EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this "AGREEMENT") is made and entered into
as of December 27, 2007, between NATIONAL COAL CORP., a Florida corporation (the
"COMPANY"), and the investor identified on the signature page to this Agreement
(the "INVESTOR").
RECITALS
A. Subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below),
and Rule 506 promulgated thereunder, the Company proposes to issue and sell up
to $15 million in shares of Common Stock, par value $0.0001 per share (the
"COMMON STOCK"), of the Company pursuant to an offering (the "OFFERING") to one
or more potential investors, including the Investor, at a purchase price to be
negotiated with each investor based on the closing sales price of the Common
Stock on or around the date such investor delivers a signed subscription
agreement.
B. The Company desires to sell to the Investor, and the Investor
desires to buy from the Company, in the Offering the number of shares of the
Common Stock (the "SHARES") set forth on the signature page of this Agreement,
upon the terms and conditions and subject to the provisions hereinafter set
forth.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual premises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE OF SECURITIES. Subject to the terms and conditions of
this Agreement, the Investor subscribes for and agrees to purchase and acquire
from the Company, and the Company agrees to sell and issue to the Investor, the
Shares in the manner set forth in SECTION 2 hereof, at the per share price (the
"OFFERING Price") and for the aggregate consideration (the "PURCHASE PRICE") set
forth on the signature page of this Agreement.
2. TERMS OF PURCHASE AND SALE OF SECURITIES. The closing of the
transactions contemplated hereby (the "CLOSING") shall take place at such time
and on such date as is determined by the Company as soon as practicable
following satisfaction of the closing conditions set forth in SECTION 7. On or
before December 27, 2007, the Investor shall deliver the Purchase Price to
Xxxxxx, Xxxxxxxx & Markiles LLP, legal counsel to the Company (the "ESCROW
AGENT"), by wire transfer of immediately available funds in accordance with the
following wire transfer instructions:
National Bank of California
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxx, XX 00000
Account Name: Xxxxxx Xxxxxxxx & Markiles, LLP
Address: 15260 Ventura Blvd, 20th Floor
ABA Routing#: Xxxxxxx Xxxx, XX 00000
Account #: 122039360
Ref: 003209873
NCC Closing
The Purchase Price will be held by the Escrow Agent and released to the
Company at Closing against delivery to the Investor of stock certificates
representing the Shares pursuant to the terms and conditions of that certain
Closing Escrow Agreement by and among the Investor, the Company and the Escrow
Agent in the form attached hereto as EXHIBIT A (the "ESCROW AGREEMENT").
Notwithstanding that the offer and sale of the Securities pursuant to this
Agreement is part of the larger Offering, the obligations of the Company and the
Investor hereunder are independent of, and not subject to the terms and
conditions of, any other agreement between the Company and any other investor in
the Offering, and the Closing may occur separate and apart from, and
irrespective of, the closing, if any, of any other purchase and sale of
securities in the Offering.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. In order to induce the
Investor to enter into this Agreement and consummate the transactions
contemplated hereby, the Company represents and warrants to the Investor as
follows:
3.1 INCORPORATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
is qualified to do business in each jurisdiction in which the character of its
properties or the nature of its business requires such qualification, except
where the failure to so qualify would not have a material adverse effect on the
business, condition (financial or otherwise) or prospects of the Company (a
"MATERIAL ADVERSE EFFECT"). Except for short-term investments and investments
that are not material to the Company, the Company does not own any shares of
stock or any other equity or long-term debt securities of any corporation or
have any equity interest in any firm, partnership, limited liability company,
joint venture, association or other entity, except as disclosed in the SEC
Documents (as defined below). Complete and correct copies of the articles of
incorporation (the "ARTICLES OF INCORPORATION") and bylaws (the "BYLAWS") of the
Company as in effect on the Effective Date have been filed by the Company with
the SEC. The Company has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement, the Escrow Agreement
and the Registration Rights Agreement attached hereto as EXHIBIT B (the
"REGISTRATION RIGHTS AGREEMENT" and, together with this Agreement and the Escrow
Agreement, the "TRANSACTION DOCUMENTS") and to carry on its business as now
conducted.
