EXHIBIT 4.2
WARRANT AGREEMENT
Dated as of October 19, 2007
Between
NATIONAL COAL CORP.,
as Issuer
and
NCC CORP.,
as Holder
Warrants to Purchase
Shares of Common Stock
WARRANT AGREEMENT, dated as of October 19, 2007 (this "AGREEMENT"),
between National Coal Corp., a Florida corporation (the "COMPANY"), and NCC
Corp., an Alabama corporation and a wholly owned subsidiary of the Company (the
"INITIAL HOLDER").
WHEREAS, the Company desires to issue to the Initial Holder Warrants
(as hereinafter defined), with an initial exercise price of $4.00 per share
(subject to adjustment as provided herein), to purchase a number of shares
(subject to adjustment as provided herein) of Common Stock (as hereinafter
defined) such that, upon exercise of all the Warrants, holders of the Warrants
would, in the aggregate, acquire 250,000 shares of Common Stock; and
WHEREAS, the Company and the Initial Holder desire to enter into this
Agreement in order to set forth terms and conditions applicable to the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 25% or more of the
Voting Stock of a Person will be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" have correlative meanings.
"BOARD OF DIRECTORS" means, as to any Person, the board of directors or
similar governing body of such Person or any duly authorized committee thereof.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CASHLESS EXERCISE RATIO" has the meaning set forth in Section 3(b).
"CLOSING DATE" means the date hereof.
"COMMON STOCK" means the common stock, par value $0.0001 per share, of
the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE NUMBER" has the meaning set forth in Section 3(a).
"EXERCISE PERIOD" means the period commencing on the Closing Date and
ending on the Expiration Date.
"EXERCISE PRICE" means $4.00 per share of Common Stock, as adjusted as
herein provided.
"EXPIRATION DATE" means 5:00 p.m., New York City time, on December 31,
2010.
"HOLDERS" or "HOLDERS" means, collectively, the Initial Holder and its
successors and assigns.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York, or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
"MARKET VALUE" per share of Common Stock as of any date shall equal (i)
if Common Stock is primarily traded on a securities exchange, the last sale
price of such Common Stock on such securities exchange on the trading day
immediately prior to the date of determination, or if no sale occurred on such
day, the mean among the closing "bid" and "asked" prices on such day, (ii) if
the principal market for Common Stock is in the over-the-counter market, the
closing sale price of such Common Stock on the trading day immediately prior to
the date of the determination, as published by the National Association of
Securities Dealers Automated Quotation System or similar organization, or if
such price is not so published on such day, the mean among the closing "bid" and
"asked" prices, if available, on such day, which prices may be obtained from any
reputable pricing service, broker or dealer reasonably satisfactory to the
Company, and (iii) if there is no public market, the Market Value shall be the
value thereof, as agreed upon in good faith by the Company and the holder;
provided, however, that if the Company and the holder cannot agree on such
value, such value shall be determined by an independent valuation firm
experienced in valuing businesses jointly selected in good faith by the Company
and the holder. Fees and expenses of the valuation firm shall be paid for
equally by the Company and the holder.
"NON-AFFILIATE SALE" means a sale by the Company to a non-Affiliate in
an arm's length transaction.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date hereof, between the Company, the Purchasers
listed on Exhibit A thereto and the Initial Holder relating to the resale of
Warrant Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSCRIPTION AGREEMENTS" means the Subscription Agreements between the
Company and each of the Purchasers listed on Exhibit A of the Registration
Rights Agreement relating to the purchase by such Purchasers of shares of the
Company's Common Stock.
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"TRANSFER" means any sale, transfer, assignment, or other disposition
of any interest in, with or without consideration, any security, including any
disposition of any security or of any interest therein which would constitute a
sale thereof within the meaning of the Securities Act.
"TRANSFER AGENT" has the meaning set forth in Section 5(b).
"VOTING STOCK" means, with respect to a Person, the capital stock of
such Person that has the right to vote for the election of the Board of
Directors or other governing body of such Person.
"WARRANT" means the right to purchase Warrant Shares on the terms
described herein evidenced by a Warrant Certificate.
"WARRANT CERTIFICATE" has the meaning set forth in Section 2(a)(i).
"WARRANT SHARES" has the meaning set forth in Exhibit A.
Section 2. CERTAIN ADMINISTRATIVE PROVISIONS.
(a) FORM OF WARRANT; REGISTER.
(i) Each Warrant issued hereunder shall be substantially in
the form of Exhibit A attached hereto (each, a "WARRANT CERTIFICATE")
and shall be executed on behalf of the Company by a duly authorized
officer of the Company. The Warrant may have notations, legends or
endorsements required by law, stock exchange rule or usage. The terms
and provisions contained in the Warrant shall constitute, and are
hereby expressly made, a part of this Warrant Agreement.
