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Executive Employment Agreement

Executive Employment Agreement

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 This Executive Employment Agreement involves

US ENERGY CORP

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Title: EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: Wyoming     Date: 8/15/2016
Industry: Metal Mining     Sector: Basic Materials

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Exhibit 10.2

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment, Severance and Non-compete Agreement (the “Agreement”) is made effective this 23 rd day of October, 2015 (the “Effective Date”), between U.S. Energy Corp, a Wyoming corporation (the “Company”) and David Veltri the (“Executive”).

 

WHEREAS, the Executive is presently employed by the Company as President and CEO;

 

WHEREAS, the Company and the Executive desire to enter into this Agreement, the terms of which shall supersede any prior agreements in place between the Executive and the Company, effective as of the Effective Date;

 

WHEREAS, the Board of Directors of the Company (“the Board”) recognizes that the Executive’s efforts have been among the most important factors to the growth and success of the Company, and the Board wishes to ensure continuing access to the Executive’s services to the benefit of the Company’s employees and shareholders;

 

WHEREAS, this Agreement will benefit the Company’s shareholders by placing the Executive in a neutral position with respect to any proposed merger, consolidation, sale of substantially all assets, change in control or similar substantial corporate change of the Company, and accordingly enable the Executive to better represent the Company and its shareholders in evaluating and responding to any such transaction;

 

WHEREAS, this Agreement will serve to secure certain benefits for the Executive to which the Board believes the Executive is entitled, as a result of services rendered and services anticipated to be provided to the Company; and

 

NOW THEREFORE, in order to effect the foregoing, the Company and the Executive wish to enter into this Agreement on the terms and conditions set forth below, and in consideration of the promises and the respective covenants and agreements of the parties herein contained, it is agreed as follows:

 

1.           Definitions . As used in this Agreement:

 

(a)           Beneficial Owner shall mean any Person who directly or through any contract, arrangement, understanding, relationship, or otherwise has or shares voting power (which includes the power to vote or to direct the voting) and/or investment power (which includes the power to dispose or to direct the disposition) of a security issued by the Company.

 

b)           Cause shall mean:

 

(i)          the negligent and continued failure by the Executive to substantially perform his duties with the Company (other than any such failure resulting from Disability) after a written demand for substantial performance improvement is delivered to the Executive, identifying the manner in which the Executive has not substantially performed his duties, or describing his participation in misconduct which is materially injurious to the Company, monetarily or otherwise, unless done or omitted to be done, in good faith and with a reasonable belief that the action or omission was in the best interest of the Company; which failure is not remedied upon notice within 10 calendar days.

 

 

 

  

(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; or

 

(v)         a material breach of any of the provisions of this Agreement applicable to Executive, which breach is not remedied within the 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.

 

(c)           Change in Control shall mean a change in the control of the Company of a nature which would be required to be reported in response to Item 6(e) of Schedule 14a to Regulation 14A, as promulgated under the Exchange Act (or any successors thereto); provided that, without limitation, a Change in Control shall be deemed to have occurred if:

 

(i) any Person is or becomes the Beneficial Owner directly or indirectly, of 50% or more of a class of equity securities of the Company, or of securities which in the aggregate provide such Beneficial Owner with 50% or more of the votes entitled to be cast with respect to the election of members of the Board of Directors;

 

(ii) during any period of two consecutive years, the individuals who at the beginning of such period constituted the Board of Directors cease for any reason to constitute a majority thereof;

 

(iii) any Person acquires, directly or indirectly, more than 25% of the outstanding shares of voting securities of the Company, coupled with or followed by the election of directors of the Company of persons who were not directors at the time of such acquisition, if such directors comprise a majority of the Board;

 

 

  

(iv) as a result of a tender offer, merger, consolidation, sale of assets, contested election or any combination of those or similar transactions, the directors of the Company immediately before such transaction(s) shall cease to constitute a majority of the Board or of any successor to the Company;

 

(v) the acquisition, directly or indirectly, by another person or entity, in a single transaction or series of related transactions of all or substantially all (greater than 50%) of the Company’s assets; or

 

(vi) the Company’s shareholders approve a plan of liquidation of the Company.

