REGISTRATION RIGHTS AGREEMENT
EXHIBIT
4.2
This
REGISTRATION RIGHTS
AGREEMENT
(this
“Agreement”)
dated
October 5, 2007, is entered into by and between United Fuel & Energy
Corporation, a Nevada corporation (the “Company”),
and
Xxxxx X. Xxxxxxx, as Trustee under the Greinke Business Living Trust dated
April
20, 1999 (the “Purchaser”).
RECITALS
A. The
Company and the Purchaser are parties to that certain Mutual Stock Purchase
Agreement dated September 14, 2007 (the “Purchase
Agreement”)
pursuant to which the Company has agreed to sell, and the Purchaser has agreed
to purchase, shares of common stock, par value $0.001 per share (“Common
Stock”),
of
the Company.
B. The
Company’s and the Purchaser’s respective obligations under the Purchase
Agreement are conditioned upon the execution and delivery of this Agreement.
C. In
connection with the purchase by the Purchaser of the Common Stock pursuant
to
the Purchase Agreement, the Company desires to grant to the Purchaser certain
registration rights with respect to the stock of the Company held by
them.
AGREEMENT
NOW,
THEREFORE,
in
consideration of the premises and respective covenants and agreements set
forth
in this Agreement and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally
bound,
the parties agree as follows:
ARTICLE
I.
REGISTRATION
RIGHTS
Section
1.1 Definitions.
For
purposes of this Agreement:
(a) “Affiliate”
means,
with respect to any Person, (i) any other Person of which securities or other
ownership interests representing more than (50%)
of the
voting interests are, at the time such determination is being made, owned,
Controlled or held, directly or indirectly, by such Person or (ii) any other
Person which, at the time such determination is being made, is Controlling,
Controlled by or under common Control with, such Person. As used herein,
“Control”,
whether used as a noun or verb, refers to the possession, directly or
indirectly, of the power to direct, or cause the direction of, the management
or
policies of a Person, whether through the ownership of voting securities
or
otherwise.
(b) “Holder”
means
a
Person that (i) is a party to this Agreement (or a permitted transferee under
Section 1.7
hereof)
and (ii) owns Registrable Securities.
(c) “Majority
in Interest of Participating Holders”
means
Participating Holders owning a majority of the Registrable Securities included
in a Registration Statement.
(d) “NASD”
means
the National Association of Securities Dealers, Inc.
(e) “Participating
Holders”
means
Holders participating, or electing to participate, in an offering of Registrable
Securities.
(f) “Person”
means
any individual, firm, corporation, company, partnership, trust, incorporated
or
unincorporated association, limited liability company, joint venture, joint
stock company, government (or an agency or political subdivision thereof)
or
other entity of any kind, and shall include any successor (by merger or
otherwise) of any such entity.
(g) “Registrable
Securities”
means
any shares of Common Stock of the Company (i) acquired
by Purchase pursuant to the Purchase Agreement;
and
(ii) issued or issuable with respect to the securities referred to in clause
(i)
above by virtue of any stock dividends, stock splits, combinations,
recapitalizations, mergers, consolidations and the like; provided,
however,
that
shares of Common Stock that are considered to be Registrable Securities shall
cease to be Registrable Securities (A) upon the sale thereof pursuant to
an
effective registration statement, (B) upon the sale thereof pursuant to
Rule 144 (or successor rule) under the Securities Act, (C) when such
securities cease to be outstanding or
(D) in
a private transaction where the transferor’s rights under this Agreement are not
assigned, or are improperly assigned pursuant to the terms and conditions
of
this Agreement.
(h) “Registrable
Securities then outstanding”
means
the number of shares of Common Stock determined by adding, at the time of
such
calculation, the number of outstanding shares of Common Stock which are
Registrable Securities, plus the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are Registrable
Securities.
(i) “Registration
Expenses”
mean
all expenses (other than underwriting discounts and commissions) arising
from or
incident to the performance of, or compliance with, this ARTICLE I,
including, without limitation, (i) SEC, stock exchange, NASD and other
registration and filing fees, (ii) all fees and expenses incurred in connection
with complying with any securities or blue sky laws (including, without
limitation, fees, charges and disbursements of counsel in connection with
blue
sky qualifications of the Registrable Securities), (iii) all printing, messenger
and delivery expenses, (iv) the fees, charges and disbursements of counsel
to
the Company and of its independent public accountants and any other accounting
and legal fees, charges and expenses incurred by the Company (including,
without
limitation, any expenses arising from any special audits or “comfort letters”
required in connection with or incident to any registration), (v) the fees,
charges and disbursements of any special experts retained by the Company
in
connection with any registration pursuant to the terms of this Agreement,
(vi)
all internal expenses of the Company (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), (vii) the fees and expenses incurred in connection with
the
listing of the Registrable Securities on any securities exchange or Nasdaq
and
(viii) Securities Act liability insurance (if the Company elects to obtain
such
insurance), regardless of whether any Registration Statement filed in connection
with such registration is declared effective.
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(j) “Registration
Statement”
shall
mean any Registration Statement of the Company filed with the SEC on the
appropriate form pursuant to the Securities Act which covers any of the shares
of Common Stock and any other Registrable Securities pursuant to the provisions
of this Agreement and all amendments and supplements to any such Registration
Statement, including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all materials
incorporated by reference therein.
