REGISTRATION RIGHTS AGREEMENT
Registration
Rights Agreement, dated as of March 9, 2006 (this “Agreement”),
by
and among United Fuel & Energy Corporation, a Nevada corporation, (the
“Company”)
on the
one hand, and the persons executing the signature page to this Agreement (each
a
“Purchaser”
and
collectively, the “Purchasers”).
W
I T N E S S E T H :
WHEREAS,
the
Company is offering (the “Offering”)
shares
of the Company’s Common Stock, par value $.001 per share (the “Common
Stock”);
WHEREAS,
the
Company desires to issue and sell to the Purchasers, the Common Stock as set
forth in one or more Agreement(s) entered into or to be entered into by and
between the Company and each Purchaser (the “Agreement”);
and
WHEREAS,
certain
terms used in this Agreement that are not defined in context are defined in
Section 3 hereof.
NOW, THEREFORE,
in
consideration of the foregoing premises and the mutual covenants and agreements
hereinafter contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, intending to be
legally bound, the parties hereto hereby agree as follows:
1. Registration
Rights.
1.1 Required
Registration.
The
Company shall use its reasonable best efforts to prepare and file with the
SEC
within ninety (90) days after the last date on which shares of Common Stock
are
issued in connection with the Offering a registration statement on Form X-0,
X-0
or S-3 (subject to the Company’s eligibility to use Form S-2 or S-3) or
successor form or another form selected by the Company that is available to
it
under the Securities Act which conforms with all applicable rules and
regulations (the “Required
Registration Statement”)
with
respect to all the Registrable Securities beneficially owned by the Purchasers
to permit the offer and re-sale from time to time of such Registrable Securities
in accordance with the methods of distribution provided by the Purchasers.
The
Company shall use its reasonable best efforts to cause the Required Registration
Statement to become effective as promptly as reasonably practicable thereafter.
The Company shall use its reasonable best efforts to keep such Required
Registration Statement continuously effective (the “Effective
Period”)
until
the first anniversary of the last date on which shares of Common Stock are
issued in connection with the Offering plus
whatever
period of time as shall equal any period prior to such first anniversary in
which the Company was not current with its reporting requirements under the
Exchange Act. To the extent that the Registrable Securities are not sold under
the Required Registration Statement, the Purchasers shall have the registration
rights as enumerated in Section 1.2.
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1.2 Piggyback
Registrations.
(a) Right
to Piggyback.
Whenever the Company proposes to register any of its securities under the
Securities Act and the registration form to be used may be used for the
registration of Registrable Securities, whether or not for sale for its own
account, the Company will give prompt written notice (but in no event less
than
fifteen (15) days before the anticipated filing date) to all holders of
Registrable Securities, and such notice shall describe the proposed registration
and distribution and offer to all holders of Registrable Securities the
opportunity to register the number of Registrable Securities as each such holder
may request; provided, however, this right shall not apply to any registration
of securities on a registration statement filed prior to the date on which
the
Required Registration Statement is required to be filed (a “Piggyback
Registration”).
Subject to paragraph (d) of this Section 1.2, the Company will include in each
Piggyback Registration all Registrable Securities with respect to which the
Company has received written requests for inclusion therein within five (5)
days
after the holders’ receipt of the Company’s notice.
(b) Reasonable
Efforts.
The
Company shall use all reasonable efforts to cause the managing underwriter
or
underwriters of a proposed underwritten offering to permit the Registrable
Securities requested to be included in a Piggyback Registration to be included
on the same terms and conditions as any similar securities of the Company or
any
other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof.
(c) Withdrawal.
Any
holder of Registrable Securities electing to participate in a Piggyback
Registration (a “Designated
Holder”)
shall
have the right to withdraw its request for inclusion of its Registrable
Securities in any Registration Statement pursuant to this Section 1.2 by giving
written notice to the Company of its request to withdraw. The Company may
withdraw a Piggyback Registration at any time.
(d) Priority
in Registrations.
