Document:

exv10w41

 

EXHIBIT 10.41

AMENDED AND RESTATED

MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,

PLEDGE AND FINANCING STATEMENT

FROM

ROYAL GOLD, INC., as Trustor

TO

STEWART TITLE OF NORTHEASTERN NEVADA, as Trustee

AND

HSBC BANK USA, National Association, as Beneficiary

DATED AS OF DECEMBER 14, 2005

THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.

THIS INSTRUMENT SECURES FUTURE ADVANCES.

THIS DOCUMENT WAS PREPARED BY

AND WHEN RECORDED AND/OR FILED

SHOULD BE RETURNED TO:

Joel O. Benson, Esq.

Davis Graham & Stubbs LLP

1550 Seventeenth Street, Suite 500

Denver, Colorado 80202

 

 

AMENDED AND RESTATED

MORTGAGE, DEED OF TRUST, SECURITY AGREEMENT,

PLEDGE AND FINANCING STATEMENT

     This Amended and Restated Mortgage, Deed of Trust, Security Agreement, Pledge and Financing
Statement (the “Mortgage”) is entered into by and among Royal Gold, Inc., a Delaware corporation,
whose address is 1660 Wynkoop Street, Suite 1000, Denver, Colorado 80202-1132 (herein called
“Trustor”), Stewart Title of Northeastern Nevada, (herein called “Trustee”), and HSBC Bank USA,
National Association (herein called “Beneficiary”), a bank organized under the laws of the State of
New York, whose address is 452 Fifth Avenue, New York, New York 10018.

RECITALS

     A. The Trustor, Trustee and Beneficiary entered into that certain Mortgage, Deed of Trust,
Security Agreement, Pledge and Financing Statement, effective as of December 18, 2000 which was
recorded with the Office of the County Clerk and Recorder, Lander County, Nevada on January 10,
2001, number 218220 in Book 485, Pages 131 to 154 (as amended and modified prior to the date
hereof, the “Existing Mortgage”). As a result of and as contemplated in that certain Amended and
Restated Loan Agreement dated as of December 14, 2005, between Trustor, as borrower, and
Beneficiary, as lender (the “Loan Agreement”), the Trustor, Trustee and Beneficiary desire to
amend, restate, modify and continue the Existing Mortgage as provided herein.

     B. This Mortgage secures the Trustor’s prompt and complete payment and performance of all
Obligations under, and as defined in, the Loan Agreement. It is a condition precedent to the
Beneficiary making “Loans” to the Trustor under, and as defined in, the Loan Agreement that the
Trustor shall have granted and perfected the liens and security interests contemplated by this
Mortgage.

     C. The Existing Mortgage is hereby amended, continued and restated in its entirety as set
forth herein.

     NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE 1 —  DEFINITIONS

     Section 1.1    Defined Terms. For the purposes of this instrument:

     “Collateral” includes Personalty Collateral and Realty Collateral as hereinafter defined.

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     “Debt Service Reserve Account” means a demand deposit account of Trustor at the offices of the
Beneficiary in New York, New York, Account Number 66C-003556, and all
other accounts which may be maintained from time to time by Trustor in accordance with the
Loan Agreement.

     “Dollars” mean lawful money of the United States of America.

     “Effective Date” means December 14, 2005.

     “Obligations” means the aggregate of:

     (i) all amounts payable pursuant to an amended and restated promissory note, dated December
14, 2005, payable in full on or before December 31, 2008, executed by Trustor, payable to the order
of the Beneficiary, in the principal face amount of Thirty Million Dollars ($30,000,000) (referred
to herein as the “Note”), executed and delivered pursuant to the Loan Agreement;

     (ii) any and all other or additional indebtedness or liabilities for which Trustor is now or
may become liable to Beneficiary in any manner, whether under this instrument, the Loan Agreement
or any other Loan Document (as defined in the Loan Agreement), either primarily or secondarily,
absolutely or contingently, directly or indirectly, jointly, severally, or jointly and severally,
and whether matured or unmatured, and whether or not created after payment in full of the
Obligations if this instrument shall not have been released of record by Beneficiary;

     (iii) all sums advanced and costs and expenses incurred by the Trustee or the Beneficiary,
including without limitation all legal, accounting, engineering, management, consulting or like
fees, made and incurred in connection with the Obligations described in paragraphs (i) and (ii)
above or any part thereof, any renewal, extension or modification of, or substitution for, the
foregoing Obligations or any part thereof, or the acquisition, perfection or maintenance and
preservation of the security therefor, whether such advances, costs or expenses shall have been
made and incurred at the request of Trustee, Beneficiary or Trustor; and

     (iv) any and all extensions and renewals of, substitutions for, or modifications or amendments
of any of the foregoing Obligations or any part thereof.

     “Personalty Collateral” means all of Trustor’s interest now owned or hereafter acquired in and
to: (i) all Products attributable to the Royalty Interests, (ii) all Production Sales Contracts,
(iii) all Royalty Agreements, (iv) all Refinery Accounts, (v) the Debt Service Reserve Account, and
(vi) all accounts, contract rights and general intangibles now existing or hereafter arising in
connection with the exploration for, production, processing, treatment, storage, transportation,
manufacture or sale of Products attributable to the Royalty Interests.

     “Proceeds” includes whatever is received upon the sale, exchange, collection or other
disposition of the Collateral and insurance payable or damages or other payments by reason of loss
or damage to the Collateral, and all additions thereto, substitutions and replacements thereof or
accessions thereto.

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     “Production Sales Contract” means each contract now in effect or hereafter entered into by
Trustor or Trustor’s predecessors in title for the sale, purchase, exchange or processing of
Products attributable to the Royalty Interests.

     “Products” means without limitation all ore, minerals, concentrate, doré, bar, and refined
gold, silver or other metals.

     “Realty Collateral” means all of Trustor’s interest in and to the Royalty Interests,
including, but not limited to, the interests of Trustor described or specified in Parts I,
II and III of Exhibit A hereto.

     “Refinery Accounts” means accounts, and the credit balances in Dollars or Products therein, of
Trustor at any refinery or processing facility to which Products attributable to the Royalty
Interests are delivered, expressly including all accounts of Trustor presently in effect at Johnson
Matthey in Salt Lake City, Utah.

     “Royalty Agreements” means the agreements identified in Part IV of Exhibit A
which create, define or otherwise pertain to the Royalty Interests, as of the Effective Date, and
all other agreements to which Trustor is a party which pertain to the Royalty Interests.

     “Royalty Interests” means the royalty interests and estates and other interests of Trustor
identified in Part I of Exhibit A attached hereto and made a part hereof, in the
lands described in Parts II and III of Exhibit A, whether now owned or
hereafter acquired, or any other Royalty Interest acquired with the proceeds of the Loan, by
operation of law or otherwise, together with all of Trustor’s interests of any nature whatsoever
now or hereafter incident or appurtenant thereto, including, but not limited to, fee mineral and
surface interests in said lands, all unsevered and unextracted Products in, under or attributable
to Trustor’s interests in the royalty interest and estates and other interests of Trustor
identified in Part I of Exhibit A hereto, in the lands described in Parts
II and III of Exhibit A and in any other royalty interests, estates and other
interests in lands acquired with the proceeds of Loans, and all rights of way, surface leases, and
easements affecting the foregoing interests of Trustor or useful or appropriate in exploring and/or
producing, processing, treating, handling, storing, transporting or marketing Products therefrom.

ARTICLE 2 —  CREATION OF SECURITY

     Section 2.1    Grant. In consideration of the Beneficiary’s advancing or extending
the funds or credit constituting the Obligations, and in consideration of the mutual covenants
contained herein, and for the purpose of securing payment of the Obligations, Trustor hereby
grants, bargains, sells, warrants, mortgages, assigns, transfers and conveys the Realty Collateral
to the Trustee, with power of sale subject to the terms thereof, for the benefit of Beneficiary; to
have and to hold the Realty Collateral, together with all and singular the rights, privileges,
contracts, and appurtenances now or hereafter at any time before the foreclosure or release hereof,
in any way appertaining or belonging thereto, unto the Trustee and to its substitutes or
successors, forever, in trust, upon the terms and conditions herein set forth; and Trustor hereby
binds and obligates itself and its successors and assigns, to warrant and to defend, all and
singular, title to the Collateral unto the Trustee, its substitutes or successors, forever,
against the claims of any and all persons whomsoever claiming any part thereof.

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     Section 2.2    Creation of Security Interest. In addition to the grant contained in
Section 2.1, and for the same consideration and purpose, Trustor hereby grants to the
Beneficiary, a first and prior security interest in all Personalty Collateral, now owned or
hereafter acquired by Trustor, and in all Proceeds. Trustor, without limiting the foregoing
provisions of this Section 2.2, stipulates that the grant made by this Section 2.2
includes a grant of a security interest in Products extracted from or attributable to the Royalty
Interests and in the Proceeds resulting from sale of such Products, such security interest to
attach to such Products as extracted and to the accounts resulting from such sales.

     Section 2.3    Pledge. Trustor hereby makes a common law pledge to the Beneficiary of
the Debt Service Reserve Account and the Refinery Accounts, and the credit balances therein from
time to time.

     Section 2.4    Proceeds. The security interest of Beneficiary hereunder in the
Proceeds shall not be construed to mean that Beneficiary consents to the sale or other disposition
of any part of the Collateral other than Products extracted from or attributable to the Royalty
Interests and sold in the ordinary course of business.

