EX-10.4
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exhibit10_4.htm
EMPLOYMENT AGMT XXXXX
EXECUTIVE
EMPLOYMENT AGREEMENT
Employment
Agreement, dated as of _April 20_, 2009 (this
“Agreement”), by and between Xxxxxx X. Xxxxxxxxxx (the “Executive”), and U.S.
ENERGY CORP., a
Wyoming corporation (the “Company” or “USE”).
R
E C I T A L S:
The
Company deems it desirable and prudent to enter into an employment agreement
with the Executive in order to assure itself of the ongoing services of the
Executive in the future, which services are deemed to be integral to the success
of the Company. The Executive desires to be employed by the Company,
upon the terms and provisions, and subject to the conditions, set forth in this
Agreement;
The
Company and the Executive previously entered into an “Executive Severance and
Non-Compete Agreement”, a copy of which is attached hereto as Schedule B,
providing for the payment of certain amounts to the Executive (i) upon a
termination of his employment within a 3 year period following a change in
control of the Company, except in the case of a termination by the Company for
cause, or by the Executive without good reason (each as defined therein), and
(ii) as consideration for the promise of the Executive not to compete with the
Company.
It is
intended by the parties that this
Executive Employment Agreement shall
supplement, and shall not supersede, such Executive Severance and Non-Compete
Agreement and the terms of this
Executive Employment Agreement shall be
interpreted accordingly. Notwithstanding anything contained herein,
in the event that any provision of this Employment Agreement directly conflicts
with the terms of the Executive Severance and Non-Compete Agreement, the terms
of the Executive Severance and Non-Compete Agreement shall apply.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements of the
parties contained herein, and other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
1. Employment;
Term
The
Company shall employ the Executive, and the Executive shall accept employment by
the Company, upon the terms and provisions, and subject to the conditions, of
this Agreement. The term of the Executive’s employment hereunder shall commence
on and as of the date hereof (the “Employment Date”) and terminate on the third
(3rd) anniversary of the Employment Date. However, this Agreement
shall automatically renew on the same terms and conditions for succeeding three
(3) year periods if the Executive is still employed as General Counesl,
Secretary unless (i) either the Executive or the Company provides written notice
to the other at least ninety (90) days prior to the expiration of this Agreement
of the intention not to renew this Agreement, or (ii) the Agreement has been
amended by mutual agreement of the parties (the “Employment Term”).
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2. Position and
Duties
The
Company shall employ the Executive as its General Counsel, Secretary. The
Executive shall be subject to the ultimate authority of the Board of Directors
of the Company. The Executive shall have the duties set forth in the Position
Description, attached hereto and incorporated herein by reference as Schedule D,
and such additional responsibilities or duties with respect to the Company and
its subsidiaries, and their respective operations, as may be determined and
assigned to the Executive by the Board of Directors of the Company.
The
Executive owes absolute loyalty to the Company on all business opportunities he
may become aware of. During the Employment Term, the Executive shall
not, without the advance written consent of the Board, provide services to or be
employed by any other person, firm, or business, regardless of its form of
organization, it being the intent of the parties that the Executive shall devote
all of his working time, attention and energy to the business and affairs of the
Company.
The
Executive agrees to vote all shares of the Company’s stock he owns in the
affirmative of all proposals put forth by the Board of Directors to the
shareholders of the Company during the Term of this Agreement.
3. Base
Salary
During
the Employment Term, the Compensation Committee shall review
the Executive’s base salary on an annual basis and make any
recommended changes to the full board of directors. The initial Base Salary
and any subsequent changes shall be reflected on a Schedule attached to and
incorporated herein by reference. The Base Salary shall be payable in
accordance with the normal payroll practices of the Company; provided, however, that such
payments shall be subject to withholding for applicable taxes and any other
amounts generally withheld from compensation paid to salaried senior executives
of the Company.
In
addition to the Base Salary, the Executive will continue to be eligible to
participate in the following established Programs and Plans in accordance with
their terms as they have been or may be amended from time to time,:
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1.
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The
June 1, 1989 U.S. Energy Corp. Employee Stock Ownership Plan
(“ESOP”)
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2.
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The
November 15, 2001 U.S. Energy Corp. Incentive Stock Option Plan
(“ISOP”).
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3.
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The
December 7, 2001 U.S. Energy Corp. Stock Compensation Plan, (“Stock
Compensation Plan”).
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4.
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Annual
Christmas Bonuses as granted by the Executive Committee of the
Company. Any Christmas Bonus paid to the Executive will be
calculated on the same basis as all Company
employees.
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5.