If a
Piggyback Registration is an underwritten primary registration on behalf of
the
Company or a secondary registration on behalf of a security holder exercising
demand registration rights (the “Initiating
Holder”),
and
the managing underwriters advise the Company in writing (with a copy to each
party hereto requesting registration of Registrable Securities) that in their
opinion the number of Registrable Securities requested to be included in such
registration exceeds the number which can be sold in such offering without
materially and adversely affecting the marketability of such primary or
secondary offering (the “Offering
Quantity”),
then
the Company will include in such registration securities in the following
priority:
(i) First,
the Company will include the securities the Company proposes to sell and, if
applicable, the securities the Initiating Holder proposes to sell.
(ii) Second,
the Company will include all Registrable Securities requested to be included
by
any Designated Holder and other holders entitled to include securities in such
Piggyback Registration (collectively, “Subordinate
Holders”),
and
if the number of such Subordinate Holders’ securities requested to be included
exceeds the Offering Quantity, then the Company shall include only each such
requesting Subordinate Holders’ pro rata share of the shares available for
registration by the Purchasers, based on the amount of securities held by each
such Subordinate Holder.
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1.3 Holdback
Agreements.
(a) To
the
extent not inconsistent with applicable law, upon the request of the Company
or,
in the case of an underwritten public offering, the underwriters managing such
underwritten offering of the Company’s securities, each holder of Registrable
Securities who owns at least 1% of the outstanding capital stock of the Company
on an “as-converted” basis or is an officer or director of the Company will not
effect any public sale or distribution (other than those included in the
registration) of any securities of the Company, or any securities, options
or
rights convertible into or exchangeable or exercisable for such securities
during the seven days prior to and the ninety (90) day period beginning on
the
effective date of the Registration Statement relating to such offering, unless
(in the case of an underwritten public offering) the managing underwriters
otherwise agree to a shorter period of time. Notwithstanding the foregoing,
no
Designated Holder shall be required to enter into any such “lock up” agreement
unless and until all of the Company’s executive officers and directors execute
identical “lock up” agreements and the Company uses commercially reasonable
efforts to cause each holder of more than 1% of its outstanding capital stock
to
execute identical “lock up” agreements. Neither the Company nor the underwriter
shall amend, terminate or waive a “lock up” agreement unless each “lock up”
agreement with a Designated Holder is also amended or waived in a similar manner
or terminated, as the case may be.
(b) The
Company shall have the right at any time to require that the Designated Holders
of Registrable Securities suspend further open market offers and sales of
Registrable Securities pursuant to a Registration Statement filed hereunder
whenever in the reasonable judgment of the Company after consultation with
counsel there is or may be in existence a Changing Event (as defined herein).
The Company will give the Designated Holders notice of any such suspension
and
will use all reasonable best efforts to minimize the length of such
suspension.
1.4 Registration
Procedures.
Whenever any Registrable Securities are required to be registered pursuant
to
this Agreement, the Company will use reasonable best efforts to effect the
registration and the sale of such Registrable Securities in accordance with
the
intended methods of disposition thereof, and pursuant thereto the Company will
as expeditiously as possible:
(a) prepare
and file with the SEC on any form, if not so otherwise provided for, for which
the Company qualifies, as soon as practicable after the end of the period within
which requests for registration may be given to the Company, a Registration
Statement with respect to the offer and sale of such Registrable Securities
and
thereafter use reasonable best efforts to cause such Registration Statement
to
become effective and remain effective until the completion of the distribution
contemplated thereby or the required time period under this Agreement, whichever
is shorter (and before filing such Registration Statement, the Company will
furnish to the counsel selected by the holders of a majority of the Registrable
Securities initiating such Registration Statement copies of all such documents
proposed to be filed); provided,
however,
that
the Company may postpone for not more than sixty (60) calendar days the filing
or effectiveness of the Required Registration Statement if the Board of
Directors, in its good faith judgment, determines that such registration could
reasonably be expected to have a material adverse effect on the Company and
its
stockholders including, but not limited to, any proposal or plan by the Company
to engage in any acquisition of assets (other than in the ordinary course of
business) or any merger, consolidation, tender offer, stock acquisition or
similar transaction then under consideration by delivering written notice to
the
holders of Registrable Securities of its determination to postpone such
Registration Statement; provided,
further,
that
(i) the
Company shall not disclose any information that could be deemed material
non-public information to any holder of Registrable Securities included in
a
Registration Statement that is subject to such postponement, (ii) in no event
may the Company postpone a filing requested hereunder more than twice;
provided,
that
such
postponements must be at least three (3) months apart; provided,
further,
that
the
Company may delay the effectiveness of the Required Registration Statement
if
the SEC rules and regulations prohibit the Required Registration Statement
from
being declared effective because its financial statements are stale at a time
when its fiscal year has ended or it has made an acquisition reportable under
Item 2 of Form 8-K or any other similar situation until the earliest time in