(ii) Each Warrant issued, exchanged or transferred hereunder
shall be registered in a warrant register (the "WARRANT REGISTER"). The
Warrant Register shall set forth (i) the number of each Warrant, (ii)
the name and address of the holder thereof, (iii) the original number
of Warrant Shares purchasable upon the exercise thereof, (iv) the
number of Warrant Shares purchasable upon the exercise thereof, as
adjusted from time to time in accordance with this Agreement and (v)
the Exercise Price for each Warrant Share, as adjusted from time to
time in accordance with this Agreement. The Warrant Register will be
maintained by the Company and will be available for inspection by any
holder at the principal office of the Company or such other location as
the Company may designate to the holders in the manner set forth in
Section 12.
(iii) All Warrants issued hereunder shall be subject to the
terms and provisions of this Agreement and, any Person to whom a
Warrant is Transferred or to whom a Warrant is issued in connection
with an exchange or exercise, by such Person's acceptance thereof,
shall be deemed to have become a party to, and to be bound by the terms
of and entitled to the benefits under, this Agreement.
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(b) EXCHANGE OF WARRANTS.
(i) A holder may exchange any Warrant issued hereunder for
another Warrant, or other Warrants of different denominations, of like
kind and tenor representing in the aggregate the right to purchase the
same number and class or series of Warrant Shares that could be
purchased pursuant to the Warrant being so exchanged. In order to
effect an exchange permitted by this Section 2(b), the holder shall
deliver to the Company such Warrant accompanied by a duly executed
written request specifying the number and denominations of Warrants to
be issued in such exchange and the names in which such Warrants are to
be issued. As promptly as practicable, but in any event within five
business days of receipt of such a request, the Company shall, without
charge, issue, register and deliver to the holder thereof each warrant
to be issued in such exchange and make any necessary changes to the
Warrant Register.
(ii) Upon receipt of evidence reasonably satisfactory to the
Company (an affidavit of the holder being satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any
Warrant, and in the case of any such loss, theft or destruction, upon
receipt of an indemnity agreement from the holder reasonably
satisfactory to the Company or, in the case of any such mutilation,
upon surrender of such Warrant, the Company shall, without charge,
issue, register and deliver in lieu of such Warrant a new Warrant of
like kind representing the same rights represented by, and dated the
date of, such lost, stolen, destroyed or mutilated Warrant.
(c) TRANSFER OF WARRANTS.
(i) Subject to the further provisions of this Agreement and
compliance with all applicable securities laws, each Warrant may be
Transferred, in whole or in part, by the holder thereof by delivering
to the Company such Warrant accompanied by a properly completed, duly
executed, Assignment in the form of Exhibit B hereto. As promptly as
practicable, but in any event within five business days of receipt of
such Assignment Form, the Company shall, without charge, issue,
register and deliver to the holder thereof a new Warrant of like kind
and tenor representing in the aggregate the right to purchase the same
number of Warrant Shares that could be purchased pursuant to the
Warrant being Transferred.
Section 3. EXERCISE OR EXCHANGE OF WARRANTS; TERMS OF WARRANTS.
(a) On any Business Day during normal business hours during the
Exercise Period, a holder may exchange a Warrant, in whole or in part, for
Warrant Shares by delivering to the Company such Warrant accompanied by a
properly completed, duly executed Exchange Form in the form of Exhibit C
attached hereto. The number of Warrant Shares to be received by a holder upon
such exchange shall be equal to the number of Warrant Shares allocable to the
portion of the Warrant being exchanged (the "EXCHANGE NUMBER"), as specified by
such holder in the Exchange Form, minus a number of Warrant Shares equal to the
quotient obtained by dividing (i) the product of (x) the Exercise Price and (y)
the Exchange Number by (ii) the Market Value (as defined below) of one Warrant
Share as of the delivery date of the Exchange Form. The Company acknowledges
that the provisions of this Section 3 are intended, in part, to ensure that a
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full or partial exchange of a Warrant pursuant to this Section 3 will qualify as
a conversion, within the meaning of paragraph (d)(3)(ii) of Rule 144 under the
Securities Act. At the request of any holder, the Company will accept reasonable
modifications to the exchange procedures provided for in this section 3 in order
to accomplish such intent.
The Company and each holder intend that if any holder exercises this
Warrant by surrendering Warrants as contemplated by Section 3(b) or Section 3(a)
hereof, such method of exercise shall be treated for United States tax purposes
as a "reorganization" pursuant to Section 368(a)(1)(E) of the Internal Revenue
Code of 1986. The Company and each holder intend that such holder (and its
direct and indirect beneficial owners) will neither realize nor recognize any
taxable income or gain as a result of its exercise of the Warrant by such
method. None of the parties hereto will take any position in their respective
tax or other financial or accounting filings that are contrary to or
inconsistent with the foregoing.
