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EXHIBIT 10.4
PUT AGREEMENT
This Put Agreement (this "Agreement") is made and entered into this 3rd day
of March, 2000, by and between KFx Inc., a Delaware corporation ("KFx"), and
Kennecott Energy Corporation, a Delaware corporation ("Kennecott").
W I T N E S S E T H:
WHEREAS, KFx and Kennecott are parties to that certain Common and Series A
Preferred Stock Purchase Agreement dated as of March 3, 2000 (the "Purchase
Agreement"), whereby, among other things, Kennecott purchased from KFx 748,559
shares of common stock, $.001 par value per share (the "Pegasus Stock"), of
Pegasus Technologies, Inc., a South Dakota corporation ("Pegasus"); and
WHEREAS, Kennecott desires to have the right to cause KFx to purchase, or
require KFx to find a purchaser for, the Pegasus Stock; and
WHEREAS, KFx is willing to so purchase or find a purchaser for the Pegasus
Stock;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Put Right. Upon prior written notice to KFx by Kennecott (the "Put
Notice"), KFx shall purchase (or find a person who is ready, willing and able to
purchase (and who in fact does purchase), on the terms and conditions set forth
herein) the Pegasus Stock from Kennecott at a purchase price equal to the result
of (i) the greater of (A) $1,000,000, or (B) the then Fair Market Value (as
defined below) of the Pegasus Stock, minus (ii) any amounts paid to Kennecott by
KFx or Pegasus pursuant to Article 9 of the Purchase Agreement. Such purchase
shall be consummated within 10 days after the later to occur of (x) the 90th day
following the date of the Put Notice, or (y) the final determination of the Fair
Market Value of the Pegasus Stock.
2. Fair Market Value. For purposes of this Agreement, the per share "Fair
Market Value" of the Pegasus Stock on any relevant date shall be determined as
follows:
(a) If the Pegasus Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Pegasus Stock on the date in question, as such price is reported
on the Nasdaq National Market or any successor system. If there is no
closing selling price for the Pegasus Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(b) If the Pegasus Stock is at the time listed on any stock exchange,
then the Fair Market Value shall be the closing selling price per share of
Pegasus Stock on the date in question on the stock exchange that is the
primary market for the Pegasus Stock, as evidenced by Pegasus' market
capitalization on each market, as such price is officially
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quoted in the composite tape of transactions on such exchange. If there is
no closing selling price for the Pegasus Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(c) If for any reason the provisions of clause (a) or (b) are not
applicable as of any relevant date, the Fair Market Value of the Pegasus
Stock shall be determined in accordance with the provisions of Exhibit A
attached hereto.
3. Term. This Agreement shall terminate on March 3, 2001 (the "Termination
Date"). The parties acknowledge and agree that if the Put Notice is delivered to
KFx prior to the Termination Date, then the term of this Agreement is extended
for the time required to effectuate the put right set forth in Section 1.
4. Entire Agreement. This Agreement, including Exhibit A attached hereto,
constitutes the entire agreement between the parties with respect to the subject
hereof and supersedes all agreements, oral or written, previously made between
the parties hereto relating to the subject matter hereof; there are no other
understandings or agreements between the parties concerning the subject matter
hereof.
5. Binding Effect. This Agreement and the rights and obligations hereunder
shall be binding upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
6. Amendments. This Agreement may not be altered, modified, or amended
except by a writing signed by each of the parties hereto.
7. Further Assurances. Each of the parties hereto agrees to execute,
acknowledge, deliver, file, record and publish certificates, instruments,
agreements and documents, and to take all action which may be required by law or
may be deemed by KFx or Kennecott, in the exercise of their reasonable good
faith discretion, to be reasonably necessary in furtherance of the purposes and
the objectives and intentions underlying this Agreement and not inconsistent
with the terms hereof.
