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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.
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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.
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(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.
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(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