(b) On any Business Day during normal business hours during the
Exercise Period, a holder shall have the right to receive from the Company the
number of Warrant Shares which the holder may at the time be entitled to receive
on exercise of such Warrants upon payment of the aggregate Exercise Price for
all Warrant Shares being purchased by such holder (i) in cash, by wire transfer
or by certified or official bank check payable to the order of the Company, (ii)
by surrendering notes or other instruments evidencing indebtedness issued by the
Company ("INDEBTEDNESS") having a principal amount, plus accrued interest, at
the time of tender equal to or greater than the aggregate Exercise Price then in
effect for all Warrant Shares being purchased by such holder, (iii) by tendering
Warrants as set forth below or (iv) any combination of cash, Indebtedness or
Warrants. Each holder may elect, upon exercise of its Warrants during the
Exercise Period, provided that the Market Value is greater than the Exercise
Price, to receive Warrant Shares on a net basis, such that, without the exchange
of any funds, the holder will receive such number of Warrant Shares as shall
equal the product of (A) the number of Warrant Shares for which such Warrant is
exercisable as of the date of exercise (if the Exercise Price were being paid in
cash) and (B) the Cashless Exercise Ratio. The "CASHLESS EXERCISE RATIO" shall
equal a fraction, the numerator of which is the Market Value (as defined below)
per share of Common Stock on the date of exercise minus the Exercise Price per
share as of the date of exercise and the denominator of which is the Market
Value per share on the date of exercise. Each Warrant not exercised prior to the
Expiration Date shall become void and all rights thereunder and all rights in
respect thereof under this Agreement shall cease as of such time.
(c) In order to exercise or exchange all or any of the Warrants
represented by a Warrant Certificate pursuant to Section 3(a) or (b) hereof, the
holder thereof must surrender upon exercise or exchange the Warrant Certificate
to the Company and deliver to the Company the form of election to purchase on
the reverse thereof duly completed and signed or the Exchange Form, and shall
provide payment to the Company of the Exercise Price, for the number of Warrant
Shares in respect of which such Warrants are then exercised or exchanged.
Payment of the aggregate Exercise Price shall be made in accordance with Section
3(b) hereof.
(d) Subject to the provisions of Section 3 hereof, upon compliance with
subsection (c) above, the Company shall deliver or cause to be delivered with
all reasonable dispatch, to or to the written order of the holder and in such
name or names as the holder may designate, a certificate or certificates for the
number of whole Warrant Shares issuable upon the exercise or exchange of such
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Warrants or other securities or property to which such holder is entitled
hereunder, together with cash as provided in Section 8 hereof; provided that if
any consolidation, merger or lease or sale of assets is proposed to be effected
by the Company or its subsidiaries as described in Section 7(g) hereof, or a
tender offer or an exchange offer for shares of Common Stock shall be made, upon
such surrender of Warrants and payment of the aggregate Exercise Price, the
Company shall, as soon as possible, but in any event not later than five
business days thereafter, deliver or cause to be delivered the full number of
Warrant Shares issuable upon the exercise of such Warrants in the manner
described in this sentence or other securities or property to which such holder
is entitled hereunder, together with cash as provided in Section 7 hereof. All
certificates in this Section 3(d) shall be deemed to have been issued and any
Person so designated to be named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the applicable Exercise Price.
(e) The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part. If less than all the
Warrants represented by a Warrant Certificate are exercised, such Warrant
Certificate shall be surrendered and a new Warrant Certificate of the same tenor
and for the number of Warrants which were not exercised shall be executed by the
Company, registered in such name or names as may be directed in writing by the
holder, and shall deliver or cause to be delivered the new Warrant Certificate
to the Person or Persons entitled to receive the same. If a holder surrenders a
portion of the principal amount of any Indebtedness in payment of the Exercise
Price pursuant to Section 3(b), the Company shall (or shall cause its applicable
wholly-owned subsidiary to) issue to such holder a new note or other instrument,
as applicable, representing the principal amount not so surrendered.
Section 4. PAYMENT OF TAXES.
The Company shall pay all documentary stamp taxes attributable to the
initial issuance of Warrant Shares upon the exercise of Warrants; provided that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer or reissuance of any Warrant Certificates or the
issuance of Warrant Shares in a name other than that of the registered holder of
a Warrant Certificate surrendered upon the exchange, and the Company shall not
be required to issue or deliver such Warrant Shares unless or until the Person
or Persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
Section 5. RESERVATION OF WARRANT SHARES; REGISTRATION OF WARRANT SHARES.
(a) The Company shall at all times reserve and keep available, free
from preemptive rights, out of the aggregate of its authorized but unissued
Common Stock and/or the authorized and issued Common Stock held in its treasury,
for the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
(b) The Company or, if appointed, the transfer agent for the Common
Stock (the "TRANSFER AGENT") and every subsequent transfer agent for any shares
of the Company's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid will be irrevocably authorized and directed at all times
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to reserve such number of authorized shares as shall be required for such
purpose. The Company shall keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company shall supply such Transfer Agent with
duly executed certificates for such purposes and shall provide or otherwise make
available any cash which may be payable as provided in Section 8 hereof. The
Company shall furnish such Transfer Agent a copy of all notices of adjustments,
and certificates related thereto, transmitted to each holder pursuant to Section
10 hereof.
