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Exhibit B
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") dated as of
August 10, 1998 is made by and between Energy Income Fund, L.P., a Delaware
limited partnership ("EIF") and Foreland Corporation, a Nevada corporation
("Foreland"). Terms used herein and not otherwise defined have the meanings
given them in that certain Stock Purchase Agreement, of even date herewith, by
and between EIF and Foreland ("Stock Purchase Agreement").
RECITALS
WHEREAS, Foreland and EIF have entered into the Stock Purchase
Agreement pursuant to which EIF is purchasing shares of Preferred Stock of
Foreland having an aggregate liquidation preference of Two Million Dollars
($2,000,000); and
WHEREAS, in connection with the purchase and sale of such
Preferred Stock, Foreland has agreed, on the terms and conditions set forth
herein, to register shares of Foreland owned by EIF as set forth below.
NOW THEREFORE, in consideration of the foregoing recitals and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. For purposes of the Shelf Registration under Section 2 hereof,
the term "Registrable Securities" means the shares of the Company's Common Stock
together with any capital stock issued in replacement of, in exchange for or
otherwise in respect of such Common Stock, issuable or issued upon conversion of
the Series 1998 Preferred Stock (the "Preferred Stock") issued to EIF except
that shares that have been resold in a public transaction shall not constitute
"Registrable Securities" for purposes of a Shelf Registration under Section 2
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 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 in a public transaction without registration under
the 1933 Act, including without limitation pursuant to Rule 144 under the 1933
Act.
2. Shelf Registration. (a) At any time but no later in any event
than within 2 months of the date of this Agreement, Foreland shall file a
registration statement ("Registration Statement") on Form S-3 (or other suitable
form, at Foreland's discretion but subject to the
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reasonable approval of EIF), covering the resale of all shares of Registrable
Securities then outstanding including an indeterminate 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 this Agreement (the "Shelf Date").
(c) If the Registration Statement is not declared effective
by the 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 aggregate amount of Preferred Stock sold pursuant to the
Stock Purchase Agreement, compounded monthly and accruing daily, until the
Registration Statement or a registration statement filed pursuant to Section 3
or Section 4 is declared effective, payable in common stock, which common stock
shall also be deemed "Registrable Securities" for the purpose of this Agreement.
The accrual amount payable will be tolled for any periods occasioned by a delay
of a Registration Statement under Section 4 as a result of the choice of EIF to
have that Registration Statement underwritten.
(d) Foreland represents that it is presently eligible to
effect the registration contemplated hereby on Form S-3 and will use its best
efforts to continue to take such actions as are necessary to maintain such
eligibility.
3. Piggyback Registration Rights. If the Registration Statement
described in Section 2 above is not effective by the Shelf Date, and 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").
4. Demand Registration Rights. (a) If the Registration Statement
described in Section 2 above is not effective by the Shelf Date, EIF shall be
entitled to request that any EIF Registrable Securities be registered under the
1933 Act if Foreland is already subject to, or
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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
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.
(b) If EIF intends to distribute the Registrable Securities
covered by its request by means of an underwriting, EIF shall so advise Foreland
as a part of its request made pursuant to this Section 4. If a registration
requested pursuant to this Section 4 is to involve an underwritten public
offering in which the obligation of the underwriters is to take all of the
securities to be sold if any are to be taken, Foreland and other holders of
securities of Foreland may include securities in such registration only if the
managing underwriter of such public offering concludes that such inclusion will
not adversely affect the successful marketing or the price of the EIF
Registrable Securities to be included in such public offering. Such other
holders of securities (together with Foreland as provided in subsection 5f)
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by EIF and reasonably
acceptable to Foreland.
5. Filing Obligations of Foreland. In connection with any
registration of the EIF Registrable Securities effected under this Agreement,
Foreland shall:
(a) prepare and file the registration statement and such
amendments and supplements to the registration statement and the prospectus or
offering circular used in connection therewith as may be necessary to keep the
registration statement 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 and to comply with the provisions of the 1933 Act
and the rules and regulations thereunder with respect to the disposition of the
Registrable Securities covered by the registration statement for the period
required to effect the distribution thereof;
(b) furnish to EIF such number of copies of any prospectus or
offering circular, including a preliminary prospectus, and of a full
registration statement and exhibits in conformity with the requirements of the
1933 Act and rules and regulations thereunder, as EIF may reasonably request in
order to facilitate the disposition of such securities;
(c) use its best efforts to register or qualify such securities
covered by the registration statement, as the case may be, under the securities
or blue sky laws of such jurisdictions as EIF may reasonably request, and
accomplish any and all other acts and things which may be necessary or advisable
to permit sale in such jurisdictions of such Registrable Securities; provided,
however, that Foreland shall not be required to register as a dealer or to
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qualify as a foreign corporation in any such jurisdictions or to escrow any
shares of its capital stock;
(d) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. EIF shall also
enter into and perform its obligations under such an agreement;
(e) notify EIF at any time when a prospectus relating thereto is
required to be delivered under the 1933 Act of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing;
(f) furnish, at the request of EIF, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Agreement, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the outside
counsel of recognized standing (or reasonably acceptable to EIF) representing
Foreland for the purposes of such registration, in form and substance as is
customarily given to underwriters in such underwritten public offering,
addressed to the underwriters, if any, and to EIF and (ii) a letter dated such
date, from the independent certified public accountants of Foreland, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to EIF;
(g) as promptly as practicable after becoming aware of such
event, notify EIF of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the registration statement to correct such untrue statement or
omission, and deliver a number of copies of such supplement or amendment to EIF;
(h) provide EIF with written notice of the date that a
registration statement registering the resale of the Registrable Securities is
declared effective by the SEC, and the date or dates when the registration
statement is no longer effective;
(i) provide EIF and their representatives the opportunity to
conduct a reasonable due diligence inquiry of Foreland's pertinent financial and
other records and make available its officers, directors and employees for
questions regarding such information as it related to information contained in
the registration statement; and
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(j) provide EIF and its representatives the opportunity to
review the registration statement and all amendments thereto no later than three
(3) days prior to their filing with the SEC.
