NATIONAL COAL CORP. SECURITIES CONVERSION AGREEMENT
NATIONAL
COAL CORP.
This
Conversion Agreement (“Agreement”)
is
made and entered as of this 15th
day of
October 2007 (the “Effective
Date”),
by
and between National Coal Corp., a Florida corporation (the “Company”),
and
the undersigned holder (“Series
A Holder”)
of
outstanding shares of the Series
A
Cumulative Convertible Preferred Stock of the Company.
WHEREAS,
the Company desires to effectuate the conversion of the shares of Series
A
Cumulative Convertible Preferred Stock of the Company held by the Series
A
Holder (the “Series
A Shares”)
into
shares of the Company’s common stock (“Common
Stock”)
in
accordance with the terms of the Series A Shares;
WHEREAS,
the Company recognizes that the conversion of such Series A Shares has value
to
the Company and cost to the Series A Holder in the amount that the Company
has
determined to be $1,648,167.95 (the “Cash
Amount”)
and
which the Company is willing to pay to the Series A Holder;
WHEREAS,
the Series A Holder is willing to convert the Series A Shares into Common
Stock
as requested by the Company; and
WHEREAS,
the Series A Holder is willing to purchase additional shares of the Common
Stock.
NOW,
THEREFORE, in consideration of the premises, and for other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged,
the
parties agree as follows:
1. Conversion.
On the
sixty second (62nd)
day
after the Effective Date, the Series A Holder hereby irrevocably agrees to
(and
shall take all actions on such date necessary to irrevocably) convert the
Series
A Shares on the terms provided in the Articles of Amendment of the Articles
of
Incorporation of the Company filed on August 31, 2004, as amended (“Articles
of Amendment”),
including submitting to the Company on such date a duly executed and completed
conversion notice and the original stock certificate representing the Series
A
Shares, provided that the Company has complied with its obligations hereunder
to
pay the Cash Amount on the Effective Date. In the event that the stock
certificate representing the Series A Shares has been lost, stolen or misplaced,
the Series A Holder shall submit to the Company a duly notarized affidavit
of
lost certificate. In order to effectuate such conversion, the Series A Holder
does hereby give to the Company the 61 days notice required under Section
5(h)(iii) of the Articles of Amendment that it hereby irrevocably elects
(under
Section 5(h)(iii) of the Articles of Amendment) to no longer be governed
by the
Beneficial Ownership Cap (as defined in the Articles of Amendment) (for
clarification purposes and without implication that the contrary would otherwise
be true, it is expressly understood and agreed that such Beneficial Ownership
Cap shall continue to apply to the Series A Holder pursuant to the terms
of the
Articles of Amendment until the sixty second (62nd)
day
after the Effective Date). Upon such conversion of the Series A Shares by
the
Series A Holder, the Company shall issue to the Series A Holder 600,753 shares
of Common Stock, which are issuable to the Series A Holder upon conversion
of
the Series A Shares in accordance with the terms of the Articles of Amendment
(the “Conversion
Shares”).
2. Cash
Amount and Stock Purchase.
2.1 Payment
of Cash Amount.
In
recognition of the value to the Company and the cost to the Series A Holder
of
such conversion contemplated by Section 1 above, and in consideration of
the
Series A Holder’s irrevocable agreement to convert the Series A Shares, the
Company shall, on the Effective Date, pay to the Series A Holder the Cash
Amount.
2.2 Shares
of Common Stock.
On the
Effective Date, the Series A Holder shall purchase from the Company, and
the
Company shall issue and sell to the Series A Holder, 558,701 shares of Common
Stock (the “New
Shares”)
from
the Company for an aggregate purchase price (the “Purchase
Price”)
equal
to the Cash Amount.
2.3 Settlement.
The
Cash Amount shall be paid by wire transfer of immediately available funds
to the
Series A Holder at the open of business on the Effective Date (to an account
designated by the Series A Holder in writing to the Company prior to the
Effective Date). Upon receipt by the Series A Holder of the Cash Amount from
the
Company, the Series A Holder shall pay the Purchase Price to the Company
by wire
transfer to the Company of immediately available funds, to an account designated
in writing by the Company to the Series A Holder prior to the Effective Date.
Written designations pursuant to this Section 2.3 may be transmitted via
email
to the following email addresses:
2.3.1 For
the
Company, to T. Xxxxxxx Xxxx at xxxxx@xxxxxxxxxxxx.xxx; and
2.3.2 For
the
Series A Holder, to Xxxx Xxxxxxx at xxxx@xxxxxxxxxxxx.xxx.
2.4 Waiver.
The Series A Holder hereby irrevocably waives all anti-dilution rights granted
to the Series A Holder by the Company solely in connection with the Company’s
issuance of the New Shares, including without limitation the anti-dilution
rights granted under Section 4.6 of that certain Warrant issued by the Company
to the Series A Holder on March 10, 2005. For clarification, it is understood
and agreed that the foregoing waiver does not apply to any issuance of any
securities other than the New Shares and that any issuance of any securities
which would otherwise be subject to such anti-dilution rights will continue
to
be subject to such anti-dilution rights.
3. Representations
and Warranties.
3.1 As
a
material inducement to the Series A Holder to enter into this Agreement,
the
Company represents to the Series A Holder that:
3.1.1 The
execution and delivery by the Company of this Agreement, and the consummation
by
the Company of the transactions set forth herein (including, without limitation,
the issuance of the Conversion Shares and the New Shares), have been duly
authorized by all necessary corporate action on the part of the Company.
All of
the Conversion Shares and the New Shares will be validly issued, fully paid
and
nonassessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock.