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Any
additional compensation plans adopted by the Board of Directors and or the
Company’s shareholders for the benefit of all the Company’s
employees.
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4. Performance
Compensation Plan
Following
the end of each fiscal year of the Company during the Employment Term, the
Executive may be eligible to receive a fiscal year end bonus in an amount not
exceeding 100% of the Executive’s Base Salary (the “Performance
Bonus”). Criteria for determining the bonus amount will be linked to
the achievement of the annual operating plan and budget, as outlined in the
Performance Compensation Plan and as approved by the Board of Directors. See
Exhibit A. Upon each anniversary of this contract, the Compensation
Committee will make recommendations to the full board and the Executive as to a
new matrix for bonus compensation no later than April 15th of each
year.)
The
Performance Bonus, if earned, shall be paid by the Company to the Executive
within thirty (30) days following the filing of the audited financial statements
of the Company for the prior fiscal year in its annual Form 10K.
4. Business
Expenses
The
Company shall reimburse the Executive for all necessary and reasonable expenses
incurred or paid by the Executive during the Employment Term in connection with
the performance of the Executive’s duties and obligations to the Company,
subject to providing the proper documentation of such expenses. The
Company will reimburse the Executive for the use of his personal vehicle at the
established Company rates but will not provide Executive with a Company owned
vehicle.
5. Benefits -
Indemnification
During
the Employment Term, the Executive will be eligible to (subject to applicable
eligibility requirements) participate in such insurance and life, health,
medical and disability benefits as are made available to the senior executives
of the Company pursuant to such plans as are from time to time maintained by the
Company.
The
Company shall provide health insurance coverage to the Executive and his spouse,
or shall reimburse the Executive for such health insurance coverage from and
after the Executive’s attainment of age 60, until the Executive becomes eligible
for Medicare benefits. This obligation will continue despite any termination of
the Executive’s employment with the Company, unless such termination is for
cause as defined in paragraph 12(b), and shall in all cases be limited to the
amount paid by the Company for its executives as determined from time to
time. In the event that the Executive becomes eligible for health
insurance from another source, the obligation of the Company hereunder shall
cease.
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The
Company shall indemnify and hold Executive harmless to the maximum extent
permitted by law and by the bylaws of the Company, and shall purchase indemnity
insurance, including directors’ and officers’ liability insurance, if available,
to protect the Executive from and against any and all claims, damages,
judgments, settlements, reasonable attorneys fees, and other expenses reasonably
incurred by the Executive in connection with any proceeding arising out of or in
connection with the Executive’s employment by the Company.
6. Vacation
During
each full year of the Employment Term, the Executive shall be entitled to the
number of days of vacation as outlined in the U.S. Energy Employee
Handbook. The Executive shall take vacation at such time or times as the
Executive desires based upon the then current business needs and activities of
the Company. The Executive is however required to take five
consecutive days of vacation during each twelve month period of the Employment
Contract to satisfy the controls established pursuant to Sarbanes
Oxley.
7. Covenant Not to
Solicit
The
Executive shall not, during the Employment Term and the two (2) year period
following the end of the Employment Term (the “Restriction Period”), directly or
indirectly solicit, entice, persuade, induce or cause any employee, officer,
manager, director, consultant, agent or independent contractor of the Company to
terminate his, her or its employment, consultancy or other engagement by the
Company to become employed by or engaged by any individual, entity, corporation,
partnership, association, or other organization (collectively, “Person”) other
than the Company, or approach any such employee, officer, manager, director,
consultant, agent or independent contractor for any of the foregoing purposes,
or authorize or assist in the taking of any of such actions by any
Person.
The
Executive shall not, during the Restriction Period, directly or indirectly,
solicit, entice, persuade, induce or cause (i) any Person who is a customer of
the Company at any time during the Restriction Period; or (ii) any lessee,
vendor or supplier to, or any other Person who had or has a business
relationship with, the Company at any time during the Restriction
Period (the Persons referred to in items (i) and (ii) above, collectively,
the “Prohibited Persons”) to enter into a business relationship with any other
Person for the same or similar services, activities or goods that any such
Prohibited Person purchased from, was engaged in or provided to, the Company or
to reduce or terminate such Prohibited Person’s business relationship with the
Company; and the Executive shall not, directly or indirectly, approach any such
Prohibited Person for any such purpose, or authorize or assist in the taking of
any of such actions by any Person.
For
purposes of this Section 7, the terms “employee”, “consultant”, “agent”, and
“independent contractor” shall include any Persons with such status at any time
during the one (1) month preceding any solicitation in question.
