REGISTRATION RIGHTS AGREEMENT
This
Registration Rights Agreement (the “Agreement”) is
made and entered into as of the 28th day of
February,
2007 (the “Effective Date”), by and among National
Coal Corp., a Florida corporation (the “Company”), and
the parties set forth on the signature page and Exhibit A hereto (each, a
“Purchaser” and collectively, the
“Purchasers”).
RECITALS
A. The
Purchasers have purchased shares of the Company’s Common Stock entitling the holders thereof
to
purchase shares of Common Stock, pursuant to Subscription Agreements
(each, a “Subscription Agreement” and collectively,
the “Subscription Agreements”) by and between the
Company and each Purchaser.
B. The
Company and the Purchasers desire to set forth the registration rights to be
granted by the Company to the Purchasers.
Now,
Therefore, in consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth herein and in the Subscription Agreements,
the parties mutually agree as follows:
AGREEMENT
1. Certain
Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
“Approved
Market” means the NASDAQ Global Market, the NASDAQ Capital Market,
the New York Stock Exchange, Inc., the American Stock Exchange, Inc. or the
NASD’s OTC Bulletin Board.
“Blackout
Period” means, with respect to a registration, a
period:
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(a) in
each case commencing on the day immediately after the Company notifies the
Holders that they are required, pursuant to Section 4(f), to suspend
offers and sales of Registrable Securities during which the Company, in the
good
faith judgment of its Board of Directors, determines (because of the existence
of, or in anticipation of, any acquisition, financing activity, or other
transaction involving the Company, or the unavailability for reasons beyond
the
Company’s control of any required financial statements, disclosure of
information which is in its best interest not to publicly disclose, or any
other
event or condition of similar significance to the Company) that the registration
and distribution of the Registrable Securities to be covered by such
registration statement, if any, would be seriously detrimental to the Company
and its shareholders and ending on the earlier of (1) the date upon which the
material non-public information commencing the Blackout Period is disclosed
to
the public or ceases to be material and (2) such time as the Company notifies
the selling Holders that the Company will no longer delay such filing of the
Registration Statement, recommence taking steps to make such Registration
Statement effective, or allow sales pursuant to such Registration Statement
to
resume; provided, however, that (i) the Company shall limit its use of
Blackout Periods described in the clause (a), in the aggregate, to 30
Trading Days in any 12-month period and (ii) no Blackout Period pursuant to
this
clause (a) may commence sooner than 60 days after the end of a prior such
Blackout Period; or
(b) commencing
on the day immediately after the Company notifies the Holders that they are
required pursuant to Section 5 to suspend offers and sales of Registrable
Securities because, with respect to a registration statement on a form other
than Form S-3, the Company reasonably determines that, based on the advice
of
counsel, a post-effective amendment to the registration statement must be filed
with the Commission in order to update the audited financial statements in
the
registration statement, or the Company elects, in its discretion, to file a
post-effective amendment to such registration statement for the purpose of
converting it to a Form S-3 after such form becomes available for use by the
Company, and, in either case, such post-effective amendment is reviewed by
the
Commission, and ending at such time as the post-effective amendment is declared
effective by the Commission; provided, however, that (i) the Company
shall use its reasonable best efforts to promptly cause such post-effective
amendment to be declared effective by the Commission and (ii) the Company may
suspend effectiveness of a registration statement for a period not to exceed
60
consecutive days, provided that the Company may not suspend its obligation
under
this clause (b) for more than 90 days in the aggregate during any
12-month period.
“Business
Day” means any day of the year, other than a Saturday, Sunday, or
other day on which the Commission is required or authorized to
close.
“Closing
Date” means March 1, 2007, or such other time as is mutually
agreed between the Company and the Purchasers for the closing of the sale
referred to in Recital A above.
“Commission”
means the Securities and Exchange Commission or any other federal agency at
the
time administering the Securities Act.
