Pennington was a
condition to closing the Merger, and their respective guarantees
and security interests were released on September 21, 1994.
18<PAGE>
John D. Lomax, Bill I. Pennington, two former directors of
IPC and certain of their affiliates participated as general and
limited partners and/or working interest owners of oil and gas
properties in which IPC also owned interests. These parties
incurred their proportionate share of drilling, completion,
workover and lease operating costs in the respective properties
on the same basis as IPC. During 1994, the amounts of costs paid
or revenues received by Messrs. Lomax and Pennington (or their
affiliates) in such transactions did not exceed $60,000 in any
one year. As required by the Merger Agreement, Inland purchased
the working interests of Messrs. Lomax and Pennington effective
October 1, 1994 for $73,982 and $12,894, respectively, which
represented fair market value.
John D. Lomax and a former director of IPC personally
guaranteed approximately $200,000 of IPC's drilling performance
bonds until they were released from their guarantees in 1995.
The Company agreed to indemnify Mr. Lomax and the former director
for any liability under their guarantees prior to their release.
T Brooke Farnsworth is a partner with Farnsworth & vonBerg,
a Houston, Texas lawfirm that renders various legal services to
IPC. IPC paid $6,885 and $63,229 to the firm for the years ended
December 31, 1995 and 1994, respectively.
Woodstead Associates II, L.P., as assignee of Energy
Management Corporation, has entered into two Registration Rights
Agreement with the Company pursuant to which the Company has
agreed to register for resale certain shares of Common Stock
owned by Woodstead Associates and Arthur J. Pasmas at the
Company's expense and certain other shares at the expense of
Woodstead Associates and Arthur J. Pasmas. During 1994,
Woodstead Associates requested the Company register 6,000,000
shares of Common Stock for resale by Woodstead Associates at the
Company's expense, which aggregated approximately $5,663.
Pengo Securities Corp. has entered into a Registration
Rights Agreement with the Company in connection with the purchase
by Pengo of 12,000,000 shares of Common Stock for an aggregate
purchase price of $6 million ($0.50 per share) pursuant to which
the Company has agreed to register for resale such shares of
Common Stock at the Company's expense. To date, Pengo has not
requested the Company register any of such shares for resale.
19<PAGE>
Randall D. Smith ("Smith"), Inland and IPC entered into a
Farmout Agreement dated effective July 1, 1995 pursuant to which
IPC agreed to farmout to Smith 40-acre drill sites and Smith
agreed to expend approximately $6,800,000 to drill wells on such
drill sites between July 1, 1995 and December 31, 1995. Pursuant
to the Farmout Agreement, 21 wells were drilled and funded by
Smith. IPC earned a supervisory fee of $25,000, proportionately
reduced to IPC's working interest ownership in the drill site,
for each well drilled, for an aggregate of $326,178 in
supervisory fees in 1995. The Farmout Agreement provides that
Smith shall reconvey the drill sites to IPC once Smith has
recovered from production an amount equal to 100% of his
expenditures, including supervisory fees and severance and
production taxes, plus an additional sum equal to an annual 22%
rate of return on all such sums expended by Smith ("Payout"). On
November 22, 1995, Inland, IPC and Smith entered into an Option
Agreement pursuant to which Smith granted to IPC the option to
reacquire the drill sites on May 10, 1997 by issuing that number
of shares of Common Stock valued at $0.50 per share, which, based
upon such valuation, would equal the amount necessary for Smith
to achieve Payout. If Inland and IPC fail to exercise such
option, Smith has been given an option, exercisable prior to
expiration of the third business day following March 10, 1997, to
purchase that number of shares of Common Stock which, based on a
valuation of $0.50 per share, would equal an amount that would
cause Smith to achieve Payout. In the event Smith elects to
purchase such shares, Inland has agreed to register the shares
upon Smith's request and to pay all expenses of such
registration.