(k) “SEC”
or
“Commission”
means
the United States Securities and Exchange Commission.
(l) “Selling
Expenses”
shall
mean the underwriting fees, discounts, selling commissions and stock transfer
taxes applicable to all Registrable Securities registered by the Participating
Holders.
Section
1.2 Piggyback
Registrations.
(a) Right
to Include Registrable Securities.
Beginning on the first anniversary of the date of this Agreement, each time
that
the Company proposes for any reason to register any of its Common Stock under
the Securities Act, either for its own account or for the account of a
stockholder or stockholders exercising demand registration rights (a
“Proposed
Registration”),
the
Company shall promptly give written notice of such Proposed Registration
to all
of the Holders of Registrable Securities (which notice shall be given not
less
than twenty (20) days prior to the expected effective date of the Company’s
Registration Statement) and shall offer such Holders the right to request
inclusion of any of such Holder’s Registrable Securities in the Proposed
Registration; provided,
however,
that
the Holders shall have no right to include Registrable Securities in a
registration statement relating either to the sale of securities to employees
of
the Company pursuant to a stock option, stock purchase or similar plan or
an SEC
Rule 145 transaction. The rights to piggyback registration may be exercised
an
unlimited number of occasions.
(b) Piggyback
Procedure.
Each
Holder of Registrable Securities shall have ten
(10)
days
from the date of receipt of the Company’s notice referred to in Section
1.2(a)
above to
deliver to the Company a written request specifying the number of Registrable
Securities such Holder intends to sell and such Holder’s intended method of
disposition. Any Holder shall have the right to withdraw such Holder’s request
for inclusion of such holder’s Registrable Securities in any Registration
Statement pursuant to this Section 1.2
by
giving written notice to the Company of such withdrawal;
provided, however, that the Company may ignore a notice of withdrawal made
within 24 hours of the time the Registration Statement is to become
effective. Subject
to Section 1.2(c)
below,
the Company shall use commercially reasonable efforts to
include
in such Registration Statement all such Registrable Securities so requested
to
be included therein; provided,
however,
that
the Company may at any time withdraw or cease proceeding with any such Proposed
Registration if it shall at the same time withdraw or cease proceeding with
the
registration of all other shares of Common Stock originally proposed to be
registered. In
the
event that the Proposed Registration by the Company is, in whole or in part,
an
underwritten public offering of securities of the Company, any request under
this Section 1.2(b)
shall
specify that the Registrable Securities be included in the underwriting on
the
same terms and conditions as the shares, if any, otherwise being sold through
underwriters under such registration.
3
(c) Priority
for Piggyback Registration.
Notwithstanding any other provision of this ARTICLE I,
if the
managing underwriter of an underwritten public offering determines and advises
the Company and the Participating Holders in writing that the inclusion of
all
Registrable Securities proposed to be included by the Participating Holders
of
Registrable Securities in the underwritten public offering would adversely
interfere with the successful marketing of the Company’s securities, then the
Participating Holders shall not be permitted to include any Registrable
Securities in excess of the amount, if any, of Registrable Securities which
the
managing underwriter of such underwritten public offering shall reasonably
and
in good faith agree in writing to include in such public offering in addition
to
the amount of securities to be registered for the account of the Company.
In no
event shall any Registrable Securities be excluded from such offering unless
all
other stockholders’ securities are excluded. The Company will be obligated to
include in such Registration Statement, as to each Participating Holder,
only
that portion of the Registrable Securities such Participating Holder has
requested be registered equal to the product of (i) the total number of
Registrable Securities which the managing underwriter agrees to include in
the
public offering and (ii) the ratio which such Participating Holder’s requested
Registrable Securities bears to the total number of Registrable Securities
requested to be included in such Registration Statement by all Participating
Holders who have requested that their Registrable Securities be included
in such
Registration Statement. It is acknowledged by the parties hereto that pursuant
to the foregoing provision, the securities to be included in a registration
initiated by the Company shall be allocated:
(i) first,
to
the Company;
(ii) second,
ratably
to the
Participating Holders; and
(iii) third,
to
any others requesting registration of securities of the Company.
Notwithstanding
the foregoing, in no event shall the amount of securities of the Participating
Holders included in the offering be reduced below 25% of the total amount
of
securities included in the offering, in which case the Participating Holders
may
be excluded below this amount if the underwriters make the determination
described above and no other stockholders securities are included in such
offering. If as a result of the provisions of this Section 1.2(c),
any
Holder shall not be entitled to include more
than
50% of
its
Registrable Securities in a registration that such Holder has requested to
be so
included, such Holder may withdraw such Holder’s request to include Registrable
Securities in such Registration Statement.
(d) Underwritten
Offering.
In the
event that the Proposed Registration by the Company is, in whole or in part,
an
underwritten public offering of securities of the Company, any notice from
the
Company to the Holders under this Section 1.2
shall
offer the Holders the right to include any Registrable Securities covered
by the
Proposed Registration in the underwriting on the same terms and conditions
as
the shares, if any, otherwise being sold through underwriters under such
registration. The managing underwriter for any Proposed Registration that
involves an underwritten public offering shall be one or more reputable
nationally recognized investment banks selected by the Company.
4
Section
1.3 Registration
Procedures.
(a) Obligations
of the Company.
