0000101594
false
US ENERGY CORP
0000101594
2023-07-28
2023-07-28
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): July 28, 2023
U.S.
ENERGY CORP.
(Exact
name of registrant as specified in its charter)
Delaware |
|
000-06814 |
|
83-0205516 |
(State
or other jurisdiction
of
incorporation) |
|
(Commission
File
Number) |
|
(IRS
Employer
Identification
No.) |
1616
S. Voss, Suite 725, Houston, Texas |
|
77057 |
(Address
of principal executive offices) |
|
(Zip
Code) |
Registrant’s
telephone number, including area code: (303) 993-3200
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2 below):
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
|
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of exchange on which registered |
Common
Stock, $0.01 par value |
|
USEG |
|
NASDAQ
Stock Market LLC
(Nasdaq
Capital Market) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item
5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
(b)
Resignation of Chief Operating Officer
On
July 28, 2023, Mr. Donald A. Kessel informed the Company of his retirement as Chief Operating Officer of U.S. Energy Corp. (the “Company”,
“we” and “us”) effective the same date, and entered into a Separation and Release Agreement with
the Company (the “Separation Agreement”). The resignation was not the result of a disagreement with the Company on
any matter relating to the Company’s operations, policies or practices.
Under
the Separation Agreement, the Company agreed to (a) pay Mr. Kessel $50,000, less all applicable withholdings and required deductions;
and (b) accelerate the vesting of an aggregate of 164,000 Restricted Stock Award shares, which would have otherwise expired upon his
resignation pursuant to their terms (collectively, (a) and (b), the “Severance Payment”). The Severance Payment is
required to be paid within 30 days. Under the Separation Agreement, Mr. Kessel provided a customary general release to the Company, subject
to certain exceptions for claims Mr. Kessel may have under the indemnification agreement previously entered into with the Company and
the Company’s governing documents, and also agreed to certain confidentiality, non-disclosure, non-solicitation, and non-disparagement
covenants in favor of the Company.
The
foregoing summary of the Separation Agreement is a summary only and is qualified in its entirety by reference to the Separation Agreement,
a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 5.02
by reference in its entirety.
The
responsibilities and duties of Mr. Kessel will be taken over by operations personnel of the Company for the time being and the Company
may pursue a new Chief Operating Officer in the future.
Item
9.01. Exhibits.
(d)
Exhibits.
* Filed herewith.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
|
U.S.
ENERGY CORP. |
|
|
|
|
By: |
/s/
Ryan Smith |
|
|
Ryan
Smith |
|
|
Chief
Executive Officer |
|
|
|
|
Dated: |
August
1, 2023 |
Exhibit
10.1
SEPARATION
AND RELEASE AGREEMENT
This
Separation and Release Agreement (this “Agreement and Release” or “Agreement”) dated
July 28, 2023, is made by and between Donald A. Kessel, an individual (“Kessel”) and U.S. Energy Corp., a Delaware
corporation (“U.S. Energy”) (collectively referred to as the “Parties” or individually
referred to as a “Party”).
RECITALS
WHEREAS,
Kessel was appointed as Chief Operating Officer of U.S. Energy effective on January 4, 2022;
WHEREAS,
Kessel is not a party to an employment or engagement agreement with U.S. Energy, and his employment with U.S. Energy is at will;
WHEREAS,
after discussion among the Parties, the Parties believe that it is in the best interest of Kessel and U.S. Energy to terminate the employment
of Kessel with U.S. Energy;
WHEREAS,
Kessel’s employment with U.S. Energy is hereby terminated July 28, 2023 (the “Separation Date”); and
WHEREAS,
the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Kessel
may have against U.S. Energy and any of the Released Parties as defined below, including, but not limited to, any and all claims arising
out of or in any way related to Kessel’s employment with or separation from U.S. Energy, each pursuant to the terms and conditions
of this Agreement set forth below.
NOW,
THEREFORE, in consideration of the mutual promises made herein and the Severance Payment (defined below) and RSA Vesting (defined
below), the receipt and sufficiency of which is acknowledged and confirmed, Kessel and U.S. Energy hereby agree as follows:
1.
Severance Payment. Subject to Kessel’s compliance with the terms and conditions of this Agreement and Release, U.S. Energy
agrees to pay Kessel $50,000.00, less all applicable withholdings and required deductions (the “Severance Payment”).
