EXHIBIT 10.1
COMMON STOCK AND WARRANT
PURCHASE AGREEMENT
between
KFX, INC.
and
BAYOU FUND, LLC.
dated as of July 16, 2001
TABLE OF CONTENTS
Page
----
1. DEFINITIONS...............................................................1
1.1. Certain Definitions.............................................1
1.2. Other Terms.....................................................1
2. AUTHORIZATION AND SALE OF SECURITIES......................................2
2.1. Authorization...................................................2
2.2. Sale of Common Stock and Warrant................................2
3. CLOSING...................................................................2
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................2
4.1. Organization and Standing.......................................2
4.2. Corporate Power.................................................2
4.3. Authorization...................................................2
4.4. Capitalization..................................................2
5. INVESTMENT REPRESENTATIONS................................................3
5.1. Accredited Investor; Experience; Risk...........................3
5.2. Investment......................................................3
5.3. Restricted Securities; Rule 144.................................3
5.4. Authorization...................................................4
5.5. Further Limitations on Disposition..............................4
5.6. Company Information.............................................5
5.7. Legends.........................................................5
6. CONDITIONS TO THE OBLIGATIONS OF THE INVESTORS............................5
6.1. Representations and Warranties Correct..........................5
6.2. Warrant and Registration Rights Agreement.......................5
6.3. Covenants.......................................................5
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7. CONDITIONS TO COMPANY'S OBLIGATIONS.......................................5
7.1. Representations Correct.........................................5
7.2. Payment in Collected Funds......................................6
8. MISCELLANEOUS.............................................................6
8.1. Governing Law...................................................6
8.2. Survival........................................................6
8.3. Successors and Assigns..........................................6
8.4. Entire Agreement; Amendment.....................................6
8.5. Notices.........................................................6
8.6. Delay or Omissions..............................................7
8.7. Counterparts....................................................7
8.8. Severability....................................................7
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COMMON STOCK AND WARRANT PURCHASE AGREEMENT, dated as of July 16,
2001 (the "Agreement"), between KFX, INC., a Delaware corporation (the
"Company"), and BAYOU FUND, LLC a New York limited liability company (the
"Investor").
In consideration of the mutual promises, covenants and conditions
hereinafter set forth, the parties hereto mutually agree as follows:
1. DEFINITIONS
1.1. Certain Definitions. As used in this Agreement, the following terms shall
have the meanings set forth in this Section 1.1:
1.1.1. "Closing" shall have the meaning specified in Section 3 of this
Agreement.
1.1.2. "Closing Date" shall have the meaning specified in Section 3 of
this Agreement.
1.1.3. "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
1.1.4. "Common Shares" shall have the meaning given in Section 2.1.
1.1.5. "Common Stock" shall mean the common stock of the company, $.001
par value per share.
1.1.6. "Registration Rights Agreement" shall mean the registration rights
agreement substantially in the form of the proposed registration rights
agreement between the Company and the Investor, a copy of which is
attached hereto as Exhibit A.
1.1.7 "Securities" has the meaning given in Section 4.3
1.1.7. "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.
1.1.8. "Warrant" shall mean warrants #BF-1 and #BF-2 issued to the
Investor, each exercisable for 250,000 shares of Common Stock at an
exercise price of $3.65 per share, copies of which are attached hereto as
Exhibit B.
1.2 Other Terms. Other terms used in this Agreement are defined in the context
in which they are used and shall have the meanings therein indicated.
2. AUTHORIZATION AND SALE OF SECURITIES
2.1 Authorization. Prior to the Closing, the Company shall have authorized the
sale and issuance of up to 1,000,000 shares of Common Stock (the "Common
Shares"), the Warrant and shall have reserved the 500,000 shares of Common Stock
issuable upon exercise of the Warrant.
2.2 Sale of Common Stock and the Warrant. On the basis of the representations,
warranties and agreements contained herein, and subject to the terms and
conditions hereof, at the Closing the Company shall issue and sell to the
Investor, and the Investor shall purchase from the Company, (i) 1,000,000 shares
of Common Stock and, (ii) the Warrant, for an aggregate consideration of
$3,650,000.00 (the "Purchase Price").
3. CLOSING
The closing of the purchase and sale of the Common Stock and the Warrant
being purchased by the Investor hereunder (the "Closing") shall be held at
Stamford, Connecticut, at 10:00 a.m. on July 16, 2001 or at such other time and
place as the Company and the Investor mutually agree (the "Closing Date"). At
the Closing, the Company shall deliver to the Investor certificates representing
the Common Shares and the Warrant being purchased by the Investor against
payment of the Purchase Price by wire transfer to an account designated by the
Company in a written notice to the Investor prior to the Closing.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investor as follows:
4.1 Organization and Standing. The Company is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
4.2 Corporate Power. The Company has all requisite legal and corporate power and
authority to execute and deliver this Agreement and the Registration Rights
Agreement, to sell and issue the Common Shares and the Warrant and to carry out
and perform its obligations under the terms of this Agreement, the Registration
Rights Agreement and the Warrant.