Whenever registration of Registrable Securities is required pursuant to this
Agreement, the Company shall use commercially
reasonable efforts to
effect
the registration and sale of such Registrable Securities in accordance with
the
intended method of distribution thereof as promptly as possible, and in
connection with any such request, the Company shall, as expeditiously as
possible:
(i) Preparation
of Registration Statement; Effectiveness.
Prepare
and file with the SEC a Registration Statement on any form on which the Company
then qualifies, which counsel for the Company shall deem appropriate and
pursuant to which such offering may be made in accordance with the intended
method of distribution thereof (except that the Registration Statement shall
contain such information as may reasonably be requested for marketing or
other
purposes by the managing underwriter), and use commercially
reasonable efforts
to cause
any registration required hereunder to become effective as soon as practicable
after the initial filing thereof and remain effective for a period of not
less
than one
(1)
year
(or such
shorter period in which all Registrable Securities have been sold in accordance
with the methods of distribution set forth in the Registration Statement);
provided,
however,
that,
in the case of any registration of Registrable Securities on Form S-3 which
are
intended to be offered on a continuous or delayed basis, such one-year
period
shall be extended, if necessary, to keep the Registration Statement effective
until all such Registrable Securities are sold, provided
that
Rule 415, or any successor rule under the Securities Act, permits an offering
on
a continuous or delayed basis;
(ii) Participation
in Preparation.
Provide
any Participating Holder, any underwriter participating in any disposition
pursuant to a Registration Statement, and any attorney, accountant or other
agent retained by any Participating Holder or underwriter (each, an
“Inspector”
and,
collectively, the “Inspectors”),
the
opportunity to participate (including, but not limited to, reviewing, commenting
on and attending all meetings) in the preparation of such Registration
Statement, each prospectus included therein or filed with the SEC and each
amendment or supplement thereto;
(iii) Due
Diligence.
For a
reasonable period prior to the filing of any Registration Statement pursuant
to
this Agreement, make available for inspection and copying by the Inspectors
such
financial and other information and books and records, pertinent corporate
documents and properties of the Company and its subsidiaries and cause the
officers, directors, employees, counsel and independent certified public
accountants of the Company and its subsidiaries to respond to such inquiries
and
to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement, as shall be reasonably necessary,
in the judgment of the Inspectors, to conduct a reasonable investigation
within
the meaning of the Securities Act;
provided,
however,
that if
requested by the Company, each Inspector shall enter into a confidentiality
agreement with the Company prior to participating in the preparation of the
Registration Statement or the Company’s release or disclosure of confidential
information to such Inspector;
5
(iv) General
Notifications.
Promptly notify in writing the Participating Holders, the sales or placement
agent, if any, therefor and the managing underwriter of the securities being
sold, (A) when such Registration Statement or the prospectus included therein
or
any prospectus amendment or supplement or post-effective amendment has been
filed, and, with respect to any such Registration Statement or any
post-effective amendment, when the same has become effective, (B) when the
SEC
notifies the Company whether there will be a “review” of such Registration
Statement and (C) of any comments (oral or written) by the SEC and by the
blue
sky or securities commissioner or regulator of any state with respect thereto
or
(D) of any request by the SEC for any amendments or supplements to such
Registration Statement or the prospectus or for additional
information;
(v) 10b-5
Notification.
Promptly notify in writing the Participating Holders, the sales or placement
agent, if any, therefor and the managing underwriter of the securities being
sold pursuant to any Registration Statement at any time when a prospectus
relating thereto is required to be delivered under the Securities Act upon
discovery that, or upon the happening of any event as a result of which,
any
prospectus included in such Registration Statement (or amendment or supplement
thereto) 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 in light of the circumstances under which they were
made,
and the Company shall promptly prepare a supplement or amendment to such
prospectus and file it with the SEC (in any event no later than ten (10)
days
following notice of the occurrence of such event to each Participating Holder,
the sales or placement agent and the managing underwriter) so that after
delivery of such prospectus, as so amended or supplemented, to the purchasers
of
such Registrable Securities, such prospectus, as so amended or supplemented,
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 in light of the circumstances under which they were
made;
(vi) Notification
of Stop Orders; Suspensions of Qualifications and Exemptions.
Promptly notify in writing the Participating Holders, the sales or placement
agent, if any, therefor and the managing underwriter of the securities being
sold of the issuance by the SEC of (A) any stop order issued or threatened
to be
issued by the SEC or (B) any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening
of any
proceeding for such purpose and the Company agrees to use commercially
reasonable efforts
to (x)
prevent the issuance of any such stop order, and in the event of such issuance,
to obtain the withdrawal of any such stop order and (y) obtain the withdrawal
of
any order suspending or preventing the use of any related prospectus or
suspending the qualification of any Registrable Securities included in such
Registration Statement for sale in any jurisdiction at the earliest practicable
date;
6
(vii) Amendments
and Supplements; Acceleration.