6. Expenses. All expenses incurred by Foreland in connection with
any registration of the Registrable Securities effected under Sections 2, 3 or 4
hereof, including, without limitation, all registration or filing fees, fees and
expenses of complying with state securities and blue sky laws, printing
expenses, fees and expenses of Foreland's counsel and accountants, and fees and
expenses of counsel for EIF, shall be paid by Foreland; provided, however, that
all underwriting discounts and selling commissions applicable to the EIF
Registrable Securities shall not be borne by Foreland but shall be borne by EIF.
7. Representations and Warranties of EIF. EIF hereby represents and
warrants to Foreland as follows: (a) EIF is duly organized, validly existing and
in good standing under the laws of Delaware; (b) EIF has the full power and
authority to enter into this Agreement; (c) the execution, delivery and
performance of this Agreement by EIF have been duly authorized by all necessary
corporate, governmental or other action; (d) this Agreement constitutes a legal,
valid and binding obligation of EIF, enforceable in accordance with its terms;
and (e) this Agreement does not violate or constitute a default under any of
EIF's organizational documents or under any indenture, mortgage, deed of trust
or other instrument, any contractual covenant or any restriction to which EIF is
a party or by which EIF or its assets are bound, nor does it violate any
provision of any law, rule, regulation, interpretation order, writ, judgment,
decree, determination, or award presently in effect having applicability to EIF.
8. Representations and Warranties of Foreland. Foreland hereby
represents and warrants to EIF as follows: (a) Foreland is duly organized,
validly existing and in good standing under the laws of Nevada; (b) Foreland has
the full power and authority to enter into this Agreement; (c) the execution,
delivery and performance of this Agreement by Foreland have been duly authorized
by all necessary corporate, governmental or other action; (d) this Agreement
constitutes a legal, valid and binding obligation of Foreland, enforceable in
accordance with its terms; (e) this Agreement does not violate or constitute a
default under any of Foreland's organizational documents or under any indenture,
mortgage, deed of trust or other instrument, any contractual covenant or any
restriction to which Foreland is a party or by which Foreland or its assets are
bound, nor does it violate any provision of any law, rule, regulation,
interpretation order, writ, judgment, decree, determination, or award presently
in effect having applicability to Foreland; and (f) there are no actions, suits,
or proceedings pending or, to the knowledge of Foreland, threatened against
Foreland or its affiliates in any court or by or before any governmental
department, agency, instrumentality, or any arbitrator, in which an adverse
decision could be reasonably expected to materially and adversely affect the
ability of Foreland or its affiliates to perform its obligations under this
Agreement.
9. Indemnification.
(a) By Foreland. In connection with the filing of any
registration statements and sales of the Registrable Securities thereunder,
Foreland shall indemnify and hold harmless EIF,
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its officers and directors, any underwriter, and each other individual or
entity, if any, who controls ("Control Person") EIF or the underwriter within
the meaning of the 1933 Act, against Losses to which EIF, underwriter, or
Control Person may become subject under the 1933 Act or otherwise, insofar as
such Losses arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which the Registrable Securities were registered under the 1933 Act, any
preliminary prospectus, offering circular or final prospectus contained therein,
or any amendment or supplement thereto, or any report filed with the Securities
and Exchange Commission (the "Disclosure Documents"), or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse EIF, and any such underwriter, or Control Person
for any legal or any other expenses reasonably incurred in connection with
investigating or defending any such losses, excluding any amounts paid in
settlement of litigation, commenced or threatened, if such settlement is
effected without the prior written consent of Foreland; provided, however, that
Foreland shall not be liable in any such case to the extent that any such Losses
arise out of or are based upon any untrue statement, alleged untrue statement or
omission or alleged omission made in such Disclosure Document in reliance upon
and in conformity with information furnished to Foreland in writing by or on
behalf of EIF for use specifically in connection with the preparation of such
Disclosure Document.