which the SEC would allow the Required Registration Statement to be declared
effective (provided that the Company shall use its reasonable best efforts
to
cure any such situation as soon as possible so that the Registration Statement
can be declared effective at the earliest possible time);
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(b) prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary
to
keep such Registration Statement effective for a period provided for in the
applicable Section above or, if such Registration Statement relates to an
underwritten offering, such period as in the opinion of counsel for the
underwriters a prospectus is required by law to be delivered in connection
with
sales of Registrable Securities by an underwriter or dealer or (ii) such shorter
period as will terminate when all of the securities covered by such Registration
Statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such Registration
Statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such
Registration Statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such Registration Statement;
(c) furnish
to each seller of Registrable Securities, prior to filing a Registration
Statement, such number of copies of such Registration Statement, each amendment
and supplement thereto, the prospectus included in such Registration Statement
(including each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;
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(d) register
or qualify such Registrable Securities under such state securities or blue
sky
laws of such jurisdictions as any seller reasonably requests and do any and
all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller and to keep each such registration
or qualification (or exemption therefrom) effective during the period which
the
Registration Statement is required to be kept effective (provided,
that
the Company will not be required to (i) qualify generally to do business in
any
jurisdiction where it would not otherwise be required to qualify but for this
subparagraph, (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction);
(e) notify
each seller of such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event (a “Changing
Event”)
as a
result of which, the prospectus included in such Registration Statement contains
an untrue statement of a material fact or omits any fact necessary to make
the
statements therein not misleading in the light of the circumstances under which
they were made, and, at the request of any such seller, the Company will as
soon
as possible prepare and furnish to such seller (a “Correction
Event”)
a
reasonable number of copies of a supplement or amendment to such prospectus
so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain an untrue statement of a material fact or
omit
to state any fact necessary to make the statements therein not misleading in
the
light of the circumstances under which they were made;
(f) cause
all
such Registrable Securities to be listed on each securities exchange on which
similar securities issued by the Company are then listed and, if not so listed,
to be listed on The Nasdaq Stock Market or the Nasdaq SmallCap trading system
or
qualified for trading on the Nasdaq OTC Bulletin Board;
(g) provide
a
transfer agent and registrar for all such Registrable Securities not later
than
the effective date of such Registration Statement;
(h) before
filing a Registration Statement or prospectus or any amendments or supplements
thereto, the Company shall provide counsel selected by the Designated Holders
holding a majority of the Registrable Securities being registered in such
registration (“Holders’
Counsel”)
and
any other Inspector (as defined below) with an adequate and appropriate
opportunity to review and comment on such Registration Statement and each
prospectus included therein (and each amendment or supplement thereto) to be
filed with the SEC, subject to such documents being under the Company’s control,
and the Company shall notify the Holders’ Counsel and each seller of Registrable
Securities of any stop order issued or threatened by the SEC;
(i) otherwise
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning with the
first
day of the Company’s first full calendar quarter after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions
of
Section 11(a) of the Securities Act and Rule 158 thereunder;
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(j) in
the
event of the issuance of any stop order suspending the effectiveness of a
Registration Statement, or of any order suspending or preventing the use of
any
related prospectus or suspending the qualification of any securities included
in
such Registration Statement for sale in any jurisdiction, the Company will
use
its reasonable best efforts promptly to obtain the withdrawal of such
order;
(k) subject
to execution and delivery of mutually satisfactory confidentiality agreements,
make available at reasonable times for inspection by any seller of Registrable
Securities, any managing underwriter participating in any disposition of such
Registrable Securities pursuant to a Registration Statement, Holders’ Counsel
and any attorney, accountant or other agent retained by any managing underwriter
(each, an “Inspector”
and
collectively, the “Inspectors”),
all
financial and other records, pertinent corporate documents and properties of
the
Company and its subsidiaries (collectively, the “Records”)
as
shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s and its subsidiaries’ officers,
directors and employees, and the independent public accountants of the Company,
to supply all information reasonably requested by any such Inspector in
connection with such Registration Statement;
(l) subject
to execution and delivery of mutually satisfactory confidentiality agreements,
keep Holders’ Counsel advised as to the initiation and progress of any
registration hereunder including, but not limited to, providing Holders’ Counsel
with all correspondence with the SEC;
(m) cooperate
with each seller of Registrable Securities and each underwriter participating
in
the disposition of such Registrable Securities and their respective counsel
in
connection with any filings required to be made with the NASD; and
(n) take
all
other steps reasonably necessary to effect the registration of the Registrable
Securities contemplated hereby.