(A)
Prepare and file with the SEC such amendments and supplements to each
Registration Statement as may be necessary to comply with the provisions
of the
Securities Act, including post-effective amendments to each Registration
Statement as may be necessary to keep such Registration Statement continuously
effective for the applicable time period required hereunder and if applicable,
file any Registration Statements pursuant to Rule 462(b) under the Securities
Act; (B) cause the related prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed pursuant to Rule
424
(or any similar provisions then in force) promulgated under the Securities
Act;
(C) comply with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all securities covered by such Registration
Statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement
as
so amended or in such prospectus as so supplemented; and (D) if a
Majority in Interest of
the
Participating Holders so request, request acceleration of effectiveness of
the
Registration Statement from the SEC and any post-effective amendments thereto,
if any are filed; provided,
however,
that at
the time of such request, the Company does not in good faith believe that
it is
necessary to amend further the Registration Statement in order to comply
with
the provisions of this subparagraph and, provided,
further,
if the
Company wishes to further amend the Registration Statement prior to requesting
acceleration, it shall have five
(5) days
to
so amend prior to requesting acceleration;
(viii) Copies.
Furnish
as promptly as practicable to each Participating Holder and Inspector prior
to
filing a Registration Statement or any supplement or amendment thereto, copies
of such Registration Statement, supplement or amendment as it is proposed
to be
filed, and after such filing such number of copies of such Registration
Statement, each amendment and supplement thereto (in each case including
all
exhibits thereto), the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other documents as each
such
Participating Holder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
Participating Holder;
(ix) Blue
Sky.
Use
commercially
reasonable efforts
to,
prior to any public offering of the Registrable Securities, register or qualify
(or seek an exemption from registration or qualifications) such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as
any Participating Holder or underwriter may request, and to continue such
qualification in effect in each such jurisdiction for as long as is permissible
pursuant to the laws of such jurisdiction, or for as long as a Participating
Holder or underwriter requests or until all of such Registrable Securities
are
sold, whichever is shortest, and do any and all other acts and things which
may
be reasonably necessary or advisable to enable any Participating Holder to
consummate the disposition in such jurisdictions of the Registrable
Securities;
provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent of process
in any
such states or jurisdictions or subject itself to material taxation in any
such
state or jurisdiction, but for this subparagraph;
7
(x) Other
Approvals.
Use
commercially
reasonable efforts
to
obtain all other approvals, consents, exemptions or authorizations from such
governmental agencies or authorities as may be necessary to enable the
Participating Holders and underwriters to consummate the disposition of
Registrable Securities;
(xi) Agreements.
Enter
into and perform customary agreements (including any underwriting agreements
in
customary form), and take such other actions as may be reasonably required
in
order to expedite or facilitate the disposition of Registrable
Securities;
(xii) Certificates,
Closing.
Provide
officers’ certificates and other customary closing documents;
(xiii) NASD.
Cooperate with each Participating Holder and each underwriter participating
in
the disposition of such Registrable Securities and underwriters’ counsel in
connection with any filings required to be made with the NASD;
(xiv) Transfer
Agent, Registrar and CUSIP.
Provide
a transfer agent and registrar for all Registrable Securities registered
pursuant hereto and a CUSIP number for all such Registrable Securities, in
each
case, no later than the effective date of such registration; and
(xv) Commercially
Reasonable Efforts.
Use
commercially
reasonable efforts
to take
all other actions necessary to effect the registration of the Registrable
Securities contemplated hereby.
(b) Seller
Information.
The
Company may require each Participating Holder as to which any registration
of
such Holder’s Registrable Securities is being effected to furnish to the Company
with such information regarding such Participating Holder and such Participating
Holder’s method of distribution of such Registrable Securities as the Company
may from time to time reasonably request in writing. If
a
Participating Holder refuses to provide the Company with any of such information
on the grounds that it is not necessary to include such information in the
Registration Statement, the Company may exclude such Participating Holder’s
Registrable Securities from the Registration Statement if the Company provides
such Participating Holder with an opinion of counsel to the effect that such
information must be included in the Registration Statement and such
Participating Holder continues thereafter to withhold such information. The
exclusion of a Participating Holder’s Registrable Securities shall not affect
the registration of the other Registrable Securities to be included in the
Registration Statement.
(c) Notice
to Discontinue.
Each
Participating Holder whose Registrable Securities are covered by a Registration
Statement filed pursuant to this Agreement agrees that, upon receipt of written
notice from the Company of the happening of any event of the kind described
in
Section 1.3(a)(v),
such
Participating Holder shall forthwith discontinue the disposition of Registrable
Securities until such Participating Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 1.3(a)(v)
or until
it is advised in writing by the Company that the use of the prospectus may
be
resumed and has received copies of any additional or supplemental filings
which
are incorporated by reference into the prospectus, and, if so directed by
the
Company in the case of an event described in Section 1.3(a)(v),
such
Participating Holder shall deliver to the Company (at the Company’s expense) all
copies, other than permanent file copies then in such Participating Holder’s
possession, of the prospectus covering such Registrable Securities which
is
current at the time of receipt of such notice. If the Company shall give
any
such notice, the Company shall extend the period during which such Registration
Statement is to be maintained effective by the number of days during the
period
from and including the date of the giving of such notice pursuant to
Section 1.3(a)(v)
to and
including the date when the Participating Holder shall have received the
copies
of the supplemented or amended prospectus contemplated by, and meeting the
requirements of, Section 1.3(a)(v).
8
Section
1.4 Registration
Expenses.
Except
as otherwise provided herein, all Registration Expenses shall be borne by
the
Company. All Selling Expenses relating to Registrable Securities registered
shall be borne by the Participating Holders of such Registrable Securities
pro
rata on the basis of the number of Registrable Securities so
registered.
