Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
On
November 21, 2018, U.S. Energy Corp. (“U.S. Energy” or the “Company”) entered into a new employment agreement
(the “Employment Agreement”) with its Chief Financial Officer (“CFO”) Ryan Smith. The term of Mr. Smith’s
previous employment agreement was set to expire on January 1, 2019.
The
term of Mr. Smith’s Employment Agreement commenced on November 21, 2018 and will continue until January 1, 2020. After January
1, 2020, Mr. Smith shall continue to be employed by the Company on an at-will basis. Under the Employment Agreement, Mr. Smith
will receive an annual base salary of $240,000 and will be eligible to receive annual cash bonuses between 0.5 and 2.5 times annual
salary and annual equity bonus grants between 1.0 and 3.0 times annual salary. The amount of any cash bonus payment and equity
bonus grant will be subject to certain predetermined performance criteria established by the Compensation Committee. A minimum
threshold level of performance must be achieved or no cash or equity bonus will be paid. Mr. Smith will also participate in the
Company’s other benefits commensurate with the executive level.
In
the event that Mr. Smith’s employment is terminated by the Company due to death or disability, Mr. Smith, or his estate
or beneficiaries, shall be entitled to (i) any accrued obligation (as that term is defined in the Employment Agreement); (ii)
any unpaid annual bonus for any completed fiscal year that has ended prior to termination with such amount to be determined by
actual performance during the completed fiscal year; (iii) any annual bonus that would have been payable based on actual performance,
pro-rated for the period Mr. Smith worked prior to death or disability; and (iv) immediate vesting of any and all equity awards
granted to Mr. Smith during his employment with the Company.
In
the event that the Company terminates Mr. Smith’s employment without cause (as that term is defined in the Employment Agreement),
Mr. Smith shall be entitled to receive (i) any accrued obligation (as that term is defined in the Employment Agreement); (ii)
any unpaid annual bonus for any completed fiscal year that has ended prior to termination with such amount to be determined by
actual performance during the completed fiscal year; (iii) a payment equal to his annual base salary; (iv) a payment equal to
twelve (12) times a percentage of the monthly COBRA premium cost applicable to Mr. Smith; and (v) immediate vesting of any and
all equity awards granted to Mr. Smith during his employment.
In
the event that Mr. Smith terminates his employment for good reason (as that term is defined in the Employment Agreement), Mr.
Smith shall be entitled to receive (i) any accrued obligation (as that term is defined in the Employment Agreement); (ii) any
unpaid annual bonus for any completed fiscal year that has ended prior to termination with such amount to be determined by actual
performance during the completed fiscal year; and (iii) a payment equal to twelve (12) times a percentage of the monthly COBRA
premium costs applicable to Mr. Smith.
In
the event that the Company terminates the Employment Agreement without cause, or Mr. Smith terminates the Employment Agreement
for good reason in connection with a change of control (as defined in the Employment Agreement), then, Mr. Smith shall be entitled
to receive (i) any accrued obligation (as that term is defined in the Employment Agreement); (ii) any unpaid annual bonus for
any completed fiscal year that has ended prior to termination with such amount to be determined by actual performance during the
completed fiscal year (i) a payment equal to his annual base salary; (ii) a payment equal to twelve (12) times a percentage of
the monthly COBRA premium costs applicable to Mr. Smith; (iii) immediate vesting of any and all equity awards granted to Mr. Smith
during his employment; and (iv) a payment equal to one (1) times the total of Mr. Smith’s annual salary plus an amount equal
to the total value of the annual bonus paid during the preceding fiscal year.
In
addition, the Employment Agreement has customary non-competition, non-solicitation and confidentiality provisions.
Prior
to Mr. Smith’s position with the Company as CFO, he was a consultant for the Company from January 2017 until May 2017. Mr.
Smith previously served as Emerald Oil Inc.’s Chief Financial Officer from September 2014 to January 2017 and Vice President
of Capital Markets and Strategy from July 2013 to September 2014. Prior to joining Emerald, Mr. Smith was a Vice President in
Canaccord Genuity’s Investment Banking Group focused solely on the energy sector. Mr. Smith joined Canaccord Genuity in
2008 and was responsible for the execution of public and private financing engagements along with mergers and acquisitions advisory
services. Prior to joining Canaccord Genuity, Mr. Smith was an Analyst in the Wells Fargo Energy Group, working solely with upstream
and midstream oil and gas companies. None of the entities at which Mr. Smith was previously employed is a parent, subsidiary or
other affiliate of the Company.
Mr.
Smith holds a Bachelor of Business Administration degree in Finance from Texas A&M University.
This
summary description is qualified in its entirety by reference to the Employment Agreement, which is filed as Exhibit 10.1 to this
Current Report on Form 8-K and is incorporated herein by reference.