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8. Non-Compete
Except as
otherwise provided in this Agreement, during the Employment Term and during the
Restriction Period, the Executive shall not directly or indirectly, alone
or in association with any other Person, manage, operate, join, control, be
employed by, or participate in the partnership, management, operation or control
of, or be connected in any manner with, including but not limited to as a
director, officer, partner, member, lender, vendor, consultant, employee,
advisor, agent, independent contractor or a controlling shareholder
of an entity that engages in the exploration or development activities for oil
and gas, molybdenum or renewable resource development (the “Business”).
For purposes of this Section 8, the Executive covenants not to compete with the
Company in its established or anticipated businesses. To remedy the
competition provision of this contract the Executive must bring in writing any
prospective opportunities he learns of and desires to participate in to the
Board of Directors and make such opportunity available to the
Company. In the event that the Company advises the Executive in
writing that it has no interest in the prospect, or business opportunity the
Executive is free to move forward however he chooses. Such written
notice will not be unreasonably withheld.
9. Protection of Confidential
Information
The
Executive acknowledges that prior to the date hereof the Executive has had
access to, and during the course of the Executive’s employment hereunder will
have access to, significant Confidential Information (as hereinafter defined).
During the Restriction Period, (i) the Executive shall maintain all Confidential
Information in strict confidence and shall not disclose any Confidential
Information to any other Person, except as necessary in connection with the
performance of the Executive’s duties and obligations under this Agreement, and
(ii) the Executive shall not use any Confidential Information for any purpose
whatsoever except in connection with the performance of the Executive’s duties
and obligations under this Agreement.
“Confidential
Information” shall mean any and all information pertaining to the Company and
the Business, whether such information is in written form or communicated
orally, visually or otherwise, that is proprietary, non-public or relates to any
trade secret, including, but not limited to, customer data, sales and marketing
information, business and marketing strategies, loan data, loan and deposit
account information, files, business secrets, computer programs or files, and
business techniques. Notwithstanding the foregoing, “Confidential Information”
shall not include information that (i) is or becomes generally available to, or
known by, the public through no fault of the Executive, or (ii) is independently
acquired or developed by the Executive outside the scope of his
employment.
10. Certain Additional
Agreements
The
Executive agrees that it is a legitimate interest of the Company and reasonable
and necessary for the protection of the goodwill and business of the
Company,
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which are
valuable to the Company, that the Executive make the covenants contained in
Sections 7, 8 and 9 of this Agreement.
The
parties acknowledge that (i) the type and periods of restriction imposed in the
provisions of Sections 7, 8 and 9 of this Agreement are fair and reasonable and
are reasonably required to protect and maintain the proprietary and other
legitimate business interests of the Company, as well as the goodwill associated
with the Business conducted by the Company, (ii) the Business conducted by the
Company extends throughout the Restricted Territory, and (iii) the time, scope,
geographic area and other provisions of Sections 7, 8 and 9 of this Agreement
have been specifically negotiated by sophisticated commercial parties
represented by experienced legal counsel.
In the
event that any covenant contained in this Agreement, including, without
limitation, any covenant contained in Sections 7, 8 and 9 of this Agreement
shall be determined by any court of competent jurisdiction to be illegal,
invalid or unenforceable by reason of its extending for too great a period of
time or over too great a geographical area or by reason of its being too
extensive in any other respect, (i) such covenant shall be interpreted to extend
over the maximum period of time for which it may be legal, valid and
enforceable, as applicable, and/or over the maximum geographical area as to
which it may be legal, valid and enforceable, as applicable, and/or to the
maximum extent in all other respects as to which it may be legal, valid and
enforceable, as applicable, all as determined by such court making such
determination, and (ii) in its reduced form, such covenant shall then be legal,
valid and enforceable, as applicable, but such reduced form of covenant shall
only apply with respect to the operation of such covenant in the particular
jurisdiction in or for which such adjudication is made. It is the intention of
the parties that such covenants shall be enforceable to the maximum extent
permitted by applicable law.
It is
acknowledged and agreed that the covenants contained in Sections 7, 8 and 9 of
this Agreement are in additional to, and do not supersede, the covenants
contained in the “Executive Severance and Non-Compete Agreement” previously
entered into by and between the parties.
11. Specific
Performance
The
Executive acknowledges that any breach or threatened breach of the covenants
contained in Sections 7, 8, 9 and 10 of this Agreement will cause the
Company material and irreparable damage, the exact amount of which will be
difficult to ascertain and that the remedies at law for any such breach or
threatened breach will be inadequate. Accordingly, the Executive agrees that the
Company shall, in addition to all other available rights and remedies
(including, but not limited to, seeking such damages as it can show it has
sustained by reason of such breach), be entitled to specific performance and
injunctive relief in respect of any breach or threatened breach of any of
Sections 7, 8, 9 and 10 of this Agreement, without being required to post
bond or other security and without having to prove the inadequacy of the
available remedies at law or irreparable harm.