Section
1.5 Indemnification.
(a) Indemnification
by the Company.
In the
event any Registrable Securities are included in a Registration Statement,
the
Company will indemnify and hold harmless to the fullest extent permitted
by law
each Holder, each of its directors, officers, employees, advisors, agents,
stockholders, members, general partners and limited partners (and the directors,
officers, employees, advisors, agents, stockholders, members, general partners
and limited partners thereof), their respective Affiliates and each Person
who
controls (within the meaning of the Securities Act or the Exchange Act) any
of
such Persons, and each underwriter and each Person who controls (within the
meaning of the Securities Act or the Exchange Act) any underwriter
(collectively, “Company
Indemnified Parties”)
from
and against any and all losses, claims, damages, expenses (including, without
limitation, reasonable costs of investigation and fees, disbursements and
other
charges of counsel, any amounts paid in settlement effected with the Company’s
consent, which consent shall not be unreasonably withheld or delayed, and
any
costs incurred in enforcing the Company’s indemnification obligations hereunder)
or other liabilities (collectively, “Losses”)
to
which any such Company Indemnified Party may become subject under the Securities
Act, the Exchange Act, any other federal, state or foreign law or any rule
or
regulation promulgated thereunder, or under any common law or otherwise,
insofar
as such Losses (or actions or proceedings, whether commenced or threatened,
in
respect thereof) are resulting from or arising out of or based upon (i) any
untrue, or alleged untrue, statement of a material fact contained in any
Registration Statement, including any prospectus or preliminary prospectus
contained therein or any amendments or supplements thereto, or any document
incorporated by reference in any of the foregoing or resulting from or arising
out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in light of the circumstances under
which
they were made), not misleading or (ii) any violation or alleged violation
by
the Company of the Securities Act, the Exchange Act, any other federal law,
any
state or foreign securities law, or any rule or regulation promulgated under
any
of the foregoing laws, relating to the offer or sale of the Registrable
Securities, and in any such case the Company will promptly reimburse each
such
Company Indemnified Party for any legal and any other Losses reasonably incurred
in connection with investigating, preparing or defending any such claim,
loss,
damage, liability, action or investigation or proceeding (collectively, a
“Claim”);
provided, however, that the Company shall not be liable to any Company
Indemnified Party for any Losses that arise out of or are based upon (x)
written
information provided by a Company Indemnified Party expressly for use in
the
Registration Statement or (y) sales of Registrable Securities by a Company
Indemnified Party to a person to whom there was not sent or given, at or
before
the written confirmation of such sale, a copy of the prospectus (excluding
documents incorporated by reference) or the prospectus as then amended or
supplemented (excluding documents incorporated by reference) if the Company
has
previously furnished in a timely manner a reasonable number of copies thereof
to
such Company Indemnified Party in compliance with this Agreement and the
Losses
of such Company Indemnified Party results from an untrue statement or omission
of a material fact contained in such preliminary prospectus which was corrected
in the prospectus (or the prospectus as then amended or
supplemented).
Such
indemnity obligation shall remain in full force and effect regardless of
any
investigation made by or on behalf of the Company Indemnified Parties and
shall
survive the transfer of Registrable Securities by such Company Indemnified
Parties.
9
(b) Indemnification
by Holders.
In
connection with any proposed registration in which a Holder is participating
pursuant to this Agreement, each such Holder shall furnish to the Company
in
writing such information with respect to such Holder as the Company may
reasonably request or as may be required by law for use in connection with
any
Registration Statement or prospectus or preliminary prospectus to be used
in
connection with such registration and each Holder agrees, severally and not
jointly, to indemnify and hold harmless the Company, any underwriter retained
by
the Company and their respective directors, officers, partners, employees,
advisors, agents, stockholders, members, general partners and limited partners,
and their respective Affiliates, and each Person who controls (within the
meaning of the Securities Act or the Exchange Act) any of such Persons
(collectively, “Holder
Indemnified Parties”)
to the
same extent as the foregoing indemnity from the Company to the Holders as
set
forth in Section 1.5(a)
(subject
to the exceptions set forth in the foregoing indemnity, the proviso to this
sentence and applicable law), but only with respect to any such information
furnished in writing by such Holder expressly for use in such Registration
Statement; provided,
however,
that
the liability of any Holder under this Section 1.5(b)
shall be
limited to the amount of the gross proceeds
received by such Holder in the offering giving rise to such liability. Such
indemnity obligation shall remain in full force and effect regardless of
any
investigation made by or on behalf of the Holder Indemnified Parties and shall
survive the transfer of Registrable Securities by such Holder.
(c) Conduct
of Indemnification Proceedings.
Any
Person entitled to indemnification hereunder (the “Indemnified
Party”)
agrees
to give prompt written notice to the indemnifying party (the “Indemnifying
Party”)
after the receipt by the Indemnified Party of any written notice of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing for which the Indemnified Party intends to claim indemnification
or contribution pursuant to this Agreement; provided, however, that, the
failure
so to notify the Indemnifying Party shall not relieve the Indemnifying Party
of
any liability that it may have to the Indemnified Party hereunder unless
and to
the extent such Indemnifying Party is materially prejudiced by such failure.