     Section 2.5    Substitution of Beneficiary for Trustor. This instrument shall be
effective, at the Beneficiary’s option and as allowed by applicable law, as a mortgage as well as a
deed of trust, and every grant herein to the Trustee of interests, powers, rights and remedies
shall likewise be a grant of the same interests, powers, rights and remedies to the Beneficiary, as
mortgagee. Subject to applicable law, Beneficiary shall in all instances, and in its sole
discretion, elect whether this instrument shall be effective as a mortgage or as a deed of trust.

     Section 2.6    Continuing Status of Lien, Security Interest and Pledge.

     (a) The Loan Agreement and the Note provide for a revolving loan or loans from the Beneficiary
to the Trustor pursuant to which, for the period specified in the Loan Agreement and in the Note,
and subject to the terms and conditions of the Loan Agreement, the Trustor may borrow, repay and
reborrow funds from the Beneficiary. So long as the commitment of the Beneficiary under the Loan
Agreement to advance funds to the Trustor remains in effect, the lien on the Realty Collateral and
the security interest in and pledge relating to the Personalty Collateral created hereby shall
remain in effect with the priority date established by the recording or filing hereof,
notwithstanding the fact that from time to time the outstanding balance of the loans to the Trustor
under the Loan Agreement may be zero.

     (b) This Mortgage amends, restates and continues the Existing Mortgage and nothing contained
herein shall be deemed or construed to be a repayment, satisfaction or novation of the Obligations
or to release, terminate, novate or in any way limit or impair any lien, security interest or
encumbrance granted or given under the Existing Mortgage or otherwise to secure the Obligations.

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ARTICLE 3 —  ASSIGNMENT OF PRODUCTION PROCEEDS

     Section 3.1    Assignment. As further security for the payment of the Obligations,
the Trustor hereby assigns to the Beneficiary, effective upon an Event of Default, all Products
(and the Proceeds therefrom) which are extracted from or attributable to the Royalty Interests and,
effective automatically upon an Event of Default, the Trustor hereby transfers, assigns, warrants
and conveys to Beneficiary all Products (and the Proceeds therefrom) which are extracted from or
attributable to the Royalty Interests. Upon the occurrence of an Event of Default, all persons
producing, purchasing and receiving such Products or the Proceeds therefrom are authorized and
directed to treat Beneficiary as the person entitled in Trustor’s place and stead to receive the
same; and further, those persons will be fully protected in so treating Beneficiary and will be
under no obligation to see to the application by Beneficiary of any Proceeds received by it.
Trustor agrees that, if, after the occurrence of an Event of Default, any Proceeds from such
Products are paid to Trustor, such proceeds shall constitute trust funds in the hands of Trustor,
shall be segregated from all other funds of Trustor and separately held by Trustor, and shall be
forthwith paid over by Trustor to Beneficiary in accordance with the Loan Agreement. Upon the
occurrence of an Event of Default, Trustor shall, if and when requested by Beneficiary, execute and
file with any production purchaser a transfer order or other instrument declaring Beneficiary to be
entitled to the Proceeds of severed Products and instructing such purchaser to pay such Proceeds to
Beneficiary. After the occurrence of an Event of Default, should any purchaser fail to make
payment promptly to Beneficiary of the proceeds derived from the sale thereof, Beneficiary shall
have the right, subject only to any contractual rights of such purchaser or any operator, to
designate another purchaser to purchase and take such Products, without liability of any kind on
Beneficiary in making such selection so long as ordinary care is used in respect thereof.

     Section 3.2    Trustor’s Payment Duties. Nothing contained herein will limit
Trustor’s duty to make payment on the Obligations when the Proceeds received by Beneficiary
pursuant to this Article 3 are insufficient to pay the costs, interest, principal and any
other portion of the Obligations then owing, and the receipt of Proceeds by Beneficiary will be in
addition to all other security now or hereafter existing to secure payment of the Obligations.

     Section 3.3    Liability of Beneficiary. Beneficiary has no obligation to enforce
collection of any Proceeds and is hereby released from all responsibility in connection therewith,
except the responsibility to account to Trustor for Proceeds actually received.

     Section 3.4    Indemnification. Trustor agrees to indemnify Beneficiary against and
hold Beneficiary harmless from all claims, actions, liabilities, losses, judgments, attorneys’
fees, costs and expenses and other charges of any description whatsoever (all of which are
hereafter referred to in this Section 3.4 as “Claims”) made against or sustained or incurred by
Beneficiary as a consequence of the assertion, either before or after the payment in full of the
Obligations, that Beneficiary received Products or Proceeds pursuant to this instrument.
Beneficiary will have the right to employ attorneys and to defend against any Claims and unless
furnished with satisfactory indemnity, after notice to Trustor, Beneficiary will have the right to
pay or compromise and adjust all Claims in its sole reasonable discretion. Trustor shall indemnify
and pay to Beneficiary all amounts paid by Beneficiary in compromise or adjustment of any of the
Claims or amounts adjudged against Beneficiary in respect of any of the Claims. The liabilities of
Trustor as set
forth in this Section 3.4 will constitute Obligations and will survive the termination of this
instrument.

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ARTICLE 4 —  TRUSTOR’S WARRANTIES AND COVENANTS

     Section 4.1    Payment of Obligations. Trustor covenants that it will pay all
Obligations when due and otherwise faithfully and strictly perform all obligations of Trustor under
the Note, the Loan Agreement and any other instrument or document executed and delivered in
connection with the Obligations. If any part of the Obligations is not evidenced by a writing
specifying a due date, Trustor agrees to pay the same upon demand. All Obligations are payable to
Beneficiary as provided in the Loan Agreement.

     Section 4.2    Warranties and Covenants.

          (a) Trustor warrants and covenants that:

          (i) no approval or consent of any regulatory or administrative commission or authority
or of any other governmental body or any other party is necessary to authorize the execution
and delivery of this instrument or of any other written instrument constituting or
evidencing the Obligations, or to authorize the observance or performance by Trustor of the
covenants contained in the instruments constituting or evidencing the Obligations, or to
authorize the observance or performance by Trustor of the covenants contained in this
instrument or in the other written instruments constituting or evidencing the Obligations or
to enable the Beneficiary to exercise its rights hereunder;

           (ii) Trustor is not obligated, by virtue of a prepayment arrangement under any
Production Sales Contract containing a “take or pay” clause or any other prepayment
arrangement, to deliver Products produced from the Royalty Interests at some future time
without then or thereafter receiving full payment therefor; and Trustor, without
Beneficiary’s prior written consent, shall not hereafter make any such prepayment
arrangements, other than by a customary “take or pay” clause contained in a Production Sales
Contract; and

           (iii) it has not (since 1987) used any corporate name or done business under a name
other than Royal Gold, Inc., and that it will not do so, or relocate its chief executive
office outside of the State of Colorado without at least thirty days’ prior notice to the
Beneficiary.

          (b) Trustor warrants and shall forever defend the Collateral against every person whomsoever
lawfully claiming the same or any part thereof, and Trustor shall maintain and preserve the lien
and security interest herein created until this instrument has been terminated as provided herein.

     Section 4.3    Operation of Property Burdened with Royalty Interests. As long as this
instrument has not been terminated, Trustor shall, at Trustor’s own expense, use commercially
reasonable efforts, consistent with its status as a non-executory, royalty interest holder and

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consistent with Trustor’s rights and obligations under the Royalty Agreements, to cause the
operator(s) of the properties subject to the Royalty Interests to:

          (a) comply fully with all of the terms and conditions of all leases and other instruments of
title and all rights-of-way, easements and privileges necessary for the proper operation of such
leases and instruments, and otherwise do all things necessary to keep Trustor’s rights and
Beneficiary’s interest in the Collateral unimpaired;

          (b) not abandon any property which is producing or capable of commercial production or
forfeit, surrender or release any lease, sublease, operating agreement or other agreement or
instrument comprising or affecting the Royalty Interests without Beneficiary’s prior written
consent, which consent shall not be withheld unreasonably;

          (c) cause the properties subject to the Royalty Interests to be maintained, developed and
operated in a good and workmanlike manner as a prudent operator would in accordance with generally
accepted practices, applicable operating agreements and all applicable federal, state and local
laws, rules, regulations and orders; and

          (d) promptly pay or cause to be paid when due and owing all rentals and royalties payable in
respect of the properties subject to the Royalty Interests; all expenses incurred in or arising
from the operation or development of such properties; and all taxes, assessments and governmental
charges imposed upon such properties.

     Section 4.4    Recording and Filing. Trustor shall pay all costs of filing,
registering and recording this and every other instrument in addition or supplemental hereto and
all financing statements Beneficiary may require, in such offices and places and at such times and
as often as may be, in the judgment of Beneficiary, necessary to preserve, protect and renew the
lien and security interest herein created as a first lien and prior security interest on and in the
Collateral and otherwise do and perform all matters or things necessary or expedient to be done or
observed by reason of any law or regulation of any State or of the United States or of any other
competent authority for the purpose of effectively creating, maintaining and preserving the lien
and security interest created herein and on the Collateral and the priority thereof. Trustor shall
also pay the costs of obtaining reports from appropriate filing officers concerning financing
statement filings in respect of any of the Collateral in which a security interest is granted
herein.