 

(d)           Date of Termination shall be the effective date of the Notice of Termination.

 

(e)           Disability shall mean absence from the Executive’s duties with the Company on a full-time basis for 60 days, as a result of incapacity due to physical or mental illness, unless within 30 days after Notice of Termination is given following such absence the Executive shall have returned to the full-time performance of duties as President and CEO of the Company.

 

(f)           Exchange Act means the Securities Exchange Act of 1934, as amended.

 

(g)           Good Reason shall mean termination subsequent to a Change in Control of the Company 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 Executive’s duties and responsibilities or other working conditions with Company including job classification change from that of an Executive;

 

(ii)         the assignment to the Executive of any duties inconsistent with the positions, responsibilities and status of the Executive with the Company immediately prior to the Change in Control, or a change in the Executive’s reporting responsibilities, titles or offices, as in effect immediately prior to the Change in Control;

 

(iii)           any removal of the Executive from, or any failure to re-elect the Executive to, any of such positions, except in connection with termination of employment for Cause, Disability, Retirement or as a result of the Executive’s death or termination by the Executive, other than for Good Reason;

 

(iv)          a reduction by the Company in the Executive’s base salary as in effect immediately prior to the Change in Control;

 

 

  

(v)          reassignment of the Executive to offices more than 25 miles from the location of the Company’s principal executive offices immediately prior to the Change in Control, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s business travel obligations prior to the Change in Control;

 

(vi)          failure by the Company to continue in effect any benefit or compensation plan, stock ownership plan, stock purchase plan, stock option plan, life insurance plan, health and accident plan, or disability plan in which the Executive is participating immediately prior to the Change in Control (or a plan providing the Executive substantially similar benefits), the taking of any action by the Company which would adversely affect the Executive’s participation in or materially reduce his benefits under any such plan, deprive the Executive of any material fringe benefit enjoyed immediately prior to the Change in Control, including, but not limited to any failure by the Company to provide the Executive with the number of vacation days to which the Executive is entitled in accordance with the Company’s normal vacation policy in effect immediately prior to the Change in Control; provided, that if the Company or a successor seeks to provide the Executive with substantially similar benefits under a different plan, the Company must solicit and obtain the Executive’s written consent to the substitution of such plan, which consent shall not be unreasonably withheld;

 

(vii)          a failure by the Company to make timely payment to the Executive of any amounts to which he is entitled hereunder or to otherwise provide Executive 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 Executive of Executive’s objection to such change, failure, reduction or breach, as the case may be; or

 

(viii)          any purported termination of the Executive’s employment by the Company which is not affected pursuant to a Notice of Termination.

 

In the event the Executive believes that any of the events set forth in subparagraphs (i), (ii), (iv), (v), (vii) or (viii) have occurred, the Executive shall promptly give written notice to the Company of his belief that such event has occurred.

 

(h)           Market Value shall mean the closing price for a security reported by the principal stock exchange on which such security is traded, or if the security is not listed for trading on a stock exchange, the closing price reported by the National Market System (“NMS”), or if the security is not listed for trading on a stock exchange or included in the NMS, the mean of the closing bid and asked prices reported by NASDAQ, or if the security is not listed for trading on a stock exchange, included in the NMS or included in the NASDAQ system, the average of the bid and asked prices reported by market makers for the security to the National Quotation Bureau, all at the close of business on the applicable date.

 

 

  

(i)           Notice of Termination shall mean a written notice whereby the Company or a successor advises the Executive that his employment with the Company is or shall be terminated, which document shall indicate the specific termination provision in this Agreement relied upon by the Company or the successor and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under those provisions.

 

(j)           Person shall mean any natural person, corporation, partnership, limited partnership, limited liability company, joint venture, trust, association, syndicate, business entity, governmental body or any combination thereof.

 

(k)           Target Bonus shall mean an amount up to 150% of Base Salary of Executive’s base salary for the relevant year, except as otherwise provided under the terms of an applicable bonus plan in place at such time.

