EXHIBIT B - FORM OF
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement, dated as of June ____, 2004 (this
"Agreement"), by and among United Fuel & Energy Corporation, a Texas corporation
(the "Company"), and the Purchasers (as defined below).
W I T N E S S E T H :
WHEREAS, the Company is offering (the "Offering") an aggregate of up to
2,000,000 shares of its Preferred Stock, par value $.001 per share (the
"Preferred Stock"), convertible into shares of the Company's Common Stock (the
securities offered in the Offering being sometimes hereinafter referred to as
the "Securities");
WHEREAS, the Company desires to issue and sell to the persons listed on
Schedule A, attached hereto (each a "Purchaser," and collectively, the
"Purchasers"), the Securities as set forth in one or more Securities Purchase
Agreements entered into or to be entered into by and between the Company and
each Purchaser (the "Securities Purchase Agreements");
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Securities Purchase Agreements that the Company
provide for the rights set forth in this Agreement; and
WHEREAS, certain terms used in this Agreement that are not defined in
context are defined in Section 3 hereof.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:
1. Registration Rights.
1.1 Required Registration. The Company shall use its reasonable best
efforts to prepare and file with the SEC within six (6) months after the Merger
(as such term is defined in the Securities Purchase Agreements) a registration
statement on Form SB-2 or successor form or another form selected by the Company
that is available to it under the Securities Act which conforms with all
applicable rules and regulations (the "Required Registration Statement") with
respect to all the Registrable Securities beneficially owned by the Purchasers
following the Merger to permit the offer and re-sale from time to time of such
Registrable Securities in accordance with the methods of distribution provided
by the Purchasers. The Company shall use its reasonable best efforts to cause
the Required Registration Statement to become effective as promptly as
reasonably practicable thereafter. The Company shall use its reasonable best
efforts to keep such Required Registration Statement continuously effective (the
"Effective Period") until the first anniversary of the effective date of the
Merger plus whatever period of time as shall equal any period, if any, during
the Effective Period in which the Company was not current with its reporting
requirements under the Exchange Act. To the extent that the Registrable
Securities are not sold under the Required Registration Statement, the
Purchasers shall have the registration rights as enumerated in Section 1.2.
1.2 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its securities under the Securities Act and the registration form to be
used may be used for the registration of Registrable Securities, whether or not
for sale for its own account, the Company will give prompt written notice (but
in no event less than fifteen (15) days before the anticipated filing date) to
all holders of Registrable Securities, and such notice shall describe the
proposed registration and distribution and offer to all holders of Registrable
Securities the opportunity to register the number of Registrable Securities as
each such holder may request. Subject to paragraph (d) of this Section 1.2, the
Company will include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within five (5) days after the holders' receipt of the Company's notice (a
"Piggyback Registration").
(b) Reasonable Efforts. The Company shall use all reasonable efforts
to cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggyback Registration to be included on the same terms and conditions as any
similar securities of the Company or any other security holder included therein
and to permit the sale or other disposition of such Registrable Securities in
accordance with the intended method of distribution thereof.
(c) Withdrawal. Any holder of Registrable Securities electing to
participate in a Piggyback Registration (a "Designated Holder") shall have the
right to withdraw its request for inclusion of its Registrable Securities in any
Registration Statement pursuant to this Section 1.2 by giving written notice to
the Company of its request to withdraw. The Company may withdraw a Piggyback
Registration at any time.
(d) Priority in Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company or a secondary
registration on behalf of a security holder exercising demand registration
rights (the "Initiating Holder"), and the managing underwriters advise the
Company in writing (with a copy to each party hereto requesting registration of
Registrable Securities) that in their opinion the number of Registrable
Securities requested to be included in such registration exceeds the number
which can be sold in such offering without materially and adversely affecting
the marketability of such primary or secondary offering (the "Offering
Quantity"), then the Company will include in such registration securities in the
following priority:
(i) First, the Company will include the securities the Company
proposes to sell and, if applicable, the securities the Initiating
Holder proposes to sell.
