<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(Amendment No. 2)
FORELAND CORPORATION
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(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
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(Title of Class of Securities)
345458301
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(CUSIP Number)
Russell J. Bruemmer
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
(202) 663-6000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
February 24, 1999
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
<PAGE> 2
SCHEDULE 13D
<TABLE>
<S> <C>
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CUSIP NO. 345458301 PAGE 2 OF 9 PAGES
-----------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Energy Income Fund, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,083,333
OWNED BY ---------------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ---------------------------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
2,083,333
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,083,333
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.1%
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14 TYPE OF REPORTING PERSON*
PN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
SCHEDULE 13D
<TABLE>
<S> <C>
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CUSIP NO. 345458301 PAGE 3 OF 9 PAGES
----------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EIF General Partner, L.L.C.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,083,333
OWNED BY ---------------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ---------------------------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
2,083,333
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,083,333
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.1%
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14 TYPE OF REPORTING PERSON*
OO
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 4
SCHEDULE 13D
<TABLE>
<S> <C>
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CUSIP NO. 345458301 PAGE 4 OF 9 PAGES
----------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert D. Gershen
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,083,333
OWNED BY ---------------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ---------------------------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
2,083,333
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,083,333
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.1%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 5
SCHEDULE 13D
<TABLE>
<S> <C>
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CUSIP NO. 345458301 PAGE 5 OF 9 PAGES
----------
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
George W. Siguler
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ---------------------------------------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,083,333
OWNED BY ---------------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ---------------------------------------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
2,083,333
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,083,333
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
18.1%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 6
SCHEDULE 13D (CONTINUED) PAGE 6 OF 9 PAGES
This Amendment No. 2 to Schedule 13D is filed by and on behalf of
Energy Income Fund, L.P. ("EIF"), EIF General Partner, L.L.C. ("EIF General
Partner"), Robert D. Gershen ("Gershen"), and George W. Siguler ("Siguler")
(collectively, the "Reporting Persons") and relates to the common stock, $.01
par value ("Common Stock"), of Foreland Corporation (the "Issuer"). This
Amendment No. 2 amends the initial statement on Schedule 13D dated January 15,
1998 (the "Initial Statement") as amended on November 30, 1998. Capitalized
terms used herein but not defined herein shall have the meanings ascribed to
them in the Initial Statement.
Item 3 is hereby amended in its entirety to read as follows:
Item 3. Source and Amount of Funds or Other Consideration.
On January 6, 1998, EIF acquired warrants to purchase 1,000,000 shares
of Common Stock as additional consideration in connection with debt financing
provided to the Issuer. On August 10, 1998, EIF amended one of the warrants to
allow for the purchase of an additional 500,000 shares of Common Stock as
consideration for certain amendments to the debt financing provided to the
Issuer. The exercise price of the warrants is $6.00 per share. On November 5,
1998, EIF acquired 2,000 shares of convertible preferred stock of the Issuer,
which are convertible into 333,333 shares of Common Stock, for aggregate
consideration of $2 million. On February 4, 1999, EIF and Issuer entered into an
agreement dated as of such date (the "Common Stock Issuance Agreement") pursuant
to which the Issuer agreed to issue to EIF 250,000 shares of Common Stock as
consideration in connection with a restructuring of the debt financing provided
by EIF to the Issuer. Issuance of the 250,000 shares of Common Stock was subject
to certain conditions, which were satisfied on February 24, 1999. The 250,000
shares of Common Stock are not permitted to be resold for one year from the date
of the Common Stock Issuance Agreement. The source of funds for such debt
financing and for the purchase price of the convertible preferred stock was
capital contributed by EIF's investors.
Item 4 is hereby amended in its entirety to read as follows:
Item 4. Purpose of Transaction.
The Reporting Persons are filing this Schedule 13D as the result of (a)
the acquisition by EIF of 250,000 shares of Common Stock of the Issuer and
warrants to purchase 1,500,000 shares of Common Stock of the Issuer pursuant to
a loan agreement entered into on January 6, 1998, as amended by agreements
dated August 10, 1998 and February 4, 1999 (the "1998 Loan Transaction") and
(b) the acquisition by EIF of 2,000 shares of convertible preferred stock on
November 5, 1998 pursuant to a Stock Purchase Agreement entered into on
August 10, 1998 (the "1998 Stock Purchase"). Pursuant to the 1998 Loan
Transaction, a warrant to purchase 750,000 shares of Common Stock at an
exercise price of $6 per share ("Warrant No. 1") and a warrant to purchase
250,000 shares of Common Stock at an exercise price of $10 per share ("Warrant
No. 2") were acquired on January 6, 1998. On August 10, 1998, Warrant No. 2 was
replaced with a warrant exercisable into 750,000 shares of Common Stock at a
reduced exercise price of $6 per share ("New Warrant No. 2"). Pursuant to
amendments dated February 4, 1999, the expiration dates of Warrant No. 1 and
New Warrant No. 2 (collectively, the "Warrants") were extended from January 6,
2003 to December 31, 2003. EIF has acquired the equity securities described
above solely for investment purposes. As the result of the 1998 Loan
Transaction and the 1998 Stock Purchase, EIF is deemed to beneficially own
18.1% of the Common Stock.
Pursuant to the terms of the 1998 Loan Transaction, Mr. Gershen was
appointed to the Board of Directors of Issuer, effective January 9, 1998. Mr.
Gershen is a Managing Director of EIF General Partner and is the president and
controlling shareholder of AEM and R.D. Gershen.
As described in Item 6 below, EIF has registration rights regarding the
shares of the Common Stock acquired by EIF pursuant to the Common Stock Issuance
Agreement and the shares of Common Stock issuable pursuant to the Warrants and
convertible preferred stock. The Reporting Persons may sell some or all of the
shares of Common Stock acquired by EIF pursuant to the Common Stock Issuance
Agreement or the shares of Common Stock issuable pursuant to the Warrants and
convertible preferred stock in privately negotiated transactions, on the market
or otherwise. The 250,000 shares of Common Stock acquired by EIF pursuant to the
Common Stock Issuance Agreement are not permitted to be resold for one year from
the date of such agreement.
<PAGE> 7
SCHEDULE 13D (CONTINUED) PAGE 7 OF 9 PAGES
Pursuant to the 1998 Loan Transaction, the Issuer has the right,
expiring March 31, 1999, to reacquire all of the Warrants and convertible
preferred stock purchased by EIF upon payment of $3,120,000 and repayment in
full of all obligations under the debt financing from EIF. In addition, the
exercise price of the Warrants will be reduced to $3.00 per share in the event
repayment of the financing extended to the Issuer by EIF under the 1998 Loan
Transaction is delayed for a certain minimum period of time.
Sections (a), (b) and (c) of Item 5 are hereby amended in their entirety to read
as follows:
Item 5. Interest in Securities of the Issuer.
(a) EIF directly holds 250,000 shares of Common Stock, the Warrants for
the right to acquire 1,500,000 shares of Common Stock and 2,000 shares of
convertible preferred stock convertible into 333,333 shares of Common Stock.
Each of the Reporting Persons is deemed to beneficially own an aggregate of
2,083,333 shares of Common Stock, constituting 18.1% of the shares outstanding.