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“Common
Stock” means the common stock, par value $0.0001 per share, of the
Company and any and all shares of capital stock or other equity securities
of:
(i) the Company which are added to or exchanged or substituted for the Common
Stock by reason of the declaration of any stock dividend or stock split, the
issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the
Company; and (ii) any other corporation, now or hereafter organized under the
laws of any state or other governmental authority, with which the Company is
merged, which results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of the shares
or assets of the Company, if immediately after such merger, consolidation,
reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting
power of such other corporation.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
“Family
Member” means (a) with respect to any individual, such
individual’s spouse, any descendants (whether natural or adopted), any trust all
of the beneficial interests of which are owned by any of such individuals or
by
any of such individuals together with any organization described in Section
501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited
liability company all of the equity interests of which are owned by those above
described individuals, trusts or organizations and (b) with respect to any
trust, the owners of the beneficial interests of such trust.
“Holder”
means each Purchaser or any of such Purchaser’s respective successors and
Permitted Assigns who acquire rights in accordance with this Agreement with
respect to the Registrable Securities directly or indirectly from a Purchaser,
including from any Permitted Assignee.
“Inspector”
means any attorney, accountant, or other agent retained by a Purchaser for
the
purposes provided in Section 4(j).
“Majority
Holders” means at any time Holders of a majority of the
Registrable Securities outstanding at such time.
“Offering
Price” means the Offering Price set forth in the Subscription
Agreements.
“Permitted
Assignee” means (a) with respect to a partnership, its
partners or former partners in accordance with their partnership interests,
(b) with respect to a corporation, its shareholders in accordance with
their interest in the corporation, (c) with respect to a limited liability
company, its members or former members in accordance with their interest in
the
limited liability company, (d) with respect to an individual party, any
Family Member of such party, (e) an entity that is controlled by, controls,
or
is under common control with a transferor, or (f) a party to this
Agreement.
The
terms
“register,” “registered,”
and “registration”
refers
to a registration effected
by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such
registration statement.
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“Registrable
Securities” means shares of Common Stock issued to each Purchaser
pursuant to the Subscription Agreements, but excluding (i) any
Registrable Securities that have been publicly sold or may be sold immediately
without registration under the Securities Act either pursuant to Rule 144 of
the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person
in
a transaction pursuant to a registration statement filed under the Securities
Act; or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act.
“Registration
Default Date” means July 30, 2007.
“Registration
Default Period” means the period during which any Registration
Event occurs and is continuing.
“Registration
Event” means the occurrence of any of the following
events:
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(a)
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the
Company fails to file with the SEC the Registration Statement on
or before
the Registration Filing Date pursuant to Section
3(a);
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(b)
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the
Registration Statement covering Registrable Securities is not declared
effective by the Commission on or before the Registration Default
Date;
or
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(c)
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after
the SEC Effective Date, sales cannot be made pursuant to the Registration
Statement for any reason (including without limitation by reason
of a stop
order, or the Company’s failure to update the Registration Statement) but
except as (i) excused pursuant to Section 3(a), or (ii) as
otherwise permitted by this Agreement, including pursuant to a Blackout
Period and as provided in Section
5.
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“Registration
Statement” means the registration statement required to be filed
by the Company pursuant to Section 3(a).
“Securities
Act” means the Securities Act of 1933, as amended, or any similar
federal statute promulgated in replacement thereof, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
at
the time.
“SEC
Effective Date” means the date the Registration Statement is
declared effective by the Commission.
“Trading
Day” means a day on whichever (a) the national securities
exchange, (b) the NASDAQ Global Market, or (c) such other securities market,
in
any such case which at the time constitutes the principal securities market
for
the Common Stock, is open for general trading of securities.
2. Term. This
Agreement shall continue in full force and effect for a period of two (2) years
from the Effective Date, unless terminated sooner hereunder.
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3. Registration.
(a) Registration
on Form S-3. As promptly as reasonably practicable after the date
hereof, but in any event not later than April 30, 2007 (the
“Registration Filing Date”), the Company shall file
with the Commission a shelf registration statement on Form S-3 relating to
the
resale by the Holders of all of the Registrable Securities; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification, or compliance pursuant to this Section 3(a),
or keep such registration effective pursuant to Section 4: (i) in any
particular jurisdiction in which the Company would be required to qualify to
do
business as a foreign corporation or as a dealer in securities under the
securities or blue sky laws of such jurisdiction or to execute a general consent
to service of process in effecting such registration, qualification or
compliance, in each case where it has not already done so; or (ii) during any
Blackout Period, in which case the Registration Filing Date shall be extended
to
the date immediately following the last day of such Blackout
Period.