(c) Before or concurrently with taking any action which would cause an
adjustment pursuant to Section 7 hereof to reduce the Exercise Price below the
then par value (if any) of the Warrant Shares, the Company shall take any
corporate action which may, in the opinion of its counsel (which may be counsel
employed by the Company), be necessary in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares at the Exercise Price
as so adjusted.
(d) The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants shall, upon issue, be fully paid, nonassessable, free
of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issuance thereof.
Section 6. OBTAINING STOCK EXCHANGE LISTINGS.
The Company shall from time to time take all action which may be
reasonably necessary so that the Warrant Shares, immediately upon their issuance
upon the exercise of Warrants, will be listed on a principal securities
exchange, automated quotation system or other market within the United States of
America, if any, on which other shares of Common Stock are then listed, if any.
Section 7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE.
The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant shall be subject to adjustment from time to time upon
the occurrence of the events enumerated in this Section 7. Notwithstanding
anything to the contrary in this Agreement, in no event shall the Exercise Price
be less than the par value of the Common Stock. For purposes of this Section 7,
"COMMON STOCK" means shares now or hereafter authorized of any class of common
shares of the Company however designated, that has the right (subject to any
prior rights of any class or series of preferred stock) to participate in any
distribution of the assets or earnings of the Company without limit as to per
share amount.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK. If the Company (i) pays a
dividend or makes a distribution on its Common Stock payable in shares of its
Common Stock, (ii) subdivides its outstanding shares of Common Stock into a
greater number of shares, (iii) combines its outstanding shares of Common Stock
into a smaller number of shares, (iv) makes a distribution on its Common Stock
in shares of its capital stock other than Common Stock or (v) issues by
reclassification of its Common Stock any shares of its capital stock, then the
Exercise Price in effect immediately prior to such action shall be
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proportionately adjusted so that the holder of any then outstanding Warrant
exercised after such action may receive the aggregate number and kind of shares
of capital stock of the Company which such holder would have owned immediately
following such action assuming the exercise of such Warrant immediately prior to
such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
If, after an adjustment pursuant to clause (v) above, a holder of a
Warrant upon exercise of it may receive shares of two or more classes of capital
stock of the Company, the Company shall determine, in good faith, the allocation
of the adjusted Exercise Price between the classes of capital stock. After such
allocation, the exercise privilege and the Exercise Price of each class of
capital stock shall after such action be subject to adjustment on terms
comparable to those applicable to Common Stock in this Section 7. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) ADJUSTMENT FOR RIGHTS ISSUE. If the Company distributes any rights,
options or warrants to all holders of its Common Stock entitling them for a
period expiring within 45 days after the record date set forth below to
subscribe for shares of Common Stock or securities convertible into, or
exchangeable or exercisable for, shares of Common Stock, in either case, at a
price per share less than the Market Value per share on that record date, the
Exercise Price shall be adjusted in accordance with the formula:
O + N X P
-----
E' = E x M
-----------
O + N
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on
the record date.
N = the number of additional shares of Common Stock
issued pursuant to such rights, options or warrants.
P = the price per share of the additional shares.
M = the Market Value per share of Common Stock on the
record date.
The adjustment shall be made successively whenever any such rights,
options or warrants are issued and shall become effective immediately after the
record date for the determination of stockholders entitled to receive the
rights, options or warrants. If at the end of the period during which such
rights, options or warrants are exercisable, not all rights, options or warrants
shall have been exercised, the Exercise Price shall be immediately readjusted to
what it would have been if "N" in the above formula had been the number of
shares actually issued.
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(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If the Company distributes to
all holders of its Common Stock any of its assets (including cash), debt
securities, preferred stock or any rights or warrants to purchase assets
(including cash), debt securities, preferred stock or other securities of the
Company, the Exercise Price shall be adjusted in accordance with the formula:
M - F
E' = E x _______________________
M
where:
E' = the adjusted Exercise Price.
E = the current Exercise Price.
M = the Market Value per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date of the debt
securities, preferred stock, assets, securities,
rights or warrants to be distributed in respect of
one share of Common Stock as determined in good faith
by the Board of Directors of the Company.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This Section 7(c) shall not apply to cash dividends or other cash
distributions paid out of consolidated current or retained earnings as shown on
the books of the Company prepared in accordance with generally accepted
accounting principles. In addition, this Section 7(c) shall not apply to rights,
options or warrants referred to in Section 7(b) hereof.
(d) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED. No adjustment in the
Exercise Price need be made unless the adjustment would require an increase or
decrease of at least 1% in the Exercise Price. Any adjustments that are not made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 7 shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be, it being understood that no
such rounding shall be made under Section 7(j).
