REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of April 10, 2001 by and between KFx Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxxxx ("Holder") to provide
Holder with certain registration rights relative to 33,333 shares of Common
Stock of KFx Inc. that Holder has the right to purchase pursuant to a
warrant provided by the Company to the Holder dated the date hereof (the
"Warrant").
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
REGISTRATION RIGHTS
Section 1.01. DEFINITIONS. For purposes of this Agreement:
(a) Common Shares. The term "Common Shares" means shares
of Common Stock, $.001 par value, of the Company.
(b) Holder. The term "Holder" means any person owning of
record Registrable Securities that have not been sold to the
public or sold pursuant to Rule 144 promulgated under the
Securities Act, or any assignee of record of such Registrable
Securities to whom rights under this Agreement have been duly
assigned in accordance with this Agreement and the Warrant.
(c) Registrable Securities or Registrable Shares. The
terms "Registrable Securities" or "Registrable Shares" means (i)
all Common Shares of the Company that may hereafter be acquired by
Holder pursuant to the exercise of the Warrant or any warrant that
is issued by the Company to Holder as a replacement for all or any
portion of the Warrant, (ii) all Common Shares of the Company that
may hereafter be acquired by Holder pursuant to the Stock Purchase
Agreement dated the date hereof to which the Company and Holder
are parties, and (iii) any Common Shares of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right
or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement
of, all such Common Shares described in clauses (i) and (ii) of
this subsection (c); excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which
rights under this Article I are not assigned in accordance with
this Agreement or any Registrable Securities sold to the public or
sold pursuant to Rule 144 promulgated under the Securities Act.
(d) Registration. The terms "register," "registration"
and "registered" mean a registration effected by preparing and
filing a registration statement in compliance with the Securities
Act and the declaration or ordering of effectiveness of such
registration statement.
(e) Registration Expenses. The term "Registration
Expenses" means all expenses incurred by the Company in complying
with Section 1.02 hereof, including, without limitation, all
registration and filing fees, listing fees, printing expenses,
fees and disbursements of counsel for the Company, blue sky fees
and expenses, the expense of any special audits incident to or
required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any
event by the Company) and the expenses of underwriters customarily
paid by similarly situated companies in connection with
underwritten offerings of equity securities to the public
(including any qualified independent underwriter required in
connection with such underwritten offering), excluding any such
fees based on the proceeds of sales of Registrable Securities by
selling Holders.
(f) Registration Statement. The term "Registration
Statement" means any registration statement under the Securities
Act for purposes of effecting a public offering of securities of
the Company.
(g) SEC. The term "SEC" means the U.S. Securities and
Exchange Commission.
(h) Securities Act. The term "Securities Act" means the
Securities Act of 1933, as amended from time to time.
Section 1.02. PIGGYBACK REGISTRATIONS.
(a) Right to Piggyback. The Company shall notify all
Holders in writing at least thirty (30) days prior to filing any
Registration Statement (including, but not limited to,
Registration Statements relating to secondary offerings of
securities of the Company, but excluding Registration Statements
relating to any employee benefit plan or a corporate
reorganization) and will afford each such Holder an opportunity to
include in such Registration Statement all or any part of the
Registrable Securities then held by such Holder. Each Holder
desiring to include in any such Registration Statement all or any
part of the Registrable Securities held by such Holder shall,
within twenty (20) days after receipt of the above-described
notice from the Company, so notify the Company in writing, and in
such notice shall inform the Company of the number of Registrable
Securities such Holder wishes to include in such Registration
Statement. The Company thereupon will use its best efforts as a
part of its filing of such Registration Statement to effect the
registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by
the Holder, to the extent required to permit the disposition of
the Registrable Securities so to be registered. If a Holder
decides not to include all of its Registrable Securities in any
Registration Statement thereafter filed by the Company, such
Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent Registration
Statement or Registration Statements as may be filed by the
Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.