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(ii) Second, the Company will include all Registrable
Securities requested to be included by any Designated Holder, and if
the number of such Designated Holders' securities requested to be
included exceeds the Offering Quantity, then the Company shall
include only each such requesting Designated Holders' pro rata share
of the shares available for registration by the Purchaser, based on
the amount of securities held by such Designated Holder.
1.3 Holdback Agreements.
(a) To the extent not inconsistent with applicable law, upon the
request of the Company or, in the case of an underwritten public offering, the
underwriters managing such underwritten offering of the Company's securities,
each holder of Registrable Securities who owns at least 1% of the outstanding
capital stock of the Company on an "as-converted" basis or is an officer or
director of the Company will not effect any public sale or distribution (other
than those included in the registration) of any securities of the Company, or
any securities, options or rights convertible into or exchangeable or
exercisable for such securities during the seven days prior to and the ninety
(90) day period beginning on the effective date of the Registration Statement
relating to such offering, unless (in the case of an underwritten public
offering) the managing underwriters otherwise agree to a shorter period of time.
Notwithstanding the foregoing, no Designated Holder shall be required to enter
into any such "lock up" agreement unless and until all of the Company's
executive officers and directors execute identical "lock up" agreements and the
Company uses commercially reasonable efforts to cause each holder of more than
1% of its outstanding capital stock to execute identical "lock up" agreements.
Neither the Company nor the underwriter shall amend, terminate or waive a "lock
up" agreement unless each "lock up" agreement with a Designated Holder is also
amended or waived in a similar manner or terminated, as the case may be.
(b) The Company shall have the right at any time to require that the
Designated Holders of Registrable Securities suspend further open market offers
and sales of Registrable Securities pursuant to a Registration Statement filed
hereunder whenever in the reasonable judgment of the Company after consultation
with counsel there is or may be in existence a Changing Event (as defined
herein). The Company will give the Designated Holders notice of any such
suspension and will use all reasonable best efforts to minimize the length of
such suspension.
1.4 Registration Procedures. Whenever any Registrable Securities are
required to be registered pursuant to this Agreement, the Company will use
reasonable best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended methods of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC on any form, if not so otherwise
provided for, for which the Company qualifies, as soon as practicable after the
end of the period within which requests for registration may be given to the
Company, a Registration Statement with respect to the offer and sale of such
Registrable Securities and thereafter use reasonable best efforts to cause such
Registration Statement to become effective and remain effective until the
completion of the distribution contemplated thereby or the required time period
under this Agreement, whichever is shorter (and before filing such Registration
Statement, the Company will furnish to the counsel selected by the holders of a
majority of the Registrable Securities initiating such Registration Statement
copies of all such documents proposed to be filed); provided, however, that the
Company may postpone for not more than sixty (60) calendar days the filing or
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effectiveness of the Required Registration Statement if the Board of Directors,
in its good faith judgment, determines that such registration could reasonably
be expected to have a material adverse effect on the Company and its
stockholders including, but not limited to, any proposal or plan by the Company
to engage in any acquisition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer or similar transaction then
under consideration by delivering written notice to the holders of Registrable
Securities of its determination to postpone such Registration Statement;
provided, further, that (i) the Company shall not disclose any information that
could be deemed material non-public information to any holder of Registrable
Securities included in a Registration Statement that is subject to such
postponement, (ii) in no event may the Company postpone a filing requested
hereunder more than twice; provided, that such postponements must be at least
three (3) months apart; provided, further, that the Company may delay the
effectiveness of the Required Registration Statement if the SEC rules and
regulations prohibit the Required Registration Statement from being declared
effective because its financial statements are stale at a time when its fiscal
year has ended or it has made an acquisition reportable under Item 2 of Form 8-K
or any other similar situation until the earliest time in which the SEC would
allow the Required Registration Statement to be declared effective (provided
that the Company shall use its reasonable best efforts to cure any such
situation as soon as possible so that the Registration Statement can be declared
effective at the earliest possible time);
(b) prepare and file with the SEC 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 for a period
provided for in the applicable Section above or, if such Registration Statement