(b) The Reporting Persons share voting and dispositive power over the
250,000 shares of Common Stock. Such Common Stock, however, is not permitted to
be resold for one year from the date of the Common Stock Issuance Agreement. The
Reporting Persons share dispositive power over (i) the Warrants for the purchase
of 1,500,000 shares of Common Stock and (ii) the convertible preferred stock
convertible into 333,333 shares of Common Stock. If and when the Warrants are
exercised for Common Stock or the convertible preferred stock is converted into
Common Stock, the Reporting Persons will share voting and dispositive power over
the shares of Common Stock acquired upon such exercise or conversion.
(c) There have been no transactions of shares of Common Stock effected
within the past 60 days by the Reporting Persons, Sigular Guff or R.D. Gershen.
Item 6 is hereby amended to read in its entirety as follows:
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
In connection with the 1998 Stock Purchase and the issuance of the
250,000 shares of Common Stock, EIF and the Issuer have entered into a
registration rights agreement dated August 10, 1998 and amended by that certain
First Amendment to Registration Rights Agreement dated as of February 4, 1999
(the "Registration Rights Agreement"). The Registration Rights Agreement
provides that the Issuer shall file, not later than two months after the date
of the amendment to the Registration Rights Agreement, a registration statement
on Form S-3 (or other suitable form) as a shelf registration statement under
Rule 415 of the Securities Act of 1933 covering the resale of the securities
issuable or issued upon conversion of the convertible preferred stock purchased
by EIF pursuant to the 1998 Stock Purchase, and, not later than one year and
two months after the date of the amendment to the Registration Rights
Agreement, a shelf registration statement covering the resale of the 250,000
shares of Common Stock issued to EIF as part of the 1998 Loan Transaction. If
the shelf registration statement is not declared effective a month after the
deadline for filing in each case, the Issuer is required to pay certain
penalties to EIF. Pursuant to the Registration Rights Agreement, EIF is also
entitled to demand and "piggy-back" registration rights with respect to the
Common Stock issued to EIF as part of the 1998 Loan Transaction and the Common
Stock underlying the convertible preferred stock. The Registration Rights
Agreement also contains provisions relating to obligations of the Issuer,
registration expenses, indemnifications and certain other matters. The
foregoing description of the Registration Rights Agreement is qualified in its
entirety by reference to such agreement, which is attached hereto as Exhibit B,
and the first amendment thereto, which is attached hereto as Exhibit E.
Under the provisions of the Warrants, EIF may exercise in whole or in
part the Warrants for, in the aggregate, 1,500,000 shares of Common Stock (the
"Warrant Stock"). As to the Warrant Stock, the Issuer has agreed to file, within
two months of written notice of any exercise of the Warrants, a registration
statement on Form S-3 (or other suitable form) as a shelf registration statement
under Rule 415 of the Securities Act of 1933 covering the resale of all Warrant
Stock. EIF is also entitled to certain demand and "piggy-back" registration
rights with respect to such Warrant Stock. The Warrants also contain provisions
relating to the procedures for exercising the Warrants, transfers of the
Warrants and Warrant Stock, adjustments to the exercise price of the Warrants,
indemnification and certain other matters. The foregoing description of the
Warrants is qualified in its
<PAGE> 8
SCHEDULE 13D (CONTINUED) PAGE 8 OF 9 PAGES
entirety by reference to such Warrants, which are attached hereto as Exhibits C
and D and the first amendments thereto, which are attached hereto as Exhibits F
and G.
Pursuant to the Registration Rights Agreement and the Warrants, on
December 21, 1998, a shelf registration statement on Form S-3 was filed by the
Issuer covering the resale of the securities issuable upon conversion of the
convertible preferred stock and upon exercise of the Warrants. As of the date of
this Amendment, such Form S-3 has not been declared effective by the Securities
and Exchange Commission.
Item 7 is hereby amended by adding thereto the following:
Item 7. Material to Be Filed as Exhibits
Exhibit E is the First Amendment to Registration Rights Agreement dated
as of February 4, 1999 by and between Energy Income Fund, L.P. and Foreland
Corporation.
Exhibit F is the First Amendment to Common Stock Purchase Warrant dated
January 6, 1998 (Warrant No. 1), dated as of February 4, 1999.
Exhibit G is the First Amendment to Common Stock Purchase Warrant dated
August 10, 1998 (Warrant No. 2), dated as of February 4, 1999.
Exhibit H is the Common Stock Issuance Agreement dated February 4, 1999
between Energy Income Fund, L.P. and Foreland Corporation.
SIGNATURES
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: March 5, 1999
ENERGY INCOME FUND, L.P.
By: EIF General Partner, L.L.C.
By: /s/ ROBERT D. GERSHEN
--------------------------
Robert D. Gershen
Managing Director
EIF GENERAL PARTNER, L.L.C.
By: /s/ ROBERT D.GERSHEN
------------------------------
Robert D. Gershen
Managing Director
/S/ ROBERT D. GERSHEN
------------------------------------
Robert D. Gershen
/s/ GEORGE W. SIGULER
------------------------------------
George W. Siguler
<PAGE> 9
SCHEDULE 13D (CONTINUED) PAGE 9 OF 9 PAGES
EXHIBIT INDEX
Exhibit E First Amendment to Registration Rights Agreement dated as of
February 4, 1999 by and between Energy Income Fund, L.P. and
Foreland Corporation.
Exhibit F First Amendment to Common Stock Purchase Warrant dated
January 6, 1998 (Warrant No. 1), dated as of February 4, 1999.
Exhibit G First Amendment to Common Stock Purchase Warrant dated
August 10, 1998 (Warrant No. 2), dated as of February 4, 1999.
Exhibit H Common Stock Issuance Agreement dated February 4, 1999 between
Energy Income Fund, L.P. and Foreland Corporation.
<PAGE> 1
Exhibit E
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
<PAGE> 2
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.
- 2 -
<PAGE> 3
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
- 3 -
<PAGE> 4
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.
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<PAGE> 5
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. THOMAS STEELE
---------------------------------
N. Thomas Steele
President
ENERGY INCOME FUND, L.P.
By: EIF General Partner, L.L.C.,
its General Partner
By: /s/ ROBERT D. GERSHEN
--------------------------
Robert D. Gershen
A Managing Director
- 5 -
<PAGE> 1
Exhibit F
FIRST AMENDMENT TO
COMMON STOCK PURCHASE WARRANT
DATED JANUARY 6, 1998
(WARRANT NO. 1)
WHEREAS, Foreland Corporation, a Nevada corporation (the
"Company") has granted to Energy Income Fund, L.P., a Delaware limited
partnership (the "Holder") a warrant to purchase 750,000 shares of Common Stock
of the Company pursuant to that certain Common Stock Purchase Warrant, dated
January 6, 1998 ("Warrant No. 1") in connection with that certain Financing
Agreement entered into between the Company and the Holder on January 6, 1996, as
amended by that First Amendment to Financing Agreement dated August 10, 1998 and
that Second Amendment to Financing Agreement (the "Second Amendment") dated as
of even date herewith (as amended, the "Financing Agreement"); and
WHEREAS, in exchange for a deferral of principal payments, an
advance of additional funds and other consideration set forth in the Second
Amendment, the Company has agreed to extend the expiration date of Warrant No.