Executive Compensation
The following tables set forth the compensation paid by
Inland (and its subsidiary, IPC) for services rendered during the
fiscal years ended December 31, 1995, 1994 and 1993, and the
number of options granted, to the Chief Executive Officer of
Inland and each of the executive officers named below, and the
value of the unexercised options held by such Chief Executive
Officer and each of the executive officers named below on
December 31, 1995:
<TABLE>
Summary Compensation Table
<CAPTION>
20<PAGE>
Annual Compensation
-----------------------------------------
Name and Other
Principal Annual
Position Year Salary Bonus Compensation<F1>
--------- ---- ------- ----- --------------
<S> <C> <C> <C> <C>
Kyle R. Miller, 1995 $180,000 $ - $ -
Chief Executive Officer 1994 180,000 15,000 -
1993 162,500 - -
John D. Lomax, 1995 96,381 - 6,057
Chairman(5) 1994 115,000 - 11,052
1993 115,000 5,000 7,617
Bill I. Pennington, 1995 137,500 - -
Vice President and 1994 123,905 - 540
Chief Financial Officer 1993 104,600 9,500 261
Long Term
Compensation
Securities All
Name and Underlying Other
Principal Options or Compensa-
Position Warrants tion<F2><F3><F4>
---------- -------------- ----------------
Kyle R. Miller, 312,500 $7,738
Chief Executive Officer 1,918,475 6,907
526,132 2,500
John D. Lomax, - 92,939
Chairman<F5> - 25,600
- 37,620
Bill I. Pennington, - 1,884
Vice President and 200,000 10,268
Chief Financial Officer - 13,550
_________________________
21<PAGE>
<FN>
<F1> The amounts in this column represent amounts contributed by
IPC for life insurance premiums.
<F2> The amounts in this column for Mr. Miller include $2,000
and $2,500 in directors' fees for attending four and five
Board meetings during 1994 and 1993, respectively,
disability insurance premiums and club membership in 1995
and 1994 of $5,272 and $4,907, respectively, and $2,466 in
1995 representing a matching contribution by the Company
under the 401(k) Plan.
<F3> The amounts in this column for Mr. Lomax include medical
insurance reimbursements of $2,005, $1,808 and $2,054 in
1995, 1994 and 1993, respectively, net overriding royalty
interests of $11,340, $23,792 and $35,566 in 1995, 1994 and
1993, respectively, $2,149 in 1995 representing a matching
contribution by the Company under the 401(k) Plan, and
$77,445 in 1995 representing the cash surrender value of a
life insurance policy on Mr. Lomax's life transferred to him
upon termination of his employment agreement with the
Company.
<F4> The amounts in this column for Mr. Pennington include club
allowances of $4,500 and $6,000 in 1994 and 1993,
respectively, medical insurance reimbursements of $497 and
$1,814 in 1994 and 1993, respectively, moving expenses of
$5,271 and $5,736 for 1994 and 1993, respectively, and
$1,884 in 1995 representing a matching contribution by the
Company under the 401(k) Plan.
<F5> Effective July 1, 1995, the Company and Mr. Lomax mutually
agreed to the termination of his employment agreement, and
entered into a two-year Deferred Compensation Agreement
providing for payment of $70,000 each year to Mr. Lomax.
</FN>
</TABLE>
_______________________
22<PAGE>
<TABLE>
Option/SAR Grants Table
(Option/Warrant/SAR Grants in Last Fiscal Year)
<CAPTION>
Percent of
Total
Number of Option/
Securities Warrant
Underlying Granted Exercise Market
Options or to or Price
Warrants Employees Base on Date Expira-
Granted in Fiscal Price of Grant tion
Name # Year ($/Sh) ($/Sh) Date
- -------- --------- --------- ------ -------- --------
<S> <C> <C> <C> <C> <C>
Kyle R.
Miller<F1> 12,500 1.5% $.65 $.65 2/1/00
300,000 36.2 .50 .50 11/6/00
John D.
Lomax - - - - -
Bill I.
