EXHIBIT 10.2
KFX, INC.
REGISTRATION RIGHTS AGREEMENT
DATED JULY 16, 2001
TABLE OF CONTENTS
Page
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1. Registration Rights................................................1
1.1 Definitions..............................................1
1.2 Request for Registration.................................2
1.3 Obligations of the Company...............................3
1.4 Furnish Information......................................4
1.5 Expenses of Demand Registration..........................4
1.6 Indemnification..........................................5
1.7 Reports Under Securities Exchange Act of 1934............7
1.8 Form S-3 Registration....................................7
1.9 Termination of Registration Rights.......................8
2. Miscellaneous......................................................8
2.1 Governing Law............................................8
2.2 Waivers and Amendments...................................8
2.3 Successors and Assigns...................................8
2.4 Entire Agreement.........................................8
2.5 Notices..................................................8
2.6 Interpretation...........................................9
2.7 Severability.............................................9
2.8 Counterparts.............................................9
2.9 Specific Performance.....................................9
2.10 Telecopy Execution and Delivery..........................9
2.11 Attorneys' Fees..........................................9
2.12 Construction.............................................9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into by and
between KFX, INC., a Delaware corporation (the "Company"), and BAYOU FUND, LLC,
a New York limited liability company ("Bayou"). This Agreement shall only become
effective upon the closing (the "Closing") of the Common Stock and Warrant
Purchase Agreement (the "Purchase Agreement") between the Company and Bayou
dated July 16, 2001 (the "Effective Date").
R E C I T A L S
WHEREAS, the Company and Bayou are parties to the Purchase Agreement July
16, 2001; and
WHEREAS, the execution and delivery the Purchase Agreement conditioned,
among other things, upon the execution of this Agreement by the Company for the
benefit of Bayou.
NOW, THEREFORE, in consideration of the premises, covenants, and conditions
set forth herein, the parties hereto hereby agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Agreement:
(a) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(b) The term "Act" means the Securities Act of 1933, as amended.
(c) The term "Common Stock" means the common stock, par value
$0.001, of the Company.
(d) The term "Form S-3" means such form under the Act as in effect
on the date hereof or any registration form under the Act subsequently
adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed by the
Company with the SEC.
(e) The term "Holder" shall mean Bayou.
(f) The terms "register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement
or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(g) The term "Registrable Securities" means (i) the Shares, and
(iii) any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security that is
issued as) a dividend or other distribution with
respect to, or in exchange for, or in replacement of, the Shares;
provided, however, that the term "Registrable Securities" shall exclude
in all cases any Registrable Securities sold by a person in a
transaction in which his rights under this Section 1 are not assigned.
(h) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable
pursuant to then immediately exercisable or convertible securities that
are, Registrable Securities.
(i) The term "Rule 144" shall mean Rule 144 as promulgated by the
SEC under the Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the SEC.
(j) The term "SEC" shall mean the United States Securities and
Exchange Commission.
(k) The term "Shares" shall mean
(A) 1,000,000 shares of the Company's Common Stock sold to Bayou
under the Purchase Agreement; and
(B) 500,000 shares to be issued upon exercise of the Warrant.
(j) The term "Warrant" shall mean the warrants #BF-1 and #BF-2
issued to Bayou each exercisable for 250,000 shares of Common Stock at
an exercise price of $3.65 per share, copies of which is attached hereto
as Exhibit A.
1.2 Request for Registration.
(a) Subject to the conditions of this Section 1.2, if the Company
shall receive at any time subsequent to the Effective Date of this
Agreement, a written request from the Holder that the Company file a
registration statement under the Act covering the registration of all of
the Registrable Securities then outstanding, then the Company shall (i)
give written notice of such request to the Holder promptly following
receipt of such request and (ii) subject to the limitations of
subsection 1.2(b), use its reasonable efforts to effect as soon as
practicable (and in any event within one hundred twenty (120) calendar
days of the receipt of such request) the registration under the Act of
all Registrable Securities of the Holder in accordance with Section
1.2(c).