(b) Piggyback
Registration. If the Company shall determine to register for sale
for cash any of its Common Stock, for its own account or for the account of
others (other than the Holders), other than (i) a registration relating solely
to employee benefit plans or securities issued or issuable to employees,
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8) or (ii) a registration relating solely
to
a Commission Rule 145 transaction, a registration on Form S-4 in connection
with
a merger, acquisition, divestiture, reorganization, or similar event, the
Company shall promptly give to the Holders written notice thereof (and in no
event shall such notice be given less than 20 calendar days prior to the filing
of such registration statement), and shall, subject to Section 3(c),
include in such registration (and any related qualification under blue sky
laws
or other compliance) (a “Piggyback Registration”), all
of the Registrable Securities specified in a written request or requests, made
within 10 calendar days after receipt of such written notice from the Company,
by any Holder or Holders. However, the Company may, without the
consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company or such other stockholders have elected to
abandon the proposal to register the securities proposed to be registered
thereby.
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(c) Underwriting. If
a Piggyback Registration is for a registered public offering involving an
underwriting, the Company shall so advise the Holders in writing or as a part
of
the written notice given pursuant to Section 3(b). In such
event the right of any Holder to registration pursuant to Section 3(b)
shall be conditioned upon such Holder’s participation in such underwriting and
the inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company and any
other stockholders of the Company distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company or
selling stockholders, as applicable. Notwithstanding any other
provision of this Section 3(c), if the underwriter or the Company
determines that marketing factors require a limitation of the number of shares
to be underwritten, the underwriter may exclude some or all Registrable
Securities from such registration and underwriting. The Company shall
so advise all Holders (except those Holders who failed to timely elect to
distribute their Registrable Securities through such underwriting or have
indicated to the Company their decision not to do so), and the number of shares
of Registrable Securities that may be included in the registration and
underwriting, if any, shall be allocated among such Holders as
follows:
(i) In
the event of a Piggyback Registration that is initiated by the Company, the
number of shares that may be included in the registration and underwriting
shall
be allocated first to the Company and then, subject to obligations and
commitments existing as of the date hereof, to all selling stockholders,
including the Holders, who have requested to sell in the registration on a
pro
rata basis according to the number of shares requested to be included;
and
(ii) In
the event of a Piggyback Registration that is initiated by the exercise of
demand registration rights by a stockholder or stockholders of the Company
(other than the Holders), then the number of shares that may be included in
the
registration and underwriting shall be allocated first to such selling
stockholders who exercised such demand and then, subject to obligations and
commitments existing as of the date hereof, to all other selling stockholders,
including the Holders, who have requested to sell in the registration, on a
pro
rata basis according to the number of shares requested to be
included.
No
Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such
registration. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice
to
the Company and the underwriter. The Registrable Securities and/or
other securities so withdrawn from such underwriting shall also be withdrawn
from such registration; provided, however, that, if by the withdrawal
of such Registrable Securities a greater number of Registrable Securities held
by other Holders may be included in such registration (up to the maximum of
any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities pursuant to the terms and
limitations set forth herein in the same proportion used above in determining
the underwriter limitation.
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(d) Other
Registrations. Prior to the SEC Effective Date the Company will
not, without the prior written consent of the Majority Holders, file or request
the acceleration of any other registration statement filed with the Commission,
and during any time subsequent to the SEC Effective Date when the Registration
Statement for any reason is not available for use by any Holder for the resale
of any Registrable Securities, the Company shall not, without the prior written
consent of the Majority Holders, file any other registration statement or any
amendment thereto with the Commission under the Securities Act or request the
acceleration of the effectiveness of any other registration statement previously
filed with the Commission, other than (A) any registration statement on Form
S-8
or Form S-4 and (B) any registration statement or amendment which the Company
is
required to file or as to which the Company is required to request acceleration
pursuant to any obligation in effect on the date of execution and delivery
of
this Agreement. Notwithstanding the foregoing, the Holders
acknowledge and agree that the Company may include shares to be registered
for
resale by other stockholders of the Company in any registration statement filed
pursuant to this Agreement.