     Section 4.5    Trustee’s or Beneficiary’s Right to Perform Trustor’s Obligations.
Trustor agrees that, if Trustor fails to perform any act which Trustor is required to perform under
this instrument, Beneficiary or the Trustee or any receiver appointed hereunder may, but shall not
be obligated to, perform or cause to be performed such act, and any expense incurred by Beneficiary
or the Trustee in so doing shall be a demand obligation owing by Trustor to Beneficiary, shall bear
interest at an annual rate equal to the maximum interest rate provided in the Note until paid and
shall be a part of the Obligations, and Beneficiary, the Trustee or any receiver shall be
subrogated to all of the rights of the party receiving the benefit of such performance. The
undertaking of such performance by Beneficiary, the Trustee or any receiver as aforesaid shall not
obligate such person to continue such performance or to engage in such performance or performance
of any other act in the future, shall not relieve Trustor from the observance or performance of any
covenant, warranty or agreement contained in this instrument

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or constitute a waiver of default hereunder and shall not affect the right of Beneficiary to
accelerate the payment of all indebtedness and other sums secured hereby or to resort to any other
of its rights or remedies hereunder or under applicable law. In the event the Beneficiary, the
Trustee or any receiver appointed hereunder undertakes any such action, no such party shall have
any liability to the Trustor in the absence of a showing of gross negligence or willful misconduct
of such party, and in all events no party other than the acting party shall be liable to Trustor.

ARTICLE 5 —  DEFAULT

     Section 5.1    Events of Default. The term “Event of Default” shall have the meaning
given thereto in the Loan Agreement, but shall also include the occurrence or the existence of any
of the following conditions:

          (a) failure by Trustor to keep, punctually perform or observe any of the covenants,
obligations or prohibitions contained herein, in any other written instrument evidencing any of the
Obligations or in any other agreement with Beneficiary (whether now existing or entered into
hereafter) following notice, if required, and the expiration of applicable cure periods, if any; or

          (b) the assertion (except by the owner of an encumbrance expressly excepted from Trustor’s
warranty of title herein) of any claim of priority over this instrument, by title, lien or
otherwise, unless Trustor within 30 days after such assertion either causes the assertion to be
withdrawn or provides Beneficiary with such security as Beneficiary may require to protect
Beneficiary against all loss, damage, or expense, including attorneys’ fees, which Beneficiary may
incur in the event such assertion is upheld.

     Section 5.2    Acceleration Upon Default. Upon the occurrence of any Event of
Default, or at any time thereafter, Beneficiary may, at its option, by notice to Trustor, declare
the entire unpaid principal of and the interest accrued on the Obligations to be due and payable
forthwith without any further notice, presentment or demand of any kind, all of which are hereby
expressly waived.

     Section 5.3    Possession and Operation of Property. Upon the occurrence of any Event
of Default, or at any time thereafter, and in addition to all other rights therein conferred on the
Trustee or the Beneficiary, the Trustee, the Beneficiary or any person, firm or corporation
designated by Beneficiary, will have the right and power, but will not be obligated, to have an
audit performed, at Trustor’s expense, of the books and records of Trustor, and to enter upon and
take possession of all or any part of the Collateral, to exclude Trustor therefrom, and to hold,
use, administer and manage the same to the extent that Trustor could do so. The Trustee, the
Beneficiary or any person, firm or corporation designated by the Beneficiary, may manage the
Collateral, or any portion thereof, without any liability to Trustor in connection with such
management except with respect to gross negligence or willful misconduct; and the Trustee, the
Beneficiary or any person, firm or corporation designated by Beneficiary will have the right to
collect, receive and receipt for all Products produced and sold from the Royalty Interests, and to
exercise every power, right and privilege of Trustor with respect to the Collateral. Providing
there has been no foreclosure sale, when and if the expenses of the management of the
Collateral have been paid and the Obligations paid in full, the remaining Collateral shall be
returned to the Trustor.

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     Section 5.4    Ancillary Rights. Upon the occurrence of an Event of Default, or at
any time thereafter, and in addition to all other rights of Beneficiary hereunder, Beneficiary may,
without notice, demand or declaration of default, all of which are hereby expressly waived by
Trustor, proceed by a suit or suits in equity or at law (i) for the seizure and sale of the
Collateral or any part thereof, (ii) for the specific performance of any covenant or agreement
herein contained or in aid of the execution of any power herein granted, (iii) for the foreclosure
or sale of the Collateral or any part thereof under the judgment or decree of any court of
competent jurisdiction, (iv) without regard to the solvency or insolvency of any person, and
without regard to the value of the Collateral, and without notice to Trustor (notice being hereby
expressly waived), for the ex parte appointment of a receiver to serve without bond pending any
foreclosure or sale hereunder, or (v) for the enforcement of any other appropriate legal or
equitable remedy.

ARTICLE 6 —  BENEFICIARY’S RIGHTS AS TO REALTY COLLATERAL UPON DEFAULT

     Section 6.1    Judicial Foreclosure. This instrument shall be effective as a mortgage
as well as a deed of trust and upon the occurrence of an Event of Default, or at any time
thereafter, in lieu of the exercise of the non-judicial power of sale hereafter given, Beneficiary
may, subject to any mandatory requirement of applicable law, proceed by suit to foreclose its lien
hereunder and to sell or have sold the Realty Collateral or any part thereof at one or more sales,
as an entirety or in parcels, at such place or places and otherwise, in such manner and upon such
notice as may be required by law, or, in the absence of any such requirement, as Beneficiary may
deem appropriate, and Beneficiary shall thereafter make or cause to be made a conveyance to the
purchaser or purchasers thereof. Beneficiary may postpone the sale of the real property included
in the Collateral or any part thereof by public announcement at the time and place of such sale,
and from time to time thereafter may further postpone such sale by public announcement made at the
time of sale fixed by the preceding postponement. Sale of a part of the real property included in
the Collateral will not exhaust the power of sale, and sales may be made from time to time until
all such property is sold or the Obligations are paid in full.

     Section 6.2    Non-Judicial Foreclosure. If the Note or other Obligations are not
paid when due, whether by acceleration or otherwise, the Trustee is hereby authorized and
empowered, and it shall be its duty, upon request of Beneficiary, and to the extent permitted by
applicable law, to sell any part of the Realty Collateral at one or more sales, as an entirety or
in parcels, at such place or places and otherwise in such manner and upon such notice as may be
required by applicable law, or in the absence of any such requirement, as Trustee and/or
Beneficiary may deem appropriate, and to make conveyance to the purchaser or purchasers thereof.
Any sale shall be made to the highest bidder for cash at the door of the county courthouse of, or
in such other place as may be required or permitted by applicable law in, the county in the state
where the Realty Collateral or any part thereof is situated; provided that and if the
Realty Collateral lies in more than one county, such part of the Realty Collateral may be sold

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at the courthouse door of any one of such counties, and the notice so posted shall designate
in which county such property shall be sold. Any such sale shall be made at public outcry, on the
day of any month, during the hours of such day and after such written notices thereof have been
publicly posted in such places and for such time periods and after all persons entitled to notice
thereof have been sent such notice, all as required by applicable law in effect at the time of such
sale. The affidavit of any person having knowledge of the facts to the effect that such a service
was completed shall be prima facie evidence of the fact of service. The Trustor agrees that no
notice of any sale, other than as required by applicable law, need be given by the Trustor, the
Beneficiary or any other person. The Trustor hereby designates as its address for the purposes of
such notice the address set out on page two hereof; and agrees that such address shall be changed
only by depositing notice of such change enclosed in a postpaid wrapper in a post office or
official depository under the care and custody of the United States Postal Service, certified mail,
postage prepaid, return receipt requested, addressed to the Beneficiary or other holder of the
Obligations at the address for the Beneficiary set out herein (or to such other address as the
Beneficiary or other holder of the Obligations may have designated by notice given as above
provided to the Trustor and such other debtors). Any such notice or change of address of the
Trustor or other debtors or of the Beneficiary or of other holder of the Obligations shall be
effective upon receipt. The Trustor authorizes and empowers the Trustee to sell the Realty
Collateral in lots or parcels or in its entirety as the Trustee shall deem expedient; and to
execute and deliver to the purchaser or purchasers thereof good and sufficient deeds of conveyance
thereto by fee simple title, with evidence of general warranty by the Trustee, and the title of
such purchaser or purchasers when so made by the Trustee, the Trustor binds itself to warrant and
forever defend. Where portions of the Realty Collateral lie in different counties, sales in such
counties may be conducted in any order that the Trustee may deem expedient; and one or more such
sales may be conducted in the same month, or in successive or different months as the Trustor may
deem expedient.

ARTICLE 7 —  BENEFICIARY’S RIGHTS AS TO PERSONALTY AND FIXTURE COLLATERAL UPON DEFAULT

     Section 7.1    Personalty Collateral. Upon the occurrence of an Event of Default, or
at any time thereafter, Beneficiary may, without notice to Trustor, exercise its rights to declare
all of the Obligations to be immediately due and payable, in which case Beneficiary will have all
rights and remedies granted by law, and particularly by the Uniform Commercial Code, including, but
not limited to, the right to take possession of the Personalty Collateral, and for this purpose
Beneficiary may enter upon any premises on which any or all of the Personalty Collateral is
situated and take possession of and operate the Personalty Collateral or remove it therefrom.
Beneficiary may require Trustor to assemble the Personalty Collateral and make it available to
Beneficiary or the Trustee at a place to be designated by Beneficiary which is reasonably
convenient to all parties. Unless the Personalty Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market, Beneficiary will give
Trustor reasonable notice of the time and place of any public sale or of the time after which any
private sale or other disposition of the Personalty Collateral is to be made. This requirement of
sending reasonable notice will be met if the notice is mailed, postage prepaid, to Trustor at the
address designated above at least five days before the time of the sale or disposition.