3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of (i) 80,000,000 shares of Common Stock, of which 25,698,792 shares
are outstanding on the date
2
hereof; and (ii) 10,000,000 shares of preferred stock, of which 1,611 shares
have been designated "Series A Cumulative Convertible Preferred Stock, of which
133.33 shares are outstanding on the date hereof. No other series of preferred
stock has been designated and no other shares of preferred stock are
outstanding. The outstanding shares of capital stock of the Company have been
duly and validly issued and are fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and were not issued in
violation of any preemptive or similar rights to subscribe for or purchase
securities. Except for (i) options to purchase Common Stock or other equity
awards issued to employees and consultants of the Company pursuant to the
employee benefits plans disclosed in the SEC Documents, (ii) warrants to
purchase an aggregate of 1,872,632 shares of Common Stock at an exercise price
of $8.50 per share, (iii) the Series A Cumulative Convertible Preferred Stock,
and (iv) warrants to purchase an aggregate of 250,000 shares of Common Stock at
an exercise price of $4.00 per share, there are no existing options, warrants,
calls, preemptive (or similar) rights, subscriptions or other rights,
agreements, arrangements or commitments of any character obligating the Company
to issue, transfer or sell, or cause to be issued, transferred or sold, any
shares of the capital stock of the Company or other equity interests in the
Company or any securities convertible into or exchangeable for such shares of
capital stock or other equity interests, and there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of its capital stock or other equity interests. There are no
voting agreements or other similar arrangements with respect to the Common Stock
to which the Company is a party. The issuance of the Shares contemplated hereby
will not result in an over-issuance of shares of Common Stock under the Articles
of Incorporation.
3.3 VALID ISSUANCE OF THE SHARES. The Shares being purchased by
the Investor hereunder will, upon issuance pursuant to the terms hereof, be duly
authorized and validly issued, fully paid and nonassessable. No preemptive
rights or other rights to subscribe for or purchase the Company's capital stock
exist with respect to the issuance and sale of the Shares by the Company
pursuant to this Agreement. Except as disclosed in the SEC Documents, and except
with respect to the Existing Registration Rights Agreement (as defined below),
no person (other than the stockholders who purchase shares in the Offering) has
any right which has not been properly waived or has not expired by reason of
lapse of time following the notification of the Company's intent to file the
registration statement to be filed by the Company pursuant to the Registration
Rights Agreement (the "REGISTRATION STATEMENT") to require the Company to
register the sale of any shares owned by such stockholder under the Securities
Act in the Registration Statement. No further approval or authority of the
stockholders or the Board of Directors of the Company shall be required for the
issuance and sale of the Shares by the Company or the filing of the Registration
Statement by the Company.
3.4 ENFORCEABILITY. The execution, delivery, and performance of
the Transaction Documents by the Company have been duly authorized by all
requisite corporate action. This Agreement has been duly executed and delivered
by the Company, and, upon its execution by the Investor, shall constitute the
legal, valid, and binding obligation of the Company, enforceable in accordance
with its terms, except to the extent that its enforceability is limited by
bankruptcy, insolvency, reorganization, or other laws relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity.
3
3.5 NO VIOLATIONS. The execution, delivery, and performance of the
Transaction Documents by the Company do not and will not violate or conflict
with any provision of the Company's Articles of Incorporation or Bylaws, each as
amended and in effect on the date hereof, and do not and will not, with or
without the passage of time or the giving of notice, result in the breach of, or
constitute a default, cause the acceleration of performance, or require any
consent under (except such consents as have been obtained as of the date
hereof), or result in the creation of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, any material instrument or
agreement to which the Company is a party or by which the Company or its
properties are bound, except such consents as have been obtained as of the date
hereof. The Company is not otherwise in violation of its Articles of
Incorporation, Bylaws or other organizational documents, nor is the Company in
violation of any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority applicable to the
Company, which violation, individually or in the aggregate, would be reasonably
expected to have a Material Adverse Effect. The Company is not in default (and
there exists no condition which, with the passage of time or otherwise, would
constitute a default) in the performance of any material bond, debenture, note
or any other evidence of indebtedness in any indenture, mortgage, deed of trust
or any other material agreement or instrument to which the Company is a party or
by which the Company is bound or by which the property of the Company is bound,
which would be reasonably expected to have a Material Adverse Effect.