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12. Termination
(a) Except
as set forth in Section 12(b), in the event of the termination of the
Executive’s employment during the Employment Term the Executive shall be
entitled to receive, and the Company shall pay the Executive (i) the Base Salary
owing to the Executive hereunder through the date of termination, (ii) accrued
vacation, and (iii) any business expenses which were properly reimbursable to
the Executive pursuant to Section 4 hereof through the date of
termination. Such amounts shall be paid to the Executive in a lump-sum not
later than seventy-five (75) days after the date of termination. The
Executive shall be entitled to no further payment upon such termination with the
exception of the health insurance benefit described in paragraph 5.
(b) In
the event of the termination of the Executive’s employment during the Employment
Term (i) by the Company without Cause (as defined below) or (ii) by the
Executive for Good Reason (as defined below), and contingent upon Executive
first executing the Separation Agreement that is attached hereto as Exhibit E
and that Separation Agreement becoming fully effective pursuant to its terms,
then the Executive shall be entitled to receive, and the Company shall pay the
Executive, in addition to the amounts described in 12(a) above, (i) severance
equal to the Executive’s annual Base Salary at the date of termination
multiplied by two (2), and (ii) cash equal to the excess of the Market Value of
securities underlying the vested options held by the Executive immediately prior
to termination, less the exercise price of such options, multiplied by the
number of shares underlying the corresponding options. Such amounts
shall be paid to the Executive in a lump-sum not later than seventy-five (75)
days after the date of termination, and shall be reduced by any amounts payable
to the Executive under paragraphs 2(a), (b) and (d) of the Executive Severance
and Non-Compete Agreement.
For
purposes of this Agreement, “Cause” shall mean:
(i)
failure to accomplish the goals established in the Company’s operating plans as
determined by the Board of Directors;(ii) that the
Executive shall have committed an intentional act of fraud, embezzlement or
theft in connection with his duties with, or in the course of his employment
with, the Company, or been convicted of a felony or other crime involving moral
turpitude;
(iii) intentional
wrongful damage to or misappropriation of property of the Company;
(iv) an
intentional or grossly negligent refusal or failure to perform Executive’s
duties, or to carry out the reasonable directions of the Company’s Board of
Directors (other than on account of illness or other physical or mental
disability), which refusal or failure is not remedied within the 10 calendar
days after receipt by the Executive of written notice from the Company thereof,
or insubordination;
(v) a
material breach of any of the provisions of this Agreement applicable to
Executive, which breach is not remedied within the
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10
calendar days after receipt by the Executive of written notice from the Company
of such breach; and in any case any such act or failure to act shall be
determined by the Board of Directors of the Company to have been materially
harmful to the Company. For purposes of this Agreement, no act, or failure to
act, on the part of the Executive shall be deemed “intentional” unless done, or
omitted to be done, by the Executive not in good faith and without a reasonable
belief that his action or omission was in the best interests of the Company, as
determined by the Board of Directors of the Company in its sole but reasonable
discretion; or
For
purposes of this Agreement, “Good Reason” shall mean a termination occurring
within one hundred and twenty (120) days after the occurrence of any of the
following events:
(i) a
significant and material adverse change in the nature or scope of Employee’s
duties and responsibilities or other working conditions with Company including
job classification change from that of an Executive,
(ii) a
failure by the Company to make timely payment to the Employee of any amounts to
which he is entitled hereunder or to otherwise provide Employee with any of the
benefits to which he is entitled hereunder on the terms provided herein or any
other breach of the covenants contained herein, any of which is not remedied
within 10 calendar days after receipt by the Company of written notice from the
Employee of Employee’s objection to such change, failure, reduction or breach,
as the case may be; or
(iii) the
liquidation, dissolution, merger, consolidation or reorganization of the Company
or transfer of a significant amount of the business and/or assets of the Company
to another party, unless the successor or successors (by liquidation,
dissolution, merger, consolidation, reorganization or otherwise) or other
transferee or transferees to which all or substantially all of such business
and/or assets have been transferred (directly or by operation of law) shall have
assumed all duties and obligations of the Company to Employee hereunder by an
instrument in writing reasonably satisfactory in form and in substance to the
Employee.
(c) Notwithstanding
the foregoing, if the Executive is a “specified employee” (within the meaning of
Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended) and if
Section 409A is applicable to any amounts payable hereunder, all such amounts
that would have been paid to the Executive under this Section 12 during the 6
month period following the termination of his employment shall instead be paid
in a lump sum on the first day of the 7th month
after the month of such termination of employment.