(e) WHEN NO ADJUSTMENT REQUIRED. With respect to Warrants of any
holder, no adjustment need be made for a transaction referred to Section 7(a),
(b) or (c), hereof, if such holder is to participate (without being required to
exercise its Warrants) in the transaction on a basis that such holder agrees is
fair and appropriate in light of the basis on which holders of Common Stock
participate in the transaction. No adjustment need be made (i) for rights to
purchase Common Stock pursuant to a Company plan for reinvestment of dividends
or interest, (ii) for a change in the par value or no par value of the Common
Stock or (iii) that would result in the Exercise Price being less than the par
value of the Common Stock. To the extent the Warrants become convertible into
cash, no adjustment need be made thereafter as to the cash. Interest will not
accrue on the cash.
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(f) NOTICE OF ADJUSTMENT. Whenever the Exercise Price is adjusted, the
Company shall provide the notices required by Section 10 hereof.
(g) REORGANIZATION OF COMPANY. Immediately after the date hereof, if
the Company consolidates or merges with or into, or transfers or leases all or
substantially all its assets to, any Person, upon consummation of such
transaction the Warrants shall automatically become exercisable for the kind and
amount of securities, cash or other assets which the holder of a Warrant would
have owned immediately after the consolidation, merger, transfer or lease if the
holder had exercised the Warrant immediately prior to the consummation of the
transaction. Concurrently with the consummation of such transaction, the
corporation formed by or surviving any such consolidation or merger if other
than the Company, or the Person to which such sale or conveyance shall have been
made, shall enter into (i) a supplemental Warrant Agreement so providing and
further providing for adjustments which shall be as nearly equivalent as may be
practical to the adjustments provided for in this Section 7(g) and (ii) a
supplement to the Registration Rights Agreement providing for the assumption of
the Company's obligations thereunder. The successor Company shall mail to
Warrant holders a notice describing the supplemental Warrant Agreement and
Registration Rights Agreement. If the issuer of securities deliverable upon
exercise of Warrants under the supplemental Warrant Agreement is an Affiliate of
the formed, surviving, transferee or lessee corporation, such issuer shall join
in the supplemental Warrant Agreement and Registration Rights Agreement. If this
Section 7(g) shall be applicable, Sections 7(a), (b) and (c) hereof shall not be
applicable.
(h) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED. In any case in which this
Section 7 shall require that an adjustment in the Exercise Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event (i) issuing to the holder of any
Warrant exercised after such record date the Warrant Shares and other capital
stock of the Company, if any, issuable upon such exercise over and above the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise on the basis of the Exercise Price and (ii) paying to such holder
any amount in cash in lieu of a fractional share pursuant to Section 10 hereof;
provided that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such additional
Warrant Shares, other capital stock and cash upon the occurrence of the event
requiring such adjustment.
(i) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to this Section 7, each Warrant outstanding prior to the
making of the adjustment in the Exercise Price shall thereafter evidence the
right to receive upon payment of the adjusted Exercise Price that number of
shares of Common Stock (calculated to the nearest hundredth) obtained from the
following formula:
N x E
-------------
N' = E'
where:
N' = the adjusted number of Warrant Shares issuable upon
exercise of a Warrant by payment of the adjusted
Exercise Price.
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N = the number or Warrant Shares previously issuable upon
exercise of a Warrant by payment of the Exercise
Price prior to adjustment.
E' = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(j) FORM OF WARRANTS. Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the exercise of the
Warrants, Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the Warrants initially
issuable pursuant to this Agreement.
Section 8. FRACTIONAL INTERESTS.
The Company shall not be required to issue fractional Warrant Shares on
the exercise of Warrants. If more than one Warrant shall be presented for
exercise in full at the same time by the same holder, the number of full Warrant
Shares which shall be issuable upon the exercise thereof shall be computed on
the basis of the aggregate number of Warrant Shares purchasable on exercise of
the Warrants so presented. If any fraction of a Warrant Share would, except for
the provisions of this Section 8, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall calculate the amount in cash
equal to the Market Value per Warrant Share and pay such amount, as determined
on the day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction, computed to the nearest whole U.S. cent.
Section 9. REPRESENTATIONS OF HOLDER; TRANSFER.