(b) By EIF. In connection with the filing of any registration
statement and sales of the EIF Registrable Securities thereunder, EIF shall
indemnify Foreland, each of its directors, each of its officers who signed such
registration statement, and each other Control Person, against any Losses to
which Foreland, any of its directors, officers, or Control Persons may become
subject under the 1933 Act or otherwise, insofar as such Losses arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any of the Disclosure Documents or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse Foreland, and any of its directors, officers, or Control
Persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claims, excluding any amounts paid in
settlement of litigation, commenced or threatened, if such settlement is
effected without the prior written consent of EIF; provided, however, that such
indemnification or reimbursement shall be payable in any such case only to the
extent that such statement or alleged statement or omission or alleged omission
is made in reliance on information furnished to Foreland in writing by or on
behalf of EIF for use specifically in connection with the preparation of such
Disclosure Document.
10. Reports under Securities Exchange Act of 1934. With a view to
making available to EIF the benefits of Rule 144 promulgated under the 1933 Act
and any other rule or regulation of the SEC that may at any time permit EIF to
sell securities of Foreland to the public without registration, Foreland agrees
to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144;
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(b) file with the SEC in a timely manner all reports and
other documents required of Foreland under the 1933 Act and the Securities
Exchange Act of 1934; and
(c) furnish to EIF, so long as EIF owns any Registrable
Securities, forthwith upon request (i) a written statement by Foreland, if true,
that it has complied with the reporting requirements of SEC Rule 144, the 1933
Act and the Securities Exchange Act of 1934, (ii) a copy of the most recent
annual or quarterly report of Foreland and such other reports and documents so
filed by Foreland, and (iii) such other information as may be reasonably
requested in availing EIF of any rule or regulation of the SEC which permits the
selling of any such securities without registration.
11. Notices. All notices and communications required or permitted
under this Agreement shall be in writing and any communication or delivery
hereunder shall be deemed to have been duly made when personally delivered to
the individual indicated below, or if sent by telecopier or mailed, when
received by the party charged with such notice and addressed as follows:
If to EIF:
Energy Income Fund, L.P.
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
If to Foreland:
Foreland Corporation
Union Terrace Office Building
00000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000-0000
Attn: N. Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
Copies of all notices (other than reports or other routine
communications), which shall not constitute notice, shall be delivered to:
Xxxxxx, Xxxxxx & Xxxxxxxxx
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxxx
Facsimile No.: (000) 000-0000
- and -
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Xxxxx, Xxxxx & Xxxxxxx, L.L.C.
Xxxxxx Xxxxx, Xxxx Xxx Xxxxx
00 Xxxx Xxxxxxxx (300 Xxxxx)
Xxxx Xxxx Xxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxx
Facsimile No.: (000) 000-0000
Any party may, by written notice so delivered to the other
parties, change the address or individual to which delivery shall thereafter be
made.
12. Counterparts. This Agreement may be executed by EIF and Foreland
in any number of counterparts, no one of which need be executed by all parties
hereto, but all of which together shall constitute one and the same instrument.
13. Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
15. Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never constituted a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement.
16. Entire Agreement. This Agreement and the Stock Purchase
Agreement constitute the entire understanding among the parties with respect to
the subject matter hereof, superseding all negotiations, prior discussions and
prior agreements and understandings relating to such subject matter.
17. Third Party Beneficiaries. This Agreement shall be binding upon,
and shall inure to the benefit of, the parties hereto and, except as otherwise
prohibited, their respective heirs, devisees, executors, administrators,
successors and assigns; and except as provided in Section 9, nothing contained
in this Agreement, express or implied, is intended to confer upon any other
individual or entity any benefits, rights or remedies.
18. Amendments. Except for waivers specifically provided herein,
this Agreement may not be amended nor any rights hereunder waived except by an
instrument in writing signed by the party to be charged with such amendment or
waiver and delivered by such party to the party claiming the benefit of such
amendment or waiver.
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19. Nonwaiver. No course of dealing or any delay or failure to
exercise any right, power or remedy hereunder on the part of EIF shall operate
as a waiver of or otherwise prejudice EIF's rights, powers or remedies.
20. Assignability. Foreland may not assign its obligations under
this Agreement without the written consent of EIF. The registration rights of
EIF under this Agreement may be assigned by EIF without the consent of Foreland.
21. Drafting. Each party acknowledges that its legal counsel
participated in the preparation of this Agreement. The parties therefore
stipulate that the rule of construction that ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement to favor any party against the other.
22. Interpretation. Unless the context of this Agreement otherwise
requires, (a) words of any gender include all genders; (b) words using the
singular or plural number also include the plural or singular number,
respectively; (c) the terms "hereof," "herein," "hereby" and derivative or
similar words refer to this entire Agreement; (d) the term "Section" refers to
the specified Section of this Agreement and (e) the term "including" means
"including without limitation." Whenever this Agreement refers to a number of
days, such number shall refer to calendar days.
IN WITNESS WHEREOF, the parties hereto each has caused this
Agreement to be executed by its duly authorized officer all as of the day and
year first set forth above.
ENERGY INCOME FUND, L.P.
By: EIF General Partner, L.L.C.,
its General Partner
By: /s/ XXXXXX X. XXXXXXX
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Xxxxxx X. Xxxxxxx
A Managing Director
FORELAND CORPORATION
By: /s/ N. XXXXXX XXXXXX
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N. Xxxxxx Xxxxxx
President
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