1; and
WHEREAS, the Company and the Holder desire to amend certain terms
of Warrant No. 1 to reflect these and other changes.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Holder
agree as follows:
1. Amendments to Warrant No. 1.
a. The first sentence of the first paragraph following
the legend of Warrant No. 1 is amended by deleting it and replacing it with the
following:
FOR VALUE RECEIVED, Energy Income Fund, L.P., a Delaware
limited partnership (the "Holder"), is entitled to
purchase from Foreland Corporation, a Nevada corporation
(the "Company"), subject to the terms and conditions
herein set forth, at any time before 5:00 p.m. Longmeadow,
Massachusetts time on December 31, 2003, or the first
business day thereafter if such day is not a business day
or such other date as may be established in accordance
with the terms of this Warrant (the "Expiration Date"),
Seven Hundred Fifty Thousand (750,000) of the shares of
duly authorized, validly issued, fully paid and
nonassessable Common Stock of the Company, one-tenth of a
cent ($.001) par value (the "Warrant Stock"), subject to
adjustment of the number or kind of shares constituting
Warrant Stock as hereinafter provided.
b. Section 1.7 of Warrant No. 1 is deleted and
replaced with the following:
<PAGE> 2
1.7 "Expiration Date" means December 31, 2003, or
the first business day thereafter if such day is not a
business day, or such other date as may be established in
accordance with the terms of this Warrant.
c. The following definition is added to Article 1:
1.20 "Warrant No. 2" means the warrant issued by
Foreland to EIF dated August 10, 1998 for Seven Hundred
Fifty Thousand (750,000) shares of Common Stock with an
exercise price of Six Dollars ($6) per share.
d. Section 4.5 of Warrant No. 1 is deleted and
replaced with the following:
4.5 Anti-dilution Adjustment.
Pursuant to Section 7.39 of the Financing
Agreement, if, during the term of this Warrant or Warrant
No. 2, or both, Foreland issues additional shares of
common stock at a price of less than Six Dollars ($6) or
issues securities convertible or exercisable into common
stock of Foreland at a conversion or exercise price of
less than Six Dollars ($6) and such securities are
converted or exercised into common stock or repurchased by
Foreland, the following calculation shall be made and
additional warrants shall be delivered by Foreland to EIF
in the number and manner described below.
Effective December 31, 1998, EIF and Foreland shall
jointly calculate, at six month intervals, the number of
shares issued as described in the above paragraph. In
making this determination, EIF and Foreland shall not
consider shares issued pursuant to stock options of
directors and officers of Foreland outstanding as of the
date hereof as set forth on Schedule 5.23 to the Financing
Agreement. Within 10 days of receipt of a written request
from EIF for delivery of additional warrants based on this
calculation, Foreland shall deliver to EIF additional
warrants for the number of shares of common stock of
Foreland equal to 15% of the shares issued as described in
the above paragraph during such six month interval. Such
warrants shall be in the form of Warrant No. 2 with an
exercise price of Six Dollars ($6) per share.
The foregoing provisions of this Section shall not
apply to (i) each issuance of additional securities, if
any, the proceeds of which are used to repay the Loan in
full within thirty (30) days (ii) each issuance of equity
securities, if any, that is pursuant to an offering with
net proceeds to Foreland of Twenty Million Dollars
($20,000,000) or more or (iii) the issuance of securities
pursuant to the Stock Purchase Agreement or
- 2 -
<PAGE> 3
Common Stock Issuance Agreement (as each term is defined
in the Financing Agreement). The occurrence of any
issuance described in (i), (ii) or (iii) above shall not
in any way limit the subsequent application of any other
provision of this Section.
e. The following Sections 8.01 and 8.02 are added to
Warrant No. 1 immediately before Section 8.1:
8.01 For purposes of the Shelf Registration under
Section 8.2 hereof, the term "Warrant Stock" means the
Warrant Stock together with any capital stock issued in
replacement of, in exchange for or otherwise in respect of
such Warrant Stock. The number of shares of "Warrant Stock
then outstanding" shall be determined by the number of
shares of Warrant Stock which have been issued or are
issuable upon exercise of the Warrant at the time of such
determination other than shares of Warrant Stock that have
been resold in a public transaction.
For purposes of a Piggyback Registration under
Section 8.1 hereof or a Demand Registration under Section
8.2 hereof, "Warrant Stock" shall have the meaning set
forth above except that the following shall not constitute
"Warrant Stock" for such purposes:
(i) Warrant Stock that may be resold in a public
transaction without registration under the 1933
Act, including without delay or limitation as to
volume or manner of sale pursuant to Rule 144 under
the 1933 Act; and
(ii) Warrant Stock that has been resold in a public
transaction.
8.02 Shelf Registration. (a) At any time but no
later in any event than within two (2) months of written
notice by the Holder of any exercise of the Warrant, as
required by Section 2.2 of the Warrant, the Company shall
file a registration statement ("Registration Statement")
on Form S-3 (or other suitable form, at the Company's
discretion but subject to the reasonable approval of the
Holder), covering the resale of all shares of Warrant
Stock then outstanding including an indeterminate number
of shares of Common Stock as required to effect exercise
of the Warrant (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 distributed thereunder may be resold in a
public transaction pursuant to Rule 144(k) of the 1933
Act. The Company shall use its best efforts to have the
Registration Statement declared effective
- 3 -
<PAGE> 4
within three (3) months after notification by the Holder
of any exercise of the Warrant, as described in Section
8.2(a) above (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 the Holder an amount equal to
two percent (2%) per month of the aggregate amount of the
Warrant, compounded monthly and accruing daily, until the
Registration Statement or a registration statement filed
pursuant to Section 8.1 or Section 8.2 is declared
effective, payable in Common Stock, which Common Stock
shall also be deemed "Warrant Stock" 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 8.2 as a result of the choice of
the Holder to have that registration statement
underwritten.
(d) The Company 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 necessary to maintain such eligibility.
f. The first paragraph of Section 8.1 of Warrant No. 1
is deleted and replaced with the following:
8.1 Piggyback Registration Rights. If, at any time
on or before the expiration of this Warrant, the Company
proposes to file a registration statement for the public
sale of any of its Common Stock or Common Stock
Equivalents under the 1933 Act (other than registration
statements (i) provided for in Section 8.2 hereof or (ii)
pursuant to Form S-4 and Form S-8 of the Securities Act of
1933) the Company 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 the Holder, 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 the Company's intent to file a
registration statement, the Holder shall be entitled to
request that some or all of the Warrant Stock be included
in such registration statement, and the Company will use
its best efforts to cause such Warrant Stock to be
included in the offering covered by such registration
statement. In the event the Warrant Stock is included in
the registration statement (a "Piggyback Registration"),
the Holder may transfer this Warrant to an underwriter or
broker for exercise by such underwriter or broker in
connection with a distribution of the Warrant Stock.
- 4 -
<PAGE> 5
The managing underwriter or underwriters in an
underwritten offering, or the holders of a majority in
number of shares of Warrant Stock requesting registration,
may determine that the number of securities proposed to be
sold in the underwriting or offering exceeds the number
that can be sold without having a materially adverse
effect on the price at which the securities could be sold.