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(d) In
the event that the Executive dies while employed as General Counsel, Secretary
and this Agreement has not been terminated, the benefits under Section 12(b)
will inure to the benefit of the Executive’s designated beneficiary or his
estate.
13. Annual Medical
Examination Executive
agrees to make himself available for an annual physical examination at a
location to be selected by the Board of Directors and at the expense of the
Company and that such medical examination will be completed no later than April
30th
of each year.
14. Miscellaneous
All
notices, demands, consents, requests, instructions and other communications to
be given or delivered or permitted under or by reason of the provisions of this
Agreement or in connection with the transactions contemplated hereby shall be in
writing and shall be deemed to be delivered and received by the intended
recipient as follows: (i) if personally delivered, on the business day of
such delivery (as evidenced by the receipt of the personal delivery service),
(ii) if mailed certified or registered mail return receipt requested, four (4)
business days after being mailed, (iii) if delivered by overnight courier (with
all charges having been prepaid), on the business day of such delivery (as
evidenced by the receipt of the overnight courier service of recognized
standing), or (iv) if delivered by facsimile transmission or email, on the
business day of such delivery if sent by 5:00 p.m. in the time zone of the
recipient, or if sent after that time, on the next succeeding business day (as
evidenced by the printed confirmation of delivery generated by the sending
party’s facsimile machine). If any notice, demand, consent, request, instruction
or other communication cannot be delivered because of a changed address of which
no notice was given (in accordance with this Section 14), or the refusal to
accept same, the notice, demand, consent, request, instruction or other
communication shall be deemed received on the second business day the notice is
sent (as evidenced by a sworn affidavit of the sender). All such notices,
demands, consents, requests, instructions and other communications will be sent
to the following addresses or facsimile numbers as applicable:
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If to the
Company, to:
U.S.
Energy Corp.
Attn:
Xxxxxx Xxxxx Xxxxxxx, CFO
000 Xxxxx
0xx
Xxxx
Xxxxxxxx,
XX 00000
(307)
856-9271
xxxxx@xxxxx.xxx
with a
copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxxxx, Weinshienk & Xxxxx,
P.C.
000 00xx Xxxxxx,
Xxxxx 0000
Xxxxxx,
XX 00000
(303)
592-8308
xxxxxxxx@xx-xxxxx.xxx
If to the
Executive, to:
Xxxxxx X. Xxxxxxxxxx
000 Xxxxx 0xx
Xxxx
Xxxxxxxx,
XX 00000
15. Amendment
This
Agreement may not be modified, amended, altered or supplemented, except by a
written agreement executed by each of the parties hereto.
16. Entire
Agreement
This
Agreement contains the entire understanding and agreement of the parties
relating to the subject matter hereof and, except as otherwise stated herein,
supersedes all prior and/or contemporaneous understandings and agreements of any
kind and nature (whether written or oral) among the parties with respect to such
subject matter, all of which are merged herein.
17. Waiver
Any
waiver by a party hereto of any breach of or failure to comply with any
provision or condition of this Agreement by any other party hereto shall not be
construed as, or constitute, a continuing waiver of such provision or condition,
or a waiver of any
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other
breach of, or failure to comply with, any other provision or condition of this
Agreement, any such waiver to be limited to the specific matter and instance for
which it is given. No waiver of any such breach or failure or of any provision
or condition of this Agreement shall be effective unless in a written instrument
signed by the party granting the waiver and delivered to the other party hereto
in the manner provided for hereunder in Section 14. No failure or delay by
any party to enforce or exercise its rights hereunder shall be deemed a waiver
hereof, nor shall any single or partial exercise of any such right or any
abandonment or discontinuance of steps to enforce such rights, preclude any
other or further exercise thereof or the exercise of any other
right.
18. Governing Law;
Jurisdiction
This
Agreement shall be governed by and construed in accordance with the laws of the
State of
Wyoming applicable to agreements made and to be performed in that
state, without regard to any of its principles of conflicts of laws or other
laws that would result in the application of the laws of another
jurisdiction.