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     Section 7.2    Sale with Realty Collateral. In the event of foreclosure, whether
judicial or non-judicial, at Beneficiary’s option it may proceed under the Uniform Commercial Code
as to the Personalty Collateral or it may proceed as to both Realty Collateral and Personalty
Collateral in accordance with its rights and remedies in respect of the Realty Collateral.

     Section 7.3    Private Sale. If Beneficiary in good faith believes that the
Securities Act of 1933 or any other State or Federal law prohibits or restricts the customary
manner of sale or distribution of any of the Personalty Collateral, or if Beneficiary determines
that there is any other restraint or restriction limiting the timely sale or distribution of any
such property in accordance with the customary manner of sale or distribution, Beneficiary may sell
or may cause the Trustee to sell such property privately or in any other manner it deems advisable
at such price or prices as it determines in its sole discretion and without any liability
whatsoever to Trustor in connection therewith. Trustor recognizes and agrees that such prohibition
or restriction may cause such property to have less value than it otherwise would have and that,
consequently, such sale or disposition by Beneficiary may result in a lower sales price than if the
sale were otherwise held.

ARTICLE 8 —  OTHER PROVISIONS CONCERNING FORECLOSURE

     Section 8.1    Possession and Delivery of Collateral. It shall not be necessary for
Beneficiary or the Trustee to have physically present or constructively in its possession any of
the Collateral at any foreclosure sale, and Trustor shall deliver to the purchasers at such sale on
the date of sale the Collateral purchased by such purchasers at such sale, and if it should be
impossible or impracticable for any of such purchasers to take actual delivery of the Collateral,
then the title and right of possession to the Collateral shall pass to the purchaser at such sale
as completely as if the same had been actually present and delivered.

     Section 8.2    Beneficiary as Purchaser. Beneficiary will have the right to become
the purchaser at any foreclosure sale, and it will have the right to credit upon the amount of the
bid the amount payable to it out of the net proceeds of sale.

     Section 8.3    Recitals Conclusive; Warranty Deed; Ratification. Recitals contained
in any conveyance to any purchaser at any sale made hereunder will conclusively establish the truth
and accuracy of the matters therein stated, including, without limiting the generality of the
foregoing, nonpayment of the unpaid principal sum of, and the interest accrued on, the written
instruments constituting part or all of the Obligations after the same have become due and payable,
nonpayment of any other of the Obligations or advertisement and conduct of the sale in the manner
provided herein, and appointment of any successor Trustee hereunder. Trustor ratifies and confirms
all legal acts that Beneficiary and/or Trustee may do in carrying out the provisions of this
instrument.

     Section 8.4    Effect of Sale. Any sale or sales of the Collateral or any part
thereof will operate to divest all right, title, interest, claim and demand whatsoever, either at
law or in equity, of Trustor in and to the premises and the property sold, and will be a perpetual
bar, both at law and in equity, against Trustor, Trustor’s successors or assigns and against any
and all persons claiming or who shall thereafter claim all or any of the property sold from,
through or under

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Trustor, or Trustor’s successors or assigns. Subject to applicable rights of redemption under
applicable law, the purchaser or purchasers at the foreclosure sale will receive immediate
possession of the property purchased; and if Trustor retains possession of the Realty Collateral,
or any part thereof, subsequent to sale, Trustor will be considered a tenant at sufferance of the
purchaser or purchasers, and if Trustor remains in such possession after demand of the purchaser or
purchasers to remove, Trustor will be guilty of forcible detainer and will be subject to eviction
and removal, forcible or otherwise, with or without process of law, and without any right to
damages arising out of such removal.

     Section 8.5    Application of Proceeds. The proceeds of any sale of the Collateral or
any part thereof will be applied as follows:

          (a) first, to the payment of all expenses incurred by the Trustee and Beneficiary in
connection therewith, including, without limiting the generality of the foregoing, court costs,
legal fees and expenses, fees of accountants, engineers, consultants, agents or managers and
expenses of any entry or taking of possession, holding, valuing, preparing for sale, advertising,
selling and conveying;

          (b) second, to the payment of the Obligations; and

          (c) third, any surplus thereafter remaining to Trustor or Trustor’s successors or assigns, as
their interests may be established to Beneficiary’s reasonable satisfaction.

     Section 8.6    Deficiency. Trustor will remain liable for any deficiency owing to
Beneficiary after application of the net proceeds of any foreclosure sale.

     Section 8.7    Trustor’s Waiver of Appraisement, Marshaling, Etc. Trustor agrees that
Trustor will not at any time insist upon or plead or in any manner whatsoever claim the benefit of
any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order
to prevent or hinder the enforcement or foreclosure of this instrument, the absolute sale of the
Collateral or the possession thereof by any purchaser at any sale made pursuant to this instrument
or pursuant to the decree of any court of competent jurisdiction. Trustor, for Trustor and all who
may claim through or under Trustor, hereby waives the benefit of all such laws and to the extent
that Trustor may lawfully do so under applicable state law, waives any and all right to have the
Realty Collateral marshaled upon any foreclosure of the lien hereof or sold in inverse order of
alienation and, Trustor agrees that the Trustor may sell the Realty Collateral as an entirety.

ARTICLE 9 —  MISCELLANEOUS

     Section 9.1    Discharge of Purchaser. Upon any sale made under the powers of sale
herein granted and conferred, the receipt of Beneficiary will be sufficient discharge to the
purchaser or purchasers at any sale for the purchase money, and such purchaser or purchasers and
the heirs, devisees, personal representatives, successors and assigns thereof will not, after
paying such purchase money and receiving such receipt of Beneficiary, be obliged to see to the
application thereof or be in anywise answerable for any loss, misapplication or nonapplication
thereof.

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     Section 9.2    Indebtedness of Obligations Absolute. Nothing herein contained shall
be construed as limiting Beneficiary to the collection of any indebtedness of Trustor to
Beneficiary only out of the income, revenue, rents, issues and profits from the Collateral or as
obligating Beneficiary to delay or withhold action upon any default which may be occasioned by
failure of such income or revenue to be sufficient to retire the principal or interest when due on
the indebtedness secured hereby. It is expressly understood between Beneficiary and Trustor that
any indebtedness of Trustor to Beneficiary secured hereby shall constitute an absolute,
unconditional obligation of Trustor to pay as provided herein or therein in accordance with the
terms of the instrument evidencing such indebtedness in the amount therein specified at the
maturity date or at the respective maturity dates of the installments thereof, whether by
acceleration or otherwise.

     Section 9.3    Defense of Claims. Trustee will promptly notify the Trustor and
Beneficiary in writing of the commencement of any legal proceedings affecting Beneficiary’s
interest in the Collateral, or any part thereof, and shall take such action, employing attorneys
acceptable to Beneficiary, as may be necessary to preserve Trustor’s, the Trustee’s and
Beneficiary’s rights affected thereby; and should Trustor fail or refuse to take any such action,
the Trustee or Beneficiary may take the action on behalf of and in the name of Trustor and at
Trustor’s expense. Moreover, Beneficiary or the Trustee on behalf of Beneficiary may take
independent action in connection therewith as they may in their discretion deem proper, and Trustor
hereby agrees to make reimbursement for all sums advanced and all expenses incurred in such actions
plus interest at a rate equal to the maximum interest rate provided in the Loan Agreement.

     Section 9.4    Termination. If all the Obligations are paid in full and the covenants
herein contained are well and truly performed, and if Trustor and Beneficiary intend at such time
that this instrument not secure any obligation of Trustor thereafter arising, then the Beneficiary
shall, upon the request of Trustor and at Trustor’s cost and expense, deliver to Trustor proper
instruments executed by the Beneficiary evidencing the release of this instrument. Until such
delivery, this instrument shall remain and continue in full force and effect.

     Section 9.5    Renewals, Amendments and Other Security. Renewals and extensions of
the Obligations may be given at any time, amendments may be made to the agreements with third
parties relating to any part of the Obligations or the Collateral, and Beneficiary may take or hold
other security for the Obligations without notice to or consent of Trustor. The Trustor or
Beneficiary may resort first to other security or any part thereof, or first to the security herein
given or any part thereof, or from time to time to either or both, even to the partial or complete
abandonment of either security, and such action will not be a waiver of any rights conferred by
this instrument.

     Section 9.6    Successor Trustees. The Trustee may resign in writing addressed to
Beneficiary or be removed at any time with or without cause by an instrument in writing duly
executed by Beneficiary. In case of the resignation or removal of the Trustee, a successor Trustee
may be appointed by Beneficiary by instrument of substitution complying with any applicable
requirements of law, and in the absence of any such requirement, without other formality than an
appointment and designation in writing. Any appointment and designation will be full evidence of
the right and authority to make the same and of all facts therein recited. Upon

A-13

 

the making of any appointment and designation, all the estate and title of the Trustee in all
of the Realty Collateral will vest in the named successor Trustee, and the successor will thereupon
succeed to all the rights, powers, privileges, immunities and duties hereby conferred upon the
Trustee. All references herein to the Trustee will be deemed to refer to the Trustee from time to
time acting hereunder.