(a) REPRESENTATIONS. Each holder hereby represents and warrants to the
Company as follows: (i) such holder is a sophisticated investor having such
knowledge and experience in business and investment matters that holder is
capable of protecting holder's own interests in connection with the acquisition,
exercise or disposition of this Warrant; (ii) such holder is an "accredited
investor" within the meaning of Regulation D promulgated under the Act; (iii)
such holder is aware that the Warrants and the Warrant Shares are being, or will
be, issued to the holder in reliance upon holder's representation in this
Section 9 and that such securities are restricted securities that cannot be
publicly sold except in certain prescribed situations; (iv) such holder is aware
of the provisions of Rule 144 promulgated under the Act and of the conditions
under which sales may be made thereunder; (v) such holder has received such
information about the Company as the holder deems reasonable, has had the
opportunity to ask questions and receive answers from the Company with respect
to its business, assets, prospects and financial condition; and (vi) such
holder, by acceptance of the Warrants, acknowledges that the Warrants and the
Warrant Shares to be issued upon exercise hereof or conversion thereof are being
acquired solely for the holder's own account and not as a nominee for any other
party, and for investment, and that the holder will not offer, sell or otherwise
dispose of the Warrants or any Warrant Shares to be issued upon exercise hereof
or conversion thereof except under circumstances that will not result in a
violation of the Securities Act or any state securities laws.
- 11 -
(b) LEGENDS. The Warrants and the Warrant Shares shall be imprinted
with a legend in substantially the following form:
THIS SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS
EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY, THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH
TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO REGISTRATION.
(c) COMPLIANCE WITH SECURITIES LAWS ON TRANSFER. The Warrants and the
Warrant Shares issuable upon exercise the Warrants may not be transferred or
assigned in whole or in part without compliance with applicable federal and
state securities laws by the transferor and the transferee.
Section 10. NOTICES TO WARRANT HOLDERS.
(a) Upon any adjustment of the Exercise Price pursuant to Section 7
hereof, the Company shall promptly thereafter prepare a certificate setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of Warrant Shares (or portion thereof)
issuable after such adjustment in the Exercise Price, upon exercise of a Warrant
and payment of the adjusted Exercise Price, and (ii) cause, at the Company's
expense, to be given to each holder of Warrants at the address appearing on the
Warrant Register for each such holder written notice of such adjustments by
first-class mail, postage prepaid. Where appropriate, such notice may be given
in advance and included as a part of the notice required to be mailed under the
other provisions of this Section 9.
(b) In the event:
(i) that the Company shall authorize the issuance to all
holders of shares of Common Stock of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of any other
subscription rights or warrants;
(ii) that the Company shall authorize the distribution to all
holders of shares of Common Stock of evidences of its indebtedness or
assets (other than dividends or cash distributions paid out of
consolidated current or retained earnings as shown on the books of the
Company prepared in accordance with generally accepted accounting
principles or dividends payable in shares of Common Stock or
distributions);
(iii) of any consolidation or merger to which the Company is a
party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets
- 12 -
of the Company substantially as an entirety, or of any reclassification
or change of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from
no par value to par value, or as a result of a subdivision or
combination), or a tender offer or exchange offer by the Company for
shares of Common Stock;
(iv) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company; or
(v) that the Company proposes to take any action (other than
actions of the character described in Section 7(a) hereof) which would
require an adjustment of the Exercise Price pursuant to Section 7
hereof;
then the Company shall, at the Company's expense, cause to be given to each
registered holder of Warrants at the address appearing on the Warrant Register,
at least 10 days prior to the applicable record date hereinafter specified, or
promptly in the case of events for which there is no record date, by first-class
mail, postage prepaid, a written notice stating (x) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
rights, options, warrants or distribution are to be determined, (y) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (z) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 9 or any defect therein shall not affect the legality or validity of any
distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up, or the vote upon any action.
(c) Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders of Warrants the
right to vote or to consent or to receive notice as stockholders in respect of
the meetings of stockholders or the election of directors of the Company or any
other matter, or any rights whatsoever as stockholders of the Company.
Section 11. REPORTS.
(a) The Company agrees with each holder, for so long as any Warrants
remain outstanding and during any period in which the Company (i) is not subject
to Section 13 or 15(d) of the Exchange Act, to make available, upon request of
any holder in connection with any sale thereof and any prospective purchaser of
such Warrants designated by such holder, the information required by Rule
144(A)(d)(4) under the Act in order to permit resales of such Warrants pursuant
to Rule 144A or such information as may be required in order to permit resales
of such Warrants pursuant to or other recognized resale exemptions and (ii) is
subject to Section 13 or 15(d) of the Exchange Act, to make all filings required
thereby in a timely manner in order to permit resales of such Warrants pursuant
to Rule 144A.
- 13 -
(b) The Company shall provide the holders copies of all such reports
under this Section 11. Any such delivery shall be on the instructions of and at
the expense of the Company.
Section 12. NOTICES TO COMPANY.
Any notice or demand authorized by this Agreement to be given or made
by the registered holder of any Warrant to the Company shall be sufficiently
given or made when received if deposited in the mail, first class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Company with the holders) as follows:
National Coal Corp.
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Any notice or communication to a registered holder of Warrants will be
mailed by first class mail, certified or registered, return receipt requested,
or by overnight air courier guaranteeing next day delivery to its address
appearing on the Warrant Register. Failure to mail a notice or communication to
such a holder or any defect in it will not affect its sufficiency with respect
to other such holders.
Section 13. SUPPLEMENTS AND AMENDMENTS.