 

2.           Acceptance and Term of Employment . The Company agrees to employ Executive, and Executive agrees to serve the Company, on the terms and conditions set forth herein. The “Term of Employment” shall mean the period commencing on the Effective Date and, unless terminated sooner as provided in Section 8 hereof, continuing for a period of two years from the Effective Date. This Agreement shall automatically renew for two (2) successive terms of one (1) year each, unless either party provides written notice within sixty (60) days prior to the expiration of the then current term that the Agreement will not be renewed; provided, however, that nonrenewal of this Agreement shall in no event be treated as a termination of employment with the Company unless Executive’s employment with the Company is actually terminated in connection with such nonrenewal. Notwithstanding any nonrenewal or other expiration of this Agreement, the provisions of Sections 9, 10, 11, 12, 13, 15, 16, 24 and 25 shall continue to apply to the same extent as if the Agreement were in full force and effect.

 

3.           Position, Duties, and Responsibilities; Place of Performance .

 

(a)          During the Term of Employment, Executive shall be employed and serve as President and CEO of the Company and shall have such duties and responsibilities as are commensurate with such title. The Executive shall report to the Chief Executive Officer of the Company and shall carry out and perform all orders , directions and policies given to Executive by the Chief Executive Officer of the Company consistent with his position and title .

 

(b)          Executive shall devote his best efforts to the performance of his duties under this Agreement and shall not engage in any other business or occupation during the Term of Employment that interferes with Executive’s exercise of judgment in the Company’s best interests. Notwithstanding the foregoing, nothing herein shall preclude Executive from (i) serving as a member of the boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity) of non-competing businesses, (ii) engaging in charitable activities and community affairs, and (iii) managing his personal investments and affairs; provided, however, that the activities set out in clauses (i), (ii), and (iii) shall be limited by Executive so as not to materially interfere, individually or in the aggregate, with the performance of his duties and responsibilities hereunder.

 

 

  

4.           Compensation . During the Term of Employment , Executive shall be entitled to the following compensation:

 

(a)           Base Salary . Executive shall be paid an annualized Base Salary , payable in United States dollars and less applicable taxes and deductions and in accordance with the regular payroll practices of the Company , of USD$359,000 with increases, if any, as may be approved in writing by the Compensation Committee.

 

(b)           Annual Short Term Incentive Bonus . Executive shall be eligible to participate in the short-term incentive cash-based program offered by the Company, in an amount as determined by the Company. The annual short-term cash-based incentive shall be based on the Company’s evaluation of the condition of the Company’s business, the results of operations, Executive’s individual performance for the relevant period, the satisfaction by the Executive or the Company of goals that may be established by the Company, as the Company may decide in its sole discretion. Each annual short-term cash-based incentive award shall be up to 150% of Base Salary governed by the applicable plan document in effect at that time.

 

(c)           Annual Long Term Incentive Equity Bonus Grants . Executive shall be entitled to participate in equity-based compensation program offered by the Company in accordance with the terms of any equity-based plans that may be adopted by the Company. The annual long-term equity-based incentive award shall be based on the Company’s evaluation of the condition of the Company’s business, the results of operations, Executive’s individual performance for the relevant period, the satisfaction by the Executive or the Company of goals that may be established by the Company, as the Company may decide in its sole discretion. Each annual long-term equity-based incentive award shall be governed by the applicable plan document in effect at that time.

 

5.           Employee Benefits .

 

(a)           General . During the Term of Employment, Executive shall be entitled to participate in health insurance , retirement plans, directors’ and officers’ insurance coverage and other benefits provided to other senior executives of the Company , as in effect from time to time.

 

(b)           Vacation and Time Off . During each calendar year of the Term of Employment, Executive shall be eligible for 20 days of paid vacation , as well as sick pay and other paid and unpaid time off in accordance with the policies and practices of the Company , as in effect from time to time.

 

6.           Reimbursement of Business Expenses . Executive is authorized to incur reasonable business expenses in carrying out his duties and responsibilities under this Agreement, and the Company shall promptly reimburse Executive for all such reasonable business expenses , subject to documentation in accordance with written Company policy, as in effect from time to time.

 

 

  

7.           Termination .

 

(a)           Termination for any reason (including but not limited to Retirement) . Except for termination for cause and except as otherwise provided for in the remaining sections of this Paragraph 7, in the event of the termination of the Executive’s employment 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 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 Company shall also provide a cash payment, equal to 18 months of COBRA health insurance coverage to the Executive for the Executive and his spouse from the date of termination, payable to the Executive in a lump-sum not later than seventy-five (75) days after the date of termination. In the event that the Executive becomes eligible for health insurance from another source, the obligation of the Company hereunder shall cease.