If
notice of commencement of any such action is given to the Indemnifying Party
as
above provided, the Indemnifying Party shall be entitled to participate in
and,
to the extent it may wish, jointly with any other Indemnifying Party similarly
notified, to assume the defense of such action at its own expense, with counsel
chosen by it and reasonably satisfactory to such Indemnified Party. The
Indemnified Party shall have the right to employ separate counsel in any
such
action and participate in the defense thereof, but the fees and expenses
of such
counsel shall be paid by the Indemnified Party unless (i) the Indemnifying
Party
agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense
of such action with counsel satisfactory to the Indemnified Party in its
reasonable judgment or (iii) the Indemnified Party reasonably
believes that
the
joint representation of the Indemnified Party and any other party in such
proceeding (including but not limited to the Indemnifying Party) would be
inappropriate due
to
actual or potential differing interests between such Indemnified Party and
the
other party represented by the same counsel.
In the
case of clauses (ii) and (iii) above, the Indemnifying Party shall not have
the right to assume the defense of such action on behalf of such Indemnified
Party. No Indemnifying Party shall be liable for any settlement entered into
without its written consent, which consent shall not be unreasonably withheld.
No Indemnifying Party shall, without the written consent of the Indemnified
Party, effect the settlement or compromise of, or consent to the entry of
any
judgment with respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder (whether
or not
the Indemnified Party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (A) includes an unconditional
release of the Indemnified Party from all liability arising out of such action
or claim and (B) does not include a statement as to, or an admission of,
fault,
culpability or a failure to act by or on behalf of any Indemnified Party.
The
rights afforded to any Indemnified Party hereunder shall be in addition to
any
rights that such Indemnified Party may have at common law, by separate agreement
or otherwise.
10
(d) Contribution.
If the
indemnification provided for in this Section 1.5
from the
Indemnifying Party is unavailable or insufficient to hold harmless an
Indemnified Party in respect of any Losses referred to herein, then the
Indemnifying Party, in lieu of indemnifying the Indemnified Party, shall
contribute to the amount paid or payable by the Indemnified Party as a result
of
such Losses in such proportion as is appropriate to reflect the relative
fault
of the Indemnifying Party and the Indemnified Party, as well as any other
relevant equitable considerations. The relative faults of the Indemnifying
Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact,
was
made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the Indemnifying Party’s and Indemnified Party’s relative
intent, knowledge, access to information and opportunity to correct or prevent
such action; provided,
however,
that
the liability of any Holder under this Section 1.5(d)
shall be
limited to the amount of the gross
proceeds
received by such Holder in the offering giving rise to such liability. The
amount paid or payable by a party as a result of the Losses or other liabilities
referred to above shall be deemed to include, subject to the limitations
set
forth in Section 1.5(a),
Section 1.5(b)
and
Section 1.5(c),
any
legal or other fees, charges or expenses reasonably incurred by such party
in
connection with any investigation or proceeding. The parties hereto 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. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution pursuant to this Section 1.5(d)
from any
Person who was not guilty of such fraudulent misrepresentation.
11
(e) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in an underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.
(f) Unless
otherwise superseded by an underwriting agreement entered into in connection
with an underwritten public offering,
the
obligations of the Company and Holders under this ARTICLE I
shall
survive the completion of any offering of Registrable Securities pursuant
to a
registration statement under this ARTICLE I,
and
shall survive the termination of this Agreement.
Section
1.6 Certain
Limitations On Registration Rights.
No
Holder may participate in any Registration Statement hereunder involving
an
underwritten public offering unless such Holder completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements,
and
other documents reasonably required under the terms of the underwriting
arrangements made in connection with such Registration Statement and agrees
to
sell such Holder’s Registrable Securities on the basis provided in any
underwriting agreement approved by the Holder or Holders entitled hereunder
to
approve such arrangements; provided,
however,
that no
such Holder shall be required to make any representations or warranties to
the
Company or the underwriters in connection with any such registration other
than
representations and warranties as to (i) such Holder’s ownership of its
Registrable Securities to be sold or transferred, (ii) such Holder’s power and
authority to effect such transfer and (iii) such matters pertaining to
compliance with securities laws as may be reasonably requested. Such Holders
of
Registrable Securities to be sold by such underwriters may, at their option,
require that any or all of the representations and warranties by, and the
other
agreements on the part of the Company to and for the benefit of such
underwriters, shall also be made to and for the benefit of such Holders and
that
any or all of the conditions precedent to the obligations of the underwriters
under the underwriting agreement be conditions precedent to the obligations
of
the Holders.
Section
1.7 Transfer
of Registration Rights.
The
rights of a Holder hereunder may be transferred or assigned in connection
with a
transfer of Registrable Securities to (i) any Affiliate of a Holder, (ii)
any
family member or trust for the benefit of any Holder, or (iii) any transferee
who, after such transfer, holds at least 500,000 shares of Registrable
Securities (as adjusted for any stock dividends, stock splits, combinations,
recapitalizations and similar events). Notwithstanding the foregoing, such
rights may only be transferred or assigned provided that all of the following
additional conditions are satisfied: (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 (including
but not limited to the restrictions on disposition of Registrable Securities);
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.
12
Section
1.8 Termination
of Registration Rights. The
rights contained in Section 1.2
hereof
shall terminate at the earlier of (a) six (6) years from the date of this
Agreement or (b) with respect to a Holder, in the opinion of the Company’s
counsel, all such Registrable Securities proposed to be sold by a Holder
may be
sold in a three (3) month period without registration under the Securities
Act
pursuant to Rule 144 (and such Registrable Securities represent less than
one
percent of the outstanding shares of Common Stock).