Each of
the parties unconditionally and irrevocably consents to the exclusive
jurisdiction of the courts of the State of
Wyoming and the federal district
court for the District of
Wyoming with respect to any suit, action or proceeding
arising out of or relating to this Agreement, and each of the parties hereby
unconditionally and irrevocably waives any objection to venue in any such court
or to assert that any such court is an inconvenient forum, and agrees that
service of any summons, complaint, notice or other process relating to such
suit, action or other proceeding may be effected in the manner provided in
Section 14 hereof. Each of the parties hereby unconditionally and
irrevocably waives the right to a trial by jury in any such action, suit or
other proceeding
19. Binding Effect, No
Assignment, etc
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective legal xxxxxxxxxxxxxxx, xxxxx, xxxxxx, successors and
permitted assigns. Neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto without the prior written consent
of the other party, and any attempt to do so shall be void and of no force and
effect, except (i) assignments and transfers by operation of law and (ii) that
the Company may assign any or all of its respective rights, interests and
obligations hereunder to any purchaser of a majority of the issued and
outstanding capital stock of the Company or a substantial part of the assets of
the Company.
20. Third
Parties
Nothing
herein is intended or shall be construed to confer upon or give to any Person,
other than the parties hereto (or persons set forth in Section 14), any
rights, privileges or remedies under or by reason of this
Agreement.
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21. Headings
The
section headings contained in this Agreement are inserted for reference
purposes only and shall not affect in any way the meaning, construction or
interpretation of this Agreement. Any reference to the masculine, feminine, or
neuter gender shall be a reference to such other gender as is appropriate.
References to the singular shall include the plural and vice versa.
22. Counterparts.
This
Agreement may be executed in two (2) or more counterparts (including by
facsimile or electronic signature, which shall constitute a legal and valid
signature), and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, and all of which, when
taken together, shall constitute one and the same document. This Agreement shall
become effective when one or more counterparts, taken together, shall have been
executed and delivered by all of the parties.
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
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U.S.
ENERGY CORP.
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By:
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/s/
Xxxxx X. Xxxxxx
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Name:
Xxxxx X. Xxxxxx
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Title:
Chairman and CEO
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EXECUTIVE
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/s/
Xxxxxx X. Xxxxxxxxxx
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Xxxxxx
X. Xxxxxxxxxx
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General
Counsel, Secretary
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SEPARATION
AGREEMENT
[form
to be completed at and tendered to Executive
within 5 days after separation]
THIS
SEPARATION AGREEMENT is entered into by and between U.S. ENERGY CORP. ("Company")
and Xxxxxx X. Xxxxxxxxxx
("Executive") for good and valuable consideration, the sufficiency of which is
hereby acknowledged.
1. Executive
and Company agree that Executive’s retirement from employment with Company is
effective as of [insert
date] (the
“Separation Date”). Company agrees to consult with Executive
regarding the wording of appropriate press releases and/or inter-company
announcements to be issued by Company.
2. Regardless
of whether he signs this Separation Agreement, Executive will be paid all
compensation as provided in paragraph 12 (a) of the Employment Agreement, a copy
of which is attached hereto and incorporated herein by reference (the
“Employment Agreement”).
3. In
exchange for Executive's agreement to this Separation Agreement, Company agrees
to provide Executive with the additional severance benefits described in
paragraph 12(b) of the Employment Agreement. Executive acknowledges
that he would not be entitled to receive the severance benefits described in
paragraph 12(b) of the Employment Agreement if he did not agree to all of the
terms of this Separation Agreement.
4. Upon
full payment by the Company to the Executive of all compensation and benefits
specified in Section 12(b) of the Employment Agreement and as provided by this
Agreement, the Executive, for himself and his affiliates, successors, heirs,
subrogees, assigns, principals, agents, partners, employees, associates,
attorneys and representatives, voluntarily, knowingly and intentionally releases
and discharges the Company and its predecessors, successors, parents,
subsidiaries, affiliates and assigns and each of their respective officers,
directors, principals, shareholders, agents, attorneys, board members, and
employees from any and all claims, actions, liabilities, demands, rights,
damages, costs, expenses, and attorney fees (including but not limited to any
claim of entitlement for attorney fees under any contract, statute, or rule of
law allowing a prevailing party or plaintiff to recover attorney fees), of every
kind and description, whether accrued or unaccrued, known or unknown at this
time (the “Released Claims”).