The Severance Payment shall be paid within 30 days of the Separation Date (the “Payment Date”). Kessel agrees
that the Severance Payment to be paid under this Agreement and Release is due solely from U.S. Energy and the Severance Payment and RSA
Vesting represents consideration which would not otherwise be due to Kessel.
2.
Release of Further Payments. The consideration set forth in Paragraph 1 and Paragraph 20 is inclusive of any and all amounts,
including but not limited to attorneys’ fees, that may be claimed by Kessel or on Kessel’s behalf against U.S. Energy. In
furtherance of the above, and without limiting any other term or condition of this Agreement and Release, Kessel agrees to release any
rights he may have to, and to waive all rights of U.S. Energy to pay, other than as set forth in Paragraph 1 and Paragraph 20,
any severance fees, any bonus, accrued compensation, reimbursement for unused vacation days, sick days or other benefits, in connection
with severance pay or otherwise, any stock or option compensation, and further acknowledges that he is not owed any funds from U.S. Energy
in connection with unreimbursed business expenses as of the date of this Agreement and Release. Kessel further agrees that he has been
paid what he is owed by U.S. Energy, if anything, for any vacation time, sick time, paid time off or paid leave of absence, or in connection
with any severance or deferred compensation plan, if eligible, and that he has been given all time off to which he was entitled under
any policy or law, including but not limited to leave under the Family and Medical Leave Act. Notwithstanding any other term or condition
of this Agreement and Release, Kessel may elect to continue health insurance coverage, following the Separation Date, in accordance with
the provisions of COBRA regardless of whether U.S. Energy enters into this Agreement and Release. Kessel’s employment with U.S.
Energy shall be deemed mutually terminated by Kessel and U.S. Energy.
Separation and Release Agreement |
Page 1 of 10 |
3.
No Further Payments. Except as described in Paragraphs 1 and 20, Kessel acknowledges and agrees that he is not entitled
to any other compensation, severance, benefits, stock compensation, options, severance pay, or other payments in connection with his
engagement by, or employment or positions with, U.S. Energy or the termination thereof.
4.
Kessel Acknowledgements. By entering into this Agreement and Release, Kessel confirms and acknowledges the Separation Date. Kessel
further acknowledges and confirms that Kessel has been paid or is being paid for any salary, wages, incentives, bonuses, commissions
and any other type of compensation due to Kessel, for work performed through and including the Separation Date. Kessel further acknowledges
that, as of the date of Kessel’s signing of this Agreement and Release, Kessel has sustained no injury or illness related in any
way to Kessel’s employment with U.S. Energy for which a worker’s compensation claim has not already been filed.
5.
Kessel’s General Release. In return for U.S. Energy’s agreement to provide Kessel with the Severance Payment referred
to in Paragraph 1 and the RSA Vesting, referred to in Paragraph 20, Kessel agrees to the following, in addition to the
other terms and conditions of this Agreement and Release:
a.
General Release. Kessel, for Kessel and Kessel’s heirs, beneficiaries, devisees, executors, administrators, attorneys,
representatives, and agents, and Kessel’s and his assigns, successors and predecessors, hereby releases and forever discharges
U.S. Energy, and its subsidiaries and affiliates, and each of their officers, directors, employees, members, agents, attorneys, predecessors,
successors and assigns of each of the foregoing entities (collectively, the “Released Parties”), from any and
all actions, causes of action, suits, debts, claims, complaints, charges, contracts, controversies, agreements, promises, damages, counterclaims,
cross-claims, claims for costs and/or attorneys’ fees, judgments and demands whatsoever, in law or equity, known or unknown, Kessel
ever had, now has, or may have against the Released Parties as of the date of Kessel’s signing of this Agreement and Release. This
release includes, but is not limited to, any claims for severance pay, restricted stock, restricted stock units, stock or option compensation,
any claims alleging breach of express or implied contract, wrongful discharge, constructive discharge, breach of an implied covenant
of good faith and fair dealing, negligent or intentional infliction of emotional distress, negligent supervision or retention, violation
of the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Older Workers Benefit Protection Act of 1990,
the Workers Adjustment and Retraining Notification Act, the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the Americans with Disabilities Act, Sections 1981 through 1988 of Title 42 of the United States Code, as amended,
the Employee Retirement Income Security Act of 1974, the Immigration Reform and Control Act, the Equal Pay Act of 1963, the Family and
Medical Leave Act of 1993, the Fair Labor Standards Act of 1938, the Older Workers Benefit Protection Act of 1990, the Occupational Safety