(b) If the Holder intends to distribute the Registrable Securities
covered by its request by means of an underwriting, it shall so advise
the Company as a part of its request made pursuant to subsection 1.2(a)
and the Company shall include such information in the written notice
referred to in subsection 1.2(a). The underwriter will be selected by
the Company and shall be reasonably acceptable to the Holder requesting
registration. The Holder, if proposing to distribute its securities
through such underwriting shall (together with the Company as provided
in subsection 1.3(e)) enter into an underwriting agreement, or similar
agreement, in customary form with the underwriter or underwriters
selected for such
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underwriting. Notwithstanding any other provision of this Section 1.2,
if the underwriter advises the Holder in writing that marketing factors
require a limitation of the number of shares to be underwritten, the
Holder shall agree to reduce to the number of shares included in the
underwriting. In the event that the number of securities being
registered is reduced pursuant to this Section 1.2(b), the Holder of the
Registrable Securities which were not included in the registration shall
be treated as if there had been no registration effected pursuant to
this Section 1.2 and shall be entitled to the benefit of Section 1.2
with respect to the Registrable Securities which were not included as if
the registration pursuant to Section 1.2 had not been requested;
provided, that any registration with respect to the Registrable
Securities which were not included shall not be required to become
effective within 180 days of the effective date of the first
registration. The Company shall not be obligated to effect, or to take
any action to effect, any registration pursuant to this Section 1.2, if
the Holder proposes to dispose of shares of Registrable Securities that
may be registered on Form S-3 pursuant to a request made pursuant to
Section 1.8.
(c) The Holder may not include any of its Registrable Securities in
the registration statement pursuant to this Agreement unless it
furnishes to the Company in writing, prior to or on the 15th calendar
day after receipt of a request therefore, such information as the
Company may reasonably request for use in connection with the
registration statement and in any application to be filed with or under
state securities laws. In connection with all such requests for
information from the Holder, the Company shall notify the Holder of the
requirements set forth in the preceding sentence. The Holder agrees to
furnish promptly to the Company all information required to be disclosed
in order to make information previously furnished to the Company by the
Holder not materially misleading.
1.3 Obligations of the Company. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall,
use its reasonable best efforts to:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its reasonable best
efforts to cause such registration statement to become effective, and,
upon the request of the Holder, use its reasonable best efforts to keep
such registration statement effective for a period of up to ninety (90)
calendar days or any less period of time in the event the distribution
described in the registration statement has been completed; provided,
however, that (i) such 90-day period shall be extended for a period of
time equal to the period the Holder refrains from selling any securities
included in such registration at the request of an underwriter of Common
Stock (or other securities) of the Company and (ii) in the case of any
registration statement on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 90-day period shall be extended, if
necessary, to keep the registration statement effective for the shorter
of (x) two years from the filing of the registration statement, (y) the
expiration of the holding period applicable to the Registrable
Securities held by holders that are not affiliates of the Company under
Rule 144(k) under the Act, or (iii) until all such Registrable
Securities are sold, provided that Rule 415, or any successor rule under
the Act, permits an offering on a continuous or delayed basis, and
provided further that applicable rules under the Act governing the
obligation to file a post-effective amendment permit, in lieu of filing
a post-effective amendment which (A) includes any prospectus required by
Section 10(a)(3) of the Act or (B) reflects facts or events representing
a
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material or fundamental change in the information set forth in the
registration statement, the incorporation by reference of information
required to be included in (A) and (B) above to be contained in periodic
reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.
(b) From time to time 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 Act with respect to the disposition of
all securities covered by such registration statement;
(c) Furnish to the Holder such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements
of the Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned by
them;
(d) Use its reasonable commercial 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 Holder;
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form acceptable to the Company and its counsel, with the
managing underwriter(s) of such offering (the Holder shall also enter
into and perform its obligations under such an agreement);
(f) Notify the Holder when a prospectus relating thereto is required
to be delivered under the 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;
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or nationally
recognized quotation system on which similar securities issued by the
Company are then listed;
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date
of such registration.
1.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of the Holder that the Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall reasonably be required by the Company or the
managing underwriters, if any, to effect the registration of the Holder's
Registrable Securities.
1.5 Expenses of Demand Registration. All expenses incurred in connection
with registrations, filings or qualifications pursuant to Section 1.2,
including all registration, filing and qualification fees, printer's fees,
accounting fees and fees and disbursements of
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counsel for the Company and the reasonable fees and disbursements of one
counsel for the Holder (selected by the Holder), and reasonably acceptable
to the Company, shall be borne by the Company. The Company, however, shall
not be required to pay an underwriter discount, commission or similar fees
related to the sale of the Registrable Securities.