(e) Default. If
a Registration Event occurs, then the Company will make payments to each
Purchaser, as partial liquidated damages for the minimum amount of damages
to
the Purchaser by reason thereof, and not as a penalty, at a rate equal to one
percent (1%) of the Offering Price per share of Common Stock held by such
Purchaser per month, for each calendar month of the Registration Default Period
(pro rated for any period less than 30 days); provided,
however, if a Registration Event occurs (or is continuing) on
a date
more than one year after the Purchaser acquired the Registrable Securities
(and
thus the one year holding period under Rule 144(d) has elapsed), liquidated
damages shall be paid only with respect to that portion of a Purchaser’s
Registrable Securities that cannot then be immediately resold in reliance on
Rule 144; and provided, further, that in no event shall the
aggregate liquidated damages payable by the Company to any Purchaser exceed
20%
of the aggregate Offering Price paid by such Purchaser for all shares of Common
Stock acquired by such Purchaser pursuant to the Subscription
Agreement. Each such payment shall be due and payable within five
days after the end of each calendar month of the Registration Default Period
until the termination of the Registration Default Period and within five days
after such termination. Such payments shall be in partial
compensation to the Purchaser, and shall not constitute the Purchaser’s
exclusive remedy for such events. The Registration Default Period
shall terminate upon (i) the filing of the Registration Statement in the case
of
clause (a) of the definition of “Registration Event,” (ii) the SEC
Effective Date in the case of clause (b) of the definition of
“Registration Event,” and (iii) the ability of the Purchaser to effect sales
pursuant to the Registration Statement in the case of clause (c) of the
definition of “Registration Event,” and (iv) in the case of the events described
in clauses (b) and (c) of the definition of “Registration Event,”
the earlier termination of the Registration Default Period. The
amounts payable as partial liquidated damages pursuant to this paragraph shall
be payable in lawful money of the United States. Amounts payable as
partial liquidated damages to each Purchaser hereunder with respect to each
share of Registrable Securities shall cease when the Purchaser no longer holds
such share of Registrable Securities or such share of Registrable Securities
can
be immediately sold by the Purchaser in reliance on Rule 144.
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4. Registration
Procedures. In the case of each registration, qualification, or
compliance effected by the Company pursuant to Section 3 hereof, the
Company will keep each Holder including securities therein reasonably advised
in
writing (which may include e-mail) as to the initiation of each registration,
qualification, and compliance and as to the completion thereof. At
its expense with respect to any registration statement filed pursuant to
Section 3, the Company will:
(a) prepare
and file with the Commission with respect to such Registrable Securities, a
registration statement on Form S-3 or any other form for which the Company
then
qualifies or which counsel for the Company shall deem appropriate, and which
form shall be available for the sale of the Registrable Securities in accordance
with the intended method(s) of distribution thereof, and use its reasonable
best
efforts to cause such registration statement to become and remain effective
at
least for a period ending with the first to occur of (i) the sale of all
Registrable Securities covered by the registration statement and (ii) the
availability under Rule 144 for the Holder to immediately and freely resell
without restriction all Registrable Securities covered by the registration
statement (in either case,
the “Effectiveness
Period”).