4.3 Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the sale and issuance of the Common
Shares, the Warrant and the shares of Common Stock issuable upon exercise
thereof (together, the "Securities") and the execution, delivery and performance
of the Company*s obligations under this Agreement, the Registration Rights
Agreement and the Warrant and the reservation of the shares of Common Stock
issuable upon exercise of the Warrant have been duly taken.
4.4 Capitalization. As of June 30, 2001, the authorized capital stock of the
Company consisted of 80,000,000 shares of Common Stock, 25,710,505 shares of
which were issued and outstanding and 20,000,000 shares of preferred stock, par
value $.001 per share, none of which
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were issued and outstanding. In addition, $13,860,000 of the Company's 6%
Convertible Debentures maturing July 31, 2002 (the "Debentures"), was issued and
outstanding. Upon conversion the issued and outstanding Debentures would be
convertible into 3,797,260 shares of Company's Common Stock, and the number of
shares of Common Stock have been reserved for that purpose. All issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
fully paid and non-assessable and issued in compliance with all applicable
federal and state securities laws. The Company has reserved 500,000 shares of
its Common Stock for issuance upon exercise of the Warrant. Shares of Common
Stock reserved for issuance to employees, directors and officers of, and
consultants to, the Company pursuant to the Company*s benefit and other plans
are set forth in Schedule 1 hereto. The only other outstanding rights, options,
warrants, conversion rights or agreements for the purchase or acquisition from
the Company of any shares of the capital stock or other securities of the
Company are also set forth on Schedule 1 hereto. There are no preemptive rights
for the Company's Common Stock.
5. INVESTMENT REPRESENTATIONS
The Investor hereby represents and warrants to the Company, as of the
Closing Date, as follows:
5.1 Accredited Investor; Experience; Risk. The Investor is an "accredited
investor" as such term is defined in Regulation D promulgated under the
Securities Act and has not been organized for the specific purpose of acquiring
the Common Shares or the Warrant. The Investor and its representatives have been
solely responsible for the Investor's own "due diligence" investigations of the
Company and its management and business, for its own analysis of the merits and
risks of the investment, and for its own analysis of the fairness and
desirability of the terms of the investment. The Investor has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks associated with the purchase of the Common Shares and the
Warrant and of protecting its interests in connection therewith. The Investor is
able to fend for itself in the transactions contemplated by this Agreement and
has the ability to bear the economic risk of the investment, including complete
loss of the investment. The Investor is experienced in evaluating and investing
in relatively early-stage, energy technology companies such as the Company.
5.2 Investment. The Investor is acquiring the Common Shares and the Warrant for
investment for its own account and not with a view to, or for resale in
connection with, any distribution thereof, and it has no present intention of
selling or distributing the Securities. The Investor understands that the
Securities have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein.
5.3 Restricted Securities; Rule 144. The Investor understands that the
Securities are characterized as "restricted securities" under the federal
securities laws inasmuch as they are
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being acquired from the Company in a transaction not involving a public offering
and that under such laws and applicable regulations the Securities may be resold
without registration under the Securities Act only in certain limited
circumstances. The Investor acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. The Investor is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public market for the shares, the availability of certain current public
information about the Company, the resale occurring not less than one (1) year
after a party has purchased and paid for the security to be sold, the sale being
effected through a "broker's transaction" or in transactions directly with a
"market maker" (as provided by Rule 144(f)) and the number of shares being sold
during any three (3) month period not exceeding specified limitations.
5.4 Authorization. The Investor represents that it has the full right, power and
authority to enter into and perform its obligations under this Agreement and the
Registration Rights Agreement, and that this Agreement and the Registration
Rights Agreement when executed and delivered by the Investor will constitute
valid and binding obligations of the Investor, enforceable in accordance with
their terms, subject to the laws of general application relating to bankruptcy,
insolvency and the relief of debtors, rules of law governing specific
performance, injunctive relief or other equitable remedies.
5.5 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, the Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until either:
(a) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and
such disposition is made in accordance with such
registration statement and the provisions of Section 5.3
hereof; or
(b) The Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding
the proposed disposition. If, in the good faith
determination of the counsel of the Company, there is a
reasonable basis for the belief that such disposition would
require registration under the Securities Act, the Company
may require that Investor furnish the Company with an
opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration under
the Securities Act.
5.6 Company Information. The Investor has had an opportunity to discuss the
Company's business, management and financial affairs with directors, officers
and management of the Company. The Investor has also had the opportunity to ask
questions of, and receive answers from, the Company and its management regarding
the terms and conditions of this investment.
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5.7 Legends. It is understood that each certificate representing the Securities
shall bear a legend in the following form or substantially similar form (in
addition to any legend required under applicable state securities laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR
DISPOSITION MAY BE EFFECTED WITHOUT (A) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR (B) AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS."