ARTICLE
II.
GENERAL
PROVISIONS
Section
2.1 Entire
Agreement.
This
Agreement, together with any certificates, documents, instruments and writings
that are delivered pursuant hereto, constitutes the entire agreement and
understanding of the parties in respect of the subject matter hereof and
supersedes all prior understandings, agreements or representations by or
among
the parties, written or oral, to the extent they relate to the subject matter
hereof. Except
as
provided in Section 1.7 and Section 2.2, there are no third party
beneficiaries having rights under or with respect to this
Agreement.
Section
2.2 Assignment;
Binding Effect.
Except
as provided in Section 1.7, no party may assign either this Agreement or
any of
its rights, interests or obligations hereunder without the prior written
approval of the other parties. All of the terms, agreements, covenants,
representations, warranties and conditions of this Agreement are binding
upon,
and inure to the benefit of and are enforceable by, the parties and their
respective successors and permitted assigns.
Section
2.3 Notices.
All
notices, requests and other communications provided for or permitted to be
given
under this Agreement must be in writing and be given by personal delivery,
by
certified or registered United States mail (postage prepaid, return receipt
requested), by a nationally recognized overnight delivery service for next
day
delivery, or by facsimile transmission, as follows (or to such other address
as
any party may give in a notice given in accordance with the provisions
hereof):
If
to the
Purchaser:
Attn: Xxxxx
X.
Xxxxxxx
X.X.
Xxx
0000
Xxxxxx,
Xxxxxxxxxx 00000-0000
Copy
to
(which shall not constitute notice):
Xxxxxx
X.
Xxxxxx
General
Counsel
X.X.
Xxx
0000
Xxxxxx,
Xxxxxxxxxx 00000-0000
Tel: |
(000)
000-0000
|
Fax: |
(000)
000-0000
|
Xxxxx
& Xxxxxx, LLP
Attn: |
Xxxxx
X. Xxxxxxx
|
000
Xxxxx
Xxxx., 00xx Xxxxx
Xxxxx
Xxxx, XX 00000-0000
Tel: |
(000)
000-0000
|
Fax: |
(000)
000-0000
|
13
If
to the
Company:
United
Fuel & Energy Corporation
Attn: |
Xxxxxxx
XxXxxxxx
|
000
Xxxxxxxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Tel: |
(000)
000-0000
|
Fax: |
(000)
000-0000
|
With
a
copy to (which shall not constitute notice):
Akin
Gump
Xxxxxxx Xxxxx & Xxxx LLP
Attn: |
Will
Xxxxxxxx
|
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxx 00000
Tel: |
(000)
000-0000
|
Fax: |
(000)
000-0000
|
All
notices, requests or other communications will be effective and deemed given
only as follows: (i) if given by personal delivery, upon such personal delivery,
(ii) if sent by certified or registered mail, on the fifth business day after
being deposited in the United States mail, (iii) if sent for next day delivery
by overnight delivery service, on the date of delivery as confirmed by written
confirmation of delivery, (iv) if sent by facsimile, upon the transmitter’s
confirmation of receipt of such facsimile transmission, except that if such
confirmation is received after 5:00 p.m. (in the recipient’s time zone) on a
business day, or is received on a day that is not a business day, then such
notice, request or communication will not be deemed effective or given until
the
next succeeding business day. Notices, requests and other communications
sent in
any other manner, including by electronic mail, will not be
effective.
Section
2.4 Specific
Performance; Remedies.
Each
party acknowledges and agrees that the other parties would be damaged
irreparably if any provision of this Agreement were not performed in accordance
with its specific terms or were otherwise breached. Accordingly, the parties
will be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and
its
provisions in any action or proceeding instituted in any
state
or federal court sitting in Nevada having
jurisdiction over the parties and the matter, in addition to any other remedy
to
which they may be entitled, at law or in equity. Except as expressly provided
herein, the rights, obligations and remedies created by this Agreement are
cumulative and in addition to any other rights, obligations or remedies
otherwise available at law or in equity. Except as expressly provided herein,
nothing herein will be considered an election of remedies.
14
Section
2.5 Submission
to Jurisdiction; Waiver of Jury Trial.
(a) Submission
to Jurisdiction.
Any
action, suit or proceeding seeking to enforce any provision of, or based
on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby must
be
brought in any federal court or state court located in Nevada, and each party
consents to the exclusive jurisdiction
and venue of such courts (and of the appropriate appellate courts therefrom)
in
any such action, suit or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have
to the
laying of the venue of any such, action, suit or proceeding in any such court
or
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum. Process in any such action, suit or proceeding
may be served on any party anywhere in the world, whether within or without
the
jurisdiction of any such court. Without limiting the foregoing, service of
process on such party as provided in Section 2.3
shall be
deemed effective service of process on such party.
(b) Waiver
of Jury Trial.
EACH
PARTY ACKNOWLEDGES THAT ANY DISPUTE THAT MAY ARISE OUT OF OR RELATING TO
THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
SUCH PARTY HEREBY EXPRESSLY WAIVES ITS RIGHT TO JURY TRIAL OF ANY DISPUTE
BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING HERETO
OR
ANY DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY.