(b) if
a registration statement is subject to review by the Commission, promptly
respond to all comments and use reasonable best efforts to diligently pursue
resolution of any comments to the satisfaction of the Commission;
(c) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be
necessary to keep such registration statement effective during the Effectiveness
Period (but in any event at least until expiration of the 90-day period referred
to in Section 4(3) of the Securities Act and Rule 174, or any successor thereto,
thereunder, if applicable), and comply with the provisions of the Securities
Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended method(s) of
disposition by the sellers thereof set forth in such registration
statement;
(d) furnish,
without charge, to each Holder of Registrable Securities covered by such
registration statement (i) a reasonable number of copies of such registration
statement (including any exhibits thereto other than exhibits incorporated
by
reference), each amendment and supplement thereto as such Holder may request,
(ii) such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 under the Securities Act) as such Holders may
request, in conformity with the requirements of the Securities Act, and (iii)
such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder,
but only during the Effectiveness Period;
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(e) use
its reasonable best efforts to register or qualify such Registrable Securities
under such other applicable securities or blue sky laws of such jurisdictions
as
any Holder of Registrable Securities covered by such registration statement
reasonably requests as may be necessary for the marketability of the Registrable
Securities (such request to be made by the time the applicable registration
statement is deemed effective by the Commission) and do any and all other acts
and things which may be reasonably necessary or advisable to enable such Holder
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such Holder; provided that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where
it
would not otherwise be required to qualify but for this paragraph (e), (ii)
subject itself to taxation in any such jurisdiction, or (iii) consent to general
service of process in any such jurisdiction;
(f) as
promptly as practicable after becoming aware of such event, notify each Holder
of such Registrable Securities at any time when a prospectus relating thereto
is
required to be delivered under the Securities Act of the happening of any event
which comes to the Company’s attention if as a result of such event the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Company shall promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate reports under
the
Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement
of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, unless suspension
of
the use of such prospectus otherwise is authorized herein or in the event of
a
Blackout Period, in which case no supplement or amendment need be furnished
(or
Exchange Act filing made) until the termination of such suspension or Blackout
Period;
(g) comply,
and continue to comply during the period that such registration statement is
effective under the Securities Act, in all material respects with the Securities
Act and the Exchange Act and with all applicable rules and regulations of the
Commission with respect to the disposition of all securities covered by such
registration statement, and make available to its security holders, as soon
as
reasonably practicable, an earnings statement covering the period of at least
twelve (12) months, but not more than eighteen (18) months, beginning with
the
first full calendar month after the SEC Effective Date, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities
Act.
(h) as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement at the earliest
possible time;
(i) permit
the Holders of Registrable Securities being included in the Registration
Statement and their legal counsel, at such Holders’ sole cost and expense
(except as otherwise specifically provided in Section 6) to review and
have a reasonable opportunity to comment on the Registration Statement and
all
amendments and supplements thereto at least two Business Days prior to their
filing with the Commission and refrain from filing any such document to which
the Majority Holders reasonably object;
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(j) make
available for inspection by any Holder and any Inspector retained by such
Holder, at such Holder’s sole expense, all Records as shall be reasonably
necessary to enable such Holder to exercise its due diligence responsibility,
and cause the Company’s officers, directors, and employees to supply all
information which such Holder or any Inspector may reasonably request for
purposes of such due diligence; provided, however, that such Holder
shall hold in confidence and shall not make any disclosure of any record or
other information which the Company determines in good faith to be confidential,
and of which determination such Holder is so notified at the time such Holder
receives such information, unless (i) the disclosure of such record is necessary
to avoid or correct a misstatement or omission in the Registration Statement
and
a reasonable time prior to such disclosure the Holder shall have informed the
Company of the need to so correct such misstatement or omission and the Company
shall have failed to correct such misstatement of omission, (ii) the release
of
such record is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction or (iii) the information in such
record has been made generally available to the public other than by disclosure
in violation of this or any other agreement. The Company shall not be
