EXECUTION COPY
FIRST AMENDMENT TO
REGISTRATION RIGHTS AGREEMENT
First Amendment to Registration Rights Agreement dated as of this 4th
day of February, 1999 (the "Amendment"), by and between Foreland Corporation, a
Nevada corporation ("Foreland") and Energy Income Fund, L.P., a Delaware limited
partnership ("EIF") to that certain Registration Rights Agreement between
Foreland and EIF dated as of August 10, 1998 (the "Registration Rights
Agreement").
WHEREAS, pursuant to the Financing Agreement dated January 6, 1998, by
and among Foreland and certain other borrowers (collectively, the "Borrowers")
and EIF, as amended by that First Amendment to Financing Agreement dated as of
August 10, 1998 and that Second Amendment to Financing Agreement (the "Second
Amendment") dated as of even date herewith (as amended, the "Financing
Agreement"), EIF agreed to make loans to Borrowers for the purposes and subject
to the terms and conditions set forth therein;
WHEREAS, pursuant to the Second Amendment, EIF has agreed to defer
principal payments and advance additional funds under the Financing Agreement in
exchange for, among other consideration, 250,000 shares of Common Stock of
Foreland (the "EIF Shares"), issued pursuant to that certain Common Stock
Issuance Agreement made between EIF and Foreland dated as of the same date
herewith and restricted from resale for one year as described in the Common
Stock Issuance Agreement;
WHEREAS, in connection with the issuance of the EIF Shares, Foreland
and EIF have agreed to amend the Registration Rights Agreement on the terms and
conditions set forth herein to, among other things, include registration rights
related to the EIF Shares;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, EIF and Foreland agree as follows:
1. Amendments to the Registration Rights Agreement:
a. Section 1 of the Registration Rights Agreement is amended by
deleting it and replacing it with the following:
1. For purposes of the Shelf Registration under Sections 2 and 2A hereof,
the term "Registrable Securities" means the shares of the Company's Common Stock
issued to EIF, including but not limited to the EIF Shares on and after the
first anniversary of the date of the Common Stock Issuance Agreement and those
shares issuable or issued upon conversion of the Series 1998 Preferred Stock,
together with any capital stock issued in replacement of, in exchange for or
otherwise in respect of such Common Stock, except that shares that have been
resold in a public transaction shall not constitute "Registrable Securities" for
purposes of a Shelf Registration under Sections 2 or 2A hereof. The number of
"Registrable Securities then outstanding" shall be determined by the number of
shares of Registrable Securities at the time of such determination.
For purposes of a Piggyback Registration under Section 3 hereof or a
Demand Registration under Section 4 hereof, "Registrable Securities" shall have
the meaning set forth above except that EIF Shares and shares of Common Stock
obtainable on conversion of the Preferred Stock (in whole or in part) shall also
not constitute Registrable Securities for purposes of a Piggyback Registration
under Section 3 hereof or a Demand Registration under Section 4 hereof if those
shares of Common Stock may be resold without delay and without limitation in
volume or manner of sale in a public transaction without registration under the
Act, including without limitation pursuant to Rule 144 under the Act.
b. Subsections (a) and (b) of Section 2 of the Registration
Rights Agreement are amended by deleting them and replacing them with the
following:
2. Shelf Registration. (a) At any time but no later in any event than
within 2 months of the date of the First Amendment to the Registration Rights
Agreement, Foreland shall have filed a registration statement ("Registration
Statement") on Form S-3 (or other suitable form, at Foreland's discretion but
subject to the reasonable approval of EIF), covering the resale of all shares of
Registrable Securities then outstanding including an indeterminable number of
shares of Common Stock as required to effect conversion of certain of the
Registrable Securities (the "Shelf Registration").
(b) The Registration Statement shall be prepared as a "shelf"
registration statement under Rule 415, and shall be maintained effective until
the distribution described in the Registration Statement is completed or until
all shares to be registered thereunder may be resold in a public transaction
without registration pursuant to Rule 144(k) of the 1933 Act. Foreland shall
use its best efforts to have the Registration Statement declared effective
within three (3) months of the date of the First Amendment to the Registration
Rights Agreement (the "Shelf Date").
c. Section 2A is added following Section 2 of the Registration
Rights Agreement:
2A. Shelf Registration of the EIF Shares. (a) At any time but no later in
any event than within 14 months of the date of the First Amendment to the
Registration Rights Agreement, Foreland shall have filed a registration
statement (the "Second Registration Statement") on Form S-3 (or other suitable
form, at Foreland's discretion but subject to the reasonable approval of EIF),
covering the resale of all shares of EIF Shares that are Registrable Securities
(the "Registrable EIF Shares") then outstanding (the "Second Shelf
Registration").
(b) The Registration Statement shall be prepared as a "shelf"
registration statement under Rule 415, and shall be maintained effective until
the distribution described in the Second Registration Statement is completed or
until all shares to be registered thereunder may be resold in a public
transaction without registration pursuant to Rule 144(k) of the 1933 Act.
Foreland shall use its best efforts to have the Second Registration Statement
declared effective within 15 months of the date of the First Amendment to the
Registration Rights Agreement (the "Second Shelf Date").
