UNITED FUEL & ENERGY CORPORATION
NEITHER THIS WARRANT NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
Warrant Date:
_________ Shares May __, 2005
UNITED FUEL & ENERGY CORPORATION
WARRANT
UNITED FUEL & ENERGY CORPORATION, a Nevada corporation ("Company"), for
value received hereby grants this warrant ("Warrant") to [Purchaser], or
registered assigns (the "Holder"). The Warrant entitles the Holder to purchase
from Company at any time prior to the Expiration Date (as defined below) up to [
] shares of common stock of Company ("Common Stock"). The exercise price for the
Warrant shall be $1.50 per share of Common Stock (the "Exercise Price"). This
Warrant shall be issued in connection with the Securities Purchase Agreement
entered into by Holder and Company as of this date.
1. Expiration Date; Exercise
1.1 Exerciseability. The Warrant granted hereunder shall be fully
exercisable as of the date hereof.
1.2 Expiration Date. The Warrant shall expire on the fifth (5) anniversary
of the date of this Warrant set forth on the first page. After the Expiration
Date, the Warrant shall expire and be of no further force or effect.
1.3 Callable Warrant. If during any consecutive 20 trading day period
(after the effectiveness of the registration statement if applicable), the
Common Stock of Company closes at the prices set forth in the following table
("Trading Price"), the Warrant shall be callable upon 10 days written notice at
$0.01 per share, in the following amounts:
Number of Warrants callable Trading Price
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1/2 of Warrants $4.00
1/2 of Warrants $4.50
If Company has called the applicable Warrants, then Holder shall exercise
such Warrants at $1.50 per share. If Holder does not exercise such Warrants when
called within 10 days of receiving notice, then such Warrants shall immediately
expire after such 10 day period.
2. Adjustments of Exercise Price and Number and Kind of Conversion Shares
2.1 In the event that Company shall at any time hereafter (a) pay a
dividend in Common Stock or securities convertible into Common Stock; (b)
subdivide or split its outstanding Common Stock; (c) combine its outstanding
Common Stock into a smaller number of shares; (d) spin-off to its shareholders a
subsidiary or operating-business unit; then the number of shares to be issued
immediately after the occurrence of any such event shall be adjusted so that the
Holder thereafter may receive the number of shares of Common Stock or the
equivalent value it would have owned immediately following such action if it had
exercised the Warrant immediately prior to such action and the Exercise Price
shall be adjusted to reflect such proportionate increases or decreases in the
number of shares.
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2.2 In case of any reclassification of the outstanding shares of Common
Stock (other than a change covered by Section 2.1 hereof or a change which
solely affects the par value of such shares) or in the case of any merger or
consolidation or merger in which Company is not the continuing corporation and
which results in any reclassification or capital reorganization of the
outstanding shares), the holder shall have the right thereafter (until the
Expiration Date) to receive upon the exercise hereof, for the same aggregate
Exercise Price payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property receivable upon such
reclassification, capital reorganization, merger or consolidation, by a holder
of the number of shares of Common Stock obtainable upon the exercise of the
Warrant immediately prior to such event; and if any reclassification also
results in a change in shares covered by Section 2.1, then such adjustment shall
be made pursuant to both this Section 2.2 and Section 2.1. The provisions of
this Section 2.2 shall similarly apply to successive reclassifications, capital
reorganizations and mergers or consolidations, sales or other transfers.
3. Transfer. Subject to compliance with applicable securities laws, the Warrant
is transferable in person, or by duly authorized attorney, upon surrender of
this Warrant properly endorsed and upon payment of any necessary transfer tax or
other governmental charge imposed upon such transfer. If less than all of the
Warrant is transferred, Company will, upon transfer, execute and deliver to the
Holder a new certificate for the portion of the Warrant not so transferred.
4. Reservation of Shares. Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, such number of shares
of Common Stock as shall from time to time be issuable upon exercise of the
Warrant. If at any time the number of authorized but unissued shares of Common
Stock shall not be sufficient to permit the exercise of the Warrant, Company
shall promptly seek such corporate action as may necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose.
5. Certificate as to Adjustments. In each case of any adjustment in the Exercise
Price, or number or type of shares issuable upon exercise of the Warrant,
Company shall compute such adjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment and showing in
detail the facts upon which such adjustment is based, including a statement of
the adjusted Exercise Price. Company shall promptly send (by facsimile and by
either first class mail, postage prepaid or overnight delivery) a copy of each
such certificate to the Holder.
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6. Loss or Mutilation. Upon receipt of evidence reasonably satisfactory to
Company of the ownership of and the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to it, and (in the case
of mutilation) upon surrender and cancellation of the Warrant, Company will
execute and deliver in lieu thereof a new Warrant of like tenor as the lost,
stolen, destroyed or mutilated Warrant.
7. Representations and Warranties of Company. Company hereby represents and
warrants to Holder that:
7.1 Due Authorization. All corporate action on the part of Company, its
officers, directors and shareholders necessary for (a) the authorization,
execution and delivery of, and the performance of all obligations of Company
under this Warrant, and (b) the authorization, issuance, reservation for
issuance and delivery of all of the Common Stock issuable upon exercise of this
Warrant, has been duly taken. This Warrant constitute a valid and binding
obligation of Company enforceable in accordance with their terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors' rights generally and to
general equitable principles.