3.6 APPROVALS. Neither the execution, delivery, and performance by
the Company of the Transaction Documents, nor the offer and sale of the Shares
contemplated hereby require the consent of, action by or in respect of, or
filing with, any person, governmental body, agency, or official, other than
those consents that have been obtained and filings that have been made pursuant
to applicable state securities laws ("STATE ACTS") and post-sale filings
pursuant to applicable state and federal securities laws and NASDAQ Global
Market listing requirements, which the Company undertakes to file within the
applicable time period, and other consents which have been obtained as of the
date hereof.
3.7 SEC DOCUMENTS. The Company has made available to Investor true
and complete copies of all reports and registration statements the Company has
filed with the Securities and Exchange Commission ("SEC") under the Securities
Act of 1933, as amended ("SECURITIES ACT"), and the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), for all periods subsequent to December
31, 2005, all in the form so filed (collectively the "SEC DOCUMENTS"). The
Company has filed in a timely manner all documents that the Company was required
to file under the Exchange Act during the 12 months preceding the date of this
Agreement. As of their respective filing dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as applicable, and none of the SEC Documents filed under the
Exchange Act contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a subsequently filed SEC
Document. None of the SEC Documents filed under the Securities Act contained an
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
at the time such SEC Documents became effective under the Securities Act.
Without limiting the foregoing, the Company meets each of the eligibility
requirements for
4
the use of Form S-3 in connection with the resale registration of the Shares as
contemplated under the Registration Rights Agreement.
3.8 FINANCIAL STATEMENTS. The Company's financial statements,
including the notes thereto, included in the SEC Documents (the "FINANCIAL
STATEMENTS") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") consistently applied (except
as may be indicated in the notes thereto) and present fairly the Company's
consolidated financial position at the dates thereof and of its operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal audit adjustments). The Company has implemented and
maintains a system of internal controls meeting the requirements of the SEC and
the Xxxxxxxx-Xxxxx Act of 2002 as applicable to the Company on the date hereof.
Since June 30, 2007, except as disclosed in the SEC Documents, there has been no
material adverse change (actual or threatened) in the assets, liabilities
(contingent or other), affairs, operations, prospects or condition (financial or
other) of the Company.
3.9 NASDAQ GLOBAL MARKET. The Common Stock is listed on the NASDAQ
Global Market. The Company has taken no action designed to de-list, or which, to
the Company's knowledge, is likely to have the effect of, suspending or
terminating the listing of the Common Stock on the NASDAQ Global Market. The
Company is in compliance with all corporate governance requirements of NASDAQ
Global Market. The Company shall comply with all requirements of the NASDAQ
Stock Market LLC (together with its affiliates, the "NASDAQ") with respect to
the issuance of the Shares and the listing of the Shares on the NASDAQ Global
Market (and shall ensure as promptly as practicable the listing of the Shares on
the NASDAQ Global Market).
3.10 INTELLECTUAL PROPERTY.
(a) To the knowledge of the Company, the Company has
ownership of or license or legal right to use all patent, copyright, trade
secret, trademark, customer lists, designs, manufacturing or other processes,
computer software, systems, data compilation, research results or other
proprietary rights used in the business of the Company and material to the
Company (collectively, "INTELLECTUAL PROPERTY"), other than Intellectual
Property generally available on commercial terms from other sources.
(b) There is no material default by the Company under any
material licenses or other material agreements under which (i) the Company is
granted rights in Intellectual Property or (ii) the Company has granted rights
to others in Intellectual Property owned or licensed by the Company.
(c) The Company believes it has taken those steps
required in accordance with sound business practice and commercially reasonable
business judgment to establish and preserve its ownership of all material
patent, copyright, trade secret and other proprietary rights with respect to its
products and technology.
5
(d) To the knowledge of the Company, the present
business, activities and products of the Company do not infringe any
intellectual property of any other person, except where such infringement would
not have a Material Adverse Effect. The Company has not been notified that any
proceeding charging the Company with infringement of any adversely held
Intellectual Property has been filed. To the Company's knowledge, there exists
no patent or patent application held by any other person that would be infringed
by the Company in the conduct of its business as currently conducted and as
proposed to be conducted in the SEC Documents, where such infringement would
have a Material Adverse Effect. To the knowledge of the Company, the Company is
not making unauthorized use of any confidential information or trade secrets of
any person. Neither the Company nor, to the knowledge of the Company, any of its
employees have any agreements or arrangements with any persons other than the
Company restricting the Company's or any such employee's engagement in business
activities that are material aspects of the Company's business as currently
conducted or as proposed to be conducted in the SEC Documents.