(c) If the Second Registration Statement is not declared
effective by the Second Shelf Date, the Company must continue to use its best
efforts to obtain a declaration of effectiveness and shall pay EIF an amount
equal to two percent (2%) per month of the closing trading price of the EIF
Shares as of the Second Shelf Date, compounded monthly and accruing daily, until
the Second Registration Statement or a registration statement filed pursuant to
Section 3 or Section 4 in relation to the Registrable EIF Shares is declared
effective, payable in common stock, which common stock shall also be deemed
"Registrable EIF Shares" for the purpose of this Agreement. The accrual amount
payable will be tolled for any periods occasioned by a delay of the Second
Registration Statement under Section 4 as a result of the choice of EIF to have
such Registration Statement underwritten.
d. Section 3 of the Registration Rights Agreement is amended by
deleting it and replacing it with the following: "Piggyback Registration Rights.
If, at any time, Foreland proposes to file a registration statement for the
public sale of any shares of the Common Stock of Foreland, any capital stock
issued in replacement of, in exchange for or otherwise in respect of such Common
Stock, or any securities or other rights convertible into Common Stock, or
entitled to receive Common Stock, or any other equity security entitled to
participate with the Common Stock in the earnings or assets of Foreland under
the Securities Act of 1933, as amended (the "1933 Act") (other than a
registration statement provided for in Sections 2 or 4 hereof) Foreland shall,
not later than thirty (30) days prior to the initial filing of the registration
statement, deliver notice of its intent to file such registration statement to
EIF, setting forth the minimum and maximum proposed offering price, commissions,
and discounts in connection with the offering, and other relevant information.
Within twenty (20) days after receipt of notice of Foreland's intent to file a
registration statement, EIF shall be entitled to request that any Registrable
Securities owned by EIF or its assigns ("EIF Registrable Securities") be
included in such registration statement, and Foreland will use its best efforts
to cause the EIF Registrable Securities to be included in the offering covered
by such registration statement (a "Piggyback Registration").
e. Section 4 of the Registration Rights Agreement is amended by
deleting it and replacing it with the following: "Demand Registration Rights.
(a) At any time, EIF shall be entitled to request that any EIF Registrable
Securities be registered under the 1933 Act if Foreland is already subject to,
or becomes subject to, periodic reporting requirements under the regulations of
the United States Securities and Exchange Commission. As soon as practicable
after receipt by Foreland of a written request for registration, Foreland shall
file, and use its best efforts to cause to become effective, an appropriate
registration statement under the 1933 Act covering the EIF Registrable
Securities, provided that in the opinion of Foreland's counsel, no events
preclude such registration. EIF shall have the right to demand registration
once EIF pursuant to this Section 4; provided however, that, the right shall not
be deemed exhausted unless the registration statement covering so much of the
EIF Registrable Securities as EIF and its assigns wish to sell pursuant to the
registration statement becomes effective; provided further however, that, if the
right is exhausted once prior to the date upon which the EIF Shares are no
longer Restricted, EIF shall be entitled to make an additional request for
registration pursuant to this Section in relation to Registrable EIF Shares that
are outstanding at the time of such request.
2. Pursuant to Section 2 of the Registration Rights Agreement,
Foreland was required to file a "shelf" registration statement covering the
resale of all shares of Registrable Securities then outstanding by October 10,
1998 and to use its best efforts to have such registration statement declared
effective by November 10, 1998. In the event the registration statement was not
declared effective by November 10, 1998, Section 2(c) of the Registration Rights
Agreement required that Foreland pay certain penalties to EIF. Foreland filed
this shelf registration statement on December 21, 1998, more than two months
after filing was required under the Agreement. Foreland has requested, and EIF
agrees that EIF shall forbear on penalties against Foreland under Section 2(c)
of the Registration Rights Agreement that have accrued as of the date of this
Amendment; provided however that, nothing contained in this Amendment shall
limit EIF's rights to such penalties in the event that any further violations of
Section 2(c) or any violations of Section 2A(c) occur. Foreland acknowledges
that, subject to the forbearance set forth in the preceding sentence, EIF has
not waived any of its rights or any remedies available to it under the
Registration Rights Agreement. Foreland hereby expressly acknowledges that any
failure by EIF to enforce its rights under the Registration Rights Agreement in
the past does not entitle Foreland to any such forbearance under any section of
the Registration Rights Agreement in the future.
3. EIF and Foreland hereby represent and warrant that the
representations and warranties made by each of them, respectively, in the
Registration Rights Agreement, including but not limited to the representations
and warranties contained in Sections 2, 7 and 8 of the Registration Rights
Agreement, are true and correct as of the date of this Amendment.
4. All capitalized terms used herein shall have the meanings
ascribed to them in the Registration Rights Agreement unless expressly defined
otherwise in this Amendment.
5. THIS AMENDMENT IS TO BE CONSTRUED UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.
6. Except as expressly amended hereby, the Registration Rights
Agreement remains in full force and effect. Any references to the Registration
Rights Agreement in the Loan Documents (as defined in the Financing Agreement)
shall refer to the Registration Rights Agreement as amended hereby.
7. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each complete set of
which, when so executed by the parties, constitutes an original but all such
counterparts together constituting but one and the same instrument.
IN WITNESS WHEREOF, the undersigned, by each of their respective duly
authorized officers or representatives, have set their hands hereto as of the
4th day of February, 1999.
FORELAND CORPORATION
By: /s/ N. Xxxxxx Xxxxxx, President
ENERGY INCOME FUND, L.P.
By: EIF General Partner, L.L.C.,
its General Partner
By: /s/ Xxxxxx X. XxXxxxxx, Vice President
