EXHIBIT 99.2
UNITED FUEL & ENERGY CORPORATION
RESTRICTED STOCK AGREEMENT
This Agreement is made as of the 17th day of July 2004, by and between
United Fuel & Energy Corporation (the "Company") and Xxxxx Xxxxxx ("Employee").
WITNESSETH:
WHEREAS, the parties previously entered a stock purchase agreement as of
July 1, 2003 which they wish to terminate and replace with this Agreement; and
WHEREAS, Xxxxxx X. Xxxxx ("Xxxxx") the Chief Executive Officer and
Chairman of the Board of Directors of the Company presently owns fifty-eight
percent (58%) (being 580 shares of stock) of the outstanding common stock of the
Company; and
WHEREAS, Xxxxx has entered into a Stock Purchase Agreement (the "Xxxxxxxx
Agreement") with Xxxxxxx X. Xxxxxxxx ("Xxxxxxxx") to purchase all of Xxxxxxxx'x
common stock in the Company being 420 shares or 42% of the outstanding shares of
common stock of the Company; and
WHEREAS, the Company has paid a portion of the partial payment made by
Xxxxx to Xxxxxxxx under the Xxxxxxxx Agreement; and
WHEREAS, the Company and Xxxxx have agreed that upon final payment to
Xxxxxxxx pursuant to the Xxxxxxxx Agreement, the Company will acquire from Xxxxx
not less than 100 shares of its common stock (being 10% of the outstanding
shares of stock of the Company);
WHEREAS, the Company regards Employee as a valuable employee of the
Company and has determined it would be to the advantage and interest of the
Company and its shareholders to grant the Employee restricted shares of stock in
the Company as an inducement for the Employee to remain in the service of the
Company and as an incentive for him to increase his efforts on behalf of the
Company;
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:
I. RESTRICTED STOCK GRANT
The Company hereby grants to Employee, on the terms and conditions
hereinafter set forth, 100 shares of the common stock of the Company (the
"Stock"). This grant shall be effective as of the date the Company acquires 10%
of its outstanding shares from Xxxxx. The date of grant is sometimes referred to
herein as the "Closing Date."
II. VESTING OF STOCK
The shares granted to the Employee shall vest in three stages as follows:
o On the Closing Date, Employee shall become vested in 50 of the
shares of the Stock. For purposes the two bullets below, the
remaining unvested shares are referred to as the "Remaining Shares."
o On the six month anniversary of the Closing Date, an additional 25
shares of the Remaining Shares shall vest.
o On the first anniversary of the Closing Date, the balance of the
Remaining Shares shall vest.
Notwithstanding the foregoing, if the Employee terminates employment from
the Company and all affiliates, voluntarily or involuntarily, for any reason
prior to the Closing Date or a subsequent vesting date, all unvested shares on
the date of termination shall be forfeited. Fair market value shall be
determined for purposes of this Section and all other provisions of this
Agreement by an appraisal conducted by the certified public accounting firm
retained by the Company to do its annual audit at the time of the fair market
value determination.
III. ADDITIONAL CONDITIONS ON VESTING
The Employee agrees to execute the following documents prior to the
Closing Date as a further precondition to the vesting of any shares:
a. Employee shall execute one or more agreements relating to
obligations in connection with the ownership of the shares or restrictions
on transfer of the shares no less restrictive than the obligations and
restrictions to which the other stockholders of the Company are subject at
the time of vesting.
b. Employee may be required, as a condition precedent to vesting, to
execute a stock pledge agreement, a security agreement, an escrow
agreement and an assignment separate from certificate to a lender of the
Company or its affiliates that has required the pledge of all outstanding
Company stock as a condition of its providing a credit facility to the
Company or its affiliates. Employee shall only be required to execute
these documents if all other stockholders of the Company have also been
required to execute such documents.
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c. If required by the Company, Employee shall give the Company
satisfactory assurance in writing, signed by Employee or his legal
representative, as the case may be, that such shares are being acquired
for investment and not with a view to the distribution thereof.
IV. RIGHTS AS SHAREHOLDER
Upon the vesting of the shares, the delivery of all documents required
under Article III by Employee to Company, and the satisfaction of any tax
withholding obligations, the Employee shall be entitled to the rights of a
shareholder of said shares in accordance with the Articles of Incorporation and
Bylaws of the Company.
V. ADJUSTMENTS IN SHARES
If there should be any change in a class of the shares subject to this
grant, through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend or other change in the corporate
structure of the Company, the Company shall make appropriate adjustments in
order to preserve, but not to increase, the benefits to Employee, including
adjustment in the number of shares subject to this grant. Any adjustment made
pursuant to this paragraph, as a consequence of a change in the corporate
structure of the Company shall not entitle Employee to acquire a percentage of
ownership of the Company or any successor company greater than Employee would
receive, prior to such change; however, Employee shall only be required to
reduce his ownership percentage in any new merged or consolidated entity of
which the Company may become a part to the same extent as all other existing
shareholders of the Company.