Pennington - - - - -
________________________
<FN>
<F1> Pursuant to Mr. Miller's employment agreement (see
"Employment Agreements", below), he is granted five-year
warrants equal to 5% of the number of shares of Common Stock
issued by Inland, or issuable by Inland pursuant to the
terms of options or other instruments granted or otherwise
issued by Inland which are convertible into or exercisable
or exchangeable for Common Stock, during the term of his
employment with an exercise price equal to the price at
which such shares were issued by Inland or the exercise,
conversion or exchange price of such options or other
instruments, as applicable. On February 1, 1995, Inland
granted an option to a financial consultant for 250,000
shares of Common Stock with an exercise price of $0.65 per
share. The closing "bid" price of Common Stock on February
1, 1995, was $0.4375 per share. Under the terms of Mr.
Miller's warrant agreement with Inland, Mr. Miller also was
granted a five-year warrant to acquire 12,500 shares at an
23
<PAGE>
exercise price of $0.65 per share. On November 6, 1995,
Inland issued 12 million shares to Pengo Securities Corp.
for $6 million ($0.50 per share). As a condition to the
purchase of such shares by Pengo, Pengo requested that Mr.
Miller waive his right to the full 5% and accept only 2.5%
instead. Consequently, upon the issuance of such shares to
Pengo pursuant to Mr. Miller's employment agreement he was
automatically granted a warrant for 300,000 shares, at an
exercise price of $0.50 per share, representing 2.5% of the
12 million shares issued to Pengo.
</FN>
</TABLE>
________________________
<TABLE>
Aggregated Option/Warrant/SAR Exercises in Last Fiscal
Year and FY-End Option/SAR Values
<CAPTION>
Value of
Number of Unexercised
Securities In-the
Underlying Money
Unexercised Options
Shares Options /Warrants/
Acquired Warrants/SARs SARs
on Value at 1995 at 1995
Exercise Realized FY-End<F1> FY-End
Name # $ # $
- ------------ -------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Kyle R. Miller None None 2,239,107 $167,156
John D. Lomax - - - -
Bill I. Pennington None None 200,000 31,250
________________________
</TABLE>
[FN]
<F1> All options and warrants were exercisable at December 31,
1995. Value is based on the closing bid price of $.46875
per share on December 31, 1995. Warrants for 775,608 shares
for Mr. Miller were not in-the-money on December 31, 1995.
________________________
Employment Agreements
24<PAGE>
Effective February 23, 1993, Inland entered into a
three-year employment agreement with Mr. Miller to serve as
President and Chief Executive Officer of Inland for an annual
base salary of $180,000. In addition, Inland granted Mr. Miller
a five-year warrant to acquire 469,632 shares of Inland Common
Stock at an exercise price of $0.4375 per share (subject to
anti-dilution adjustments) and agreed for so long as he is an
executive officer of Inland to grant additional five-year
warrants to Mr. Miller equal to 5% of the number of shares issued
by Inland in future transactions, or issuable by Inland pursuant
to the terms of options or other instruments granted or otherwise
issued by Inland which are convertible into or exercisable or
exchangeable for Common Stock (other than shares issued pursuant
to employee benefit plans or pursuant to a warrant for 2,008,894
shares initially granted by Inland on February 23, 1993), with an
exercise price equal to the price at which such additional shares
were issued or the exercise, conversion or exchange price of such
options or other instruments, as applicable. Mr. Miller's
employment agreement is renewable for successive one year terms,
unless either party gives written notice of such party's
intention not to renew at least ninety days prior to the
termination of the current term; provided, however, it is also
subject to termination at any time by either party by giving at
least one year prior written notice. No notice was given by
either party and, consequently, the employment agreement
automatically renewed for a one-year period expiring February 23,
1997. If the agreement is terminated by Inland without cause,
Mr. Miller is entitled to one years' salary and bonus.
John D. Lomax entered into an employment agreement with
Inland at the closing of the Merger providing for a two year
term, at a salary of $115,000. The employment agreement also
provided for medical and disability benefits and certain other
benefits. As part of his employment agreement with Inland, Mr.