3.11 ABSENCE OF LITIGATION. Except as disclosed in the SEC
Documents, there is no action, suit or proceeding or, to the Company's
knowledge, any investigation, pending, or to the Company's knowledge, threatened
by or before any court, governmental body or regulatory agency against the
Company that is required to be disclosed in the SEC Documents and is not so
disclosed. The Company has not received any written or oral notification of, or
request for information in connection with, any formal or informal inquiry,
investigation or proceeding from the SEC, the NASDAQ, the National Association
of Securities Dealers, Inc. or the Financial Industry Regulatory Authority, Inc.
The foregoing includes, without limitation, any such action, suit, proceeding or
investigation that questions any of the Transaction Documents or the right of
the Company to execute, deliver and perform under same.
3.12 ENVIRONMENTAL AND SAFETY LAWS. The Company is not in violation
of any applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are or, to the
Company's knowledge, will be required in order to comply with any such existing
statute, law or regulation. No Hazardous Materials (as defined below) are used
or have been used, stored, or disposed of by the Company or by any other person
or entity on any property owned, leased or used by the Company, other than
Hazardous Materials used, stored, or disposed of by the Company in the ordinary
course of business and in accordance with customary standards in the coal mining
industry. For the purposes of the preceding sentence, "HAZARDOUS MATERIALS"
shall mean (a) materials which are listed or otherwise defined as "hazardous" or
"toxic" under any applicable local, state, federal and/or foreign laws and
regulations that govern the existence and/or remedy of contamination on
property, the protection of the environment from contamination, the control of
hazardous wastes, or other activities involving hazardous substances, including
building materials, or (b) any petroleum products or nuclear materials.
3.13 INVESTMENT COMPANY. The Company is not an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.
6
3.14 NO MANIPULATION OF STOCK. The Company has not taken and will
not, in violation of applicable law, take any action designed to or that might
reasonably be expected to cause or result in unlawful manipulation of the price
of the Common Stock.
3.15 ACCOUNTANTS. Xxxxxx, Xxxxxx & Banks, LLP, who issued their
report with respect to the financial statements incorporated by reference into
the Company's Annual Reports on Form 10-K for the years ended December 31, 2005
and December 31, 2006, and Ernst & Young LLP, who issued their report with
respect to the financial statements incorporated by reference into the Company's
Annual Report on Form 10-K for the year ended December 31, 2006, are each
independent registered public accounting firms as required by the Securities
Act.
3.16 TAXES. The Company has filed all necessary federal, state and
foreign income and franchise tax returns and has paid or accrued all taxes shown
as due thereon, and the Company has no knowledge of a tax deficiency which has
been or might be asserted or threatened against it which would have a Material
Adverse Effect.
3.17 BROKERS OR FINDERS. The Company has not dealt with any broker
or finder in connection with the transactions contemplated by this Agreement,
and the Company has not incurred, and shall not incur, directly or indirectly,
any liability for any brokerage or finders' fees or agents commissions or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.18 SECURITIES LAWS. Assuming that all of the representations and
warranties of the Investor set forth in SECTION 4, and all of the
representations and warranties of the other Investors participating in the
Offering, are true and correct, the offer and sale of the Shares in the Offering
was conducted and completed in compliance with the Securities Act.
3.19 NO MATERIAL ADVERSE CHANGE. Except as set forth in or
contemplated by the SEC Documents, since December 31, 2006, the Company and its
subsidiaries have conducted their business in the ordinary course, consistent
with past practice, and there has been no (i) change that has had or would
reasonably be expected to have a Material Adverse Effect, (ii) acquisition or
disposition of any material asset by the Company or any of its subsidiaries or
any contract or arrangement therefore, otherwise than for fair value in the
ordinary course of business, (iii) material change in the Company's accounting
principles, practices or methods or (iv) incurrence of material indebtedness.