(b) Underwriting. If a Registration Statement under which
the Company gives notice under this Section 1.02 is for an
underwritten offering, then the Company shall so advise the
Holders. In such event, the right of any such Holder's Registrable
Securities to be included in a registration pursuant to this
Section 1.02 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable
Securities through such underwriting shall enter into an
underwriting agreement in customary form with the managing
underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the
managing underwriter(s) determine(s) in good faith that marketing
factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares
(including Registrable Securities) from the registration and the
underwriting, and the number of shares that may be included in the
registration and the underwriting shall be allocated, first, to
the Company, and second, the maximum number of Registrable
Securities requested to be included therein by the Holders and the
maximum number of any other securities of the same class as the
Registrable Securities ("Other Securities") requested to be
included therein by other shareholders of the Company having
registration rights ("Other Holders"), pro rata among the
respective Holders and Other Holders on the basis of the number of
Registrable Securities and Other Securities requested to be
included in such registration by each such Holder and Other
Holder. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw all or any part of
such Holder's Registrable Securities therefrom by written notice
to the Company and the underwriter, delivered at any time prior to
the effective date of the Registration Statement. Any Registrable
Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. For any Holder that
is a partnership or corporation, the partners, retired partners
and shareholders of such Holder, or the estates and family members
of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a
single "Holder," and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals
included in such "Holder," as defined in this sentence.
(c) Expenses. All Registration Expenses incurred in
connection with a registration pursuant to this Section 1.02 shall
be borne by the Company, except that notwithstanding anything to
the contrary herein, if a Holder withdraws all or any part of such
Holder's Registrable Securities from an underwriting at any time
less than ten (10) business days prior to the effective date of
the Registration Statement, such Holder shall pay its pro rata
share (based on the number of Registrable Securities included in
the Registration Statement on behalf of such Holder, or if no
Registration Statement had been filed as of the date of such
withdrawal, the number of Registrable Securities such Holder
requested to be included in the Registration Statement) of all
Registration Expenses, excluding all discounts, commissions or
other amounts payable to underwriters or brokers in connection
with the offering. Each Holder participating in a registration
pursuant to this Section 1.02 shall bear such Holder's
proportionate share (based on the total number of shares sold in
such registration) of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such
offering.
Section 1.03 OBLIGATIONS OF THE COMPANY. Whenever required to effect
the registration of any Registrable Securities under this Agreement,
the Company shall:
(a) Prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities and use
reasonable, diligent efforts to cause such Registration Statement
to become effective.
(b) Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used
in connection with such Registration Statement as may be necessary
to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration
Statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act and such other documents as
they may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by them that are included in
such registration.
(d) Use reasonable, diligent efforts to register and
qualify the securities covered by such Registration Statement
under such other securities or blue sky laws of such jurisdictions
as shall be reasonably requested by the Holders, provided that the
Company shall not be required solely as a result of such
Registration or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such
jurisdictions.
(e) 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(s) of such offering.
(f) Notify each Holder of Registrable Securities covered
by such Registration Statement at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act of the happening of any event as a result of which the
prospectus included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing, and at the request of
each Holder promptly prepare and furnish to such Holder a
reasonable number of copies of a supplement to or amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing.
(g) Use its best efforts to list such Registrable
Securities on each securities exchange on which any equity
security of the Company is then listed.
Section 1.04 OBLIGATIONS OF THE HOLDERS.
(a) It shall be a condition precedent to the obligations
of the Company to take any action pursuant to Section 1.02 that
the selling Holders furnish to the Company such information
regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as is
required to timely effect the registration of their Registrable
Securities.
(b) Each Holder delivering a written request to
participate in an underwritten registered offering in accordance
with Section 1.02 shall, if requested by the Company, as soon as
practicable after such delivery, execute and deliver to the
Company a custody agreement and power of attorney in customary
form satisfactory to the Company and any managing underwriter with
respect to the Registrable Securities identified for sale by such
Holder (a "Custody Agreement" and "Power of Attorney,"
respectively). Each Custody Agreement and Power of Attorney shall
provide, among other things, that such Holder will deliver to and
deposit in custody with the custodian named therein (which shall
be designated by the Company) a certificate or certificates
representing such Registrable Securities (duly endorsed in blank
by the registered owner or owners thereof or accompanied by duly
executed stock powers in blank) and irrevocably appoint such
custodian and attorney-in-fact with full power and authority to
act under the Custody Agreement and Power of Attorney,
respectively, on the Holder's behalf with respect to matters
specified therein, including the execution and delivery of an
underwriting agreement.
(c) Each Holder that has Registrable Securities included
in any Registration Statement shall not (until further notice from
the Company) effect sales thereof after receipt of notice from the
Company to suspend sales to permit the Company to correct or
update any Registration Statement, including any prospectus.