required to disclose any confidential information in such records to any
Inspector until and unless such Inspector shall have entered into a
confidentiality agreement with the Company with respect thereto, substantially
in the form of this Section 4(j), which agreement shall permit such
Inspector to disclose records to the Holder who has retained such
Inspector. Each Holder agrees that it shall, upon learning that
disclosure of such Records is sought in or by a court or governmental body
of
competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at the Company’s expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the records
deemed confidential. The Company shall hold in confidence and shall
not make any disclosure of information concerning a Holder provided to the
Company pursuant to this Agreement unless (i) disclosure of such information
is
necessary to comply with federal or state securities laws, (ii) disclosure
of
such information to the Staff of the Division of Corporation Finance is
necessary to respond to comments raised by the Staff in its review of the
Registration Statement, (iii) disclosure of such information is necessary to
avoid or correct a misstatement or omission in the Registration Statement,
(iv)
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (v) such
information has been made generally available to the public other than by
disclosure in violation of this or any other agreement. The Company
agrees that it shall, upon learning that disclosure of such information
concerning a Holder is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to such Holder and
allow
such Holder, at such Holder’s expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, such
information;
(k) use
its reasonable best efforts to cause all the Registrable Securities covered
by
the Registration Statement to be quoted on the NASDAQ Global Market or such
other principal securities market on which securities of the same class or
series issued by the Company are then listed or traded;
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(l) provide
a transfer agent and registrar, which may be a single entity, for the
Registrable Securities at all times;
(m) cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to issue and deliver certificates (not bearing any
restrictive legends) representing Registrable Securities to be offered pursuant
to the Registration Statement after delivery of certificates to the Company
and
enable such certificates to be in such denominations or amounts as the Holders
may reasonably request and registered in such names as the Holders may
request;
(n) during
the Effectiveness Period, refrain from bidding for or purchasing any Common
Stock or any right to purchase Common Stock or attempting to induce any Person
to purchase any such security or right if such bid, purchase or attempt would
in
any way limit the right of the Holders to sell Registrable Securities by reason
of the limitations set forth in Regulation M under the 1934 Act;
and
(o) take
all other reasonable actions necessary to expedite and facilitate disposition
by
the Holders of the Registrable Securities pursuant to the Registration
Statement.
5. Suspension
of Offers and Sales. Each Holder of Registrable Securities agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 4(f) hereof or of the commencement of a
Blackout Period, such Holder shall discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 4(f) hereof or notice of the
end of the Blackout Period, and, if so directed by the Company, such Holder
shall deliver to the Company (at the Company’s expense) all copies (including,
without limitation, any and all drafts), other than permanent file copies,
then
in such Holder’s possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in Section
4(a)(iii) hereof shall be extended by the greater of (i) ten business days
or (ii) the number of days during the period from and including the date of
the
giving of such notice pursuant to Section 4(f) hereof to and including
the date when each Holder of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by Section 4(f) hereof.
6. Registration
Expenses. The Company shall pay all expenses in connection with
any registration, including, without limitation, all registration, filing,
stock
exchange fees, printing expenses, all fees and expenses of complying with
securities or blue sky laws, and the fees and disbursements of counsel for
the
Company and of its independent accountants; provided that, in any underwritten
registration, each party shall pay for its own underwriting discounts and
commissions and transfer taxes. Except as provided above in this Section
6 and Section 9, the Company shall not be responsible for the
expenses of any attorney or other advisor employed by a Holder of Registrable
Securities.
-11-
7. Assignment
of Rights. No Holder may assign its rights under this Agreement to any party
without the prior written consent of the Company; provided, however,
that a Holder may assign its rights under this Agreement without such
restrictions to a Permitted Assignee as long as (a) such transfer or assignment
is effected in accordance with applicable securities laws; (b) such transferee
or assignee agrees in writing to become subject to the terms of this Agreement;
and (c) the Company is given written notice by such Holder of such transfer
or
assignment, stating the name and address of the transferee or assignee and
identifying the Registrable Securities with respect to which such rights are
being transferred or assigned.
8. Information
by Holder. The Holder or Holders of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder or Holders and the distribution proposed by such Holder
or
Holders as the Company may request in writing.