relates to an underwritten offering, such period as in the opinion of counsel
for the underwriters a prospectus is required by law to be delivered in
connection with sales of Registrable Securities by an underwriter or dealer or
(ii) such shorter period as will terminate when all of the securities covered by
such Registration Statement have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth in
such Registration Statement (but in any event not before the expiration of any
longer period required under the Securities Act), and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement;
(c) furnish to each seller of Registrable Securities, prior to
filing a Registration Statement, such number of copies of such Registration
Statement, each amendment and supplement thereto, the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
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(d) register or qualify such Registrable Securities under such state
securities or blue sky laws of such jurisdictions as any seller reasonably
requests and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller and to
keep each such registration or qualification (or exemption therefrom) effective
during the period which the Registration Statement is required to be kept
effective (provided, that the Company will 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 subparagraph, (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction);
(e) notify each seller 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 (a "Changing Event") as a result
of which, the prospectus included in such Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and, at the request of any such seller, the Company will as soon
as possible prepare and furnish to such seller (a "Correction Event") a
reasonable number of copies of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not misleading in the
light of the circumstances under which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on The Nasdaq Stock Market or the
Nasdaq SmallCap trading system or qualified for trading on the Nasdaq OTC
Bulletin Board;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration Statement;
(h) before filing a Registration Statement or prospectus or any
amendments or supplements thereto, the Company shall provide counsel selected by
the Designated Holders holding a majority of the Registrable Securities being
registered in such registration ("Holders' Counsel") and any other Inspector (as
defined below) with an adequate and appropriate opportunity to review and
comment on such Registration Statement and each prospectus included therein (and
each amendment or supplement thereto) to be filed with the SEC, subject to such
documents being under the Company's control, and the Company shall notify the
Holders' Counsel and each seller of Registrable Securities of any stop order
issued or threatened by the SEC;
(i) otherwise comply with all applicable rules and regulations of
the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least twelve months
beginning with the first day of the Company's first full calendar quarter after
the effective date of the Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;
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(j) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any securities included in such Registration Statement for sale in any
jurisdiction, the Company will use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(k) subject to execution and delivery of mutually satisfactory
confidentiality agreements, make available at reasonable times for inspection by
any seller of Registrable Securities, any managing underwriter participating in
any disposition of such Registrable Securities pursuant to a Registration
Statement, Holders' Counsel and any attorney, accountant or other agent retained
by any managing underwriter (each, an "Inspector" and collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company and its subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's and its subsidiaries' officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement;
(l) subject to execution and delivery of mutually satisfactory
confidentiality agreements, keep Holders' Counsel advised as to the initiation
and progress of any registration hereunder including, but not limited to,
providing Holders' Counsel with all correspondence with the SEC;
(m) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the NASD; and
(n) take all other steps reasonably necessary to effect the
registration of the Registrable Securities contemplated hereby.
(o) Registration Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, printing expenses, messenger and delivery expenses,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding discounts and commissions,
which will be paid by the sellers of Registrable Securities) and other Persons
retained by the Company will be borne by the Company, and the Company will pay
its internal expenses (including, without limitation, all salaries and expenses
of its Employees performing legal or accounting duties), the expense of any
annual audit or quarterly review, the expense of any liability insurance and the
expenses and fees for listing the securities to be registered on each securities
exchange or trading system on which similar securities issued by the Company are
then listed or qualified for trading. The Company shall have no obligation to
pay any underwriting discounts or commissions attributable to the sale of
Registrable Securities and any of the expenses incurred by the Designated
Holders, such costs to be borne by such Designated Holder or Holders.