Lomax was entitled to certain life insurance benefits and to
receive an overriding royalty interest in any oil, gas and
mineral lease previously acquired by IPC or which in the future
may be acquired by Inland, equal to 1% of the lease interest
acquired by IPC and 1% of the lease interest acquired by Inland
if such lease acquired by Inland relates to a project developed
by Mr. Lomax and brought to the attention of IPC or Inland by Mr.
25<PAGE>
Lomax. Mr. Lomax's employment agreement provided that if he was
terminated by Inland without cause, he would be entitled to one
years' salary and bonus. Effective July 1, 1995, Inland and Mr.
Lomax mutually agreed to terminate his employment agreement and
entered into a two-year Deferred Compensation Agreement providing
for payment of $70,000 per year to Mr. Lomax, and which continued
his entitlement to health and life insurance benefits until July
1, 1996 and his entitlement to the overriding royalty interests
earned prior to July 1, 1995.
Bill I. Pennington also entered into an employment agreement
with Inland at the closing of the Merger providing for a two year
term, at a salary of $137,500. The employment agreement also
provides for medical and disability benefits and certain other
benefits. As part of his employment agreement with Inland, Mr.
Pennington was granted an option for 200,000 shares of common
stock exercisable at $.3125, the closing "bid" price per share at
the closing of the Merger, and which expires 10 years after the
date of grant. Mr. Pennington's employment agreement is
renewable for successive one year terms, unless either party
gives written notice of such party's intention not to renew at
least 90 days prior to the termination of the current term;
provided, however, it is also subject to termination at any time
by either party by giving at least one year prior written notice.
If Mr. Pennington's agreement is terminated by Inland without
cause, Mr. Pennington is entitled to one years' salary and bonus.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding
the ownership of Common Stock and Series A Preferred Stock as of
March 31, 1996, by each stockholder known to the Company to own
beneficially more than five percent of the outstanding Common
Stock or Series A Preferred Stock, each current director, and all
executive officers and directors of the Company as a group, based
on information provided to the Company by such persons. Except
as otherwise stated, each such person has sole investment and
voting power with respect to the shares set forth in the table:
26<PAGE>
<TABLE>
<CAPTION>
Series A Preferred Stock
------------------------
Number
Name and Address of
of Beneficial Owner Shares Percent
-------------------- ------- --------
<S> <C> <C>
Randall D. Smith<F1><F2> 19,691 18.4
Pengo Securities Corp.
Woodstead Associates II, L.P.
885 Third Ave., 34th Floor
New York, New York 10022
Citicorp Venture Capital Ltd.<F3> 39,779 37.2
Citicorp
Citibank, N.A.
399 Park Ave.
Floor 14/Zone 4
New York, New York
Texas Commerce Investment 9,945 9.3
Company
P.O. Box 2558
Houston, Texas 77252-8057
Kyle R. Miller<F4> - -
475 17th Street
Suite 1500
Denver, Colorado 80202
James F. Etter<F4> - -
E. 5503 Broadway
Spokane, Washington 99212
Arthur J. Pasmas<F1><F4> 2,188 2.0
5858 Westheimer, Suite 400
Houston, Texas 77057
John D. Lomax<F5> 1,997 1.9
791 Nyes Place
Laguna Beach, CA 92651
27<PAGE>
Bill I. Pennington<F4> 1.383 1.3
6501 Canyon Crest Dr.
Salt Lake City, Utah 84121
T Brooke Farnsworth<F4> - -
333 North Sam Houston Parkway
Suite 300
Houston, Texas 77060
Richard F. Conway<F1><F2> - -
885 Third Ave., 34th Floor
New York, New York 10022
All Executive Officers and 5,568 5.2
Directors as a Group
(9 persons)<F6>
Common Stock
--------------------------------
Number of
Shares
Assuming
Conversion
of Series A
Number Preferred
Name and Address of Stock
of Beneficial Owner Shares Percent by Holder Percent
- -------------------- ------- ------- ----------- -------
<S> <C> <C> <C> <C>
Randall D.
Smith<F1><F2> 20,600,188 50.3 22,451,044 52.5
Pengo Securities Corp.
Woodstead Associates II, L.P.