1.6 Indemnification.
(a) To the extent permitted by law, the Company will indemnify and
hold harmless the Holder, any underwriter (as defined in the Act) for
the Holder and each person, if any, who controls the Holder or
underwriter within the meaning of the Act or the 1934 Act, against any
losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Act, the 1934 Act or other federal or state
securities law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively, a
"Violation"): (i) any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto (collectively, the "Filings"), (ii)
the omission or alleged omission to state in the Filings 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 Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to the Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.6(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 that occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by the Holder, underwriter or controlling person.
(b) To the extent permitted by law, the Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any
of the foregoing persons may become subject, under the Act, the 1934 Act
or other federal or state securities law insofar as such losses, claims,
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 the Holder expressly
for use in connection with such registration; and the Holder will pay
any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this subsection 1.6(b), in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in
this subsection 1.6(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; provided,
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that, in no event shall any indemnification obligation of the Holder
under this subsection 1.6(b) exceed the net proceeds from the offering
received by the Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.6 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
1.6, 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 (together with all other
indemnified parties that may be represented without conflict by one
counsel) shall have the right to retain one separate 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
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
indemnified party's acquiring actual knowledge of the commencement of
any such action, if materially prejudicial to the indemnifying party's
ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 1.6, but the
omission so to 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 1.6.
(d) If the indemnification provided for in this Section 1.6 is held
by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, claim, damage or expense referred to
therein, then the indemnifying party in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim or expense as
well as any other relevant equitable considerations. The relative fault
of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. In no
event shall the Holder be required to contribute an amount in excess of
the net proceeds from the offering received by the Holder. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to indemnification from a person who
was not guilty of fraudulent misrepresentation.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions
of the underwriting agreement shall control.
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(f) The obligations of the Company and the Holder under this Section
1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and
otherwise.
1.7 Reports Under Securities Exchange Act of 1934. With a view to making
available the benefits of certain rules and regulations of the SEC,
including Rule 144, that may at any time permit a Holder to sell securities
of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 and;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act.
1.8 Form S-3 Registration. If the Company shall receive from the Holder
a written request or requests that the Company effect a registration of the
Registrable Securities that are registrable on Form S-3 and any related
qualification or compliance with respect to all of the Registrable
Securities owned by the Holder, the Company will use its reasonable best
efforts to effect, as soon as reasonably practicable (and in any event
within one hundred twenty (120) calendar days of the receipt of such
request), such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of the Holder's Registrable Securities
as are specified in such request; provided, however, that the Company shall
not be obligated to effect any such registration, qualification or
compliance, pursuant to this Section 1.8, if Form S-3 is not available for
such offering by the Holder, in which case the Company shall file a
registration statement respecting the Shares in accordance with the terms
and provisions of Section 1.2.
(a) If the Holder requests registration pursuant to this Section 1.8
intends to distribute the Registrable Securities covered by its request
by means of an underwriting, it shall so advise the Company as part of
its request made pursuant to this Section 1.8 and the Company shall
include such information in the written notice referred to in clause (a)
of this Section 1.8. The underwriter will be selected by the Company and
shall be reasonably acceptable to the Holder requesting registration. In
such event, the right of the Holder to include its Registrable
Securities in such registration shall be conditioned upon the Holder's
participation in such underwriting and the inclusion of the Holder's
Registrable Securities in the underwriting to the extent provided
herein. The Holder upon proposing to distribute its securities through
such underwriting shall (together with the Company as provided in
Section 1.3(e)) enter into an underwriting agreement, or similar
agreement, in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of
this Section 1.8, if the underwriter advises the Holder requesting
registration in writing that marketing factors require a limitation of
the number of shares to be underwritten, then the Holder agrees to
reduce the number of shares of Registrable Securities provided, however,
that the number of shares of Registrable Securities to be included in
such underwriting shall not be reduced unless all securities to be sold
by or for the account of any stockholder, person or party other than an
the Holder (including those shares to be sold for the Company's
account), are first entirely excluded from the underwriting. In the
event that the number of securities being registered is reduced
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pursuant to this Section 1.8(a), the Holder of the Registrable
Securities which were not included in the registration shall be treated
as if there had been no registration effected pursuant to this Section
1.8 and shall be entitled to the benefit of Section 1.8 with respect to
the Registrable Securities which were not included as if the
registration pursuant to Section 1.8 had not been requested; provided,
that any registration with respect to the Registrable Securities which
were not included shall not be required to become effective within 180
days of the effective date of the first registration.