     Section 9.7    Limitations on Interest. No provision of the Note, Loan Agreement or
other instrument constituting or evidencing any of the Obligations or any other agreement between
the parties shall require the payment or permit the collection of interest in excess of the maximum
non-usurious rate which Trustor may agree to pay under applicable laws. The intention of the
parties being to conform strictly to applicable usury laws now in force, the interest on the
principal amount of the Note and the interest on other amounts due under and/or secured by this
instrument shall be held to be subject to reduction to the amount allowed under said applicable
usury laws as now or hereafter construed by the courts having jurisdiction, and any excess interest
paid shall be credited to Trustor.

     Section 9.8    Effect of Instrument. This instrument shall be deemed and construed to
be, and may be enforced as, an assignment, chattel mortgage or security agreement, common law
pledge, contract, deed of trust, financing statement, real estate mortgage, and as any one or more
of them if appropriate under applicable state law. This instrument shall be effective as a
financing statement covering minerals or the like and accounts subject to Section 9-103(5) (or
corresponding provision) of the Uniform Commercial Code as enacted in the appropriate jurisdiction
and is to be filed for record in the Office of the County Clerk or other appropriate office of each
county where any part of the collateral is situated. A carbon, photographic, or other reproduction
of this Mortgage or of any financing statement relating to this Mortgage shall be sufficient as a
financing statement.

     Section 9.9    Unenforceable or Inapplicable Provisions. If any provision hereof or
of any of the written instruments constituting part or all of the Obligations is invalid or
unenforceable in any jurisdiction, whether with respect to all parties hereto or with respect to
less than all of such parties, the other provisions hereof and of the written instruments will
remain in full force and effect in that jurisdiction with respect to the parties as to which such
provision is valid and enforceable, and the remaining provisions hereof will be liberally construed
in favor of Beneficiary in order to carry out the provisions hereof. The invalidity of any
provision of this instrument in any jurisdiction will not affect the validity or enforceability of
any provision in any other jurisdiction.

     Section 9.10    Rights Cumulative. Each and every right, power and remedy given to
Beneficiary herein or in any other written instrument relating to the Obligations will be
cumulative and not exclusive; and each and every right, power and remedy whether specifically given
herein or otherwise existing may be exercised from time to time and as often and in such order as
may be deemed expedient by Beneficiary, and the exercise, or the beginning of the exercise, of any
such right, power or remedy will not be deemed a waiver of the right to exercise, at the same time
or thereafter, any other right, power or remedy. A waiver by Beneficiary of any right or remedy
hereunder or under applicable law on any occasion will not be a bar to the exercise of any right or
remedy on any subsequent occasion.

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     Section 9.11    Non-Waiver. No act, delay, omission or course of dealing between
Beneficiary and Trustor will be a waiver of any of Beneficiary’s rights or remedies hereunder or
under applicable law. No waiver, change or modification in whole or in part of this instrument or
any other written instrument will be effective unless in a writing signed by Beneficiary.

     Section 9.12    Beneficiary’s Expenses. Trustor agrees to pay in full all expenses
and reasonable attorneys’ fees of Beneficiary which may have been or may be incurred by Beneficiary
in connection with the collection of the Obligations and the enforcement of any of Trustor’s
obligations hereunder and under any documents executed in connection with the Obligations.

     Section 9.13    Indemnification. Trustor shall indemnify Beneficiary and the Trustee
and hold each of them harmless against, and neither Beneficiary nor the Trustee shall be liable
for, any loss, cost or damage, including without limitation attorneys’, consultants’ or management
fees, resulting from exercise by Beneficiary or the Trustee of any right, power or remedy conferred
upon it by this instrument or any other instrument pertaining hereto, or from the attempt or
failure of Beneficiary or the Trustee to exercise any such right, power or remedy; and
notwithstanding any provision hereof to the contrary, the foregoing indemnity shall in all respects
continue and remain in full force and effect even though all indebtedness and other sums secured
hereby may be fully paid and the lien of this instrument released.

     Section 9.14    Partial Releases. In the event Trustor sells for monetary
consideration or otherwise any portion of the Royalty Interests, as permitted by the Loan
Agreement, Beneficiary and Trustee shall release the lien of this instrument with respect to the
portion sold, at the request of Trustor. No release from the lien of this instrument of any part
of the Collateral by Beneficiary shall in anywise alter, vary or diminish the force, effect or lien
of this instrument on the balance or remainder of the Collateral.

     Section 9.15    Subrogation. This instrument is made with full substitution and
subrogation of Beneficiary and Trustee in and to all covenants and warranties by others heretofore
given or made in respect of the Collateral or any part thereof.

     Section 9.16    Notice. All notices and deliveries of information hereunder shall be
deemed to have been duly given if actually delivered or mailed by registered or certified mail,
postage prepaid, addressed to the parties hereto at the addresses set forth above on page 1; if by
mail, then as of the date of such mailing. Each party may, by written notice so delivered to the
others, change the address to which delivery shall thereafter be made.

     Section 9.17    Successors. This instrument shall bind and inure to the benefit of
the respective successors and assigns of the parties.

     Section 9.18    Interpretation.

          (a) Article and section headings used in this instrument are intended for convenience only and
shall be given no significance whatever in interpreting and construing the provisions of this
instrument.

A-15

 

          (b) As used in this instrument, “Beneficiary” and “Trustee” include their respective
successors and assigns. Unless context otherwise requires, words in the singular number include
the plural and in the plural number include the singular. Words of the masculine gender include
the feminine and neuter gender and words of the neuter gender may refer to any gender.

     Section 9.19    Inconsistencies with Related Documents. To the extent, if any, the
provisions hereof are inconsistent with the provisions of the Loan Agreement, such inconsistencies
shall be resolved by giving controlling effect to the Loan Agreement.

     Section 9.20    Counterparts. This instrument may be executed in any number of
counterparts, each of which will for all purposes be deemed to be an original, and all of which are
identical except that to facilitate recordation, in particular counterparts hereof, portions of
Exhibit A hereto which describe properties situated in counties other than the county in which the
counterpart is to be recorded have been omitted.

     Section 9.21    Governing Law. This Mortgage, insofar as it pertains to Royalty
Interests and Personalty Collateral located in the State of Nevada shall be governed by the laws of
Nevada. This Mortgage, insofar as it constitutes a common law pledge with respect to the Debt
Service Reserve Account, shall be governed by the laws of New York. With respect to all other
Collateral, this Mortgage shall be governed by the laws of the state in which the collateral is
located.

          Executed as of the Effective Date.

	 	 	 	 	 
	 	TRUSTOR:

ROYAL GOLD, INC.

 	 
	 	By:  	/s/ Tony Jensen
 	 
	 	 	Name:  	Tony Jensen 	 
	 	 	Title:  	President & CEO 	 

A-16

 

	 	 	 	 	 

	 	 	 
	ATTEST:
	 	 
	 
	 	 
	[Corporate Seal]
	 	 
	 
	 	 
	/s/ Karen Gross
	 	 
	 

	 	 

Karen Gross, Vice President & Corporate Secretary

(Name and Title)

	 	 	 	 	 	 	 	 	 
	STATE OF COLORADO
	 	)	 	 	 	 	 	 
	CITY AND
	 	)	 	ss.	 	 	 	 
	COUNTY OF DENVER
	 	)	 	 	 	 	 	 

     On
August 30, 2006 personally appeared before me, a notary
public, Tony Jensen, the President & CEO of Royal Gold, Inc., a Delaware
corporation, who acknowledged that he executed the above instrument.

     Witness my hand and official seal.

     My
commission expires 04/24/2008.

	 	 	 	 	 
	 

	 	Randy Parcel
 

Notary Public
	 	 

[Seal]

A-17

 

	 	 	 	 	 	 	 
	 	 	HSBC BANK USA,

NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ P.E. Kavanagh	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	P.E. Kavanagh	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Senior Vice President	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 
	STATE OF NEW YORK
	 	)	 	 	 	 	 	 
	CITY AND
	 	)	 	ss.	 	 	 	 
	COUNTY OF NEW YORK
	 	)	 	 	 	 	 	 

     On
September 6, 2006 personally appeared before me, a notary public,
P.E. Kavanagh a Senior Vice President, of HSBC Bank USA,
National Association, who acknowledged that he executed the above

     Witness my hand and official seal.

     My
commission expires 9/19/2010.

	 	 	 	 	 
	 

	 	/s/ Lourdes R. Smart 

Notary Public
	 	 

[Seal]

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Exhibit 4.2    
    

REGISTRATION RIGHTS AGREEMENT  

        THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and is effective as of December 31, 2002, by and between ENRG, Inc., a Delaware
corporation (the "Company"), and the equity security holders of the Company as identified on Schedule A hereto the "Holders"). 

 
 

RECITALS    
    

        A.    Upon
the terms and subject to the conditions of a Membership Interest Purchase Agreement among the Company and the Holders dated as of December 31, 2002 (the
"Purchase Agreement"), the Holders have agreed to sell to the Company all of the outstanding membership interests of Blue Energy & Technologies, L.L.C. ("Blue"), in exchange for consideration
of (i) an aggregate of 3,740,614 shares of the Company's Common Stock (the "Shares") and (ii) warrants to purchase Common Stock of the Company (the "Warrants"). 

        B.    A
material inducement for the parties to execute the Purchase Agreement is that the Company and the Holders shall enter into this Agreement. 

AGREEMENT  

        NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements of the parties contained herein, the parties agree as follows: 

        1.    Definitions.    As
used herein, the terms below shall have the following meanings. Any such term, unless the context otherwise
requires, may be used in the singular or plural, depending upon the reference. 

        "Affiliate"
shall have the meaning provided in the Exchange Act and the rules and regulations of the Commission promulgated thereunder. 