885 Third Ave., 34th Floor
New York, New York 10022
Citicorp Venture
Capital Ltd.<F3> 1,593,114 3.9 5,332,141 11.9
Citicorp
Citibank, N.A.
399 Park Ave.
Floor 14/Zone 4
New York, New York
28<PAGE>
Texas Commerce
Investment 398,290 1.0 1,227,040 2.9
Company
P.O. Box 2558
Houston, Texas 77252-8057
Kyle R. Miller<F4> 2,810,536 6.5 2,810,536 6.5
475 17th Street
Suite 1500
Denver, Colorado 80202
James F. Etter<F4> 846,255 2.1 846,255 2.1
E. 5503 Broadway
Spokane, Washington 99212
Arthur J. Pasmas<F1><F4> 1,033,067 2.5 1,238,728 3.0
5858 Westheimer, Suite 400
Houston, Texas 77057
John D. Lomax<F5> 971,518 2.4 1,149,226 2.8
791 Nyes Place
Laguna Beach, CA 92651
Bill I. Pennington<F4> 989,927 2.4 1,119,922 2.7
6501 Canyon Crest Dr.
Salt Lake City, Utah 84121
T Brooke Farnsworth<F4> 20,000 * 20,000 *
333 North Sam Houston Parkway
Suite 300
Houston, Texas 77060
Richard F. Conway<F1><F2> - - - -
885 Third Ave., 34th Floor
New York, New York 10022
All Executive
Officers and 7,793,492 17.7 8,316,856 18.6
Directors as a Group
(9 persons)<F6>
______________________
29<PAGE>
<FN>
* Less than 1%
<F1> Woodstead Associates II, L.P. has the right to designate up
to two nominees to the Company's Board of Directors for as
long as it owns 6,000,000 or more shares, and one nominee
for as long as it owns 3,000,000 or more shares but less
than 6,000,000 shares. Arthur J. Pasmas and Richard F.
Conway, Vice Presidents of Smith Management Company, an
affiliate of Woodstead Associates, are such nominees.
Messrs. Pasmas and Conway disclaim beneficial ownership of
the shares of the Company's Common Stock and Series A
Preferred Stock owned by Woodstead Associates and Woodstead
Associates disclaims beneficial ownership of the shares of
the Company's Common Stock owned by Messrs. Pasmas and
Conway and their respective shares are not included in the
table in the shares owned by the other. Woodstead
Associates owns 8,600,188 shares of Common Stock and 19,691
shares of Series A Preferred Stock of record and
beneficially. Randall D. Smith is deemed to also
beneficially own the shares owned of record by Woodstead
Associates.
<F2> Pengo Securities Corp. owns of record and beneficially
12,000,000 shares of Common Stock. Randall D. Smith is
deemed to also beneficially own the shares owned of record
by Pengo Securities Corp. Messrs. Pasmas and Conway
disclaim beneficial ownership of the shares of Common Stock
owned by Pengo, and Pengo disclaims beneficial ownership of
the shares of Common Stock owned by Messrs. Pasmas and
Conway and their respective shares are not included in the
table in the shares owned by the other.
<F3> Citicorp Venture Capital Ltd. is the record and beneficial
owner of the shares, which may also be deemed to be
beneficially owned by its parent, Citibank, N.A., and by
Citicorp, the parent of Citibank, N.A.
<F4> Includes shares issuable under outstanding stock options and
warrants granted to Messrs. Miller, Etter, Pasmas,
Pennington, Farnsworth, and all executive officers and
directors as a group for 2,239,107, 122,900, 20,000,
200,000, 20,000 and 3,149,007 shares, respectively.
30<PAGE>
<F5> Includes 909,050 shares of Common Stock and 1,815 shares of
Series A Preferred Stock before conversion, and 1,079,651
shares of Common Stock after conversion, owned of record and
beneficially; 13,392 shares of Common Stock and 91 shares of
Series A Preferred Stock before conversion, and 21,946
shares of Common Stock after conversion, held of record by
the Lomax Family Trust; 13,392 shares of Common Stock and 91
shares of Series A Preferred Stock before conversion, and
21,945 shares of Common Stock after conversion, held of
record by the Dorothy M. Lomax Testamentary Trust; and
25,684 shares of Common Stock held of record by the Estate
of Dorothy M. Lomax.