4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. In order to induce the
Company to enter into this Agreement and consummate the transactions
contemplated hereby, the Investor represents and warrants to the Company the
following:
4.1 AUTHORITY. If a corporation, partnership, limited partnership,
limited liability company, or other form of entity, the Investor is duly
organized or formed, as the case may be, validly existing, and in good standing
under the laws of its jurisdiction of organization or formation, as the case may
be. The Investor has all requisite individual or entity right, power, and
authority to execute, deliver, and perform the Transaction Documents to which it
is a party.
4.2 ENFORCEABILITY. The execution, delivery, and performance by
the Investor of the Transaction Documents to which it is a party have been duly
7
authorized by all requisite partnership or corporate action, as the case may be.
This Agreement has been duly executed and delivered by the Investor, and, upon
its execution by the Company, shall constitute the legal, valid, and binding
obligation of the Investor, enforceable in accordance with its terms, except to
the extent that its enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium, or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
4.3 NO VIOLATIONS. The execution, delivery, and performance by the
Investor of the Transaction Documents to which it is a party do not and will
not, with or without the passage of time or the giving of notice, result in the
breach of, or constitute a default, cause the acceleration of performance, or
require any consent under (except such consents as have been obtained as of the
date hereof), or result in the creation of any lien, charge or encumbrance upon
any property or assets of the Investor pursuant to, any material instrument or
agreement to which the Investor is a party or by which the Investor or its
properties may be bound, and, do not or will not violate or conflict with any
provision of the articles of incorporation or bylaws, partnership agreement,
operating agreement, trust agreement, or similar organizational or governing
document of the Investor, as applicable.
4.4 KNOWLEDGE OF INVESTMENT AND ITS RISKS. The Investor has
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of Investor's investment in the Shares. The
Investor understands that an investment in the Company represents a high degree
of risk and there is no assurance that the Company's business or operations will
be successful. The Investor has considered carefully the risks attendant to an
investment in the Company, and that, as a consequence of such risks, the
Investor could lose Investor's entire investment in the Company.
4.5 INVESTMENT INTENT. The Investor hereby represents and warrants
that (i) the Shares are being acquired for investment for the Investor's own
account, and not as a nominee or agent and not with a view to the resale or
distribution of all or any part of the Shares in violation of the Securities
Act, and the Investor has no present intention of selling, granting any
participation in, or otherwise distributing any of the Shares within the meaning
of and in violation of the Securities Act, and (ii) the Investor does not have
any contracts, understandings, agreements, or arrangements, directly or
indirectly, with any person and/or entity to distribute, sell, transfer, or
grant participations to such person and/or entity with respect to, any of the
Shares. The Investor is not purchasing the Shares as a result of any
advertisement, article, notice or other communication regarding the Shares
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.
4.6 INVESTOR STATUS. The Investor is an "accredited investor" as
that term is defined by Rule 501 of Regulation D promulgated under the
Securities Act and the information provided by the Investor in the Investor
Questionnaire, a copy of which is attached hereto as EXHIBIT C, is truthful,
accurate, and complete.
4.7 NO REGISTRATION. The Investor understands that Investor may be
required to bear the economic risk of Investor's investment in the Company for
an indefinite period of time. The Investor further understands that (i) neither
the offering nor the sale of the Shares has been registered under the Securities
8
Act or any applicable State Acts in reliance upon exemptions from the
registration requirements of such laws, (ii) the Shares must be held by he, she
or it indefinitely unless the sale or transfer thereof is subsequently
registered under the Securities Act and any applicable State Acts, or an
exemption from such registration requirements is available, (iii) except as set
forth in the Registration Rights Agreement, the Company is under no obligation
to register any of the Shares on the Investor's behalf or to assist the Investor
in complying with any exemption from registration, and (iv) the Company will
rely upon the representations and warranties made by the Investor in this
Agreement in order to establish such exemptions from the registration
requirements of the Securities Act and any applicable State Acts.
4.8 TRANSFER RESTRICTIONS. The Investor will not transfer any of
the Shares unless such transfer is registered or exempt from registration under
the Securities Act and such State Acts, and, if requested by the Company in the
case of an exempt transaction, the Investor has furnished an opinion of counsel
reasonably satisfactory to the Company that such transfer is so exempt. The
Investor understands and agrees that (i) the certificates evidencing the Shares
will bear appropriate legends indicating such transfer restrictions placed upon
the Shares, (ii) the Company shall have no obligation to honor transfers of any
of Shares in violation of such transfer restrictions, and (iii) the Company
shall be entitled to instruct any transfer agent or agents for the securities of
the Company to refuse to honor such transfers.