If it or they make such a determination in good faith,
then the Company may reduce the number of shares of Common
Stock to be included in the registration to the highest
number that the managing underwriter (or underwriters) or
a majority of the holders (as the case may be) determine
will not have a material adverse effect on the price of
the shares to be sold. If the number of shares of Common
Stock to be sold in a registration are limited pursuant to
this paragraph, the Company will include in the
registration:
(i) First, all shares the Company proposes to
sell;
(ii) Second, all shares of Common Stock for which
registration was requested pursuant to rights to require
the Company to register shares in the absence of any other
registration reduced, if necessary, to the maximum number
of shares consistent with the limitation required by this
Section 8.1; and
(iii) Third, shares of Common Stock for which
registration was requested pursuant to rights to require
the Company to register shares incidental to the
registration of other shares reduced pro rata according to
the number of shares for which registration was requested
by each Person so requesting registration, or in such
other proportions as such Persons may agree.
g. The first paragraph of Section 8.2 of Warrant No. 1
is deleted and replaced with the following:
8.2 Demand Registration Rights. At any time, the
Holder shall be entitled to request that the Warrant Stock
be registered under the 1933 Act. The Company shall, as
soon as practicable after receipt of a written request for
registration, file, and use its best efforts to cause to
become effective, an appropriate registration statement
under the 1933 Act covering the Warrant Stock, provided
that in the opinion of the Company's counsel, no events
preclude such registration. The Company may postpone for a
reasonable period of time (not to exceed 90 days) the
filing of any registration statement otherwise required to
be prepared and filed by it pursuant to this Section if,
at the time it receives a request for registration:
- 5 -
<PAGE> 6
(1) the Company is conducting or about to
conduct an offering of its securities and
the Company is advised by its investment
banker that such offering would be affected
adversely by the registration so demanded
and the Company shall have furnished to the
Holder seeking a demand registration a
certificate signed by the President of the
Company to that effect;
(2) the Board of Directors of the Company shall
determine in good faith that such offering
will interfere with a pending or
contemplated financing, merger, sale of
assets, recapitalization or other similar
corporate action of the Company and the
Company shall have furnished to the Holder
seeking a demand registration a certificate
signed by the President of the Company to
that effect, accompanied by a certified copy
of the relevant board resolutions; or
(3) the Board of Directors of the Company shall
determine in good faith that the disclosures
required in connection with registration of
the Warrant Stock might adversely affect the
business or prospects of the Company and the
Company shall have furnished to the Holder
seeking a demand registration a certificate
signed by the President of the Company to
the effect, accompanied by a certified copy
of the relevant board resolutions.
If the Holder intends to distribute the Warrant
Stock covered by its request by means of an underwriting,
the Holder shall so advise the Company as a part of its
request made pursuant to this Section. If a registration
requested pursuant to the Section 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, the Company and other holders
of securities of the Company 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 Warrant Stock to be included in such public offering.
Such other holders of securities (together with the
Company as provided in subsection 8.5(d)) shall enter into
an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting
by the Holder and reasonably acceptable to the Company.
h. The references to Section 9.2 in the third and
fourth paragraphs of Section 8.2 of Warrant No. 1 are deleted and replaced with
references to Section 8.2.
i. Section 8.3 is deleted and replaced with the
following:
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<PAGE> 7
8.3 Filing Obligations of the Company. In
connection with any registration of the Warrant Stock, the
Company 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 Holders of the
Warrant Stock covered by such registration statement have
completed the distribution described in the registration
statement or until all shares to be distributed thereunder
may be resold in a public transaction 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 Warrant Stock
covered by the registration statement for the period
required to effect the distribution thereof;
(b) furnish to the Holder 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
the Holder may reasonably request in order to facilitate
the disposition of Warrant Stock owned by such Holder;
(c) use its best efforts to register or qualify the
Warrant Stock covered by the registration statement, as
the case may be, under the securities or blue sky laws of
such jurisdictions as the Holder 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 Warrant Stock; provided, however,
that the Company shall not be required to register as a
dealer or to 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. The Holder
shall also enter into and perform its obligations under
such an agreement;
(e) furnish, at the request of the Holder, on the
date that such Warrant Stock is 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 the Holder) representing the Company for the
purposes of such registration, in
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<PAGE> 8
form and substance as is customarily given to underwriters
in such underwritten public offering, addressed to the
underwriters, if any, and to the Holder and (ii) a letter
dated such date, from the independent certified public
accountants of the Company, 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
the Holder;
(f) as promptly as practicable after becoming aware
of such event, notify the Holder 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 the Holder;
(g) provide the Holder with written notice of the
date that a registration statement registering the resale
of the Warrant Stock is declared effective by the SEC, and
the date or dates when the registration statement is no
longer effective;
(h) provide the Holder and their representatives
the opportunity to conduct a reasonable due diligence
inquiry of the Company'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
(i) provide the Holder 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.
j. The reference to "Sections 9.1 or 9.2" in Section
8.4 of Warrant No. 1 is deleted and replaced with "Sections 8.2, 8.3 or 8.4."
k. Paragraph (a) of Section 8.5 is deleted and
replaced with the following:
(a) By the Company. In connection with the filing
of any registration statements and sales of the Warrant
Stock thereunder, the Company shall indemnify and hold
harmless the Holder of this Warrant, its directors and
officers, any underwriter, and each other Person, if any,
who controls the Holder or the underwriter within the
meaning of the 1933
- 8 -
<PAGE> 9
Act, against losses, claims, damages or liabilities, joint
or several (or actions in respect thereto) ("Losses"), to
which any such Holder, underwriter, or controlling 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 Warrant Stock was 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
any such Holder, underwriter, or controlling Person 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 the Company;
provided, however, that the Company 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 the Company in writing by or
on behalf of the Holder of this Warrant for use
specifically in connection with the preparation of such
Disclosure Document.
l. The following Section 8.7 is added to Warrant
No. 1:
8.7 Reports under Securities Exchange Act of 1934
(the "1934 Act"). With a view to making available to the
Holder 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 the Holder to sell securities of the
Company to the public without registration, the Company
agrees to:
(a) make and keep public information
available, as those terms are understood and
defined in SEC Rule 144;
(b) file with the SEC in a timely manner all
reports and other documents required of the Company
under the 1933 Act and the 1934 Act; and
(c) furnish to the Holder, so long as the
Holder owns any Warrant Stock, forthwith upon
request (i) a written statement by the Company, if
true, that it has complied with the reporting
requirements of SEC Rule 144, the 1933 Act and the
1934 Act, (ii) a copy of the most recent annual or
quarterly report of the
- 9 -
<PAGE> 10
Company and such other reports and documents so
filed by the Company, and (iii) such other
information as may be reasonably requested in
availing the Company of any rule or regulation of
the SEC which permits the selling of any such
securities without registration.
2. All capitalized terms used herein shall have the meanings
ascribed to them in Warrant No. 1 unless expressly defined otherwise in this
Amendment.
3. THIS AMENDMENT IS TO BE CONSTRUED UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.
4. Except as expressly amended hereby, Warrant No. 1 remains in
full force and effect. Any references to this Warrant in the Loan Documents (as
defined in the Financing Agreement) shall refer to Warrant No. 1 as amended
hereby.
5. 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.
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<PAGE> 11
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. THOMAS STEELE
--------------------
N. Thomas Steele
President
ENERGY INCOME FUND, L.P.