<F6> See (4) and (5) above.
</FN>
</TABLE>
________________________
STOCKHOLDER PROPOSALS FOR THE
1997 ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders must be received by the Company at
its principal executive office at 475 17th Street, Suite 1500,
Denver, Colorado 80202, by December 24, 1996 for inclusion in the
Company's proxy statement and form of proxy relating to the 1997
annual meeting of stockholders.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand served as the Company's principal
independent public accountants for 1995 and has been selected by
the Company to serve in 1996. Representatives of Coopers &
Lybrand are expected to be present at the 1996 annual meeting of
stockholders with the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
31<PAGE>
OTHER MATTERS
The cost of solicitation of proxies in the accompanying form
will be paid by the Company. In addition to solicitation by use
of the mails, certain officers and employees of the Company may
solicit the return of proxies by telephone, telegram or personal
interviews.
By Order of the Board of
Directors
Michael J. Stevens
Secretary
April 23, 1996
32<PAGE>
Appendix A
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
INLAND RESOURCES INC.
Pursuant to RCW 23B.10.060 of the Washington Business
Corporation Act, the undersigned corporation hereby submits the
following amendment(s) to the corporation's Articles of
Incorporation.
1. The name of the corporation is Inland Resources Inc.
2. The date of filing the original Articles of
Incorporation
with the Secretary of State of Washington is August 12, 1985.
3. The Articles of Incorporation of the corporation are
amended by amending paragraph 1 of Article IV to read in its
entirety as follows:
"The aggregate number of shares which this
Corporation shall have authority to issue is 10,000,000
shares of common stock having a par value of $0.001 per
share, and 20,000,000 shares of Class A preferred stock
having a par value of $0.001 per share. Fully paid stock
of this Corporation shall not be liable to any further
call or assessment. At the filing of these Articles of
Amendment, each outstanding share of common stock of the
par value of $.001 per share shall become one-tenth
(1/10th) share of common stock of the par value of $0.001
per share, so that after the filing of these Articles of
Amendment stockholders shall be deemed to hold one share
of common stock for every ten shares of common stock held
prior to the filing, with any fractional shares being
rounded up to the nearest whole share of common stock."
4. The date of adoption of this amendment was May 22,
1996.
33<PAGE>
5. The amendment was duly approved by shareholder action
in accordance with the provisions of RCW 23B.10.030 and RCW
23B.10.040.
6. These Articles of Amendment will be effective upon
filing.
DATED: ___________________ ___, 1996.
INLAND RESOURCES INC.
By: _________________________
Kyle R. Miller, President
and CEO
34<PAGE>
Appendix B
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
INLAND RESOURCES INC.
Pursuant to RCW 23B.10.060 of the Washington Business
Corporation Act, the undersigned corporation hereby submits the
following amendment(s) to the corporation's Articles of
Incorporation.
1. The name of the corporation is Inland Resources Inc.
2. The date of filing the original Articles of
Incorporation with the Secretary of State of Washington is
August 12, 1985.
3. The Articles of Incorporation of the corporation are
amended by amending paragraph 1 of Article IV to read in its
entirety as follows:
"The aggregate number of shares which this
Corporation shall have authority to issue is 25,000,000
shares of common stock having a par value of $0.001 per
share, and 20,000,000 shares of Class A preferred stock
having a par value of $0.001 per share. Fully paid stock
of this Corporation shall not be liable to any further
call or assessment. "
4. The date of adoption of this amendment was May 22,
1996.
5. The amendment was duly approved by shareholder action
in accordance with the provisions of RCW 23B.10.030 and RCW
23B.10.040.
6. These Articles of Amendment will be effective upon
filing.
35<PAGE>
DATED: _________________________ ___, 1996.
INLAND RESOURCES INC.