4.9 PRINCIPAL ADDRESS. The Investor's principal residence, if an
individual, or principal executive office, if an entity, is set forth on the
signature page of this Agreement.
5. INDEPENDENT NATURE OF INVESTOR'S OBLIGATIONS AND RIGHTS. The
obligations of the Investor under the Transaction Documents to which it is a
party are several and not joint with the obligations of any other purchaser in
the Offering, and the Investor shall not be responsible in any way for the
performance of the obligations of any other purchaser of shares in the Offering
under any Transaction Document or otherwise. The decision of the Investor to
purchase Shares pursuant to the Transaction Documents has been made by the
Investor independently of any other purchaser in the Offering. Nothing contained
herein or in any other Transaction Document, and no action taken by any
purchaser in the Offering, shall be deemed to constitute such purchasers as a
partnership, an association, a joint venture, or any other kind of entity, or
create a presumption that the purchasers of Shares or any other shares in the
Offering are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Document. The
Investor acknowledges that no other purchaser in the Offering has acted as agent
for the Investor in connection with making its investment hereunder and that no
other purchaser in the Offering will be acting as agent of the Investor in
connection with monitoring its investment in the Shares or enforcing its rights
under the Transaction Documents. The Investor shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising
out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other purchaser in the Offering to be joined as an
additional party in any proceeding for such purpose.
6. EXISTING REGISTRATION RIGHTS AGREEMENT. The Company and certain holders
of equity securities of the Company are parties to that Registration Rights
Agreement, dated October 17, 2007 (the "EXISTING REGISTRATION RIGHTS
AGREEMENT"). Section 3(d) of the Existing Registration Rights Agreement provides
9
that the Company may include shares to be registered for resale by other
stockholders of the Company in any registration statement filed pursuant to the
Existing Registration Rights Agreement. The Investor acknowledges and agrees
that the Shares may be included in the registration statement filed pursuant to
the Existing Registration Rights Agreement.
7. CONDITIONS PRECEDENT.
7.1 CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO CONSUMMATE THE
CLOSING. The obligation of the Investor to consummate the Closing and to
purchase and pay for the Shares being purchased by it pursuant to this Agreement
is subject to the satisfaction of the following conditions precedent:
(a) The representations and warranties of the Company
contained herein shall be true and correct on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date.
(b) The Investor shall have received a certificate in
form and substance acceptable to the Investor signed by an appropriate officer
of the Company: (i) certifying to the fulfillment of the conditions set forth in
SECTION 7.1(A); and (ii) attaching true and correct copies of the resolutions
adopted by the board of directors of the Company approving the transactions
contemplated hereby, and certifying that such resolutions have not been in any
way amended, annulled, rescinded or revoked and are in full force and effect as
of the Closing Date.
(c) The Registration Rights Agreement and the Escrow
Agreement shall have been executed and delivered by the Company.
(d) The Company shall have performed all obligations and
conditions required to be performed or observed by the Company under this
Agreement and the other Transaction Documents on or prior to the Closing Date.
(e) The Company shall have consummated the sale of, and
issued, at least 1,000,000 shares in the Offering in addition to the Shares; the
Company shall have notified the Investor of the exact number of shares so
issued.
Notwithstanding anything contained herein to the contrary, if, for any
reason, the Closing has not occurred on or before the Closing Deadline, then:
(1) the Escrow Agent or the Company (as applicable) shall promptly (subject to
the last sentence of this paragraph) return to the Investor the aggregate
Purchase Price originally deposited by the Investor into escrow in accordance
with SECTION 2 hereof; (2) the Escrow Agent or the Investor (as applicable)
shall promptly return to the Company the certificates representing the Shares
originally deposited by the Company into escrow; and (3) both the Company and
the Investor shall thereafter be released from any and all obligations hereunder
(including but not limited to the Investor's obligation to purchase, and the
Company's obligation to sell, the Shares as contemplated herein). In addition,
in the event that the Escrow Agent or the Company becomes obligated to return
the Purchase Price to the Investor pursuant to the preceding clause (1) but
fails to do so, the Company shall be further obligated to pay to the Investor an
10
amount equal to 0.25% of the Purchase Price for each full day after the first
Business Day following the Closing Deadline during which such failure continues
unremedied.