By: EIF General Partner, L.L.C.,
its General Partner
By: /S/ ROBERT D. GERSHEN
-----------------------
Robert D. Gershen
A Managing Director
- 11 -
<PAGE> 1
Exhibit G
FIRST AMENDMENT TO
COMMON STOCK PURCHASE WARRANT
DATED AUGUST 10, 1998
(WARRANT NO. 2)
WHEREAS, Foreland Corporation, a Nevada corporation (the
"Company") has granted to Energy Income Fund, L.P., a Delaware limited
partnership (the "Holder") a warrant to purchase 750,000 shares of Common Stock
of the Company pursuant to that certain Common Stock Purchase Warrant, dated
August 10, 1998 ("Warrant No. 2") in connection with that certain Financing
Agreement entered into between the Company and the Holder on January 6, 1996, as
amended by that First Amendment to Financing Agreement dated August 10, 1998 and
that Second Amendment to Financing Agreement (the "Second Amendment") dated as
of even date herewith (as amended, the "Financing Agreement"); and
WHEREAS, in exchange for a deferral of principal payments, an
advance of additional funds and other consideration set forth in the Second
Amendment, the Company has agreed to extend the expiration date of Warrant No.
2; and
WHEREAS, the Company and the Holder desire to amend certain
terms of Warrant No. 2 to reflect these changes.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Holder
agree as follows:
1. Amendments to Warrant No. 2.
a. The first sentence of the first paragraph following
the legend of Warrant No. 2 is amended by deleting it and replacing it with the
following:
FOR VALUE RECEIVED, Energy Income Fund, L.P., a Delaware
limited partnership (the "Holder"), is entitled to
purchase from Foreland Corporation, a Nevada corporation
(the "Company"), subject to the terms and conditions
herein set forth, at any time before 5:00 p.m. Longmeadow,
Massachusetts time on December 31, 2003, or the first
business day thereafter if such day is not a business day
or such other date as may be established in accordance
with the terms of this Warrant (the "Expiration Date"),
Seven Hundred Fifty Thousand (750,000) of the shares of
duly authorized, validly issued, fully paid and
nonassessable Common Stock of the Company, one-tenth of a
cent ($.001) par value (the "Warrant Stock"), subject to
adjustment of the number or kind of shares constituting
Warrant Stock as hereinafter provided.
b. Section 1.7 of Warrant No. 2 is deleted and
replaced with the following:
<PAGE> 2
1.7 "Expiration Date" means December 31, 2003, or
the first business day thereafter if such day is not a
business day, or such other date as may be established in
accordance with the terms of this Warrant.
c. Section 1.19 of Warrant No. 2 is deleted and
replaced with the following:
1.19 "Warrant No. 1" means the warrant dated
January 6, 1998 issued by Foreland to EIF for Seven
Hundred Fifty Thousand (750,000) shares of Common Stock
with an exercise price of Six Dollars ($6) per share.
d. The third paragraph of Section 4.5 is deleted and
replaced with the following:
The foregoing provisions of this Section shall not
apply to (i) each issuance of additional securities, if
any, the proceeds of which are used to repay the Loan in
full within thirty (30) days (ii) each issuance of equity
securities, if any, that is pursuant to an offering with
net proceeds to Foreland of Twenty Million Dollars
($20,000,000) or more or (iii) the issuance of securities
pursuant to the Stock Purchase Agreement or Common Stock
Issuance Agreement (as each term is defined in the
Financing Agreement). The occurrence of any issuance
described in (i), (ii) or (iii) above shall not in any way
limit the subsequent application of any other provision of
this Section.
e. The first paragraph of Section 8.3 of Warrant No. 2
is deleted and replaced with the following:
8.3 Piggyback Registration Rights. If, at any time
on or before the expiration of this Warrant, the Company
proposes to file a registration statement for the public
sale of any of its Common Stock or Common Stock
Equivalents under the 1933 Act (other than registration
statements (i) provided for in Section 8.4 hereof or (ii)
pursuant to Form S-4 and Form S-8 of the Securities Act of
1933) the Company 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 the Holder, 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 the Company's intent to file a
registration statement, the Holder shall be entitled to
request that some or all of the Warrant Stock be included
in such registration statement, and the Company will use
its best efforts to cause such Warrant Stock to be
included in the offering covered by such registration
statement. In the event the Warrant Stock is included in
the
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<PAGE> 3
registration statement (a "Piggyback Registration"), the
Holder may transfer this Warrant to an underwriter or
broker for exercise by such underwriter or broker in
connection with a distribution of the Warrant Stock.
f. The first paragraph of Section 8.4 of Warrant No. 2
is deleted and replaced with the following:
8.4 Demand Registration Rights. At any time, the
Holder shall be entitled to request that the Warrant Stock
be registered under the 1933 Act. The Company shall, as
soon as practicable after receipt of a written request for
registration, file, and use its best efforts to cause to
become effective, an appropriate registration statement
under the 1933 Act covering the Warrant Stock, provided
that in the opinion of the Company's counsel, no events
preclude such registration. The Company may postpone for a
reasonable period of time (not to exceed 90 days) the
filing of any registration statement otherwise required to
be prepared and filed by it pursuant to this Section if,
at the time it receives a request for registration:
2. All capitalized terms used herein shall have the meanings
ascribed to them in Warrant No. 2 unless expressly defined otherwise in this
Amendment.
3. THIS AMENDMENT IS TO BE CONSTRUED UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS.
4. Except as expressly amended hereby, Warrant No. 2 remains
in full force and effect. Any references to this Warrant in the Loan Documents
(as defined in the Financing Agreement) shall refer to Warrant No. 2 as amended
hereby.
5. 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.
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<PAGE> 4
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. THOMAS STEELE
--------------------
N. Thomas Steele
President
ENERGY INCOME FUND, L.P.
By: EIF General Partner, L.L.C.,
its General Partner
By: /S/ ROBERT D. GERSHEN
---------------------
Robert D. Gershen
A Managing Director
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<PAGE> 1
Exhibit H
COMMON STOCK ISSUANCE AGREEMENT
This Common Stock Issuance Agreement (this "Agreement") dated as
of February 4, 1999, is made between Energy Income Fund, L.P., a Delaware
limited partnership ("EIF") and Foreland Corporation, a Nevada Corporation
("Foreland").
RECITALS
WHEREAS, pursuant to the Financing Agreement dated as of January
6, 1998 by and among Foreland, Eagle Springs, Foreland Refining, Foreland
Asphalt, Foreland Asset, Transportation and Cowboy Asphalt (collectively
referred to as the "Borrowers") and EIF, as amended from time to time (the
"Financing Agreement"), EIF agreed to make loans to the Borrowers for the
purposes and subject to the terms and conditions set forth therein;
WHEREAS, pursuant to the Second Amendment to the Financing
Agreement dated as of even date herewith (the "Second Amendment"), EIF agreed
to, among other things, defer principal payments and advance additional funds
under the Financing Agreement;
WHEREAS, in exchange for this deferral and advance and other
consideration set forth in the Second Amendment, Foreland agreed to issue to EIF
250,000 shares of the Common Stock of Foreland (the "EIF Common Stock")
restricted from resale for one year from the date of this Agreement;
NOW THEREFORE, in consideration of the premises, and other good
and valuable consideration the adequacy of which is expressly acknowledged, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. The following terms shall have the
meanings set forth herein:
"Affiliate", an "affiliate of", or a Person "affiliated" with, a
specified Person, is a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Person specified.
"Business Day" shall mean any day other than a (i) Saturday, (ii)
Sunday, or (iii) any day on which commercial banking institutions in New York,
New York are authorized or obligated to close, provided that if four (4)
consecutive days are not Business Days, the next day shall be deemed a Business
Day whether or not banks located in New York are authorized or obligated to
close.
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"Closing Date" shall mean the date when Closing actually occurs.