(o) Registration
Expenses.
All
expenses incident to the Company’s performance of or compliance with this
Agreement including, without limitation, all registration and filing fees,
fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, and fees and disbursements of counsel for
the
Company and all independent certified public accountants, underwriters
(excluding discounts and commissions, which will be paid by the sellers of
Registrable Securities) and other Persons retained by the Company will be borne
by the Company, and the Company will pay its internal expenses (including,
without limitation, all salaries and expenses of its Employees performing legal
or accounting duties), the expense of any annual audit or quarterly review,
the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange or trading system on
which similar securities issued by the Company are then listed or qualified
for
trading. The Company shall have no obligation to pay any underwriting discounts
or commissions attributable to the sale of Registrable Securities and any of
the
expenses incurred by the Designated Holders, such costs to be borne by such
Designated Holder or Holders.
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1.5 Indemnification.
(a) The
Company agrees to indemnify and hold harmless, to the fullest extent permitted
by law, each holder of Registrable Securities and its general or limited
partners, officers, directors, members, managers, employees, advisors,
representatives, agents and Affiliates (collectively, the “Representatives”)
from
and against any reasonable loss, claim, damage, liability, a single reasonable
attorney’s fees, cost or expense and costs and expenses of investigating and
defending any such claim (collectively, the “Losses”)
and
any action in respect thereof to which such holder of Registrable Securities
or
its Representatives may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or
threatened, in respect thereto) arise out of or are based upon (i) any untrue
or
alleged untrue statement of a material fact contained in any Registration
Statement at the time it is declared effective, prospectus or preliminary
prospectus (but only preliminary prospectuses approved for distribution by
the
Company) or any amendment or supplement thereto or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however,
that
the Company shall not be liable to any such holder or other indemnitee in any
such case to the extent that any such Loss (or action or proceeding, whether
commenced or threatened, in respect thereof) arises out of or is based upon
an
untrue statement or alleged untrue statement or omission or alleged omission,
made in such Registration Statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, in reliance upon, and in
conformity with, written information prepared and furnished to the Company
by
such holder of Registrable Securities or its Representatives expressly for
use
therein or by failure of such holder of Registrable Securities to deliver a
copy
of the Registration Statement or prospectus or any amendments or supplements
thereto after the Company has furnished such holder of Registrable Securities
with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable
Securities.