Any amendment or supplement to this Agreement or waiver of any
provision hereof shall require the written consent of the holders of a majority
of the then outstanding Warrants (excluding Warrants held by the Company or any
of its Affiliates). The consent of each holder of Warrants affected shall be
required for any amendment pursuant to which the Exercise Price would be
increased or the number of Warrant Shares purchasable upon exercise of Warrants
would be decreased (other than pursuant to adjustments provided in this
Agreement).
Section 14. SUCCESSORS.
All the covenants and provisions of this Agreement by or for the
benefit of the Company shall bind and inure to the benefit of their respective
successors and assigns hereunder.
Section 15. TERMINATION.
This Agreement shall terminate on the Expiration Date provided that the
Company has complied with its obligations hereunder. Notwithstanding the
foregoing, this Agreement will terminate on any earlier date if all Warrants
have been exercised.
Section 16. GOVERNING LAW.
(a) This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of New York, without
regard to principles of conflicts of laws (other than Section 5-1401 and Section
5-1402 of the New York General Obligations Law), and for all purposes shall be
construed in accordance with the internal laws of said state.
- 14 -
(b) Each of the parties hereto irrevocably consents to the
non-exclusive jurisdiction of Supreme Court of New York, New York county and the
United States District Court for the Southern District of New York, New York
county and waives trial by jury in any action or proceeding with respect to this
Agreement.
Section 17. BENEFITS OF THIS AGREEMENT.
This Agreement shall be for the sole and exclusive benefit of the
Company and the holders of Warrants. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
holders of Warrants any legal or equitable right, remedy or claim under this
Agreement.
Section 18. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
[Signature Page Follows]
- 15 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
NATIONAL COAL CORP.
a Florida corporation
By: /s/ Xxxxxx Xxxxxx
----------------------------
Name: Xxxxxx Xxxxxx
Title: President and CEO
NCC CORP.
an Alabama corporation
By: /s/ Xxxxxx Xxxxxx
----------------------------
Name: Xxxxxx Xxxxxx
Title: President and CEO
- 16 -
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THIS SECURITY AND THE WARRANT SHARES TO BE ISSUED UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY, THE WARRANT SHARES TO BE ISSUED UPON ITS
EXERCISE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO REGISTRATION.
NATIONAL COAL CORP.
WARRANT CERTIFICATE
WARRANT NO. [ ]
This Warrant Certificate certifies that [ ], or its registered assigns,
is the registered holder of [ ] Warrants (the "WARRANTS") to purchase shares of
common stock, par value $0.0001 (the "COMMON STOCK"), of National Coal Corp., a
Florida corporation (the "COMPANY"). Each Warrant entitles the registered holder
upon exercise at any time until 5:00 p.m. New York City time on December 31,
2010 to receive from the Company [ ] fully paid and nonassessable shares of
Common Stock (the "WARRANTS SHARES") at the initial exercise price (the
"EXERCISE PRICE") of $4.00 per share payable upon surrender of this Warrant
Certificate and payment of the Exercise Price at the office of the Company,
subject to the conditions set forth herein and in the Warrant Agreement (as
hereinafter defined) referred to on the reverse hereof. The Exercise Price and
number of Warrant Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
No Warrant may be exercised after 5:00 p.m., New York City time on
December 31, 2010. To the extent not exercised by such time, any such Warrant
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall be governed by and construed in
accordance with the internal laws of the State of New York.
*********
A-1
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed below.
DATED: _____________________
NATIONAL COAL CORP.
By:________________________________
Name:
Title:
A-2
[Reverse of Warrant Certificate]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m. New York City time on
December 31, 2010 entitling the holder on exercise to receive shares of Common
Stock, and are issued pursuant to a Warrant Agreement dated as of October 19,
2007 (the "WARRANT AGREEMENT"), between the Company and NCC Corp., which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. Capitalized terms used but not defined
herein have the meaning ascribed to such terms in the Warrant Agreement. A copy
of the Warrant Agreement may be obtained by the holder hereof upon written
request to the Company.
In order to exercise all or any of the Warrants represented by this
Warrant Certificate, the holder must deliver to the Company at its office set
forth in Section 12 of the Warrant Agreement this Warrant Certificate and the
form of election to purchase on the reverse hereof duly completed and signed,
and payment to the Company of the Exercise Price for the number of Warrant
Shares in respect of which such Warrants are then exercised. No adjustment shall
be made for any dividends on any Common Stock issuable upon exercise of this
Warrant.
The Warrant Agreement provides that, upon the occurrence of certain
events, the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted; provided that no adjustment may be made that reduces
the Exercise Price below the par value of the Common Stock. If the Exercise
Price is adjusted, the Warrant Agreement provides that the number of shares of
Common Stock issuable upon the exercise of each Warrant shall be adjusted. No
fractions of a share of Common Stock will be issued upon the exercise of any
Warrant, but the Company will pay the cash value thereof determined as provided
in the Warrant Agreement.