8. Notices. All notices required or permitted hereunder shall be in writing
and shall be deemed effectively given: (a) upon personal delivery to the party
to be notified; (b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day;
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) two days after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the parties
hereto at the respective addresses set forth below, or as notified by such party
from time to time at least 10 days prior to the effectiveness of such notice:
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if to KFx: KFx Inc.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Chairman
Facsimile: (000) 000-0000
with a copy to: Xxxxxxxx & Xxxxxxxx LLP
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
if to Kennecott: Kennecott Energy Company
000 Xxxxx Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxxx Xxxxxxx
Facsimile: (000) 000-0000
with a copy to: Xxxxx, Xxxxxx & Xxxxxx LLP
000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxxxx
Facsimile: (000) 000-0000
9. Governing Law; Jurisdiction. This Agreement shall be governed by,
interpreted under, and construed in accordance with the laws of the State of
Colorado, applicable to contracts made and to be performed therein, without
giving effect to the principles of conflicts of law. Except in respect of an
action commenced by a third party in another jurisdiction, KFx and Kennecott
agree that any legal suit, action, or proceeding arising out of or relating to
this Agreement must be instituted in a state or federal court in the State of
Colorado, County of Denver, if there is any such court which has and will
exercise its jurisdiction in any such matter, and they hereby irrevocably
subject to the jurisdiction of any such court and agree not to assert therein
any objection based on venue or the inconvenience of such forum.
10. Captions. Captions used herein are inserted for reference purposes only
and shall not affect the interpretation or construction of this Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement. This Agreement may be
executed and delivered by facsimile transmission.
12. No Third Party Beneficiaries. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their successors and
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.
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13. Expenses. Except as otherwise provided in Exhibit A, 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.
* * * * *
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date and year first written above.
KFx Inc.
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
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Title: E.V.P. & C.F.O.
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Kennecott Energy Corporation
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Vice President & C.F.O.
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EXHIBIT A
PROCEDURES FOR DETERMINING
FAIR MARKET VALUE
(a) Generally. Whenever the Fair Market Value of the Pegasus Stock is
required to be determined under clause (c) of Section 2 of this Agreement, it
shall be determined by the mutual agreement of Kennecott and KFx. If Kennecott
and KFx cannot agree on Fair Market Value within forty-five days after the date
KFx receives the Put Notice, such amount shall be determined by independent
appraisal conducted by appraisers selected pursuant to paragraph (b) of this
Exhibit A. At any time prior to final determination of such amount pursuant to
paragraph (b), Kennecott and KFx shall be entitled to submit to the appraisers
(and shall submit to each other) any bids and other information from unrelated
third parties and any other information related to the valuation of the Pegasus
Stock that such party considers relevant, and such bids and other information
shall be accorded the weight such appraisers deem appropriate. Kennecott and KFx
shall each have an opportunity to comment on any such bids and other information
provided to the appraisers by the other party after receiving a copy thereof. In
determining the Fair Market Value of the Pegasus Stock, the appraisers shall
determine the value of Pegasus as a whole and shall not apply any valuation
discounts (such as minority interest and lack of marketability discounts). All
appraisals shall be in writing and delivered to each of KFx and Kennecott within
60 days of the appointment of the applicable appraiser.
(b) Selection. If an independent appraisal is required pursuant to this
Agreement, Kennecott and KFx shall consult for the purpose of appointing a
mutually acceptable, qualified appraiser. If they are unable to agree on a
single appraiser within ten (10) days, then the independent appraisal shall be
arrived at by mutual agreement of two independent appraisers, one chosen by
Kennecott and one chosen by KFx, or, if the values established by the two
appraisers differ by more than 10%, their appraisals shall be treated in the
manner described in paragraph (c) of this Exhibit A, together with an appraisal
arrived at by a third independent appraiser chosen by the mutual consent of such
two appraisers; provided, however, that if either party fails to appoint an
appraiser within fifteen (15) days after a written request to do so by the other
party, or if the values established by the two appraisers differ by more than
10%, and the two appraisers fail to appoint a third appraiser within twenty (20)
days after the date the latter of their appraisals is delivered to KFx and
Kennecott, then either party may initiate an arbitration proceeding with the
American Arbitration Association in Denver, Colorado for purposes of appointing
a nationally recognized, independent appraiser.
(c) Valuation. If one appraiser is chosen, the value determined by such
appraiser shall be final and binding upon Kennecott and KFx. If two appraisers
are chosen, one appraiser by Kennecott and one by KFx, and such appraisers agree
on the value (or the values determined by the appraisers differ by no more than
10%), such value (or the average values in the case of values that differ by no
more than 10%) shall be final and binding upon Kennecott and KFx. If three
appraisers are appointed and the difference between the determination which is
farther from the middle determination and the middle determination is more than
125% of the difference between the middle determination and the third
determination, then such farther determination shall be excluded, the remaining
two determinations shall be averaged, and such average shall be final and
binding upon Kennecott and KFx; otherwise, the average of all three
determinations shall be final and binding upon Kennecott and KFx.
(d) Expenses. All expenses of any appraisals hereunder shall be borne
equally by Kennecott and KFx.
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