Subject to the accuracy of the representations and warranties of the Series
A
Holder in this Agreement, the offer and issuance by the Company of the
Conversion Shares and the New Shares is exempt from registration under the
Securities Act; and
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3.1.2 This
Agreement has been duly executed and delivered by the Company and constitutes
a
valid and binding obligation of the Company enforceable against the Company
in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
3.2 As
a
material inducement to the Company to enter into this Agreement, the Series
A
Holder represents to the Company that:
3.2.1 The
execution and delivery by the Series A Holder of this Agreement, and the
consummation by the Series A Holder of the transactions set forth herein,
have
been duly authorized by all necessary action, corporate or otherwise, on
the
part of the Series A Holder;
3.2.2 This
Agreement has been duly executed and delivered by the Series A Holder and
constitutes a valid and binding obligation of the Series A Holder enforceable
against the Series A Holder in accordance with its terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies;
3.2.3 The
Series A Holder has had reasonable opportunity to seek the advice of independent
counsel respecting the terms of this Agreement and the implications thereof
and
has relied solely upon the advice of its own tax and legal advisors with
respect
to the tax and other legal aspects of this Agreement;
3.2.4 The
Series A Holder is
an
“accredited investor” within the meaning of Rule 501 of Regulation D under the
Securities Act of 1933, as amended (the “Securities
Act”);
3.2.5 The
Series A Holder has
sufficient knowledge and experience in investing in companies similar to
the
Company in terms of the Company’s stage of development so as to be able to
evaluate the risks and merits of its investment in the Company and it is
able
financially to bear the risks thereof;
3.2.6 The
Series A Holder has
received or has had full access to all the information it considers necessary
or
appropriate to make an informed investment decision with respect to the New
Shares to be issued to the Series A Holder under this Agreement. The Series
A
Holder further has had an opportunity to ask questions and receive answers
from
the Company regarding the terms and conditions of the offering of the New
Shares
and to obtain additional information necessary to verify any information
furnished to the Series A Holder or to which the Series A Holder had
access;
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3.2.7 The
New
Shares are being acquired for the Series A Holder’s own account for the purpose
of investment and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act; provided,
however,
that by
making the representation herein, the Series A Holder does not agree, or
make
any representation or warranty, to hold the New Shares for any minimum or
other
specific term and reserves the right to dispose of the New Shares at any
time in
accordance with or pursuant to a registration statement or an exemption from
registration under the Securities Act;
3.2.8 The
Series A Holder understands
that while
the
Conversion Shares have been registered, (i) the New Shares
have not
been registered under the Securities Act by reason of their issuance in a
transaction exempt from the registration requirements of the Securities Act,
(ii) the New Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, and (iii) the New Shares will bear a legend to such
effect;
3.2.9 The
Series A Holder understands that the New Shares are being offered and sold
to
the Series A Holder in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and that
the
Company is relying upon the truth and accuracy of, and the Series A Holder’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Series A Holder set forth herein in order to determine
the availability of such exemptions and the eligibility of the Series A Holder
to acquire the New Shares; and
3.2.10 The
Series A Holder is not acquiring the New Shares as a result of any
advertisement, article, notice or other communication 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. Miscellaneous/General.
4.1 Amendment.
No
modification or amendment hereof shall be valid and binding, unless it be
in
writing and signed by the Series A Holder and the Company.
4.2 Headings.
Section
headings are inserted herein for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
4.3 Governing
Law; Jurisdiction.
This
Agreement and the performance of the transactions and obligations of the
parties
hereunder shall
be
governed by and construed solely in accordance with the internal laws of
the
State of Tennessee with respect to contracts made and to be fully performed
therein, without regard to the conflicts of laws principles thereof. By their
execution of this Agreement, the parties hereby expressly and irrevocably
(i)
agree that any suit or proceeding arising directly and/or indirectly pursuant
to
or under this Agreement, shall be brought solely in a federal or state court
located in the State of Tennessee, (ii) submit to the in personam
jurisdiction of the federal and state courts located in the State of Tennessee
and agree that any process in any such action may be served upon any of them
personally, or by certified mail or registered mail upon them or their
registered agent, return receipt requested, with the same full force and
effect
as if personally served upon them in the State of Tennessee, and (iii) waive
any
claim that any such jurisdiction is not a convenient forum for any such suit
or
proceeding and any defense or lack of in personam
jurisdiction with respect thereto.
In the
event of litigation to enforce this Agreement, the prevailing party shall
be
entitled to reasonable attorneys’ fees and costs from the non-prevailing
party.
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4.4 Counterparts;
Facsimile; PDF.
This
Agreement may be executed in any number of counterparts, each of which shall
constitute an original, but all of which, taken together, shall constitute
one
and the same instrument. Facsimile or portable document format signatures
shall
have the same binding effect as original signatures.
4.5 Entire
Agreement.
This
Agreement represents the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof and all prior conversations,
negotiations, understandings and agreements between the parties hereto
concerning the subject matter hereof are hereby expressly
superseded.
[signature
page follows]
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IN
WITNESS WHEREOF, this Agreement has been executed by the parties with the
intent
that it be effective as of the date first above written.
“COMPANY”
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NATIONAL
COAL CORP.,
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a
Florida corporation
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By:
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/s/ Xxxxxx X. Xxxxxx | |
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Name:
Xxxxxx X. Xxxxxx
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Title:
President and CEO
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“SERIES
A HOLDER”
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If
Business Entity:
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Entity
Name: Crestview
Capital Master, LLC
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By:
Crestview Capital Partners, LLC, its sole manager
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Date
Signed:
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By:
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/s/ Xxxxxxx X. Xxxxx | ||
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Name:
Xxxxxxx X. Xxxxx
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Title:
Manager
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If
Individual:
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Date
Signed:
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(Signature)
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,
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Individually
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(Print
Name)
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