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1.5 Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the
fullest extent permitted by law, each holder of Registrable Securities and its
general or limited partners, officers, directors, members, managers, employees,
advisors, representatives, agents and Affiliates (collectively, the
"Representatives") from and against any reasonable loss, claim, damage,
liability, a single reasonable attorney's fees, cost or expense and costs and
expenses of investigating and defending any such claim (collectively, the
"Losses") and any action in respect thereof to which such holder of Registrable
Securities or its Representatives may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereto) arise out of or are based upon (i) any untrue
or alleged untrue statement of a material fact contained in any Registration
Statement at the time it is declared effective, prospectus or preliminary
prospectus (but only preliminary prospectuses approved for distribution by the
Company) or any amendment or supplement thereto or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the Company shall not be liable to any such holder or other indemnitee in any
such case to the extent that any such Loss (or action or proceeding, whether
commenced or threatened, in respect thereof) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission,
made in such Registration Statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information prepared and furnished to the Company by
such holder of Registrable Securities or its Representatives expressly for use
therein or by failure of such holder of Registrable Securities to deliver a copy
of the Registration Statement or prospectus or any amendments or supplements
thereto after the Company has furnished such holder of Registrable Securities
with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any Registration Statement in which the
holders of Registrable Securities are participating pursuant to this Agreement,
the holders of Registrable Securities will furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
any such Registration Statement or prospectus and, to the fullest extent
permitted by law, each such holder of Registrable Securities will, severally but
not jointly, indemnify and hold harmless the Company and its Representatives
from and against any Losses and any action in respect thereof to which the
Company and its Representatives may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon (i) the
purchase or sale of Registrable Securities during a suspension as set forth in
herein after written receipt of notice of such suspension, (ii) by failure of
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such holder of Registrable Securities to deliver a copy of the Registration
Statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder of Registrable Securities with a sufficient
number of copies of the same, (iii) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, prospectus or preliminary
prospectus or any amendment or supplement thereto, or (iv) any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but, with respect to clauses
(iii) and (iv) above, only to the extent that such untrue statement or omission
is made in such Registration Statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, in reliance upon and in
conformity with written information prepared and furnished to the Company by
such holder of Registrable Securities expressly for use therein; provided,
however, that such holder of Registrable Securities shall not be liable in any
such case to the extent that prior to the filing of any such Registration
Statement or prospectus or amendment or supplement thereto, such holder of
Registrable Securities has furnished in writing to the Company information
expressly for use in such Registration Statement or prospectus or any amendment
or supplement thereto which corrected or made not misleading information
previously furnished to the Company; provided, further, however, that the
obligation to indemnify will be individual to each such holder of Registrable
Securities and will be limited to the net amount of proceeds received by such
holder of Registrable Securities from the sale of Registrable Securities
pursuant to such Registration Statement. In connection with an underwritten
offering, each holder of Registrable Securities participating in such offering
will indemnify such underwriters, their officers and directors and each Person
who controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the
Company.
(c) Promptly after receipt by any Person entitled to indemnification
pursuant to Section 1.5(a) or 1.5(b) (an "Indemnified Party") of notice of any
claim or the commencement of any action, the Indemnified Party shall, if a claim
in respect thereof is to be made against the Person against whom such indemnity
may be sought (an "Indemnifying Party"), promptly notify the Indemnifying Party
in writing of the claim or the commencement of such action; provided, that the
failure to notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability which it may have to an Indemnified Party otherwise
than under Section 1.5(a) or 1.5(b) except to the extent of any actual prejudice
resulting therefrom. If any such claim or action shall be brought against an
Indemnified Party, and it shall notify the Indemnifying Party thereof, the
Indemnifying Party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified Indemnifying Party, to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or action, the
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Indemnifying Party shall not be liable to the Indemnified Party for any legal or
other expenses subsequently incurred by the Indemnified Party in connection with
the defense thereof other than reasonable costs of investigation; provided, that
the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party and its Representatives who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the written opinion of
counsel to such Indemnified Party, representation of both parties by the same
counsel would be inappropriate due to actual or potential conflicts of interest
between them, it being understood, however, that the Indemnifying Party shall
not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any claim or pending or threatened proceeding in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability arising out of such claim or proceeding other than the payment of
monetary damages by the Indemnifying Party on behalf of the Indemnified Party.