(b) In
connection with any Registration Statement in which the holders of Registrable
Securities are participating pursuant to this Agreement, the holders of
Registrable Securities will furnish to the Company in writing such information
as the Company reasonably requests for use in connection with any such
Registration Statement or prospectus and, to the fullest extent permitted by
law, each such holder of Registrable Securities will, severally but not jointly,
indemnify and hold harmless the Company and its Representatives from and against
any Losses and any action in respect thereof to which the Company and its
Representatives may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon (i) the purchase
or sale of Registrable Securities during a suspension as set forth in herein
after written receipt of notice of such suspension, (ii) by failure of such
holder of Registrable Securities to deliver a copy of the Registration Statement
or prospectus or any amendments or supplements thereto after the Company has
furnished such holder of Registrable Securities with a sufficient number of
copies of the same, (iii) any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, prospectus or preliminary
prospectus or any amendment or supplement thereto, or (iv) any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but, with respect to clauses
(iii) and (iv) above, only to the extent that such untrue statement or omission
is made in such Registration Statement, any such prospectus or preliminary
prospectus or any amendment or supplement thereto, in reliance upon and in
conformity with written information prepared and furnished to the Company by
such holder of Registrable Securities expressly for use therein; provided,
however,
that
such holder of Registrable Securities shall not be liable in any such case
to
the extent that prior to the filing of any such Registration Statement or
prospectus or amendment or supplement thereto, such holder of Registrable
Securities has furnished in writing to the Company information expressly for
use
in such Registration Statement or prospectus or any amendment or supplement
thereto which corrected or made not misleading information previously furnished
to the Company; provided,
further,
however,
that
the obligation to indemnify will be individual to each such holder of
Registrable Securities and will be limited to the net amount of proceeds
received by such holder of Registrable Securities from the sale of Registrable
Securities pursuant to such Registration Statement. In connection with an
underwritten offering, each holder of Registrable Securities participating
in
such offering will indemnify such underwriters, their officers and directors
and
each Person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification
of
the Company.
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(c) Promptly
after receipt by any Person entitled to indemnification pursuant to Section
1.5(a) or 1.5(b) (an “Indemnified
Party”)
of
notice of any claim or the commencement of any action, the Indemnified Party
shall, if a claim in respect thereof is to be made against the Person against
whom such indemnity may be sought (an “Indemnifying
Party”),
promptly notify the Indemnifying Party in writing of the claim or the
commencement of such action; provided,
that
the failure to notify the Indemnifying Party shall not relieve the Indemnifying
Party from any liability which it may have to an Indemnified Party otherwise
than under Section 1.5(a) or 1.5(b) except to the extent of any actual prejudice
resulting therefrom. If any such claim or action shall be brought against an
Indemnified Party, and it shall notify the Indemnifying Party thereof, the
Indemnifying Party shall be entitled to participate therein, and, to the extent
that it wishes, jointly with any other similarly notified Indemnifying Party,
to
assume the defense thereof with counsel reasonably satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or action, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
or
other expenses subsequently incurred by the Indemnified Party in connection
with
the defense thereof other than reasonable costs of investigation; provided,
that
the Indemnified Party shall have the right to employ separate counsel to
represent the Indemnified Party and its Representatives who may be subject
to
liability arising out of any claim in respect of which indemnity may be sought
by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the written opinion of
counsel to such Indemnified Party, representation of both parties by the same
counsel would be inappropriate due to actual or potential conflicts of interest
between them, it being understood, however, that the Indemnifying Party shall
not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for
the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any claim or pending or threatened proceeding
in
respect of which the Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability arising out of such claim or proceeding other than the payment
of
monetary damages by the Indemnifying Party on behalf of the Indemnified Party.
Whether or not the defense of any claim or action is assumed by the Indemnifying
Party, such Indemnifying Party will not be subject to any liability for any
settlement made without its consent, which consent will not be unreasonably
withheld.
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(d) If
the
indemnification provided for in this Section 1.5 is unavailable to the
Indemnified Parties in respect of any Losses referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the holders of the
Registrable Securities on the other from the offering of the Registrable
Securities, or if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits but
also
the relative fault of the Company on the one hand and the holders of the
Registrable Securities on the other in connection with the statements or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and of each
holder of the Registrable Securities on the other shall be determined by
reference to, among other things, whether any action taken, including any untrue
or alleged untrue statement of a material fact, or the omission or alleged
omission to state a material fact relates to information supplied by such party,
and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The
Company and the holders of the Registrable Securities agree that it would not
be
just and equitable if contribution pursuant to this Section 1.5(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the Losses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 1.5, no holder of Registrable
Securities shall be required to contribute any amount in excess of the amount
by
which the total price at which the Registrable Securities of such holder were
offered to the public exceeds the amount of any Losses which such holder has
otherwise paid by reason of such untrue or alleged untrue statement or omission
or alleged omission. No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. Each holder’s obligations to contribute pursuant to this
Section 1.5 is several in the proportion that the proceeds of the offering
received by such holder of Registrable Securities bears to the total proceeds
of
the offering received by all the holders of Registrable Securities and not
joint.