By: ______________________
Kyle R. Miller, President
and CEO
<PAGE>
Preliminary Copy
INLAND RESOURCES INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting of
stockholders of INLAND RESOURCES INC. (the "Company") will be
held on Wednesday, May 22, 1996, at 9:00 a.m., local time, at the
Denver Petroleum Club located at 555 17th Street, Suite 3700,
Denver, Colorado, for the following purposes:
(1) To elect seven members of the Board of
Directors to serve until the 1997 annual meeting of
stockholders or until their respective successors are
duly elected and qualified, with four members of the
Board of Directors to be elected by the holders of
Common Stock and three members of the Board of
Directors to be elected by the holders of Series A
Preferred Stock;
(2) To approve (i) an amendment to the Company's
Articles of Incorporation to decrease the number of
authorized shares of Common Stock from 100,000,000
shares to 10,000,000 shares (without affecting par
value), (ii) a 1-for-10 reverse stock split of the
Company's presently issued and outstanding shares of
Common Stock (the "Reverse Split"), and (iii) an
amendment to the Company's Articles of Incorporation,
following the effective date of the Reverse Split, to
increase the post-split number of authorized shares of
Common Stock from 10,000,000 shares to 25,000,000
shares (without affecting par value), all of which
shall be considered as one proposal (the "Proposal")
submitted to a vote of the holders of Common Stock.
Holders of Series A Preferred Stock are not entitled to
vote on the Proposal and the Company is not asking for
a proxy from holders of Series A Preferred Stock in
connection with the Proposal; and
(3) To consider and act upon any other matters
which may properly come before the meeting or any
adjournment thereof.
The holders of record of Common Stock and Series A Preferred
Stock of the Company at the close of business on April 19, 1996
will be entitled to vote at the meeting, as described above.
For a period of at least ten days prior to the meeting, a
complete list of stockholders entitled to vote at the meeting
will be open to the examination of any stockholder during
ordinary business hours at the Company's offices at 475 17th
Street, Suite 1500, Denver, Colorado.
By order of the Board of Directors
MICHAEL J. STEVENS
Secretary
April 23, 1996
You are cordially invited to attend the meeting in person.
Even if you plan to be present, you are urged to sign, date and
mail the enclosed proxy promptly. However, if you attend the
meeting, you may vote in person or by your proxy.
<PAGE>
Preliminary Copy
Series A Preferred Stock Proxy
Inland Resources Inc.
This Series A Preferred Stock Proxy is
Solicited on Behalf of the Board of Directors
The undersigned hereby (1) acknowledges receipt of the
Notice of Annual Meeting of Stockholders of Inland Resources Inc.
(the "Company") to be held at the Denver Petroleum Club located
at 555 17th Street, Suite 3700, Denver, Colorado 80202, on May
22, 1996, beginning at 9:00 a.m., Denver Time, and the Proxy
Statement in connection therewith and (2) appoints Kyle R. Miller
and Michael J. Stevens, and each of them, the undersigned's
proxies with full power of substitution for and in the name,
place and stead of the undersigned, to vote upon and act with
respect to all of the shares of Series A Preferred Stock of the
Company standing in the name of the undersigned, or with respect
to which the undersigned is entitled to vote and act, at the
meeting and at any adjournment thereof.
The undersigned directs that the undersigned's proxy be
voted as follows:
1. ELECTION OF [ ] FOR all nominees listed below
DIRECTORS (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote
for all nominees listed
below
[ ]ABSTAIN from voting
John D. Lomax, Bill I. Pennington and T Brooke Farnsworth
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name on the line
provided below.)
- -----------------------------------------------------------------
2. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER
MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING.
This proxy will be voted as specified above. If no
specification is made, this proxy will be voted for the election
of the Series A Preferred Stock director nominees in item 1
above.
The undersigned hereby revokes any proxy heretofore given to
vote or act with respect to the Series A Preferred Stock of the
Company and hereby ratifies and confirms all that the proxies,
their substitutes, or any of them may lawfully do by virtue
hereof.