Whether or not the defense of any claim or action is assumed by the Indemnifying
Party, such Indemnifying Party will not be subject to any liability for any
settlement made without its consent, which consent will not be unreasonably
withheld.
(d) If the indemnification provided for in this Section 1.5 is
unavailable to the Indemnified Parties in respect of any Losses referred to
herein, then each 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 in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the holders of the
Registrable Securities on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but also
the relative fault of the Company on the one hand and the holders of the
Registrable Securities on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of each
holder of the Registrable Securities on the other shall be determined by
reference to, among other things, whether any action taken, including any untrue
or alleged untrue statement of a material fact, or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the holders of the Registrable Securities agree that
it would not be just and equitable if contribution pursuant to this Section
1.5(d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
Indemnified Party as a result of the Losses referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 1.5, no holder of the Registrable
Securities shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Securities of such holder were
offered to the public exceeds the amount of any Losses which such holder has
otherwise paid by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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. Each holder's obligations to contribute pursuant to this
Section 1.5 is several in the proportion that the proceeds of the offering
received by such holder of the Registrable Securities bears to the total
proceeds of the offering received by all the holders of the Registrable
Securities and not joint.
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1.6 Participation in Underwritten Registrations.
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Person or
Persons entitled hereunder to approve such arrangements (including, without
limitation, pursuant to the terms of any over-allotment or "green shoe" option
requested by the managing underwriter(s), provided, that each holder of
Registrable Securities shall not be required to sell more than the number of
Registrable Securities that such holder has requested the Company to include in
any registration) and (ii) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting arrangements
and this Agreement.
(b) Each Person that is participating in any registration hereunder
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind described in Section 1.4(e) above, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
Registration Statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section 1.4(e).
1.7 Current Public Information. The Company covenants that it will
file all reports required to be filed by it under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder, and
will use reasonable best efforts to take such further action as the Purchaser
may reasonably request, all to the extent required to enable the holders of
Registrable Securities to sell Registrable Securities pursuant to Rule 144 or
Rule 144A adopted by the SEC under the Securities Act or any similar rule or
regulation hereafter adopted by the SEC. The Company shall, upon the request of
a Designated Holder, deliver to such Designated Holder a written statement as to
whether it has complied with such requirements.
2. Transfers of Certain Rights.
2.1 Transfer. The rights granted to the Purchaser under this
Agreement may not be assigned or transferred without the prior written consent
of the Company.
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2.2 Transferees. Any transferee to whom rights under this Agreement
are permitted by the Company to be transferred shall, as a condition to such
transfer, deliver to the Company a written instrument by which such transferee
agrees to be bound by the obligations imposed upon the Purchaser under this
Agreement to the same extent as if such transferee were a Purchaser hereunder.
2.3 Subsequent Transferees. A transferee to whom rights are
transferred pursuant to this Section 2 may not again transfer such rights to any
other person or entity, other than as provided in Sections 2.1 and 2.2 above.
3. Certain Definitions. The following capitalized terms shall have the
meanings ascribed to them below:
"Affiliate" means any Person that directly or indirectly controls,
or is under common control with, or is controlled by such Person. As used in
this definition, "control" (including with its correlative meanings, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of a Person (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).
"Common Stock" means the common stock, no par value, of the Company.
"Employees" means any current, former, or retired employee, office
consultant, advisor, independent contractor, agent, officer or director of the
Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Person" means any individual, company, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
governmental body or other entity.
"Registrable Securities" means, subject to the immediately following
sentence, (i) shares of Common Stock issued or issuable upon the conversion of
shares of Preferred Stock acquired from the Company pursuant to the Securities
Purchase Agreements, (ii) any securities issued or issuable directly or
indirectly with respect to the securities referred to in clause (i) by way of
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger (including the Merger), consolidation or other
reorganization, and (iii) any other shares of Common Stock held by a Person
holding Registrable Securities other than shares of Common Stock which have
ceased to be Registrable Securities. As to any particular shares of Common Stock
constituting Registrable Securities, such shares of Common Stock will cease to
be Registrable Securities when they (x) have been effectively registered under
the Securities Act and disposed of in accordance with a Registration Statement
covering them, (y) have been sold to the public pursuant to Rule 144 (or by
similar provision under the Securities Act), or (z) are eligible for resale
under Rule 144(k) (or by similar provision under the Securities Act) without any
limitation on the amount of securities that may be sold under paragraph (e)
thereof.