VI. LIMITATION ON TRANSFER AND ASSIGNABILITY
The grant of restricted stock under this Agreement is personal to the
Employee and neither the grant nor any right hereunder shall be transferable or
assignable by Employee, either voluntarily or involuntarily, or by operation of
law or otherwise. In the event of any attempt by Employee to alienate, assign,
pledge, hypothecate, or otherwise dispose of this grant or of any right
hereunder, except as provided in this Agreement, or in the event of the levy of
any attachment, execution or similar process upon the rights or interest hereby
conferred, the Company, at its election, may terminate this grant with respect
to all unvested shares and neither the Employee nor any other person shall have
the right to vest in such shares at any time.
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VII. LEGEND
Each share certificate granted under this Agreement shall bear a legend
indicating that it is "Restricted Stock." When the restricted shares become
vested, the Company shall take such steps as may be appropriate to delete the
restricted stock legend.
VIII. SECTION 83(B) ELECTION
The Employee may elect, within 30 days of the date of grant (i.e., the
Closing Date) pursuant to Section 83(b) of the Internal Revenue Code, to include
in his income the fair market value of the shares covered by this Agreement in
the taxable year of grant. If he makes this election, the Employee shall
promptly notify the Company by submitting to the Company, in the manner it
specifies, a copy of the statement filed with the Internal Revenue Service in
which the Employee makes such election.
IX. RESTRICTED SHARE CERTIFICATES TO BE HELD BY THE COMPANY
Unless otherwise agreed, certificates for some or all unvested shares
shall be held by the Company until such shares have become vested and will be
transferred to the Employee only after satisfaction of all federal, state and
local income and employment tax withholding liabilities that arise either on
account of the Section 83(b) election or upon the vesting of the shares.
X. GENERAL RESTRICTIONS
The Company shall not be required to deliver any share certificate until
it has been furnished with such opinion, representation or other document as it
may deem desirable, in its discretion, to insure compliance with any law or
regulation of the Securities and Exchange Commission or any other governmental
authority having jurisdiction over the Company, the Employee, or the shares
awarded under this Agreement or any interest therein. This grant is also subject
to the requirement that if at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of the shares (or
the interests evidenced hereby) subject to this grant upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of this award or the issue of shares hereunder,
this grant and the interests evidenced hereby shall have no validity unless such
listing registration, qualification, consent or approval shall have been
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effected or obtained to the complete satisfaction of the Company and free of any
conditions not acceptable to the Company.
XII. NO EFFECT ON TERMS OF EMPLOYMENT
Subject to the terms of any written employment contract to the contrary,
nothing in this Agreement shall effect the right of the Company (or any of its
Affiliates that employs employees) to terminate or change the terms of
employment of Employee at any time and for any reason whatsoever, with or
without cause.
XII. NOTICE
Any notice required to be given under the terms of this Agreement shall be
addressed to the Company in care of its secretary at the office of the Company
at P. 0. Xxx 0000, Xxxxxxx, Xxxxx 00000, and any notice to be given to Employee
shall be addressed to him at his address on file in the Company's employment
records, or such other address as either party to this Agreement may hereafter
designate in writing to the other. Any such notice shall be deemed to have been
fully given when enclosed in a properly sealed envelope or wrapper addressed to
the aforesaid, registered or certified, and deposited (postage or registration
or certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Government.
XIII. INFORMATION
Beginning as of the date this Agreement is executed, the Company shall
provide the Employee access, on an annual or other periodic basis, to such
financial information regarding the Company as the Company prepares for
distribution to its shareholders generally.
XIV. ENTIRE AGREEMENT
This Agreement constitutes the sole and only agreement of the parties to
it and supersedes any prior understandings or written or oral agreements between
the parties respecting this subject matter, including the Incentive Stock
Purchase Agreement dated as of July 1, 2003. Any oral representations or
modifications concerning this instrument shall be of no force or effect except
in a subsequent modification in writing signed by both parties hereto.
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XV. ATTORNEY'S FEES
If any actions at law or in equity, including any action for declaratory
relief, is brought to enforce or interpret the provisions of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees, which may be
set by the Court in the same action or in a separate action brought for the
purpose, in addition to any other relief to which they may be entitled.
XVI. GOVERNING LAW
This Agreement shall be construed under and in accordance with the laws of
the State of Texas, and all obligations of the parties created by this Agreement
are performable in Midland County, Texas.
XVII. LEGAL CONSTRUCTION
In the event any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not effect any
other provision, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained in it.
IN WITNESS WHEREOF, the Company and the Employee have caused this
Restricted Stock Agreement to be executed on the date set forth opposite their
respective signatures, it being further understood that the date of grant may
differ from the date of signature.
Dated: 7/17/04 UNITED FUEL & ENERGY CORPORATION
By /s/ Xxxxxx X. Xxxxx
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Title Chairman
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Dated: 7/17/04 EMPLOYEE
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