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1.6 Participation
in Underwritten Registrations.
(a) No
Person
may participate in any registration hereunder which is underwritten unless
such
Person (i) agrees to sell such Person’s securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements (including, without limitation, pursuant to the
terms of any over-allotment or “green shoe” option requested by the managing
underwriter(s), provided,
that
each holder of Registrable Securities shall not be required to sell more than
the number of Registrable Securities that such holder has requested the Company
to include in any registration) and (ii) completes and executes all
questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and this Agreement.
(b) Each
Person that is participating in any registration hereunder agrees that, upon
receipt of any notice from the Company of the happening of any event of the
kind
described in Section 1.4(e) above, such Person will forthwith discontinue the
disposition of its Registrable Securities pursuant to the Registration Statement
until such Person’s receipt of the copies of a supplemented or amended
prospectus as contemplated by such Section 1.4(e).
1.7 Current
Public Information.
The
Company covenants that it will file all reports required to be filed by it
under
the Securities Act and the Exchange Act and the rules and regulations adopted
by
the SEC thereunder, and will use reasonable best efforts to take such further
action as the Purchaser may reasonably request, all to the extent required
to
enable the holders of Registrable Securities to sell Registrable Securities
pursuant to Rule 144 or Rule 144A adopted by the SEC under the Securities Act
or
any similar rule or regulation hereafter adopted by the SEC. The Company shall,
upon the request of a Designated Holder, deliver to such Designated Holder
a
written statement as to whether it has complied with such
requirements.
2. Transfers
of Certain Rights.
2.1 Transfer.
The
rights granted to the Purchaser under this Agreement may not be assigned or
transferred without the prior written consent of the Company.
2.2 Transferees.
Any
transferee to whom rights under this Agreement are permitted by the Company
to
be transferred shall, as a condition to such transfer, deliver to the Company
a
written instrument by which such transferee agrees to be bound by the
obligations imposed upon the Purchaser under this Agreement to the same extent
as if such transferee were the Purchaser hereunder.
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2.3 Subsequent Transferees.
A
transferee to whom rights are transferred pursuant to this Section 2 may not
again transfer such rights to any other person or entity, other than as provided
in Sections 2.1 and 2.2 above.
3. Certain
Definitions.
The
following capitalized terms shall have the meanings ascribed to them
below:
“Affiliate”
means
any Person that directly or indirectly controls, or is under common control
with, or is controlled by such Person. As used in this definition, “control”
(including with its correlative meanings, “controlled by” and “under common
control with”) shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise).
“Common
Stock”
means
the common stock, par value $.001 per share, of the Company.
“Employees”
means
any current, former, or retired employee, office consultant, advisor,
independent contractor, agent, officer or director of the Company.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the SEC promulgated thereunder.
“Person”
means
any individual, company, partnership, firm, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental body
or
other entity.
“Registrable
Securities”
means,
subject to the immediately following sentence, (i) shares of Common Stock issued
to any Purchaser pursuant to the Subscription Agreement and (ii) any securities
issued or issuable directly or indirectly with respect to the securities
referred to in clause (i) by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular shares of Common Stock
constituting Registrable Securities, such shares of Common Stock will cease
to
be Registrable Securities when they (x) have been effectively registered under
the Securities Act and disposed of in accordance with a Registration Statement
covering them, (y) have been sold to the public pursuant to Rule 144 (or by
similar provision under the Securities Act), or (z) are eligible for resale
under Rule 144(k) (or by similar provision under the Securities Act) without
any
limitation on the amount of securities that may be sold under paragraph (e)
thereof.
“Registration
Statement”
means
any registration statement of the Company filed under the Securities Act which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration
statement.
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“SEC”
means
the United States Securities and Exchange Commission or any other federal agency
at the time administering the Securities Act.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations of the
SEC
promulgated thereunder.
4. Miscellaneous.
4.1 Recapitalizations,
Exchanges, etc.