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"Registration Statement" means any registration statement of the
Company filed under the Securities Act which covers any of the Registrable
Securities pursuant to the provisions of this Agreement, including the
prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such registration statement.
"SEC" means the United States Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
4. Miscellaneous.
4.1 Recapitalizations, Exchanges, etc. The provisions of this
Agreement shall apply to the full extent set forth herein with respect to (i)
the Securities, (ii) any and all securities into which the Securities are
converted, exchanged or substituted in any recapitalization or other capital
reorganization by the Company and (iii) any and all equity securities of the
Company or any successor or assign of the Company (whether by merger,
consolidation, sale of assets or otherwise) which may be issued in respect of,
in conversion of, in exchange for or in substitution of, the Securities and
shall be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, recapitalizations and the like occurring after the date hereof.
The Company shall cause any successor, assign or issuer of securities that are
Registrable Securities (whether by merger, consolidation, sale of assets or
otherwise) to enter into a new registration rights agreement with the Designated
Holders on terms substantially the same as this Agreement as a condition of any
such transaction.
4.2 No Inconsistent Agreements. The Company has not and shall not
enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Purchasers in this Agreement or grant any
additional registration rights to any Person or with respect to any securities
which are not Registrable Securities which are prior in right to or inconsistent
with the rights granted in this Agreement. The granting of demand registration
rights or pari passu piggyback registration rights shall be deemed not to be
inconsistent with the rights granted to Purchasers in this Agreement.
4.2 Amendments and Waivers. The provisions of this Agreement may be
amended and the Company may take action herein prohibited, or omit to perform
any act herein required to be performed by it, if, but only if, the Company has
obtained the written consent of holders of at least a majority of the
Registrable Securities then in existence.
4.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
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4.4 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.5 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including telecopy, telex or similar
writing) and shall be deemed given or made as of the date delivered, if
delivered personally or by telecopy (provided that delivery by telecopy shall be
followed by delivery of an additional copy personally, by mail or overnight
courier), one day after being delivered by overnight courier or three days after
being mailed by registered or certified mail (postage prepaid, return receipt
requested), to the parties at the following addresses (or to such other address
or telex or telecopy number as a party may have specified by notice given to the
other party pursuant to this provision):
If to the Company, to:
United Fuel & Energy Corporation
000 Xxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
With a copy to:
Xxxxx Xxxxxxx XXX
Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
If to the Purchaser, to:
The address or facsimile number of each Purchaser as
recorded in the stockholders records of the Company.
4.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas, without regard to the
conflicts of laws rules or provisions.
4.7 Forum; Service of Process. Any legal suit, action or proceeding
brought by any party or any of its affiliates arising out of or based upon this
Agreement shall be instituted in any federal or state court in Midland County,
Texas, and each party waives any objection which it may now or hereafter have to
the laying of venue or any such proceeding, and irrevocably submits to the
jurisdiction of such courts in any such suit, action or proceeding.
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4.8 Captions. The captions, headings and arrangements used in this
Agreement are for convenience only and do not in any way limit or amplify the
terms and provisions hereof.
4.9 No Prejudice. The terms of this Agreement shall not be construed
in favor of or against any party on account of its participation in the
preparation hereof.
4.10 Words in Singular and Plural Form. Words used in the singular
form in this Agreement shall be deemed to import the plural, and vice versa, as
the sense may require.
4.11 Successors and Assigns; Third Party Beneficiaries. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, permitted
assigns, executors, administrators and heirs.
4.12 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and understandings
of any and every nature among them.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be duly executed as of the date and year first written
above.
UNITED FUEL & ENERGY CORPORATION
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
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