If more than one of the proxies named shall be present in
person or by substitute at the meeting or at any adjournment
thereof, the majority of the proxies so present and voting,
either in person or by substitute, shall exercise all of the
powers hereby given.
Please date, sign and mail this proxy in the enclosed
envelope.
Date ____________________ ___,
1996
___________________________
Signature of Stockholder
______________________________
Signature of Stockholder
Please date this proxy and
sign your name exactly as it
appears hereon. Where there
is more than one owner, each
should sign. When signing as
an attorney, administrator,
executor, guardian or trustee,
please add your title as such.
If executed by a corporation,
the proxy should be signed by
a duly authorized officer.
<PAGE>
Preliminary Copy
Common Stock Proxy
Inland Resources Inc.
This Common Stock Proxy is Solicited on
Behalf of the Board of Directors
The undersigned hereby (1) acknowledges receipt of the
Notice of Annual Meeting of Stockholders of Inland Resources Inc.
(the "Company") to be held at the Denver Petroleum Club located
at 555 17th Street, Suite 3700, Denver, Colorado 80202, on May
22, 1996, beginning at 9:00 a.m., Denver Time, and the Proxy
Statement in connection therewith and (2) appoints Kyle R. Miller
and Michael J. Stevens, and each of them, the undersigned's
proxies with full power of substitution for and in the name,
place and stead of the undersigned, to vote upon and act with
respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned, or with respect to which
the undersigned is entitled to vote and act, at the meeting and
at any adjournment thereof.
The undersigned directs that the undersigned's proxy be
voted as follows:
1. ELECTION OF [ ] FOR all nominees listed below
DIRECTORS (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote
for all nominees listed
below
[ ]ABSTAIN from voting
Kyle R. Miller, James F. Etter, Arthur J. Pasmas and Richard F.
Conway
(INSTRUCTION: To withhold authority to vote for any
individual nominee, write that nominee's name on the line
provided below.)
----------------------------------------------------------------
2. APPROVAL OF [ ] FOR Approval of the Proposal
PROPOSAL described below
[ ] AGAINST Approval of the Proposal
described below
[ ] ABSTAIN from voting
The Proposal [items (i) through (iii) below]
constitutes a unified proposal to approve, and a
vote "FOR" will constitute approval of, all of the
following matters:
(i) An amendment to the Company's Articles of
Incorporation to decrease the number of
authorized shares of Common Stock from
100,000,000 shares to 10,000,000 shares
(without affecting par value); and
(ii) a 1-for-10 reverse stock split of the
Company's presently issued and outstanding
shares of Common Stock (the "Reverse Split");
and
(iii) an amendment to the Company's Articles of
Incorporation, following the effective date
of the Reverse Split, to increase the post-
split number of authorized shares of Common
Stock from 10,000,000 shares to 25,000,000
shares (without affecting par value).
3. IN THE DISCRETION OF THE PROXIES, ON ANY OTHER
MATTER WHICH MAY PROPERLY COME BEFORE THE MEETING.
This proxy will be voted as specified above. If no
specification is made, this proxy will be voted for the election
of the Common Stock director nominees in item 1 above and for
approval of the Proposal in item 2 above.
The undersigned hereby revokes any proxy heretofore given to
vote or act with respect to the Common Stock of the Company and
hereby ratifies and confirms all that the proxies, their
substitutes, or any of them may lawfully do by virtue hereof.
If more than one of the proxies named shall be present in
person or by substitute at the meeting or at any adjournment
thereof, the majority of the proxies so present and voting,
either in person or by substitute, shall exercise all of the
powers hereby given.
Please date, sign and mail this proxy in the enclosed
envelope.
Date __________________ ____,
1996
______________________________
Signature of Stockholder
______________________________
Signature of Stockholder
Please date this proxy and
sign your name exactly as it
appears hereon. Where there
is more than one owner, each
should sign. When signing as
an attorney, administrator,
executor, guardian or trustee,
please add your title as such.
If executed by a corporation,
the proxy should be signed by
a duly authorized officer.