"Common Stock" shall mean the common stock, par value $.001 per
share, of Foreland.
"Eagle Springs" shall mean Eagle Springs Production
Limited-Liability Company, a Nevada limited liability company.
"Foreland Asphalt" shall mean Foreland Asphalt Corporation, a
Utah corporation.
"Foreland Asset" shall mean Foreland Asset Corporation, a Nevada
corporation.
"Foreland Refining" shall mean Foreland Refining Corporation, a
Texas corporation.
"Lien" shall mean any mortgage, security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), charge, preference, priority or other security agreement, option,
warrant, attachment, right of first refusal, preemptive, conversion, put, call
or other claim or right, restriction on transfer (other than restrictions
imposed by federal and state securities laws), or preferential arrangement of
any kind or nature whatsoever (including any restriction on the transfer of any
assets, any conditional sale or other title retention agreement, any financing
lease involving substantially the same economic effect as any of the foregoing
and the filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
"Losses" shall mean losses, damages, claims, demands, suits,
costs, expenses, liabilities and sanctions of every kind and character,
including without limitation reasonable attorneys' fees, court costs and costs
of investigation.
"Person" shall mean any natural person, sole proprietorship,
corporation, general partnership, limited partnership, limited liability
company, union, association, court, agency, agreement, tribunal,
instrumentality, commission, arbitrator, board, bureau, or other entity or
authority.
"Preferred Stock" shall mean all of the shares of the 1998 Series
Convertible Preferred Stock of Foreland.
"Qualified Offering" means an offering of the Common Stock in
which the aggregate net proceeds to Foreland shall be at least Four Million
Dollars ($4,000,000).
"Registration Rights Agreement" shall mean that certain
Registration Rights Agreement by and between EIF and Foreland dated August 10,
1998 as amended by the First Amendment to Registration Rights Agreement dated as
of even date herewith.
"Shareholder" shall mean any holder of Shares.
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"Shares" shall mean any and all issued and outstanding shares of
capital stock of Foreland, including, without limitation, the Common Stock and
the Preferred Stock.
"Transportation" shall mean Foreland Transportation, Inc., a Utah
Corporation (formerly known as Petrosource Transportation).
In addition, the following terms are defined elsewhere in this
Agreement:
"Closing" Section 3.1
"Effective Time" Section 2.2
"EIF" Introductory paragraph
"Indemnified Party" Section 6.3
"Indemnifying Party" Section 6.3
"Indemnity Obligation" Section 6.3
"Liability" Section 4.1(h)
Terms used but not defined herein shall have the meanings
ascribed to them in the Financing Agreement.
1.2 Accounting Terms. Accounting terms used herein and not
otherwise defined herein shall be construed in accordance with generally
accepted accounting definitions and principles consistently applied.
1.3 Singular and Plural. Words used herein in the singular, where
the context so permits, shall be deemed to include the plural and vice versa.
The definitions of words in the singular herein shall apply to such words when
used in the plural where the context so permits and vice versa.
ARTICLE II
ISSUANCE
2.1 Issuance. Pursuant to the terms and subject to the conditions
hereof, on the Closing Date, but effective as of the Effective Time, Foreland
shall issue to EIF the EIF Common Stock in consideration of EIF's deferral of
principal payments and waiver of certain covenants under the Financing Agreement
and other consideration as described in the Second Amendment.
2.2 Effective Time. The issuance of the EIF Common Stock shall be
effective as of February 4, 1999 (the "Effective Time"); provided however, that
this Agreement shall be of no force and effect until receipt by EIF and
execution of this Agreement by EIF in Massachusetts.
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<PAGE> 4
ARTICLE III
THE CLOSING
3.1 Date of Closing. Subject to the conditions stated in this
Agreement, the consummation of the transactions contemplated hereby (the
"Closing") shall be held on such date as is mutually satisfactory to the parties
hereto.
3.2 Place of Closing. The Closing shall be held at such place as
the parties hereto may agree in writing.
3.3 Conditions to Foreland's Closing. The obligations of Foreland
hereunder are subject to the following conditions, each of which must be
satisfied or waived by Foreland prior to Closing:
(a) Execution of the Second Amendment. At the Closing,
the Second Amendment shall have been executed by EIF and Foreland.
(b) Other Deliveries. EIF shall have delivered such
documents, certificates and/or instructions as may be reasonably necessary or
advisable to carry out EIF's obligations under, and to fulfill the purpose of,
this Agreement.
(c) Representations and Warranties True. Foreland shall
be satisfied that all representations and warranties of EIF contained in this
Agreement are true in all material respects at and as of the Closing as if such
representations and warranties were made at and as of the Closing, and that EIF
shall have performed and satisfied all material agreements in all material
respects as required by this Agreement to be performed and satisfied by EIF at
or prior to the Closing.
3.4 Conditions to EIF's Closing. The obligations of EIF hereunder
are subject to the following conditions, each of which must be satisfied or
waived by EIF prior to Closing:
(a) Execution of the Second Amendment. At the Closing,
the Second Amendment shall have been executed by EIF and Foreland.
(b) Resolutions. Prior to or at Closing, EIF shall have
received resolutions of the Board of Directors and/or Shareholders of Foreland,
as required by law and Foreland's By-laws, authorizing and approving the
transactions contemplated by this Agreement, certified by the respective
Secretary or Assistant Secretary of Foreland, together with certified copies of
Foreland's Articles of Incorporation and By-laws and a good-standing certificate
with respect to Foreland from the State of Nevada.
(c) Stock Certificates. At the Closing, Foreland shall
deliver to EIF a certificate representing the EIF Common Stock, with all
necessary transfer taxes paid or other revenue stamps affixed thereto.
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<PAGE> 5
(d) Opinion of Counsel. Prior to or at Closing, EIF shall
have received an opinion of Kruse, Landa & Maycock, L.L.C. in form and substance
reasonably acceptable to EIF.
(e) Registration Rights Agreement. Prior to or at Closing,
Foreland shall deliver the Registration Rights Agreement to EIF, executed by
Foreland.
(f) Other Deliveries. Foreland shall have delivered such
additional instruments, as may be reasonably necessary or advisable to carry out
EIF's obligations under, and to fulfill the purpose of, this Agreement and any
other document, certificate or other instructions delivered pursuant hereto.
(g) Representations and Warranties True. EIF shall be
satisfied that all representations and warranties of Foreland contained in this
Agreement shall be true in all material respects as at and as of the Closing as
if such representations and warranties were made at and as of the Closing, and
that Foreland have performed and satisfied all material agreements in all
material respects as required by this Agreement to be performed and satisfied by
Foreland at or prior to the Closing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Foreland. Foreland
represents and warrants as of the date hereof and as of the Closing Date as
follows:
(a) Organization. Foreland is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and is duly qualified to carry on its business as now being conducted.