-12-
9. Indemnification.
(a) In
the event of the offer and sale of Registrable Securities held by Holders under
the Securities Act, the Company shall, and hereby does, indemnify and hold
harmless, to the fullest extent permitted by law, each Holder, its directors,
officers, partners, each other person who participates as an underwriter in
the
offering or sale of such securities, and each other person, if any, who controls
or is under common control with such Holder or any such underwriter within
the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, and expenses to which the Holder or any such
director, officer, partner or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such shares were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter
and
controlling person for any legal or any other expenses reasonably incurred
by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement in
or
omission or alleged omission from such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of such
Holder specifically stating that it is for use in the preparation thereof or
(ii) if the person asserting any such loss, claim, damage, liability (or action
or proceeding in respect thereof) who purchased the Registrable Securities
that
are the subject thereof did not receive a copy of an amended preliminary
prospectus or the final prospectus (or the final prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Registrable Securities to such person because of the failure of such Holder
or
underwriter to so provide such amended preliminary or final prospectus and
the
untrue statement or alleged untrue statement or omission or alleged omission
of
a material fact made in such preliminary prospectus was corrected in the amended
preliminary or final prospectus (or the final prospectus as amended or
supplemented). Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Holders, or any such director,
officer, partner, underwriter or controlling person and shall survive the
transfer of such shares by the Holder.
-13-
(b) As
a condition to including any Registrable Securities to be offered by a Holder
in
any registration statement filed pursuant to this Agreement, each such Holder
agrees to be bound by the terms of this Section 9 and to indemnify and
hold harmless, to the fullest extent permitted by law, the Company, its
directors and officers, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company or any
such director or officer or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, if such statement
or
alleged statement or omission or alleged omission was made in reliance upon
and
in conformity with written information about such Holder as a Holder of the
Company furnished to the Company, and such Holder shall reimburse the Company,
and each such director, officer, and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating,
defending, or settling and such loss, claim, damage, liability, action, or
proceeding; provided, however, that such indemnity agreement found in
this Section 9(b) shall in no event exceed the gross proceeds from the
offering received by such Holder. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer by any Holder of such shares.
-14-
(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in Section 9(a) or
(b) hereof (including any governmental action), such indemnified
party
shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the indemnifying party of the commencement of
such
action; provided that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under Section 9(a) or (b) hereof, except to the extent that the
indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified
party, unless in the reasonable judgment of counsel to such indemnified party
a
conflict of interest between such indemnified and indemnifying parties may
exist
or the indemnified party may have defenses not available to the indemnifying
party in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof, unless in such indemnified party’s
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of
the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of
investigation. Neither an indemnified nor an indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement, which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party shall have the right to retain,
at its own expense, counsel with respect to the defense of a claim.
(d) In
the event that an indemnifying party does or is not permitted to assume the
defense of an action pursuant to Section 9(c) or in the case of the
expense reimbursement obligation set forth in Section 9(a) and
(b), the indemnification required by Section 9(a) and (b)
hereof shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills received or expenses,
losses, damages, or liabilities are incurred.
-15-
(e) If
the indemnification provided for in this Section 9 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to
any loss, liability, claim, damage or expense referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall (i) contribute to the amount paid or payable by such indemnified party
as
a result of such loss, liability, claim, damage or expense as is appropriate
to
reflect the proportionate relative fault of the indemnifying party on the one
hand and the indemnified party on the other (determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact
or omission relates to information supplied by the indemnifying party or the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission), or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law or provides a lesser sum to the indemnified party
than the amount hereinafter calculated, not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable
considerations. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty
of such fraudulent misrepresentation.
(f) Indemnification
similar to that specified in the preceding subsections of this Section 9
(with appropriate modifications) shall be given by the Company and each Holder
of Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation or
governmental authority other than the Securities Act.
10. Rule
144. For a period of at least 24 months following the Closing Date, the
Company will use its reasonable best efforts (a) to timely file all reports
required to be filed by the Company after the date hereof under the Securities
Act and the Exchange Act (including the reports pursuant to Section 13(a) or
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144) and
the rules and regulations adopted by the Commission thereunder), (b) if the
Company is not required to file reports pursuant to such sections, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell
shares of Common Stock under Rule 144, and (c) to take such further action
as
any holder of shares of Common Stock may reasonably request, all to the extent
required from time to time to enable the Purchasers to sell shares of Common
Stock without registration under the Securities Act within the limitation of
the
exemptions provided by Rule 144, including causing its attorneys to issue and
deliver any appropriate legal opinion required to permit a Purchaser to sell
shares of Common Stock under Rule 144 upon receipt of appropriate documentation
relating to such sale.