        "Agreement"
shall mean this Registration Rights Agreement. 

        "Blue"
shall mean Blue Energy & Technologies, L.L.C. 

        "Closing
Date" shall have the meaning provided in the Purchase Agreement. 

        "Commencement
Date" means the date the Company becomes eligible to file a registration statement on Form S-3 (or a similar
short-form registration statement) under the Securities Act with respect to any offering of securities by any of the Holders. 

        "Commission"
shall mean the United States Securities and Exchange Commission. 

        "Common
Stock" shall mean the Company's Common Stock. 

        "Company"
shall mean ENRG, Inc. 

        "Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended, or any successor law, and the rules and regulations issued pursuant to that Act or
any successor law. 

        "Holder"
shall mean any Person who is a party to this Agreement and identified on Schedule A and who is the record or
beneficial owner of (i) Registrable Securities or (ii) other securities of the Company (including, without limitation, the Warrants) convertible into, or exercisable for, Registrable
Securities, or any assignee thereof in accordance with Sections 10 and 20 hereof. The identity of the Holders shall he set forth on Schedule A which shall be
revised from time to time as appropriate. 

1

 

        "Person"
shall be construed broadly and shall include, without limitation, an individual, partnership, limited liability company, joint venture, corporation,
trust or unincorporated organization or any other similar entity. 

        "Principal
Stockholder" means a Person owning 5% or more of any class of securities of the Company, or owning 5% or more of the total outstanding securities
of the Company. 

        "Purchase
Agreement" shall have the meaning provided in Recital A. 

        "Qualified
Public Offering" shall mean the sale, in an Underwritten Offering, under the Securities Act of the Company's Common Stock having an aggregate
offering value of at least $30 million underwritten by a firm of national standing. 

        "Register,"
"registered" and "registration" shall refer to a registration effected by preparing and
filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document by the
Commission. 

        "Registration
Expenses" shall mean all expenses other than underwriting discounts and commissions and stock transfer taxes incurred in connection with the
registration and sale of Registrable Shares pursuant to Sections 2 or 3, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, fees and
expenses of compliance with state securities or blue sky laws and related fees and disbursements of underwriters fees and expenses of other Persons retained by the Company (if any), and reasonable
fees and disbursements of counsel for the Company. Selling Holders may engage their own counsel; provided, however, that in the event the selling Holders retain separate counsel, the fees and expenses
of such counsel shall be borne by the selling Holders. 

        "Registrable
Shares" shall mean (a) the Shares, (b) shares of Common Stock issuable upon the exercise of any warrants held by any Holder or any
other shares of Common Stock issued to any of the Holders by the Company, or (c) any Common Stock of the Company issued to a Holder as a dividend or other
distribution with respect to, or in exchange for or in replacement of, any of the securities described in (a) and (b) above; provided,  however,
that shares of Common Stock shall only be treated as Registrable Shares if and so long as (i) they have not been sold by any Holder to
or through a broker or dealer or underwriter in a public distribution or otherwise, all pursuant to an effective registration statement under the Securities Act, (ii) they have not been sold in
a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(l) thereof, including any sale pursuant to Rule 144 under the
Securities Act or any similar provision, so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale, or (iii) if the Holder
shall not have received from the Company an opinion of counsel reasonably acceptable to the Holder stating that they may immediately be resold by the Holder pursuant to Rule 144(k) under the
Securities Act without any volume limitation and without any additional unreasonable expense. 

        "Securities
Act" shall mean the Securities Act of 1933, as amended, or any successor law, and the rules and regulations issued pursuant to that Act or any
successor law. 

        "Shares"
shall mean the shares of Common Stock issued by the Company to the Sellers pursuant to the Purchase Agreement and the shares of Common Stock
issuable upon exercise of the warrants to purchase Common Stock issued by the Company to Sellers pursuant to the Purchase Agreement. 

        "Underwritten
Offering" shall mean a registration under the Securities Act in which securities of the Company arc sold to an underwriter on a firm commitment
basis for reoffering to the public. 

        "Violation"
shall have the meaning provided in Section 8(a). 

        2.    Company
Registration.    If (but without any obligation whatsoever to do so) the Company in its sole discretion proposes to
register any of its Common Stock under the Securities Act in connection 

2

 

with
the public offering of such securities solely for cash (other than (i) a registration relating to the sale of securities to participants in a Company stock or other compensation plan, or
(ii) a Commission Rule 145 transaction), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company, the Company shall cause to be registered under the Securities Act all of the Registrable Securities that each such Holder
has requested to be registered subject to the underwriter cutback and other provisions of Section 5 hereof and elsewhere in this Agreement. Notwithstanding the foregoing, the Company will not
be required to give notice to the Holders in connection with the first Qualified Public Offering if the underwriters managing the proposed offering have advised the Company in writing that in their
judgment market conditions will not allow the inclusion of any secondary shares in such Qualified Public Offering provided all Holders are similarly excluded. In the event the managing underwriters
and the Company subsequently determine to add any secondary shares in the Qualified Public Offering, such notice shall he provided and all rights granted by this Section 2 shall apply to all
Holders. 

        3.    Demand
Registrations.    

	(a)
	Request
for Registration.If, at any time after the Commencement Date, BC Gas, Inc. ("BC Gas"), Westport Innovations, Inc. ("Westport"),
Boone Pickens ("Pickens"), Pickens Grandchildrens Trust U/D/T 11/30/99 ("PCG," and together with Pickens, the "Pickens Group"), Perseus 2000, L.L.C. ("Perseus" and together with BC Gas, Westport and
the Pickens Group, the "Demand Registrants," or each a "Demand Registrant"), or any of their successors or assigns submits a written request (a "Demand Notice") to the Company that the Company
register the Registrable Shares under and in accordance with the Securities Act (a "Demand Registration"), then the Company shall promptly after receipt of such Demand Notice file its registration
statement with the Securities and Exchange Commission and use commercially reasonable efforts to cause the registration statement to become effective as soon thereafter as reasonably possible.
Notwithstanding the foregoing, if the Company shall furnish to such Demand Registrant a certificate signed by the president of the Company stating that in the good faith judgment of the board of
directors of the Company, it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed on or before the date filing would be required in connection
with any Demand Registration and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer such filing or delay its effectiveness for a
reasonable period not to exceed 60 days provided that such right shall not be exercised more than once with respect to a request for registration hereunder during any period of twelve
consecutive months. The Company will pay all Registration Expenses in connection with such withdrawn request for registration. Notwithstanding the foregoing, the Company shall not be required to
effect (i) any registration where the anticipated aggregate gross proceeds from the sale of the Registrable Shares to be included in such registration is less than $500,000, (ii) any
registration requested within less than twelve months after the filing of another registration pursuant to this Agreement in which all of the Registrable Shares requested to be included in such
registration by participating Demand Registrants were so included, (iii) any registration on a Form S-1 (or similar long-form registration statement) or
(iv) more than three Demand Registrations by any single Demand Registrant. The Company shall promptly (within no more than two Business Days) notify the Holders that the Commencement Date has
occurred.

	(b)
	If
at the time the Company registers the Registrable Securities under the Securities Act pursuant to this Section 3, the sale or other disposition of such Registrable
Securities by a Demand Registrant may be made pursuant to a registration statement on Form S-3 (or 

3

 

any
successor form that permits the incorporation by reference of future filings by the Company under the Exchange Act), such registration statement, unless otherwise directed by such Demand
Registrant, shall be filed as a "shelf" registration statement pursuant to Rule 415 under the Securities Act (or any successor rule). Any such shelf registration shall cover the disposition of
all Registrable Securities in one or more underwritten offerings, block transactions, broker transactions, at-market transactions and in such other manner or manners as may be specified by
such Demand Registrant. The Company shall use its best efforts to keep such "shelf" registration continuously effective as long as the delivery of a prospectus is required under the Securities Act in
connection with the disposition of the Registrable Securities registered thereby and in furtherance of such obligation, shall supplement or amend such registration statement if, as and when required
by the rules, regulations and instructions applicable to the form used by the Company for such registration or by the Securities Act or by any other rules and regulations thereunder applicable to
shelf registrations. On one occasion during each twelve months such shelf registration statement remains effective, upon their receipt of a certificate signed by the president of the Company in
accordance with the second sentence of Section 3(a) hereof, the Demand Registrants will refrain from making any sales of Registrable Securities under the shelf registration statement for a
period of up to 60 days; provided that this right to cause the Demand Registrants to refrain from making sales shall not be exercised by the Company during the one year period following any
exercise of the Company's right to defer the filing or delay its effectiveness of a registration statement under the second sentence of Section 3(a). 

        4.    Company
Obligations.    Whenever required under the Agreement to effect the registration of any Registrable Shares, the Company
shall: 

        (a)    Commission
Filing.    Prepare and file with the Commission a registration statement with respect to such Registrable Shares and
use all reasonable commercial efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Shares registered thereunder, keep
such registration statement effective for up to ninety (90) days or until all of the shares of Common Stock registered thereunder arc sold, whichever occurs sooner. 

        (b)    Amendments.    Prepare
and file with the Commission such amendments and supplements to the registration statement and the
prospectus used in connection with the registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares covered
by the registration statement, and furnish such copies thereof to the Holders. 