(b) Capital Stock. On the date hereof, the authorized
capital of Foreland consists of (i) 50,000,000 shares of Common Stock, par value
$0.001 per share, of which 9,423,190 shares are issued and outstanding as of the
date hereof, and (ii) 5,000,000 shares of preferred stock, par value $0.001 per
share, of which:
(A) 2,000,000 preferred shares are designated as
1991 Series Convertible Preferred Stock with 20,000 of such
preferred shares issued and outstanding (convertible into
6,667 shares of Common Stock);
(B) 1,650,000 preferred shares are designated as
1994 Series Convertible Redeemable Preferred Stock with
153,140 of such preferred shares issued and outstanding
(convertible into 51,047 shares of Common Stock);
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(C) 1,000,000 preferred shares are designated as
1995 Series Convertible Preferred Stock with 349,103 of such
preferred shares issued and outstanding (convertible into
116,368 shares of Common Stock);
(D) 50,000 preferred shares are designated as
Series A Preferred Stock with none of such preferred shares
issued and outstanding;
(E) 2,000 preferred shares are designated as 1998
Series Convertible Preferred Stock with all of such
preferred shares issued and outstanding (convertible into
333,333 shares of Common Stock); and
(F) 298,000 preferred shares are not designated.
Foreland has no other Shares or capital stock of any class or other equity
securities or equity equivalents authorized, issued or outstanding. Foreland has
reserved a sufficient number of authorized shares of Common Stock for issuance
pursuant to Warrant No. 1 and Warrant No. 2 and for conversion of the Preferred
Stock. Except as set forth in Schedule 4.1, there are no outstanding or
authorized options, warrants, calls, subscriptions, rights, agreements or
commitments of any character obligating Foreland to issue any Shares or
securities convertible into or exchangeable for or evidencing the right to
purchase or subscribe for any capital stock of Foreland. All issued and
outstanding shares of the capital stock of Foreland (i) are, or shall be upon
the Closing, duly authorized, validly issued, fully-paid and nonassessable, (ii)
are, shall be and have been (other than the 1998 Series Preferred Stock) free of
any preemptive rights, (iii) were not, and shall not be, issued in violation of
the terms of any contract, agreement, lease, plan, instrument or other document
binding on Foreland, and (iv) were and shall be issued in compliance with all
applicable charter documents of Foreland and all applicable federal and state
securities or "blue sky" laws and regulations.
(c) Transfer of the EIF Common Stock. Upon the
consummation of the transactions contemplated hereby, EIF will acquire title to
the EIF Common Stock, free and clear of any and all Liens. The EIF Common Stock
has been, or will be prior to the Closing, duly authorized and, when issued and
delivered to EIF as provided in this Agreement, will be validly issued, fully
paid, and nonassessable, and the issuance of such shares will not violate or
contravene the terms of any contract, agreement, note, bond, mortgage,
indenture, deed or trust, license, franchise, permit, lease, plan, instrument,
or other document binding on Foreland. The EIF Common Stock shall be restricted
from resale for one year from the date of this Agreement and has registration
rights pursuant to the Registration Rights Agreement.
(d) No Conflict. Foreland has all requisite power and
authority to carry on its business as presently conducted, to enter into this
Agreement and to perform its obligations hereunder. The consummation of the
transactions contemplated by this Agreement will not violate, or be in conflict
with, any material provision of the certificate of incorporation of Foreland or
any material provision of any agreement or instrument to which Foreland is a
party or by which it is bound (except for any provision in any agreement
relating to required consents to transfer), noncompliance with which would have
a materially adverse effect upon EIF, upon
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EIF's acquisition or ownership of the EIF Common Stock after the Closing Date or
upon any of the transactions contemplated by this Agreement or, to the knowledge
of Foreland, any judgment, decree, order, statute, rule or regulation applicable
to Foreland (subject to required approvals of Federal, state or other
governmental agencies).
(e) Authorization. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all requisite action on the part of Foreland.
(f) Enforceability. This Agreement has been duly executed
and delivered on behalf of Foreland. This Agreement constitutes legal, valid and
binding obligations of Foreland enforceable in accordance with their respective
terms.
(g) Proceedings. There are no actions, suits, proceedings
or governmental investigations or inquiries pending, or, to the knowledge of
Foreland, threatened against Foreland or any of its Affiliates, or their
respective properties, assets, operations or businesses, which would, singly or
in the aggregate, have a material adverse effect on the business of Foreland.
(h) Financial Statements. The financial statements of
Foreland dated as of September 30, 1998 (i) fairly present the assets,
liabilities, and financial condition of Foreland as of the dates thereof and the
results of operations of Foreland for the respective periods ended on such
dates, (ii) have been prepared from the books and records of Foreland in
accordance with generally accepted accounting principles consistently applied,
and (iii) include all adjustments that are necessary for a fair presentation of
the information shown and do not contain any items of a special or nonrecurring
nature that are not identified as such. Foreland has no direct or indirect
liability, indebtedness, obligation, expense, claim, deficiency, guaranty, or
endorsement of or by any Person (other than endorsements of notes, bills, and
checks presented to banks for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute, contingent, matured,
unmatured, or otherwise ("Liability") other than Liabilities that are reflected,
accrued or reserved for in the Financial Statements or arise in the ordinary
course of Foreland's business consistent with past practice. The Financial
Statements do not contain as of the date hereof any misstatement of material
fact and does not fail to state any facts necessary (in lights of the
circumstances in which they were made) to make the statements therein not
misleading. Since the date of such Financial Statements, there has been no
material adverse change in the assets, business, financial condition or
prospects of Foreland.
(i) Compliance with Law. Foreland is not in violation of
any order, injunction, judgment, ruling, law, or regulation of any court or
governmental authority applicable to the property or business of Foreland, which
violation or violations in the aggregate would have a material adverse effect on
Foreland. The licenses, permits and other governmental authorizations held by
Foreland are valid and sufficient for the conduct of Foreland's businesses as
currently conducted, except where the failure to hold such licenses, permits,
and other governmental authorizations would not have a material adverse effect.
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(j) Fees. Foreland has not incurred any liability,
contingent or otherwise, for brokers' or finders' fees relating to the
transactions contemplated by this Agreement for which EIF or Foreland shall have
any responsibility whatsoever.
4.2 Representations and Warranties of EIF. EIF represents and
warrants to Foreland as of the date hereof and as of the Closing Date as
follows:
(a) Organization. EIF is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to carry on its business as currently conducted.
(b) No Conflict. EIF has all requisite power and
authority to carry on its business as presently conducted, to enter into this
Agreement, and to perform its obligations under this Agreement. The consummation
of the transactions contemplated by this Agreement will not violate, or be in
conflict with, any material provision of the limited partnership or partnership
agreement of EIF or any agreement or instrument to which EIF is a party or by
which it is bound, noncompliance with which would have a materially adverse
effect upon Foreland or upon EIF's acquisition or ownership of the EIF Common
Stock or upon any of the transactions contemplated by this Agreement, or, to the
knowledge of EIF, any judgment, decree, order, statute, rule or regulation
applicable to EIF (subject to required approvals of Federal, state or other
governmental agencies).
(c) Accredited Investor. EIF is an Accredited Investor as
defined by Regulation D of the Securities Act of 1933, as amended.
(d) Authorization. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby have been duly and
validly authorized by all requisite action on the part of EIF.
(e) Enforceability. This Agreement has been duly executed
and delivered on behalf of EIF. This Agreement constitutes legal, valid and
binding obligations of EIF, enforceable in accordance with their respective
terms.
(f) Investment Intent. EIF acknowledges that the EIF
Common Stock has not been registered under the Securities Act of 1933, as
amended, or applicable state securities laws and that the certificates
representing such shares will bear a legend to such effect. EIF is acquiring the
EIF Common Stock hereunder for investment purposes only and not with a view to,
or for resale in connection with, the distribution thereof and with no intention
of distributing or selling any thereof except in compliance with federal or
state securities laws, and will make no sale or other transfer of the EIF Common
Stock except in compliance with federal or state securities laws.