 

(b)           Termination without Cause . In the event of the termination of the Executive’s employment by the Company without Cause (except following a Change in Control), then the Executive shall be entitled to receive, and the Company shall pay the Executive, in addition to the amounts described in 7(a) above:

 

(i)          severance equal to 1.5x the Executive’s current annual Base Salary, plus an amount equal to the current year Target Bonus as of the date of termination; and

 

(ii)          accelerated vesting of any unvested equity-based awards as proscribed for and in accordance with the relevant terms of the applicable equity-based compensation programs and award agreements.

 

Executive’s right to receive payment of such amounts shall be conditioned upon the Executive’s execution of a separation agreement and general release in a form acceptable to the Company. Such payments shall be paid to the Executive in a lump-sum not later than seventy-five (75) days after the date of termination, and if the Executive has not executed a binding release by such date, the Executive shall forfeit all rights to such payments; provided however, that if such seventy-five day period begins in a first taxable year and ends in a second taxable year, such payments shall be made in the second taxable year.

 

(c)           Termination without Cause, or by the Executive for Good Reason, in connection with a Change in Control . If any Change in Control shall occur, the Executive shall be entitled to the following benefits, upon the subsequent termination of the Executive’s employment within one year following the Change in Control, unless such termination is because of the Executive’s death or Retirement, by the Company for Cause or Disability, or by the Executive other than for Good Reason, then the Executive shall be entitled to receive, and the Company shall pay the Executive, in addition to the amounts described in 7(a) above:

 

 

  

(i)          any bonus for a past or the current fiscal year which has been awarded or otherwise earned but not yet paid under any Bonus Plan(s). The Executive shall be considered to have earned the right to participate in bonus Plans of the Company for any fiscal year for which service of more than six months has been provided, and the bonus ultimately owed for any such period shall be adjusted proportionately to reflect the service of the Executive for the applicable portion of the year;

 

(ii)         severance pay in an amount equal to 2x the Executive’s current year annual Base Salary, plus an amount equal to the current year target bonus;

 

(iii)          accelerated vesting of any unvested equity-based awards as proscribed for and in accordance with the relevant terms of the applicable equity-based compensation programs and award agreements.

 

(iv)        all reasonable legal fees and expenses incurred by the Executive as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement), such fees and expenses being payable on or before the expiration of ten days from the presentation of applicable invoices by the Executive to the Company or any successor;

 

(v)         cash payment equal to the cost of coverage under all life insurance, medical, health, accident, and disability programs or arrangements in which the Executive was entitled to participate immediately prior to the Change in Control for a period of two years from the termination, payable to the Executive in a lump-sum not later than seventy-five (75) days after the date of termination.

 

(vi)        (A) If it is determined that the payment or benefit provided to or for the benefit of the Executive under this Paragraph 7(c) (a “Payment”), whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (“Code”) or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, shall be referred to as the “Excise Tax”), the Payment shall be reduced if and to the extent that a reduction in the Payment would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state, and local income taxes and the Excise Tax), than he would have retained had he been entitled to receive all of the Payment (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). The Company shall reduce the Payment by first reducing or eliminating payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the furthest in time from the date the “Determination” (as hereinafter defined) is delivered to the Company and the Executive.

 

 

  

(B)           The determination as to whether the Payment shall be reduced to the Limited Payment Amount and the amount of such Limited Payment Amount (the “Determination”) shall be made at the Company’s expense by a firm selected by the Company and reasonably acceptable to the Executive (the “Tax Firm”). The agreed upon Tax Firm shall provide the Determination in writing, together with detailed supporting calculations and documentation, to the Company and the Executive on or prior to the effective date of termination of the Executive’s employment if applicable, or at such other time as requested by the Company or by the Executive. Within ten (10) days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the “Dispute”) in writing setting forth the precise basis of the dispute. If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive.

 

(C)           Any Excise Tax with respect to the Executive’s Payment shall be the sole obligation of


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