        (c)    Prospectus.    Furnish
to the Holders and any underwriters such number of copies of the registration statement and of each
amendment and supplement thereto (in each case including all exhibits), and such numbers of copies of the prospectus included in the registration statement (including each preliminary prospectus) and
such other documents as they may reasonably request in order to facilitate the disposition of Registrable Shares owned by them in accordance with the intended method of disposition thereof as set
forth in the registration statement, and cause all related filings to be made with the Commission as required by Rule 424. The Company hereby consents to the use (in accordance with law and the
"Plan of Distribution" provided by the selling Holder and any underwriters) of the prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if
any, in connection with the offering and the sale of the Registrable Shares covered by the prospectus or any amendment or supplement thereto. 

4

 

        (d)    Blue
Sky Qualification.    Register and qualify the Registrable Shares covered by the registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders (given the intended method of distribution), and do any and all other acts and things which may be
reasonably necessary or advisable to enable the Holders to consummate the disposition in such jurisdictions of the Registrable Shares covered by the registration statement;  provided, however, that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business as a foreign corporation or to take any action that would subject it to service of process in any such states or jurisdictions in suits other than those arising out
the offer and sale of the Registrable Securities covered by the registration statement. 

        (e)    Prospectus
Delivery.    Promptly notify each Holder of Registrable Shares covered by the registration statement at any time when
the Company becomes aware of the happening of any event as a result of which the registration statement or the prospectus included in the registration statement or any supplement to the prospectus (as
then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (in the case of the prospectus, in light of the
circumstances under which they were made) not misleading or, if for any other reason it shall he necessary during such time period to amend or supplement the registration statement or the prospectus
in order to comply with the Securities Act, whereupon, in either case, each Holder shall immediately cease to use the registration statement or prospectus for any purpose and, as promptly as
practicable thereafter, the Company shall prepare and file with the Commission, and furnish without charge to the appropriate Holders, a supplement to or amendment of the registration statement or
prospectus which will correct such statement or omission or effect such compliance and such copies thereof as the Holders may reasonably request. 

        (f)    Stop
Orders/Suspensions.    The Company shall promptly notify the underwriters, if any, and the Holders of the issuance of, or, to
the Company's knowledge, the threatened issuance of any stop order by the Commission suspending the effectiveness of the registration statement or of the receipt by the Company of any notification
with respect to the suspension or threatened suspension of the qualification of any of the Registrable Securities for sale under the securities or blue sky laws of any jurisdiction, and the Company
shall take all commercially reasonable action necessary (1) to prevent the
entry of any threatened stop order or any threatened suspension or (2) to remove any stop order or lift any suspensions once entered. 

        (g)    Furnish
Company Information.    Upon the request of any such Person, furnish to any selling Holder expressly named in any
registration statement or prospectus as a selling security holder and any underwriter(s) participating in any disposition pursuant to a registration statement, before filing with the Commission,
copies of any registration statement or any prospectus included therein or any amendments or supplements to any such registration statement or prospectus, which documents will be subject to the review
and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least three business days, and the Company will not file any such registration statement or
prospectus or any amendment or supplement to any such registration statement or prospectus (including all such documents incorporated by reference) to which the selling Holders of the Registrable
Shares covered by such registration statement or the underwriter(s) in connection with such sale, if any shall reasonably object within three business days after the receipt thereof provided, however,
that no such review period shall apply to periodic reports that the Company is required to file or believes advisable under the Exchange Act. Any such review and comments shall be provided through the
single counsel for all such Persons and the three business day period shall terminate upon completion of such review and comment with that counsel. 

        (h)    Registration
Expenses.    The Company shall pay all Registration Expenses (other than underwriting discounts and commissions) in
connection with the registration of the Registrable 

5

 

Shares
pursuant to this Agreement, provided, however, that the Company shall not be obligated to pay for
more than three Demand Registrations made by Perseus. 

        (i)    Company
Officials.    Promptly after the filing of any document that is incorporated by reference into a registration statement or
prospectus and upon the request of any selling Holder expressly named in such registration statement or underwriter participating in any disposition pursuant to such registration statement, make a
responsible official of the Company available, at reasonable times during normal business hours after appropriate advance notice, for discussion of such document arid other customary due diligence
matters, which discussions shall be coordinated by the single counsel for all selling Holders. The Company may require that a confidentiality agreement in customary form and otherwise reasonably
satisfactory to it be entered into prior to any such discussion and such official shall not be obligated to disclose any information that he is not legally permitted to disclose. 

        (j)    Inspections
of Documents.    Make available at reasonable limes for Inspection by the selling Holders, any managing underwriter
participating in any disposition pursuant to such registration statement and any attorney or accountant retained by such selling Holders or any of such underwriter(s), information reasonably requested
by any such Holder, underwriter, attorney or accountant solely in connection with the establishment of a "due diligence" defense for such persons in connection with such registration statement or any
posteffective amendment thereto subsequent to the filing thereof and prior to its effectiveness (collectively, "Company Information"); provided, however, that such Company
Information shall not be disclosed unless the requesting party signs a confidentiality agreement in customary form and otherwise reasonably satisfactory to the Company; and provided, further, that the
Company shall not be obligated to disclose any Company Information that it is not legally permitted to disclose by operation of government regulation or similar requirement. 

        (k)    Plan
of Distribution.    If requested by any selling Holders or the underwriter(s) in connection with such sale, if any, promptly
include in any registration statement or prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any,
may reasonably request to have included therein relating to the "Plan of Distribution" of the Registrable Securities, information with respect to the principal amount of Registrable Securities being
sold to such underwriter(s), the purchase price being paid therefor, any other terms of the offering of the Registrable Securities to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as reasonably practicable after the Company is notified of the matters to be included in such prospectus supplement or
post-effective amendment. 

        5.    Underwriting
Requirements.    In connection with any offering contemplated by this Agreement which constitutes an Underwritten
Offering, the Company shall not be required to include any of the Holders' Registrable Shares in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company
and the underwriters selected by the person(s) entitled to select the underwriters, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the
success of the offering by the Company, such determination to be confirmed in writing upon the request of any Holder. If the total amount of securities requested by all stockholders (including but not
limited to the Holders) to be included in an offering contemplated by Section 2 hereof exceeds the amount of securities to be sold other than by the Company that the underwriters determine in
their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of securities which the underwriters determine in
their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among all selling stockholders (including but not limited to the Holders)
according to the total amount of securities sought to he included by each such stockholder in the Underwritten Offering). 

6

 

        6.    Furnish
Holder Information.    It shall be a condition precedent to the obligations of the Company to take any action pursuant to
this Agreement with respect to the Registrable Shares of any selling Holder that each Holder (i) shall furnish to the Company such information regarding itself, the Registrable Shares held by
it, and the intended method of disposition of such securities as the Company may from time to time reasonably request to prepare the registration statement and maintain its effectiveness and
(ii) shall agree in writing to observe all obligations applicable to a Holder under this Agreement. 

        7.    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 Agreement. 

        8.    Indemnification.    In
the event any Registrable Shares are included in a registration statement under this Agreement: 

        (a)    Indemnification
by the Company.    To the full extent permitted by law, the Company will indemnify and hold harmless each Holder,
each of its directors and officers, 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, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act, or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or actions or proceedings 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 fad contained in the registration statement, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto, (ii) any omission or alleged omission to state therein a material fact required to he 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 state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act, or any state securities law, and the Company will pay to each such Holder, director, officer, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them, plus appropriate local counsel, in connection with investigating or defending army such loss, claim, damage, liability, action or
proceeding; provided, however; that the indemnity agreement contained in this Section 8(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage, liability, action or proceeding if such settlement is effected without the consent of the Company (which consent shall not he
unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or proceeding to which any Holder, director, officer, underwriter or controlling
person may become subject 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, underwriter or controlling person. This right to indemnification shall remain in full force and effect notwithstanding any investigation made by or on
behalf of such Holder or underwriter and shall survive the transfer of such securities by such Holder. 

        (b)    Indemnification
by Holder.    To the full extent permitted by law, each selling Holder severally, but not jointly, 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 Securities
Act or the Exchange Act, any underwriter (as defined in the Securities Act), any other Holder selling securities pursuant to the registration statement and each person, if any, who controls any such
underwriter or other Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, 

7

 

damages,
or liabilities (or actions or proceedings 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 the preparation of the registration statement;  provided, however, that the indemnity agreement contained in this Section 8(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, further, that in no event shall any indemnity under this Section 8(b) exceed the net
proceeds from the offering received by such Holder. 

        (c)    Procedures.    Promptly
after receipt by an indemnified party under this Section 8 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 8, 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 which may be represented without conflict by one counsel) shall have the
right to retain one separate counsel (plus appropriate local 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 commencement of any such action, if prejudicial in any material respect to its ability to
defend such action, shall to the extent prejudicial relieve such indemnifying party of any liability to the indemnified party under this Section 8, 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 8. 

        (d)    Contribution.    If
the indemnification provided for in this Section 8 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and the indemnified parties on the other in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or related to information supplied by, such
indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action;  provided, however, that in no event shall the liability of any selling Holder hereunder be greater in
amount than the difference between the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Shares giving rise to such contribution obligation and all amounts
previously contributed by such Holder with respect to such losses, claims, damages, liabilities and expenses. The amount paid or payable to a party as a result of the losses, claims damages,
liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. 

8

 

        The
parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation
or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. 

        (e)    Survival.    The
obligations of the Company and Holders under this Section 8 shall survive the completion of any offering
of Registrable Shares in a registration statement under this Agreement, and otherwise. 

