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Exhibit 10.8
EXECUTIVE
EMPLOYMENT AGREEMENT
This
Executive Employment Agreement (this “Agreement”)
is made as of May 2, 2008 (the “Effective Date”)
between KENTUCKY USA ENERGY, INC., a Delaware corporation (the
“Company”), and CLARENCE G.COLLINS (the
“Executive”).
W
I T N E S S E T H:
WHEREAS,
the Executive desires to be employed by the Company as its
Director of Exploration and Development and the Company wishes
to employ the Executive in such capacity;
NOW,
THEREFORE, in consideration of the foregoing recitals and the
respective covenants and agreements of the parties contained
in this document, the Company and the Executive hereby agree
as follows:
1.
Employment and Duties . The Company agrees to
employ and the Executive agrees to serve as the Company’s
Director of Exploration and Development. The duties and
responsibilities of the Executive shall include the duties and
responsibilities as the Board may from time to time reasonably
assign to the Executive.
The
Executive shall devote a significant amount of his working
time and efforts during the Company’s normal business
hours to the business and affairs of the Company and its
subsidiaries and to the diligent and faithful performance of
the duties and responsibilities duly assigned to him pursuant
to this Agreement. The particular job responsibilities of the
Executive are set forth in Exhibit A attached
hereto.
2.
Term . The term of this Agreement shall commence
on the Effective Date and shall continue for a period of four years
and shall be automatically renewed for successive one year periods
thereafter unless either party provides the other party with
written notice of his or its intention not to renew this Agreement
at least three months prior to the expiration of the initial term
or any renewal term of this Agreement. “Employment
Period” shall mean the initial four year term plus renewals,
if any.
3.
Place of Employment . The Executive’s
services shall be performed at the Company’s offices that
will be located in the State of Kentucky, and any other locus where
the Company now or hereafter has a business
facility. The parties acknowledge, however, that the
Executive may be required to travel in connection with the
performance of his duties hereunder.
4.
Base Salary . For all services to be rendered by
the Executive pursuant to this Agreement, the Company agrees to pay
the Executive during the Employment Period an initial base salary
(the “Base Salary”) at an annual rate of
$90,000. The Base Salary shall be paid in periodic
installments in accordance with the Company’s regular payroll
practices.
The
Compensation Committee (the “Compensation
Committee”) of the Board (or by the independent members
of the Board, if there is no Compensation Committee) shall
review the Executive’s Base Salary annually and shall
make a recommendation to the Board as to whether such Base
Salary should be increased but not decreased, which decision
shall be within the Board’s sole
discretion.
5.
Bonus . During the term of this Agreement, the
Executive shall be entitled to an annual bonus of at least 25% of
his Base Salary (which percentage may be increased or decreased in
the discretion of the Board), to be determined according to
achievement of performance-related financial and operating targets
established annually for the Company and the Executive by the
Compensation Committee (or by the independent members of the Board
if there is no Compensation Committee). The standards
set forth in Exhibit B attached hereto shall serve as a guideline
for determining additional bonus compensation. The Executive shall
have reasonable input in the development of these
targets. Such performance targets for each fiscal year
shall be adopted by the Compensation Committee prior to the end of
the prior fiscal year. Each annual bonus shall be paid
by the Company to the Executive promptly after determination that
the relevant targets have been met, it being understood that the
attainment of any financial targets shall be determined after the
results of the annual audit are known.
6.
Expenses . The Executive shall be entitled to
prompt reimbursement by the Company for all reasonable ordinary and
necessary travel, entertainment and other expenses incurred by the
Executive while employed (in accordance with the policies and
procedures established by the Company for its senior executive
officers) in the performance of his duties and responsibilities
under this Agreement; provided, that the Executive shall properly
account for such expenses in accordance with Company policies and
procedures.
7.
Other Benefits . During the term of this
Agreement, the Executive shall be eligible to participate in
incentive, savings, retirement (401(k)) and welfare benefit plans,
including, without limitation, health, medical, dental, vision,
life (including accidental death and dismemberment) and disability
insurance plans (collectively, the “Benefit Plans”), in
substantially the same manner and at substantially the same levels
as the Company makes such opportunities available to the
Company’s managerial or salaried executive
employees.
8.
Vacation . During the term of this Agreement, the
Executive shall be entitled to accrue, on a pro rata basis, paid
vacation days per year in accordance with standard policy to be
established by the Company for its senior executives
. The Executive shall be entitled to carry over any
accrued, unused vacation days from year to year without
limitation.
9.
Stock Options .
(a)
Grant of Options . Upon the execution hereof, the
Company shall grant the Executive options to purchase shares of the
Company’s common stock (“Options” [under the
Company’s Stock Option Plan (the “Stock Option
Plan”) to be established by the Board of Directors of the
Company. Such grant shall be evidenced by an option
agreement as contemplated by the Stock Option Plan.] In
subsequent years the Executive shall be eligible for such grants of
Options and other permissible awards [under the Stock Option Plan]
as the Compensation Committee or the Board shall
determine.
(b)
Option Price; Term . The per share exercise price
of the Options shall be established in accordance with the Stock
Option Plan, which represents the fair market value per share of
Company common stock on the date of grant. The term of
the Option shall be ten years from the date of grant.
(c)
Exercise . The percentage of the Options shall
become exercisable on each monthly anniversary of the date of grant
in accordance with the Stock Option Plan.
(d)
Payment . The full consideration for any shares
purchased by the Executive upon exercise of the Options shall be
paid in cash.
(e)
Termination of Employment; Accelerated Vesting
.
(1)
If
the Executive’s employment is terminated for Cause, as such
term is defined below, all Options, whether or not vested, shall
immediately expire effective the date of termination of
employment.