The
provisions of this Agreement shall apply to the full extent set forth herein
with respect to (i) the Common Stock, (ii) any and all securities into
which the Securities are converted, exchanged or substituted in any recapitalization
or other capital reorganization by the Company and (iii) any and all equity
securities of the Company or any successor or assign of the Company (whether
by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in conversion of, in exchange for or in substitution of, the Common
Stock and shall be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like occurring after
the
date hereof. The Company shall cause any successor, assign or issuer of
securities that are Registrable Securities (whether by merger, consolidation,
sale of assets or otherwise) to enter into a new registration rights agreement
with the Designated Holders on terms substantially the same as this Agreement
as
a condition of any such transaction.
4.2 No
Inconsistent Agreements.
The
Company has not and shall not enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Purchasers in
this Agreement or grant any additional registration rights to any Person or
with
respect to any securities which are not Registrable Securities which are prior
in right to or inconsistent with the rights granted in this Agreement. The
granting of demand registration rights or pari passu piggyback registration
rights shall be deemed not to be inconsistent with the rights granted to
Purchasers in this Agreement.
4.3 Amendments and Waivers.
The
provisions of this Agreement may be amended and the Company may take action
herein prohibited, or omit to perform any act herein required to be performed
by
it, if, but only if, the Company has obtained the written consent of holders
of
at least a majority of the Registrable Securities then in existence. Any Person
that has executed a Subscription Agreement after the date of this Agreement
pursuant to this Offering shall become a party to this Agreement as a
“Purchaser” upon execution of this Agreement.
4.4 Severability.
Whenever possible, each provision of this Agreement shall be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be held to be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
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4.5 Counterparts.
This
Agreement may be executed in one or more counterparts each of which shall be
deemed an original, but all of which together shall constitute one and the
same
instrument.
4.6 Notices.
All
notices, requests and other communications to any party hereunder shall be
in
writing (including telecopy, telex or similar writing) and shall be deemed
given
or made as of the date delivered, if delivered personally or by telecopy
(provided that delivery by telecopy shall be followed by delivery of an
additional copy personally, by mail or overnight courier), one day after being
delivered by overnight courier or three days after being mailed by registered
or
certified mail (postage prepaid, return receipt requested), to the parties
at
the following addresses (or to such other address or telex or telecopy number
as
a party may have specified by notice given to the other party pursuant to this
provision):
If
to the
Company, to:
United
Fuel & Energy Corporation
000
Xxxxx
Xxxxxxxxxx
Xxxxx
000
Xxxxxxx,
Xxxxx 00000
Attention:
President
With
a
copy to:
Akin
Gump
Xxxxxxx Xxxxx & Xxxx, LLP
000
Xxxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxx 00000
Attention:
Will Xxxxxxxx
If
to
each Purchaser, to:
The
address or facsimile number of each Purchaser as recorded in the stockholders
records of the Company or set forth in the applicable Subscription
Agreement.
4.7 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Texas, without regard to the conflicts of laws rules or
provisions.
4.8 Forum;
Service of Process.
Any
legal suit, action or proceeding brought by any party or any of its affiliates
arising out of or based upon this Agreement shall be instituted in any federal
or state court in Midland County, Texas, and each party waives any objection
which it may now or hereafter have to the laying of venue or any such
proceeding, and irrevocably submits to the jurisdiction of such courts in any
such suit, action or proceeding.
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4.9 Captions.
The
captions, headings and arrangements used in this Agreement are for convenience
only and do not in any way limit or amplify the terms and provisions
hereof.
4.10 No
Prejudice.
The
terms of this Agreement shall not be construed in favor of or against any party
on account of its participation in the preparation hereof.
4.11 Words
in Singular and Plural Form.
Words
used in the singular form in this Agreement shall be deemed to import the
plural, and vice versa, as the sense may require.
4.12 Successors
and Assigns; Third Party Beneficiaries.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors, permitted
assigns, executors, administrators and heirs.
4.13 Entire
Agreement.
This
Agreement sets forth the entire agreement and understanding between the parties
as to the subject matter hereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.
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IN
WITNESS WHEREOF,
the
parties hereto have caused this Registration Rights Agreement to be duly
executed as of the date and year first written above.
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