        9.    Amendment
of Registration Rights.    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 the holders of sixty-six percent (66%) of the
Registrable Shares then outstanding; provided that no such consent shall he required with respect to any amendment that (a) only amends Schedule A hereto to add one or more additional
persons or entities as a "Holder" or (b) grants to any person or entity that beneficially owns at least 20% of the Company's outstanding Common Stock demand registration rights substantially
the same and no more beneficial to such person or entity as the demand registration rights granted to Perseus under Section 3 hereof. Any amendment or waiver effected in accordance with this
Section shall be binding upon each Holder of any Registrable Shares then outstanding, each future holder of all such Registrable Shares and the Company. 

        10.    Assignment
of Registration Rights.    Except as otherwise provided herein, the rights to cause the Company to register Registrable
Shares pursuant to this Agreement may only be assigned to a purchaser, assignee or transferee of the underlying Registrable Shares in a transaction permitted by, and otherwise in compliance with, the
Stockholders Agreement entered into in accordance with the Purchase Agreement (if then in effect) and, then, only if the transferee has executed a joinder agreement substantially in the form of
Exhibit I hereto and Schedule I thereto. The Company may, at is election, require that this covenant be enforced by requiring all Holders to legend their share certificates in a manner
similar to that required by Section 4 of the Stockholders Agreement referred to above. 

        11.    "Market
Stand-Off" Agreement.    Each Holder hereby agrees that for a period of (i) 180 days following
the effective date of the first Qualified Public Offering filed on Form S-1 or similar form under the Securities Act and (ii) ninety (90) days for any registration
effected subsequent thereto pursuant to Section 2 (provided the Holders are given written notice of the offering and the right to participate therein as provided for in this Agreement), each
Holder shall not, unless otherwise agreed to by the managing underwriters, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who agree to he similarly bound) any securities of the Company held by it at any time during such period except Common
Stock included in such registration; provided, however, that all executive officers, directors of the Company, Principal Stockholders and all other persons with registration rights (whether or not
pursuant to this Agreement) enter into similar agreements. In addition, each Holder agrees to acknowledge the undertaking provided for in this Section 12 by entering into customary written
"lock-up" agreements with the managers of the relevant underwriting. The requirement of clause (ii) shall not apply to a Holder that, at the time of receipt of the referenced notice
from the Company, (a) beneficially owned less than 5% of the outstanding shares of each class of the capital stock of the Company, (b) is not an Affiliate or an employee of the Company
and (c) waives any further benefits of this Agreement for it or any subsequent assignee or transferee of its Registrable Shares. In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of each Holder (and the 

9

 

shares
or securities of every other person subject to the foregoing restriction) until the end of such period. 

        12.    No
Other Registration Rights.    The Company hereby represents and warrants to the Holders that, except as provided herein, it has
not granted to any person or entity any rights to cause the registration of securities issued by the Company. The Company shall not grant to any person or entity any right to cause the registration of
securities issued by the Company except through an amendment to this Agreement duly approved in accordance with Section 9 hereof. 

        13.    Termination.    The
rights provided in this Agreement shall terminate on the tenth anniversary of the effective date of this
Agreement. 

        14.    Governing
Law.    This agreement shall be construed, interpreted and the rights of the parties determined in accordance with the
laws of the state of Delaware (without regard to the conflict of laws provisions thereof). 

        15.    Counterparts.    This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. 

        16.    Titles
and Subtitles.    The titles and subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. 

        17.    Negotiation
of Agreement.    Each of the parties acknowledges that it has been represented by independent counsel of its choice
throughout all negotiations that have preceded the execution of this Agreement and that it has executed the same with consent and upon the advice of said independent counsel. Each party and its
counsel cooperated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto shall be deemed the work product of the parties and
may not be construed against any party by reason of its preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against
the party that drafted it is of no application and is hereby expressly waived. The provisions of this Agreement shall be interpreted in a reasonable manner to effect the intentions of the parties and
this Agreement. 

        18.    Notices.    Any
notice, request, instruction or other document to be given hereunder by any party hereto to another party hereto
shall be in writing, shall be deemed to have been duly given or delivered when delivered personally or telecopied (receipt confirmed, with a copy sent by reputable overnight courier), or one business
day after delivery to a reputable overnight courier, postage prepaid, to the address of the party set forth below such person's signature on this Agreement or to such address as the party to whom
notice is to be given may provide in a written notice to each o the other parties to this Agreement, a copy of which written notice shall be on file with the Secretary of the Company. 

        19.    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 he interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms to the fullest
extent permitted by law. 

        20.    Further
Assurances.    Each of the parties shall, without further consideration, use reasonable efforts to execute and deliver
such additional documents and take such other action as the other parties, or any of them may reasonably request to carry out the intent of this Agreement and the transactions contemplated hereby. 

        21.    Successors
and Assigns.    This Agreement shall be binding upon, and all rights hereto shall inure to the benefit of, the parties
hereto, and their respective successors and permitted assigns. 

10

 

        22.    Entire
Agreement.    This Agreement embodies the entire agreement and understanding of the parties hereto in respect of the
actions and transactions contemplated by this Agreement. The parties agree that the terms of this Agreement supercede any and all prior agreements between the parties relating to the transactions
contemplated hereby. There are no restrictions, promises, inducements, representations, warranties, covenants or undertakings with regard to the registration of the Company's capital stock pursuant to
the Securities Act, other than those expressly set forth or referred to in this Agreement. 

        23.    Recapitalizations,
etc.    The provisions of this Agreement (including any calculation of share ownership) shall apply, to the
full extent set forth herein with respect to the Registrable Shares, to any and all shares of capital stock of the Company or any capital stock, partnership units or, any other security evidencing
ownership interests in any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for, or in substitution of
the Common Stock that is issuable upon exercise of the Note by reason of any stock dividend, split, combination, recapitalization, liquidation, reclassification, merger, consolidation or otherwise. 

(Signature
Pages Follow) 

11

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. 

	 	 	ENRG, INC.
	

 	
 	

By:	
 	

/s/  ANDREW J. LITTLEFAIR      

	

 	
 	
Address:
	 	 	 	 	3020 Old Ranch Parkway

Suite 200

Seal Beach, CA 90740

Attention: Andrew J. Littlefair
 Telecopier: (562) 493-2804
	

 	
 	

PERSEUS 2000, L.L.C.
	

 	
 	

By:	
 	

/s/  ILLEGIBLE      

	 	 	Its:	 	Senior Managing Director
	

 	
 	
Address:
	 	 	 	 	2099 Pennsylvania Avenue, N.W., 9th Floor

Washington, D.C. 20006

Attention: Thomas G. Labreque, Jr.

Telephone: (202) 432-0101
 Telecopier: (202) 429-0588
	

 	
 	

GFI CONTROL SYSTEMS, INC.
	

 	
 	

By:	
 	

/s/  ILLEGIBLE      

	 	 	Its:	 	President/CEO
	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:

12

 

	 	 	GRI INTERNATIONAL, INC.
	

 	
 	

By:	
 	

/s/  ILLEGIBLE      

	 	 	Its:	 	Corporate Secretary
	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:
	

 	
 	

PAUL NELSON HOLDING LLC
	

 	
 	

By:	
 	

/s/  PAUL R. NELSON      

	 	 	Its:	 	Member
	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:
	

 	
 	

BC GAS INC.
	

 	
 	

By:	
 	

/s/  ILLEGIBLE      

	 	 	Its:	 	SVP Multi Utility Services
	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:

13

 

	 	 	WESTPORT INNOVATIONS, INC.
	

 	
 	

By:	
 	

/s/  D. R. DEMERS      
 Its: CEO
	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:
	

 	
 	

BOONE PICKENS
	

 	
 	

By:	
 	

/s/  BOONE PICKENS      

	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:
	

 	
 	

PICKENS GRANDCHILDREN TRUST U/D/T 11/30/99
	

 	
 	

By:	
 	

/s/  BOONE PICKENS      

	

 	
 	

Its:	
 	

 
	 	 	 	 	

	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:

14

 

	 	 	ALAN P. BASHAM
	

 	
 	

By:	
 	

/s/  ALAN P. BASHAM      

	

 	
 	

Its:	
 	

 
	 	 	 	 	

	

 	
 	
Address:
	 	 	 	 	

	

 	
 	

 	
 	

Attention:
 Telecopier:

15

 
 

SCHEDULE A    
    HOLDERS    

Exhibit 1 

Form
of 

REGISTRATION
RIGHTS AGREEMENT JOINDER 

        As
of the date set forth below, the undersigned is acquiring from                          [shares of the Common Stock]
(Options to purchase
shares of the Common Stock] (the "Shares"), of ENRG, Inc. (the "Company"). By execution of this Registration Rights Agreement Joinder, the undersigned, as successor to
                         in respect of the Shares, shall be deemed to be a party to that certain Registration Rights
Agreement, dated as of
                         200    , by and between the Company and the "Holders" identified on the
signature pages thereof (the "Registration
Rights Agreement"). Pursuant to Section 10 of the Registration Rights Agreement, the undersigned, as successor to
                         in respect of the Shares, shall
have all rights, and shall observe all the obligations, applicable to a "Holder" under such Registration Rights Agreement. In order to give effect to this transaction, please add the undersigned to
the list of "Holders" as set forth in Schedule A to the Registration Rights Agreement. 

	Name

Address for

Notices	 	with copies to
	

 	
 	

	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:
	

 	
 	

Date:	
 	

 
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Name:

Title:
	

 	
 	

Date:	
 	

 

QuickLinks

Exhibit 4.2

RECITALS

SCHEDULE A HOLDERS

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