6. CONDITIONS TO THE OBLIGATIONS OF THE INVESTOR
The obligations of the Investor to purchase the Common Stock and the
Warrant at the Closing are subject to the fulfillment on or prior to the Closing
Date of all of the conditions set forth below in this Section 6.
6.1 Representations and Warranties Correct. The representations and warranties
made in Section 4 hereof shall be true and correct in all material respects when
made, and shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if they had been made on and as
of the Closing Date.
6.2 Warrant and Registration Rights Agreements. The Company shall execute and
deliver the Registration Rights Agreement and the Warrant.
6.3 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.
7. CONDITIONS TO COMPANY'S OBLIGATIONS
The Company*s obligation to sell the Common Shares and the Warrant to
the Investor at the Closing is subject to the fulfillment of the following
conditions:
7.1 Representations Correct. The representations made by such Investor in
Section 6 hereof shall be true and correct in all material respects when made,
and shall be true and correct in all material respects on the Closing Date with
the same force and effect as if they had been made on the Closing Date.
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7.2 Payment in Collected Funds. The Company has received $3,650,000.00 from
Investor by bank wire transfer as payment for the Shares in accordance with wire
transfer instructions provided prior to Closing.
8. MISCELLANEOUS
8.1 Governing Law. This Agreement shall be governed in all respects by the laws
of the State of New York.
8.2 Survival. The representations, warranties, covenants and agreements made in
Sections 4 and 5 hereof shall not survive the Closing, except for the covenants
of the Investor in Section 5.5, which shall survive for a period of two years
from the Closing Date.
8.3 Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto.
8.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof and
supersede and preempt any prior understandings, agreements or representations by
or among the parties, written or oral, which may have related to the subject
matter hereof in any way, including, without limitation, any summary of terms or
similar agreement. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the Company and the Investor.
8.5 Notices, etc. Any notice required or permitted pursuant to this Agreement
shall be in writing and shall be deemed sufficient (i) immediately when
delivered personally or by facsimile, (ii) twenty (20) hours after being
deposited with an overnight courier service (e.g. Federal Express) for next day
delivery, or (iii) forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, addressed as
follows:
If to the Investor:
Bayou Fund, LLC.
00 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
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If to the Company:
KFx Inc.
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
Attention: CEO
8.6 Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to the Investor, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of the Investor nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of the
Investor of any breach or default under this Agreement, or any waiver on the
part of any holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to the Investor, shall be cumulative and not alternative.
8.7 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
8.8 Severability. In the event that any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without said
provision; provided, however, that no such severability shall be effective if it
materially changes the economic benefit of this Agreement to any party.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Common
Stock and War rant Purchase Agreement, or have caused this Common Stock and
Warrant Purchase Agreement to be fully executed on their behalf as of the date
first set forth above.
KFX, INC.
By: ______________________
Name: Xxxxxxxx Xxxxxxx
Title: Chairman & CEO
BAYOU FUND, LLC
By: ______________________
Name: ______________________
Title: ______________________
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EXHIBIT A
---------
Registration Rights Agreement
Attached.
EXHIBIT B
---------
Warrants
BF-1 and BF-2
Attached.
SCHEDULE 1
----------
Stock Option Plans:
-------------------
Plan Name Shares Reserved
--------- ---------------
Amended & Restated 1992 Stock Option Plan 1,000,000
1996 Stock Option & Incentive Plan 1,500,000
1999 Stock Incentive Plan 2,000,000
1998 Advisory Committee Stock Option Plan 100,000
1998 Directors Stock Option Plan 200,000
Non-Plan Stock Options:
-----------------------
Xxxx X. Xxxxxxx Expires 6/17/05 500,000
Xxxx X. Xxxxxxx Expires 1/01/06 150,000
Xxxx X. Xxxxxxx Expires 1/01/07 150,000
Xxxx X. Xxxxxxx Expires 1/01/08 150,000
Xxxx X. Xxxxxxxxx Expires 10/01/05 250,000
Warrants:
---------
Innovative Research Expires 8/03/01 55,000
BlueStone Capital Expires 7/31/02 253,333
Jefferies International Expires 7/31/02 200,000
Xxxxx X. Xxxxxx Expires 8/02/01 75,000
Landrica Development Expires 4/30/05 1,300,000
Xxxxxxx X. Xxxxxx Expires 3/08/06 166,667
Xxxxxxxx Xxxxxxx Expires 3/08/06 66,667
Xxxx X. Xxxxxx Expires 4/09/06 33,333
Xxxxxxx X. Xxxx Expires 5/21/06 14,887
Xxxx X. Xxxxxx Expires 5/24/06 33,333
Stock Plans:
------------
Forfeitable Stock Plan for Independent Contractors 408,000
Vendor Stock Plan 34,957