The Company has agreed pursuant to a Registration Rights Agreement
dated as of October 19, 2007 between the Company, the Purchasers listed on
Exhibit A thereto and the Initial Holder (the "REGISTRATION RIGHTS AGREEMENT")
to, among other things, file a shelf registration statement covering resales of
the Warrant Shares and to use commercially reasonable efforts to have that
resale registration statement declared effective within 120 days of the issue
date, and to keep the resale registration statement effective for two years
following the effective date of the registration statement (unless the
securities are sold earlier or cease to be restricted securities).
Warrant Certificates, when surrendered by the registered holder thereof
in person or by legal representative or attorney duly authorized in writing, may
be exchanged, in the manner and subject to the limitations provided in the
Warrant Agreement, but without payment of any service charge, for another
Warrant Certificate or Warrant Certificates of like tenor evidencing in the
aggregate a like number of Warrants.
A-3
Upon due presentation for registration of transfer of this Warrant
Certificate a new Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
Each holder, by its acceptance of this Warrant, agrees to be bound by
the terms of the Warrant Agreement and the Registration Rights Agreement, and
all such replacements thereof.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
A-4
[Form of Election to Purchase]
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to receive ______ shares of Common Stock and herewith
tenders payment for such shares to the order of NATIONAL COAL CORP., [cash]
[Warrants] equal [in fair market value] Indebtedness equal [in principal amount]
to $______ in accordance with the terms hereof. The undersigned requests that a
certificate for such shares be registered in the name of _____________, whose
address is ______________________ and that such shares be delivered to
__________________ whose address is_________________________. If said number of
shares is less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of ____________________, whose
address is______________________, and that such Warrant Certificate be delivered
to whose address is ________________________.
The undersigned represents that it is acquiring the shares solely for its own
account and not as a nominee for any other party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities
laws and hereby repeats the representations and warranties of the undersigned
that are set forth in Section 9(a) of the Warrant Agreement.
DATE: _________________________________
SIGNATURE
A-5
EXHIBIT B
ASSIGNMENT FORM
[To be signed only upon transfer of a Warrant]
For value received, the undersigned hereby sells, assigns and transfers
unto _________________________, all of the rights represented by the within
Warrant to purchase _________ shares of Common Stock of NATIONAL COAL CORP., a
Florida corporation the "ISSUER"), to which such Warrant relates, and appoints
________________________ attorney to transfer such Warrant on the books of the
Issuer, with full power of substitution in the premises.
Dated: ______________________
___________________________________
Name:
Title:
By executing and delivering this Assignment Form to the Issuer, the
undersigned hereby agrees to become a party to, to be bound by, and to comply
with the provisions of the Warrant Agreement dated as of October 19, 2007 (as
amended, restated, supplemented or otherwise modified from time to time, the
"WARRANT AGREEMENT"), among the Issuer and NCC Corp., in the same manner as if
the undersigned were an original signatory to the Warrant Agreement.
The undersigned agrees that he, she or it shall be a "holder", as such
term is defined in the Warrant Agreement.
Dated: ____________________
___________________________________
Signature of transferee
___________________________________
Print Name of transferee
___________________________________
___________________________________
___________________________________
Address
___________________________________
Facsimile
___________________________________
Telephone
B-1
EXHIBIT C
EXCHANGE FORM
[To be signed upon exchange of a Warrant]
TO NATIONAL COAL CORP.
The undersigned, being the holder of the within Warrant, hereby elects
to exchange, pursuant to Section 3(a) of the Warrant Agreement referred to in
such Warrant, the portion of such Warrant representing the right to purchase
_________ shares of Common Stock of NATIONAL COAL CORP., a Florida corporation
(the "ISSUER"). The undersigned hereby requests that the certificates or
evidence of ownership for the number of shares issuable in such exchange
pursuant to such Section 3(a) be issued in the name of, and be delivered to,
_____________________, whose address is ____________________________.
The undersigned represents to the Issuer that the undersigned (a) is
not exchanging the Warrant Shares with a view to Transfer such Warrant Shares in
violation of the Securities Act of 1933, as amended (the "SECURITIES ACT") or
any other applicable state or federal securities laws; (b) it is acquiring the
shares solely for its own account and not as a nominee for any other party and
not with a view toward the resale or distribution thereof except in compliance
with applicable securities laws and hereby repeats the representations and
warranties of the undersigned that are set forth in Section 9(a) of the Warrant
Agreement; and (c) acknowledges that the issuance of the Warrant Shares has not
been registered under the Securities Act and that the Warrant Shares may be
resold only if registered pursuant to the provisions of the Securities Act, or
if an exemption therefrom is available.
The foregoing exercise is (check one):
______ Irrevocable
______ Conditioned upon the consummation of the transaction described
briefly below:
Dated: _____________________________ _____________________________
Name:
Title:
C-1