For the purposes of this Agreement, the "CLOSING DEADLINE" shall mean
December 31, 2007; PROVIDED, HOWEVER that the Closing Deadline shall be extended
automatically until January 4, 2008 unless and until the Investor provides the
Company with written notice of an earlier Closing Deadline (which may be the
date of such written notice but may not be sooner than January 2, 2008).
7.2 CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CONSUMMATE THE
CLOSING. The obligation of the Company to consummate the Closing and to issue
and sell to the Investor the Shares to be purchased by it at the Closing is
subject to the satisfaction of the following conditions precedent:
(a) The representations and warranties of the Investor
contained herein shall be true and correct on and as of the Closing Date with
the same force and effect as though made on and as of the Closing Date.
(b) The Registration Rights Agreement and the Escrow
Agreement shall have been executed and delivered by the Investor.
(c) The Investor shall have performed all obligations and
conditions required to be performed or observed by the Investor under this
Agreement and the other Transaction Documents on or prior to the Closing Date.
8. PROSPECTUS DELIVERY REQUIREMENT. The Investor hereby covenants with the
Company not to make any sale of the Shares without causing the prospectus
delivery requirement under the Securities Act to be satisfied (unless the
Investor is selling such Shares in a transaction not subject to the prospectus
delivery requirement).
9. FURTHER ASSURANCES. The parties hereto will, upon reasonable request,
execute and deliver all such further assignments, endorsements and other
documents as may be necessary in order to perfect the purchase by the Investor
of the Shares.
10. ENTIRE AGREEMENT; NO ORAL MODIFICATION. This Agreement contains the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings with respect
thereto and may not be amended or modified except in a writing signed by both of
the parties hereto.
11. BINDING EFFECT; BENEFITS. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors
and assigns; however, nothing in this Agreement, expressed or implied, is
intended to confer on any other person other than the parties hereto, or their
respective heirs, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
12. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
11
13. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the United States of America and the
State of New York, both substantive and remedial.
14. PREVAILING PARTIES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party shall be entitled to receive and the
nonprevailing party shall pay upon demand reasonable attorneys' fees in addition
to any other remedy.
15. NOTICES. All communication hereunder shall be in writing and, if sent
to the Investor shall be mailed, delivered, telegraphed or sent by facsimile or
electronic mail, and confirmed to the Investor at the address set forth on the
signature page of this Agreement, or if sent to the Company, shall be mailed,
delivered, telegraphed or sent by facsimile or electronic mail and confirmed to
the Company at National Coal Corporation, 0000 Xxxxxx Xxxxxxxx Xx., Xxxxxxxxx,
XX 00000, Attention: Chief Financial Officer, facsimile number (000) 000-0000.
16. HEADINGS. The section headings herein are included for convenience only
and are not to be deemed a part of this Agreement.
12
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
COMPANY:
NATIONAL COAL CORP.,
a Florida corporation
By: /S/ XXXXXX XXXXXX
------------------------------------------------
Name: Xxxxxx Xxxxxx
Its: Chief Executive Officer
INVESTOR:
CENTAURUS ENERGY MASTER FUND, LP
By: Centaurus Energy, LP, General Partner
By: Centaurus Energy Partners, LP, General Partner
By: Centaurus Advisors, LLC, General Partner
By: /S/ XXXX XXXXXXX
------------------------------------------------
Name: Xxxx Xxxxxxx
Title: President
0000 XXXX XXX XXXXXXXXX, XXXXX 000
XXXXXXX, XXXXX 00000
---------------------------------------------------
(Address)
00-000-0000
---------------------------------------------------
IRS Tax Identification No. (if applicable)
000-000-0000
---------------------------------------------------
Telephone Number
000-000-0000
---------------------------------------------------
Fax Number
xxxxx@xxxxxxxxxxxxxxx.xxx
---------------------------------------------------
E-Mail Address
1,000,000 X $4.10 = $4,100,000
Number of Shares Offering Price Purchase Price
13
EXHIBIT A
ESCROW AGREEMENT
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
INVESTOR QUESTIONNAIRE