(2)
If
the Executive’s employment is terminated voluntarily by the
Executive without Good Reason, as such term is defined below, all
unvested Options shall immediately expire effective the date of
termination of employment. Vested Options, to the extent
unexercised, shall expire one month after the termination of
employment.
(3)
If
the Executive’s employment terminates on account of death or
Disability, as defined below, all unvested Options shall
immediately expire effective the date of termination of
employment. Vested Options, to the extent unexercised,
shall expire one year after the termination of
employment.
(4)
If
the Executive’s employment is terminated (A) in connection
with a Change of Control, as defined below, (B) by the Company
without Cause or (C) by the Executive for Good Reason, all unvested
Options shall immediately vest and become exercisable effective the
date of termination of employment, and, to the extent unexercised,
shall expire one year after any such event.
10.
Termination of Employment .
(a)
Death . If the Executive dies during the
Employment Period, this Agreement and the Executive’s
employment with the Company shall automatically terminate and the
Company shall have no further obligations to the Executive or his
heirs, administrators or executors with respect to compensation and
benefits accruing thereafter, except for the obligation to pay to
the Executive’s heirs, administrators or executors any earned
but unpaid Base Salary, unpaid pro rata annual bonus
and unused vacation days accrued through the date of death and
reimbursement of any and all reasonable expenses paid or incurred
by the Executive in connection with and related to the performance
of his duties and responsibilities for the Company during the
period ending on the termination date. The Company shall
deduct, from all payments made hereunder, all applicable taxes,
including income tax, FICA and FUTA, and other appropriate
deductions. In addition, the Executive’s spouse
and minor children shall be entitled to continued coverage, at the
Company’s expense, under all health, medical, dental and
vision insurance plans in which the Executive was a participant
immediately prior to his last date of employment with the Company
for a period of one year following the death of the
Executive.
(b)
Disability . In the event that, during the term
of this Agreement, the Executive shall be prevented from performing
his duties and responsibilities hereunder to the full extent
required by the Company by reason of Disability (as defined below)
this Agreement and the Executive’s employment with the
Company shall automatically terminate and the Company shall have no
further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits accruing thereafter, except for the obligation to pay the
Executive or his heirs, administrators or executors any earned but
unpaid Base Salary, unpaid pro rata annual bonus
and unused vacation days accrued through the Executive’s last
date of employment with the Company and reimbursement of any and
all reasonable expenses paid or incurred by the Executive in
connection with and related to the performance of his duties and
responsibilities for the Company during the period ending on the
termination date. The Company shall deduct, from all
payments made hereunder, all applicable taxes, including income
tax, FICA and FUTA, and other appropriate deductions through the
last date of the Executive’s employment with the
Company. For purposes of this Agreement,
“Disability” shall mean a physical or mental disability
that prevents the performance by the Executive, with or without
reasonable accommodation, of his duties and responsibilities
hereunder for a period of not less than an aggregate of three
months during any twelve consecutive months.
(c)
Cause .
(1)
At
any time during the Employment Period, the Company may terminate
this Agreement and the Executive’s employment hereunder for
Cause. For purposes of this Agreement,
“Cause” shall mean: (a) the willful and continued
failure of the Executive to perform substantially his duties and
responsibilities for the Company (other than any such failure
resulting from a Disability) after a written demand by the Board
for substantial performance is delivered to the Executive by the
Company, which specifically identifies the manner in which the
Board believes that the Executive has not substantially performed
his duties and responsibilities, which willful and continued
failure is not cured by the Executive within 30 days of his receipt
of such written demand; (b) the conviction of, or plea of guilty or
nolo
contendere to, a felony, (c), violation of Sections 11 or 12
of this Agreement, or (d) fraud, dishonesty or gross misconduct
which is materially and demonstratively injurious to the
Company. Termination under section 10(c)(1)(b),
10(c)(1)(c) or 10(c)(1)(d) above shall not be subject to
cure.
(2)
Upon
termination of this Agreement for Cause, the Company shall have no
further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and
benefits thereafter, except for the obligation to pay the Executive
any earned but unpaid Base Salary, unused vacation days accrued
through the Executive’s last date of employment with the
Company and reimbursement of any and all reasonable expenses paid
or incurred by the Executive in connection with and related to the
performance of his duties and responsibilities for the Company
during the period ending on the termination date. The
Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other
appropriate deductions.
(d)
Change of Control . For purposes of this
Agreement, “Change of Control” shall mean the
occurrence of any one or more of the following: (i) the
accumulation, whether directly, indirectly, beneficially or of
record, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended) of 50% or more of the shares of the outstanding
equity securities of the Company, (ii) a merger or
consolidation of the Company in which the Company does not survive
as an independent company or upon the consummation of which the
holders of the Company’s outstanding equity securities prior
to such merger or consolidation own less than 50% of the
outstanding equity securities of the Company after such merger or
consolidation, or (iii) a sale of all or substantially all of
the assets of the Company; provided, however, that the following
acquisitions shall not constitute a Change of Control for the
purposes of this Agreement: (A) any acquisitions of common stock or
securities convertible into common stock directly from the Company,
or (B) any acquisition of common stock or securities convertible
into common stock by any employee benefit plan (or related trust)
sponsored by or maintained by the Company.
(e)
Good Reason .
(1)
At
any time during the term of this Agreement, subject to the
conditions set forth in Section 10(e)(2) below, the Executive may
terminate this Agreement and the Executive’s employment with
the Company for “Good Reason.” For purposes
of this Agreement, “Good Reason” shall mean the
occurrence of any of the following events: (A) the assignment,
without the Executive’s consent, to the
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