(i) Subject
to the last sentence of this subsection (i), the Released Claims include, but
are not limited to, those which arise out of, relate to, or are based upon: (i)
the Executive’s employment with, or separation from, the Company or its
subsidiaries and any related officer or director positions; (ii) statements,
acts or omissions by the Parties whether in their individual or representative
capacities, (iii) express or implied agreements between the Parties (except as
provided herein) and claims under any severance plan, (iv) all federal, state,
and municipal statutes, ordinances, and regulations, including, but not limited
to, claims of discrimination based on race, national origin, age,
Schedule
E
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sex,
disability, whistleblower status, public policy, or any other characteristic of
the Executive under the Age Discrimination in Employment Act, the Older Workers
Benefit Protection Act, the Americans with Disabilities Act, the Equal Pay Act,
Title VII of the Civil Rights Act of 1964 (as amended), the Employee Retirement
Income Security Act of 1974, the Rehabilitation Act of 1973, the Worker
Adjustment and Retraining Notification Act, or any other federal, state, or
municipal law prohibiting discrimination or termination for any reason, (v)
state and federal common law, and (vi) any claim which was or could have been
raised by the Executive; provided, however, that the Released Claims shall not
include stock in the Company currently held by the Executive or the Executive’s
outstanding options to purchase stock from the Company, and any such options
shall vest pursuant to the terms of the relevant stock option grants and stock
option plan. Provided, that Released Claims shall not include any
claims against the Company which the Executive may have before or after the date
of this Separation Agreement, which claims are covered by the indemnification
provisions of the Company’s articles of incorporation, bylaws, or
Wyoming
corporate law and which may not be legally released.
(ii) The
Company voluntarily, knowingly and intentionally releases and discharges the
Executive from any and all claims, actions, liabilities, demands, rights,
damages, costs, expenses, and attorney fees (including but not limited to any
claim of entitlement for attorney fees under any contract, statute, or rule of
law allowing a prevailing party or plaintiff to recover attorney fees), of every
kind and description. Provided, that the foregoing Company release
shall not include claims which the Company may have against the Executive before
or after the date of this Separation Agreement, which claims are covered by the
indemnification provisions of the Company’s articles of incorporation, bylaws,
or
Wyoming corporate law and which may not be legally released.
EXHIBIT
A to Employment Agreement
5. Executive
agrees that he will not file, cause to be filed, or prosecute any civil suit in
any court for any claims which are released in Paragraph 4. In the
event that Executive breaches this paragraph, all Released Persons shall be
entitled to recover from Executive all reasonable attorney fees and costs
incurred as a result of such breach, provided, however, that Executive's
obligation to pay attorney fees and costs shall apply to claims asserted under
the Age Discrimination in Employment Act or the Older Workers Benefit Protection
Act only as specifically authorized by federal law.
6. This
Separation Agreement constitutes the entire agreement between Executive and
Employer concerning his separation from employment with Employer and supersedes
all prior agreements relating thereto, and there are no other promises,
understandings, or agreements relating thereto except as may be provided
herein. Both parties agree and acknowledge that they have not relied
upon any representation, whether written or oral, of the other party in
connection with entering into this Separation Agreement. Nothing in
this Agreement shall be construed as an admission of liability or wrongdoing by
either party. The purpose of this Agreement is solely to amicably
resolve all issues relating to Executive's employment and separation from
employment with Employer and to provide transitional assistance to
Executive. No rules of construction
Schedule
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based
upon which party drafted any portion of this Agreement shall be applicable in
the event of any dispute over its meaning or interpretation. This
Agreement shall be construed and enforced in accordance with the law of the
State of
Wyoming. If any provision of this Agreement is found to be
invalid or unenforceable by a court of competent jurisdiction, the remaining
terms of this Agreement will remain in full force and effect, and any Court
having jurisdiction shall modify any such invalid or unenforceable provision to
the extent necessary for it to be valid and enforceable.
7. Executive
understands that this is an important legal document. Executive is
advised to consult with an attorney before signing this Separation
Agreement. Executive has 21 days after receiving this Separation
Agreement to consider it, and if Executive chooses to agree to the terms of this
Separation Agreement, Executive understands that he must sign and return this
Separation Agreement to Employer within that 21-day period. If
Executive signs this Separation Agreement, he will then have the right to revoke
this Separation Agreement by delivering written notice of revocation, but such
notice must be received by Employer within seven (7) days after the date that
Executive signed this Separation Agreement. If this Separation
Agreement is not signed and delivered within 21 days, or if it is revoked within
the seven day period, neither Executive nor Employer will have any rights or
obligations under this Separation Agreement. The Effective Date of
this Separation Agreement is the eighth day after Executive signs it, unless
Executive revokes it as described above.
8. It
is expressly understood that Executive has read and reviewed this Separation
Agreement and every word of it, that Executive has had an opportunity to discuss
this Separation Agreement with an attorney if he chose to do so, and that
Executive understands this Separation Agreement. By signing below,
Executive represents that this Separation Agreement has been entered into
voluntarily and knowingly and is binding upon him, his heirs, and personal
representatives, and shall inure to the benefit of Employer, its successors and
assigns.
U.S. Energy
Corp.
By:
______________________________
__________________________________
Xxxxxx X.