(b) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so
requested to be registered as soon as reasonably practicable after
receipt of the request or requests of the Holder. All expenses incurred
in connection with a registration requested pursuant to this Section 1.8
(other than underwriting discounts and commissions), including all
registration, filing, qualification, printer's fees, accounting fees,
reasonable fees and disbursements of one legal counsel for the Holder,
and fees and disbursements of counsel for the Company, shall be borne by
the Company.
1.9 Termination of Registration Rights. The Holder shall not be entitled
to exercise any right provided for in this Section 1 after such time at
which all Registrable Securities held by the Holder can be sold in any
three-month period without registration in compliance with Rule 144 of the
Act.
2. Miscellaneous.
2.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS BY
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS RULES.
2.2 Waivers and Amendments. This Agreement may be terminated and any
term of this Agreement may be amended or waived (either generally or in a
particular instance and either retroactively or prospectively) with the
written consent of the Company and the Holder. Notwithstanding the
foregoing, additional parties may be added as Holders under this Agreement
with the written consent of the Company and the Holder. No such amendment or
waiver shall reduce the aforesaid percentage of the Registrable Securities,
the holders of which are required to consent to any termination, amendment
or waiver without the consent of the record holders of all of the
Registrable Securities. Any termination, amendment or waiver effected in
accordance with this Section 2.2 shall be binding upon each holder of
Registrable Securities then outstanding, each future holder of all such
Registrable Securities and the Company.
2.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto.
2.4 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
2.5 Notices. All notices and other communications required or permitted
hereunder shall be in writing and may be delivered in person or by
facsimile, electronic mail,
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courier or U.S. mail, in which event it may be mailed by first-class,
certified or registered, postage prepaid, addressed (a) if to a Holder, at
the address set forth in the Company's records or, at such other address as
an Holder shall have furnished to the Company or (b) if to the Company, at
its address set forth on the signature page of this Agreement, or at such
other address as the Company shall have furnished to the Holder. All such
notices and other communications shall be deemed given upon personal
delivery, upon confirmation of facsimile transfer, upon confirmation of
electronic mail transmission, upon delivery by courier or three business
days after deposit in the United States mail.
2.6 Interpretation. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words
"without limitation." The titles and subtitles used in this Agreement are
used for convenience only and are not considered in construing or
interpreting this Agreement.
2.7 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded
from this Agreement, and the balance of the Agreement shall be interpreted
as if such provision were so excluded, and shall be enforceable in
accordance with its terms.
2.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
2.9 Specific Performance. The parties hereto agree that it would be
impossible to measure in money the damages which would accrue to a party
hereto by reason of a failure to perform any of the obligations under this
Agreement. Therefore, if any party hereto is forced to institute any action
or proceeding to enforce the provisions hereof, any person against whom such
action or proceeding is brought hereby waives the claim or defense that the
party instituting such action has an adequate remedy at law and such person
shall not urge in any such action that an adequate remedy at law exists.
2.10 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties
hereto, and an executed copy of this Agreement may be delivered by one or
more parties hereto by facsimile or similar electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen,
and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all parties
hereto agree to execute an original of this Agreement as well as any
facsimile, telecopy or other reproduction hereof.
2.11 Attorneys' Fees. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party shall be
entitled to all costs and expenses of maintaining such suit or action,
including reasonable attorneys' fees.
2.12 Construction. This Agreement has been negotiated by the parties
hereto and their respective legal counsel, and legal or equitable principles
that might require the construction of this Agreement or any provision of
this Agreement against the party drafting this Agreement will not apply in
any construction or interpretation of this Agreement.
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[Signature page follows.]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day,
month and year first set forth above.
"Company"
KFx, Inc.
By:
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Xxxxxxxx Xxxxxxx, Chairman and CEO
"Bayou"
Bayou Fund, LLC
By:
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SIGNATURE PAGE TO KFX, INC. REGISTRATION RIGHTS AGREEMENT