7.2 Organization. Company is a corporation duly organized, validly
existing and in good standing under the laws of the Nevada and has all requisite
corporate power to grant this Warrant.
7.3 Valid Issuance of Stock. Any shares of Common Stock issued upon
exercise of this Warrant will be duly and validly issued, fully paid and
non-assessable.
7.4 Governmental Consents. All consents, approvals, orders, authorizations
or registrations, qualifications, declarations or filings with any federal or
state governmental authority on the part of Company required in connection with
the consummation of the transactions contemplated herein have been obtained.
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8. Notices of Record Date. In case, Company shall take a record of the holders
of its Common Stock (or other stock or securities at the time receivable upon
the exercise of this Warrant), for the purpose:
8.1 of entitling them to receive any dividend or other distribution, or
any right to subscribe for or purchase any shares of stock of any class or any
other securities or to receive any other right; or
8.2 of any consolidation or merger of Company with or into another
corporation, any capital reorganization of Company, any reclassification of the
capital stock of Company, or any conveyance of all or substantially all of the
assets of Company to another corporation in which holders of Company stock are
to receive stock, securities or property of another corporation; or
8.3 of any voluntary dissolution, liquidation or winding-up of Company; or
8.4 of any redemption or conversion of all outstanding Common Stock; then,
and in each such case, Company will mail or cause to be mailed to the Holder a
copy of the notice with respect to the foregoing received by it from Company
specifying, as the case may be, (a) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, or (b) the date on
which such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation, winding-up, redemption or conversion is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock or (such stock or securities as at the time are receivable upon the
exercise of this Warrant), shall be entitled to exchange their shares of Common
Stock (or such other stock or securities), for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution, liquidation or winding-up. Company shall use all
reasonable efforts to ensure such notice shall be delivered at least 15 days
prior to the date therein specified.
9. Severability. If any term, provision, covenant or restriction of the Warrant
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of the Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated to the same extent as if Company is
owner of the underlying Common Stock.
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10. Notices. All notices, requests, consents and other communications required
hereunder shall be in writing and by first class mail or by registered or
certified mail, postage prepaid, return receipt requested, and (other than in
connection with the exercise of the Warrant) shall be deemed to have been duly
made when received or, if sent registered or certified mail, postage prepaid,
return receipt requested, on the third day following deposit in the mails: if
addressed to the Holder, to the address set forth on the Securities Purchase
Agreement between the Holder and Company; and if addressed to Company,
Attention, Xxxxx Xxxxxx, 000 Xxxxx Xxxxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000
or such other address as it may designate in writing.
11. No Rights as Shareholder. The Holder shall have no rights as a shareholder
of Company with respect to the shares issuable upon exercise of the Warrant
until the actual exercise hereunder.
UNITED FUEL &ENERGY, INC.
By: __________________________________
Xxxxx Xxxxxx, Chief Executive Officer
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EXHIBIT "A"
NOTICE OF EXERCISE
(To be signed only upon exercise of the Warrant)
To: UNITED FUEL & ENERGY CORPORATION.
The undersigned hereby elects to purchase shares of Common Stock (the
"Warrant Shares") of UNITED FUEL & ENERGY CORPORATION. ("Company"), pursuant to
the terms of the enclosed Warrant (the "Warrant"). The undersigned tenders
herewith payment of the exercise price pursuant to the terms of the Warrant.
The undersigned hereby represents and warrants to, and agrees with Company as
follows:
1. Holder is acquiring the Warrant Shares for its own account, for
investment purposes only.
2. Holder understands that an investment in the Warrant Shares involves a
high degree of risk, and Xxxxxx has the financial ability to bear the economic
risk of this investment in the Warrant Shares, including a complete loss of such
investment. Holder has adequate means for providing for its current financial
needs and has no need for liquidity with respect to this investment.
3. Holder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an investment
in the Warrant Shares and in protecting its own interest in connection with this
transaction.
4. Holder understands that the Warrant Shares have not been registered
under the Securities Act or under any state securities laws. Holder is familiar
with the provisions of the Securities Act and Rule 144 thereunder and
understands that the restrictions on transfer on the Warrant Shares may result
in Holder being required to hold the Warrant Shares for an indefinite period of
time.
5. Xxxxxx agrees not to sell, transfer, assign, gift, create a security
interest in, or otherwise dispose of, with or without consideration
(collectively, "Transfer") any of the Warrant Shares except pursuant to an
effective registration statement under the Securities Act or an exemption from
registration. As a further condition to any such Transfer, except in the event
that such Transfer is made pursuant to an effective registration statement under
the Securities Act, if in the reasonable opinion of counsel to Company any
Transfer of the Warrant Shares by the contemplated transferee thereof would not
be exempt from the registration and prospectus delivery requirements of the
Securities Act, Company may require the contemplated transferee to furnish
Company with an investment letter setting forth such information and agreements
as may be reasonable requested by Company to ensure compliance by such
transferee with the Securities Act.
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Until the effectiveness of the registration statement each certificate
evidencing the Warrant Shares will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE EXERCISED, SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
Number of Warrant Exercised: ________
Dated:
[Name]
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