Xxxxxxxxxx
Schedule
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Schedule
for Base Salary
The base
salary for Xxxxxx X. Xxxxxxxxxx for 2009 is $169,000, thereafter changed
annually upon recommendation of the Compensation Committee and approval of the
full Board.
Exhibit
A
U.S.
ENERGY 2009 Performance Compensation Plan
The
Company’s employees are eligible to receive an annual incentive bonus tied to
achievement by the Company of a variety of financial, strategic and personal
objectives. Separate plans with different weighting of objectives for
employees have been created to take into account the different levels and types
of responsibilities that the executives and employees have within the
Company.
The Board
of Directors will establish performance objectives, thresholds and goals for
each calendar year and will approve personal objectives established for
employees by management. The Performance Compensation Plan links cash
awards to achievement of the short-term business objectives and shareholder’s
interest.
The
activation trigger for consideration of Performance Compensation payments is the
attainment of positive cash flow from operations. Distribution of the
total bonus percentage between the executive and non-executive tier of employees
will be determined by the Compensation Committee as soon as possible following
the filing of the audited annual financial results with the Securities and
Exchange Commission.
An
Outstanding Performance Compensation Award has also been established within the
plan to recognize an employee who makes a significant contribution to the
current or future welfare of the Company. Such a compensation award
will be determined by the Board of Directors without regard to any trigger,
financial requirement or timing.
The 2009
Performance Compensation Plan is weighted to compensate Senior Management for
improvement of shareholder value. Middle Management as well as Staff
personnel of the Company may also become eligible for inclusion under the
Performance Compensation Plan in the event that goals and objectives are met as
detailed in the Compensation Matrix, but to a lesser degree and after Senior
Management is compensated as determined by the Compensation Committee and
approved by the full Board of Directors.
Criteria
for each compensation matrix will be evaluated and modified annually under the
direction of the Board of Directors upon the recommendations of the Compensation
Committee. In the event that there is no positive cash flow from
operations, there will be no additional performance compensation under this plan
over base salaries and approved compensation plans with the exception of
extraordinary compensation for achievement as indicated above and approved by
the Board of Directors.
Schedule
A
Page
1 of 2
The 2009
Compensation Matrix is as follows:
|
Description
|
Tier
|
|
Tier
|
|
Tier
|
|
Tier
|
|
Executive
|
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
Range
|
$0-$50,000
|
|
$50,000-$99,999
|
|
$100,000-149,999
|
|
150,000
+
|
|
Senior
|
|
|
|
|
|
|
|
|
Non-executive
|
|
Management
|
|
Bonus
Percentage of Base Salary
|
33%
|
|
33%
|
|
50%
|
|
100%
|
|
100%
|
|
(Maximum)
|
|
|
|
|
|
|
|
|
|
|
Criteria
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Factors
|
|
|
|
|
|
|
|
|
|
|
Stock
Price
|
|
|
|
|
|
|
|
|
|
|
(based
upon 200 day moving average)
|
5.0%
|
|
5.0%
|
|
10.0%
|
|
15.0%
|
|
20.0%
|
|
XXX
Factor
|
2.5%
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
|
10.0%
|
|
EPS
Factor
|
2.5%
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
|
10.0%
|
|
Cash-Flow
Factor
|
5.0%
|
|
5.0%
|
|
10.0%
|
|
15.0%
|
|
20.0%
|
|
|
15%
|
|
20%
|
|
30%
|
|
40%
|
|
60%
|
|
Performance
rating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Budget
|
|
|
|
|
|
|
|
|
|
|
Department
|
20%
|
|
15%
|
|
10%
|
|
10%
|
|
|
|
Company
|
|
|
|
|
5%
|
|
10%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
Department
Goals
|
25%
|
|
25%
|
|
20%
|
|
5%
|
|
|
|
Company
Goals
|
15%
|
|
15%
|
|
15%
|
|
20%
|
|
20%
|
|
Individual
employee Goals
|
25%
|
|
25%
|
|
20%
|
|
15%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
|
Definitions:
Cash Flow from Operations –
Cash flow from operations from the annual audited financial statements filed
with the Securities and Exchange Commission. The cost of operations
of the water treatment plant at Mount Xxxxxx, interest income and income taxes
paid will be added back to compute Cash Flow from Operations for purposes of
this Performance Compensation Plan.
Return on Equity Factor
(“XXX”) – Positive addition to Retained Earnings and or a reduction of the prior
year loss which results in a reduction of Retained Earnings.
Earnings Per Share Factor (“EPS”)
– Improvement in earnings per share from prior year.
Budget – Meet expense goals
outlined in annual operating budget with Board approved modifications throughout
the year.
Schedule
A
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