-16-
11. Independent
Nature of Each Purchaser’s Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to
purchase Common Stock and enter into this Agreement has been made by each
Purchaser independently of any other Purchaser. Nothing contained
herein and no action taken by any Purchaser pursuant hereto, shall be deemed
to
constitute such Purchasers as a partnership, an association, a joint venture,
or
any other kind of entity, or create a presumption that the Purchasers are in
any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement. Each Purchaser acknowledges that
no
other Purchaser has acted as agent for the Purchaser in connection with making
its investment in Common Stock and that no other Purchaser will be acting as
agent of the Purchaser in connection with monitoring its investment in the
Common Stock or enforcing its rights under this Agreement. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and
it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose.
12. Miscellaneous
(a) Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Tennessee and the United States of America, both
substantive and remedial. Any judicial proceeding brought against either of
the
parties to this agreement or any dispute arising out of this Agreement or
any matter related hereto shall be brought in the courts of the State of
Tennessee, Xxxx County, or in the United States District Court for the Eastern
District of Tennessee and, by its execution and delivery of this agreement,
each
party to this Agreement accepts the jurisdiction of such courts. The foregoing
consent to jurisdiction shall not be deemed to confer rights on any person
other
than the parties to this Agreement.
(b) Successors
and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
Permitted Assigns, executors and administrators of the parties
hereto. In the event the Company merges with, or is otherwise
acquired by, a direct or indirect subsidiary of a publicly traded company,
the
Company shall condition the merger or acquisition on the assumption by such
parent company of the Company’s obligations under this Agreement.
(c) Entire
Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.
-17-
(d) Notices,
etc. All notices or other communications which are required or permitted
under this Agreement shall be in writing and sufficient if delivered by hand,
by
facsimile transmission, by registered or certified mail, postage pre-paid,
by
electronic mail, or by courier or overnight carrier, to the persons at the
addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
If
to the Company:
|
0000
Xxxxxx Xxxxxxxx Xx.
Xxxxxxxxx,
XX 00000
Attention:
Chief Financial Officer
Facsimile: (000)
000-0000
|
|
If
to the Purchasers:
|
To
each Purchaser at the address
set
forth on Exhibit A
|
or
at
such other address as any party shall have furnished to the other parties in
writing.
(e) Delays
or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any Holder of any Registrable Securities, upon any breach
or default of the Company under this Agreement, shall impair any such right,
power or remedy of such Holder nor shall it be construed to be a waiver of
any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereunder occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only
to
the extent specifically set forth in such writing. All remedies,
either under this Agreement, or by law or otherwise afforded to any holder,
shall be cumulative and not alternative.
(f) Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
enforceable against the parties actually executing such counterparts, and all
of
which together shall constitute one instrument.
(g) Severability.
In the case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
(h) Amendments.
The provisions of this Agreement may be amended at any time and from time to
time, and particular provisions of this Agreement may be waived, with and only
with an agreement or consent in writing signed by the Company and by the
Majority Holders. The Purchasers acknowledge that by the operation of
this Section 12(h), the Majority Holders may have the right and power to
diminish or eliminate all rights of the Purchasers under this
Agreement.
[Signatures
on following page]
-18-
This
Registration Rights Agreement is hereby executed as of the date first above
written.
COMPANY:
By: _________________________
Name: Xxx
Xxxxxx
Its: Chief
Executive Officer
|
|
PURCHASER:
______________________________
(Print
Name)
By: _________________________
Name:
_________________________
Its: _________________________
|
-19-
EXHIBIT
A
PURCHASER
INFORMATION
Name
|
Address
|
The
J-K Navigator Fund, L.P.
|
c/o
Steelhead Partners, LLC
0000
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
|
Steelhead
Offshore, Ltd.
|
c/o
Steelhead Partners, LLC
0000
Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
|
Xxxxxx
Xxxxxx
|
c/o
National Coal Corp.
0000
Xxxxxx Xxxxxxxx Xx.
Xxxxxxxxx,
XX 00000
|
-20-