(g) Fees. EIF has incurred no liability, contingent or
otherwise, for brokers' or finders' fees relating to the transactions
contemplated by this Agreement for which Foreland shall have any responsibility
whatsoever.
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ARTICLE V
OBLIGATIONS AFTER CLOSING
5.1 Transfer Taxes. Foreland shall pay all transfer, documentary,
sales, use, registration, excise or similar taxes in connection with the
transactions contemplated by this Agreement.
5.2 Financial Information. During the term of the Loans, Foreland
shall prepare financial statements in accordance with generally accepted
accounting principles consistently applied as of each March 31, June 30,
September 30, and December 31 for the periods then ended. Quarterly statements
shall contain consolidated financial statements including a balance sheet,
statement of income, and statements of the source and application of cash flow
for the period then ended. Annual statements prepared as of each December 31 and
for the year period then ended shall be audited and accompanied by an opinion
from an independent certified public accountant. Copies of the financial
statements required by this subsection shall be furnished to EIF within 45 days
after the end of each fiscal period except for the annual statements, copies of
which shall be furnished within 90 days after the end of the fiscal period to
which they relate. EIF acknowledges that, while the Financing Agreement is in
place, delivery of such financial information as is required pursuant to the
Financing Agreement will satisfy Foreland's obligation under this Section 5.2.
5.3 Registration. In addition to any and all rights set forth in
this Agreement, EIF shall have registration rights as set forth in the
Registration Rights Agreement.
5.4 Further Assurances. After Closing, Foreland and EIF shall
each execute, acknowledge and deliver or cause to be executed, acknowledged and
delivered such instruments and take such other action as may be necessary or
advisable to assure to the other the rights, titles, interests, estates, and
privileges intended to be assigned, delivered, or reserved to such party and to
consummate the transactions and to carry out their obligations under this
Agreement and under any document, certificate, or other instrument delivered
pursuant hereto.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by EIF. From and after the Closing Date, EIF
shall defend, indemnify and save and hold harmless Foreland, its directors,
officers, employees and agents against all Losses arising out of or resulting
from any breach of any representation, warranty, covenant or agreement of EIF
under this Agreement (including the Schedules and the Exhibits hereto).
6.2 Indemnification by Foreland. From and after the Closing Date,
Foreland shall defend, indemnify and save and hold harmless EIF, its directors,
officers, employees and agents against all Losses (a) arising out of or
resulting from any breach of any representation,
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warranty, covenant or agreement of Foreland under this Agreement (including the
Schedules and the Exhibits hereto); (b) that relate to claims or other demands
by third parties with respect to any violation by Foreland of any federal or
state securities laws in connection with the transactions contemplated by this
Agreement; or (c) in connection with the operating of the Properties from the
Closing Date.
6.3 Procedures. The parties hereto agree promptly to notify the
other party of the making of any demand, the assertion of any claim, or the
commencement of any suit, action or proceeding by any third party for which
indemnity may be sought under this Agreement (an "Indemnity Obligation") prior
to expending or committing to expend funds for which indemnity may be sought.
The party from whom indemnification is sought (the "Indemnifying Party") shall
have the right, but not the obligation, to assume the defense or settlement of
any Indemnity Obligation of which the party seeking indemnification (the
"Indemnified Party") gives notice; provided, however, that if the Indemnifying
Party does not elect to assume such defense or settlement, the Indemnified Party
shall have the right, but not the obligation, to assume such defense or
settlement but shall not thereby waive any right to indemnity therefor by the
Indemnifying Party pursuant to this Agreement, and the Indemnifying Party shall
at all times have the right, at its option and expense, to participate fully
therein. Each party shall have reasonable access to the books, records and
personnel in the possession or control of the other party which are pertinent to
the defense or settlement of any Indemnity Obligation. The parties shall
cooperate in the defense or settlement of any Indemnity Obligation, but the
party electing to assume such defense or settlement shall have full authority to
determine all action to be taken with respect thereto and the terms of the
settlement; provided, however, that without the consent of the Indemnified
Party, no settlement shall be entered into that does not include as an
unconditional term thereof the giving by the Person asserting such claims of an
unconditional release of the Indemnified Party from all personal liability with
respect to such claim. The Indemnified Party may join the Indemnifying Party in
any suit, action or proceeding to which any such right of indemnity created by
this Agreement would or might apply, for the purpose of enforcing any such
right.
ARTICLE VII
MISCELLANEOUS
7.1 Survival. The representations, warranties, covenants,
agreements and indemnities set forth in this Agreement shall survive the
Closing; provided, however, that any claim or demand for breach of a
representation or warranty under Sections 6.1 or 6.2(a) and any claim or demand
under Section 6.2 must be asserted in writing on or before the one (1) year
anniversary date of the Closing Date, after which date such indemnities shall
expire except to the extent this Agreement expressly provides that any such
provision shall survive for a longer period. If the Closing occurs, all
conditions of Closing shall be deemed to have been satisfied or waived, and,
after the Closing, neither party shall have any liability whatsoever to the
other arising out of, resulting from or attributable to any such conditions of
Closing, regardless of whether such conditions of Closing were, in fact,
satisfied or waived.
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7.2 Exhibit and Schedules. The Exhibit and Schedules referred to
in this Agreement are hereby incorporated in this Agreement by reference and
constitute a part of this Agreement. Each party to this Agreement and its
counsel has received a copy of the Exhibits and Schedules prior to and as of
the execution of this Agreement.
7.3 Expenses. Foreland shall be responsible for payment of all
expenses, including legal fees, incurred by Foreland and EIF to negotiate,
document, and close the transactions contemplated hereby.
7.4 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.
136 Dwight Road
Longmeadow, MA 01106
Attn: Robert D. Gershen
Facsimile No.: (413) 567-7926
If to Foreland:
Foreland Corporation
143 Union Blvd.
Suite 210
Lakewood, CO 80228
Attn: N. Thomas Steele
Facsimile No.: (303) 988-3234
Copies of all notices (other than reports or other routine
communications), which shall not constitute notice hereunder, shall be delivered
to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attn: Russell J. Bruemmer
Facsimile No.: (202) 663-6363
- and -
Kruse, Landa & Maycock, L.L.C.
Eighth Floor, Bank One Tower
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50 West Broadway (300 South)
Salt Lake City, UT 84101-2034
Attn: James R. Kruse, Esq.
Facsimile No.: (801) 359-3954
Any party may, by written notice so delivered to the other
parties, change the address or individual to which delivery shall thereafter be
made.
7.5 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.
7.6 Limitation of Remedies. In no event shall either party to
this Agreement be entitled to recover special or consequential damages from the
other party as a result of a breach of this Agreement by such other party,
including, without limitation, special damages in the nature of lost or future
profits.
7.7 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.
7.8 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.
7.9 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto and all other agreements executed in connection herewith)
constitutes 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.
7.10 Parties in Interest. 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 this Article VII, which is
also intended to benefit and be enforceable by the Indemnified Parties, nothing
contained in this Agreement, express or implied, is intended to confer upon any
other Person any benefits, rights or remedies.
7.11 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.
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7.12 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.
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/ ROBERT D. GERSHEN
-------------------------------------
Robert D. Gershen
A Managing Director
FORELAND CORPORATION
By:/S/ N. THOMAS STEELE
------------------------------------
N. Thomas Steele
President
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