Section 1.05. DELAY OF REGISTRATION. No Holder shall have any
right to obtain or seek an injunction restraining or otherwise delaying any
such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Article I.
Section 1.06 INDEMNIFICATION. In the event any Registrable
Securities are included in a Registration Statement pursuant to Section
1.02:
(a) By the Company. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the
partners, officers, directors, legal counsel and accountants of
each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder
or underwriter within the meaning of the Securities Act or the
Exchange Act against any losses, claims, expenses, damages, or
liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange Act or any other securities
or other law of any jurisdiction, common law or otherwise, insofar
as such losses, claims, expenses, damages, or liabilities (or
actions proceedings or settlements in respect thereof) arise out
of or are based upon any of the following statements, omissions or
violations (collectively, "Violations" and, individually, a
"Violation"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in or incorporated by
reference in any Registration Statement, including any
preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto or any
document incorporated by reference therein;
(ii) 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,
or
(iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, or any
other securities or other law of any jurisdiction, common
law or otherwise, or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any such
other laws, in connection with the offering covered by
such Registration Statement;
and the Company will reimburse each such Holder, partner, officer
or director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them, as incurred, in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.06(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for
any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by such
Holder, partner, officer, director, underwriter or controlling
person of such Holder.
(b) By Selling Holders. To the extent permitted by law,
each selling Holder, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, each person,
if any, who controls the Company within the meaning of the
Securities Act, its legal counsel, its accountants, any
underwriter and any other Holder selling securities under such
Registration Statement or any of such other Holder's partners,
directors or officers or any person who controls such Holder
within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer,
controlling person, legal counsel, accountant, underwriter or
other such Holder, partner or director, officer or controlling
person of such other Holder may become subject under the
Securities Act, the Exchange Act or any other securities or other
law of any jurisdiction, common law or otherwise, insofar as such
losses, claims, expenses, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in
connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, legal
counsel, accountant, underwriter or other Holder, partner,
officer, director, legal counsel, accountant or controlling person
of such other Holder in connection with investigating or defending
any such loss, claim, damage, liability or action; provided,
however, that the indemnity agreement contained in this subsection
1.06(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall
not be unreasonably withheld; and provided, further, that the
total amounts payable by a Holder under this Section 1.07 in
respect of any Violation shall not exceed the net proceeds
received by such Holder in the registered offering out of which
such Violation arises.
(c) Notice. Promptly after receipt by an indemnified
party under this Section 1.07 of notice of the commencement of any
action (including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 1.06, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with
any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right
to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential conflict of interests
between such indemnified party and any other party represented by
such counsel in such proceeding or if, and for such period, such
indemnified party was required to retain counsel prior to the
indemnifying party's retention of counsel. The failure to deliver
written notice to the indemnifying party within a reasonable time
of the commencement of any such action shall relieve such
indemnifying party of its liability to the indemnified party under
this Section 1.06 only if and to the extent it is prejudicial to
its ability to defend such action, and the omission to so deliver
written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise
than under this Section 1.06.
(d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of the Company and Holders are subject to the
limitation that, insofar as they relate to any Violation made in a
preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the SEC at the time the Registration Statement
in question becomes effective or the amended prospectus filed with the
SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any person if a
copy of the Final Prospectus was furnished to the indemnified party and
was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the
Securities Act.
(e) Contribution. In order to provide for just and
equitable contribution to joint liability under the Securities
Act, in any case in which either (i) any Holder exercising rights
under this Agreement, or any controlling person of any such
Holder, makes a claim for indemnification pursuant to this Section
1.06 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of
appeal) that such indemnification may not be enforced or is
otherwise unavailable in such case notwithstanding the fact that
this Section 1.06 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the
part of any such selling Holder or any such controlling person in
circumstances for which indemnification is provided under this
Section 1.06; then, and in each such case, the Company and such
Holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from
others) in such proportion so that such Holder is responsible for
the portion represented by the percentage that the public offering
price of its Registrable Securities offered by and sold under the
Registration Statement bears to the public offering price of all
securities offered by and sold under such Registration Statement,
and the Company and other selling Holders are responsible for the
remaining portion; provided, however, that, in any such case, (A)
no such Holder will be required to contribute any amount in excess
of the net proceeds received from the sale of all such Registrable
Securities offered and sold by such Holder pursuant to such
Registration Statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
(f) Survival; Release. The obligations of the Company and
Holders under this Section 1.06 shall survive the completion of
any offering of Registrable Securities in a Registration Statement
and otherwise. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of each
indemnified party, consent to entry of any judgment or enter into
any settlement which admits fault on behalf of the indemnified
party or which does not include as an unconditional term thereof
the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or
litigation.