THE
SCOPE OF THIS WAIVER IS INTENDED TO ENCOMPASS ANY AND ALL ACTIONS, SUITS
AND
PROCEEDINGS THAT RELATE TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED
HEREBY, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY REPRESENTS THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT IN THE EVENT OF ANY ACTION,
SUIT
OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) SUCH PARTY
UNDERSTANDS AND WITH THE ADVICE OF COUNSEL HAS CONSIDERED THE IMPLICATIONS
OF
THIS WAIVER, AND (iii) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY.
Section
2.6 Governing
Law.
This
Agreement will be governed by and construed in accordance with the laws of
the
State of Nevada, without giving effect to any choice of law
principles.
Section
2.7 Headings.
The
article and section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation
of
this Agreement.
Section
2.8 Amendments.
An
amendment or modification to any provision of this Agreement will require
the
written consent of the Company and the holders of at least 66
2/3%
of the
Registrable Securities then outstanding.
15
Section
2.9 Extensions;
Waivers.
Any
party may, for itself only, (a) extend the time for the performance of any
of
the obligations of any other party under this Agreement, (b) waive any
inaccuracies in the representations and warranties of any other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any such extension or waiver will be valid only if set forth in a
writing signed by the party to be bound thereby. No waiver by any party of
any
default, misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, may be deemed to extend to any prior or subsequent default,
misrepresentation or breach of warranty or covenant hereunder or affect in
any
way any rights arising because of any prior or subsequent such occurrence.
Neither the failure nor any delay on the part of any party to exercise any
right
or remedy under this Agreement shall operate as a waiver thereof, nor shall
any
single or partial exercise of any right or remedy preclude any other or further
exercise of the same or of any other right or remedy.
Section
2.10 Severability.
The
provisions of this Agreement will be deemed severable and the invalidity
or
unenforceability of any provision will not affect the validity or enforceability
of the other provisions hereof; provided that if any provision of this
Agreement, as applied to any party or to any circumstance, is judicially
determined not to be enforceable in accordance with its terms, the parties
agree
that the court judicially making such determination may modify the provision
in
a manner consistent with its objectives such that it is enforceable, and/or
to
delete specific words or phrases, and in its modified form, such provision
will
then be enforceable and will be enforced.
Section
2.11 Counterparts;
Effectiveness.
This
Agreement may be executed in two or more counterparts, each of which will
be
deemed an original but all of which together will constitute one and the
same
instrument. This Agreement will become effective when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
Section
2.12 Construction.
This
Agreement has been freely and fairly negotiated among the parties. If an
ambiguity or question of intent or interpretation arises, this Agreement
will be
construed as if drafted jointly by the parties and no presumption or burden
of
proof will arise favoring or disfavoring any party because of the authorship
of
any provision of this Agreement. Any reference to any law will be deemed
to
refer to such law as
amended
and all
rules and regulations promulgated thereunder, unless the context requires
otherwise. The words “include,” “includes,” and “including” will be deemed to be
followed by “without limitation.” Pronouns in masculine, feminine, and neuter
genders will be construed to include any other gender, and words in the singular
form will be construed to include the plural and vice versa, unless the context
otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,”
“hereunder,” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The parties
intend that each representation, warranty, and covenant contained herein
will
have independent significance. If any party has breached any covenant contained
herein in any respect, the fact that there exists another covenant relating
to
the same subject matter (regardless of the relative levels of specificity)
which
the party has not breached will not detract from or mitigate the fact that
the
party is in breach of the first covenant.
16
Section
2.13 Attorneys’
Fees.
If any
dispute among any parties arises in connection with this Agreement, the
prevailing party in the resolution of such dispute in any action or proceeding
will be entitled to an order awarding full recovery of reasonable attorneys’
fees and expenses, costs and expenses (including experts’ fees and expenses and
the costs of enforcing this Section 2.13)
incurred in connection therewith, including court costs, from the non-prevailing
party.
Section
2.14 Adjustments
for Stock Splits, Etc.
Wherever
in this Agreement there is a reference to a specific number of shares of
the
Company’s capital stock of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock,
the
specific number of shares so referenced in this Agreement will automatically
be
proportionally adjusted to reflect the effect of such subdivision, combination
or stock dividend on the outstanding shares of such class or series of
stock.
Section
2.15 Aggregation
of Stock.All
shares of Common Stock owned or acquired by the Purchaser or its
Affiliated entities or persons (assuming full conversion, exchange and exercise
of all convertible, exchangeable and exercisable securities into Common Stock)
shall be aggregated together for the purpose of determining the availability
of
any right under this Agreement.
[SIGNATURE
PAGE FOLLOWS]
17
IN
WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement as of the date first above written.
COMPANY:
|
UNITED
FUEL & ENERGY CORPORATION
|
||
|
By:
|
/s/
Xxxxxxx XxXxxxxx
|
|
|
Name:
|
Xxxxxxx
XxXxxxxx
|
|
|
Title:
|
President
and Chief Executive Officer
|
|
PURCHASER:
|
XXXXX
X. XXXXXXX, AS TRUSTEE UNDER THE GREINKE BUSINESS LIVING TRUST
DATED APRIL
20, 1999
|
||
|
/s/
Xxxxx X. Xxxxxxx
|
||
|
Xxxxx
X. Xxxxxxx, Trustee
|
18