Section 1.07. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby
agrees that it shall not, to the extent requested by the Company or an
underwriter of securities of the Company, sell or otherwise transfer or
dispose of any Registrable Securities or other shares of stock of the
Company then owned by such Holder (other than to donees of the Holder who
agree to be similarly bound) for up to ninety (90) days following the
effective date of a Registration Statement of the Company for an
underwritten offering filed under the Securities Act; provided that all
officers and directors of the Company have entered into similar agreements.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the
shares subject to this Section and to impose stop transfer instructions
with respect to the Registrable Securities and such other shares of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Section 1.08. TERMINATION OF THE COMPANY'S OBLIGATIONS. The
Company shall have no obligations pursuant to Section 1.02 with respect to
any Registrable Securities proposed to be sold by a Holder in a
registration pursuant to Section 1.02 if, in the opinion of counsel to the
Company, all such Registrable Securities proposed to be sold by a Holder
and all other Common Shares then owned by such Holder may be sold in a
three-month period without registration under the Securities Act pursuant
to Rule 144 under the Securities Act. In such event, such Holder shall not
be subject to the provisions of Section 1.07.
ARTICLE II
AMENDMENT
Section 2.01. AMENDMENT. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with
the written consent of the Company and Holders holding Registrable
Securities representing more than fifty percent (50%) of all the
Registrable Securities (on an as-converted basis). Any amendment or waiver
effected in accordance with this Section 2.01 shall be binding upon each
Holder and the Company.
ARTICLE III
GENERAL PROVISIONS
Section 3.01. NOTICES. Any and all notices required or permitted
to be given to a party pursuant to the provisions of this Agreement must be
in writing and will be effective and deemed to provide such party
sufficient notice under this Agreement on the earliest of the following:
(i) at the time of personal delivery, if delivery is in person; (ii) at the
time of transmission by facsimile, addressed to the other party at its
facsimile number, with confirmation of receipt made by both telephone and
printed confirmation sheet verifying successful transmission of the
facsimile; (iii) one (1) business day after deposit with an express
overnight courier for deliveries within a country, or three (3) business
days after such deposit for international deliveries or (iv) three (3)
business days after deposit in mail by certified mail (return receipt
requested) or equivalent for deliveries within a country.
All notices for international delivery will be sent by facsimile
or by express courier. All notices not delivered personally or by facsimile
will be sent with postage and/or other charges prepaid and properly
addressed to the party to be notified at the following address or facsimile
number:
Company: KFx Inc.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Chief Financial Officer
Holder: Xxxx X. Xxxxxx
___________________________________
___________________________________
___________________________________
___________________________________
Any party may by notice so given change its address for future
notices hereunder. Notice shall conclusively be deemed to have been given
in the manner set forth above.
Section 3.02. ENTIRE AGREEMENT. This Agreement and the Warrant
constitute and contain the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, correspondence, agreements, understandings, duties
or obligations between the parties respecting the subject matter hereof.
Section 3.03. GOVERNING LAW. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware.
Section 3.04. NO THIRD PARTY BENEFICIARIES. This Agreement shall
be binding upon and inure solely to the benefit of the parties hereto and
their permitted assigns and nothing herein, express or implied, is intended
to or shall confer upon any other person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
Section 3.05. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall inure to the benefit of, and shall be binding upon, the
successors and permitted assigns of the parties hereto.
Section 3.06. HEADINGS. The descriptive headings contained in this
Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
Section 3.07. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
Section 3.08. EXPENSES. All costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs and expenses.
Section 3.09. CONSTRUCTION. Words used herein, regardless of the
gender specifically used, shall be deemed and construed to include any
other gender, masculine, feminine or neuter, as the context requires.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
THE COMPANY:
KFX INC.
By: /s/ Xxxx X. Xxxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
HOLDER:
/s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