and Health Act of 1970, the Worker Adjustment and Retraining Notification Act of 1989, the Genetic Information Nondiscrimination Act
of 2008, the Sarbanes-Oxley Act, the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Fair Credit Reporting Act,
the Vocational Rehabilitation Act, the Lily Ledbetter Fair Pay Act of 2009, the Americans with Disabilities Act, the Rehabilitation Act
of 1973, the Genetic Information Nondiscrimination Act, the Immigration Reform and Control Act of 1986, the Civil Rights Act of 1991,
the Consumer Credit Protection Act, the American Recovery and Reinvestment Act of 2009, the Asbestos Hazard Emergency Response Act, Employee
Polygraph Protection Act, the Uniformed Services Employment and Reemployment Rights Act, any claims arising under the Texas Labor Code
including the Texas Payday Act, the Texas Anti-Retaliation Act, Chapter 21 of the Texas Labor Code, the Texas Whistleblower Act, the
Texas Constitution, Texas common law, claims pursuant to any other federal, state or local law regarding discrimination, harassment or
retaliation based on age, race, sex, religion, national origin, marital status, disability, sexual orientation or any other unlawful
basis or protected status or activity, and claims for alleged violation of any and all other applicable state, county and local ordinances,
statutes and regulations, local, state or federal law, regulation, ordinance, public policy or common-law duty having any bearing whatsoever
upon the terms and conditions of, and/or the cessation of Kessel’s employment with and by U.S. Energy or relating to U.S. Energy
or his employment with U.S. Energy in general, each to the extent allowed pursuant to applicable law. Along with such release, all benefits
to Kessel from U.S. Energy (i.e., health insurance coverage, 401(k) plans and life insurance (if any)) will be terminated. The Released
Parties can seek attorneys’ fees, costs, or other damages arising from Kessel for Kessel’s breach of the release. Kessel
agrees that, if any portion of this release is found to be unenforceable, the remainder of the release will remain enforceable. This
release does not include claims that may not be released under applicable law.
Separation and Release Agreement |
Page 2 of 10 |
b.
Unknown Claims. Kessel understands and agrees that the release set forth in Section 5.a above, extends to all claims of
every nature, known or unknown, suspected or unsuspected, past or present. In connection therewith, Kessel agrees to the following:
“A
general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor
at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the
debtor or released party.”
Kessel
hereby specifically acknowledges and agrees that (i) Kessel’s waiver of known and unknown claims is knowing and voluntary; (ii)
the Severance Payment is in addition to anything of value to which Kessel already is entitled; and (iii) but for this Agreement, Kessel
would not be entitled to the Severance Payment or RSA Vesting.
c.
Specific Release. Kessel agrees not only to release and discharge the Released Parties from any and all claims against
the Released Parties that Kessel could make on Kessel’s own behalf, but also those which may have been or may be made by any other
person or organization on Kessel’s behalf. Kessel specifically waives any right to become, and promises not to become, a member
of any class in a case in which any claim or claims are asserted against any of the Released Parties based on any acts or omissions occurring
on or before the date of Kessel’s signing of this Agreement and Release. If Kessel is asserted to be a member of a class in a case
against any of the Released Parties based on any acts or omissions occurring on or before the date of Kessel’s signing of this
Agreement and Release, Kessel shall immediately withdraw with prejudice in writing from said class, if permitted by law to do so. Kessel
agrees that Kessel will not encourage or assist any person in filing or pursuing any proceeding, action, charge, complaint, or claim
against the Released Parties, except as required by law.
6.
Nonwaivable Claims. This Agreement and Release is not intended to interfere with Kessel’s exercise of any protected, nonwaivable
right, including Kessel’s right to file a charge with the Equal Employment Opportunity Commission or other government agency. By
entering into this Agreement and Release, however, Kessel acknowledges that U.S. Energy is not required to pay the Severance Payment
set forth herein and that U.S. Energy would not have agreed to pay such amounts to Kessel if not for Kessel agreeing to the terms of
this Agreement, such amount is in full satisfaction of any amounts to which Kessel might be entitled and Kessel is forever discharging
the Released Parties from any liability to Kessel for any acts or omissions occurring on or before the date of Kessel’s signing
of this Agreement and Release. This Agreement and Release is also not intended to diminish any right of indemnity that Kessel may enjoy
in respect of his actions or inactions during his tenure as an employee of U.S. Energy.
7.
Claims Not Released. Kessel is not waiving any rights hereunder that Kessel may have to: (i) Kessel’s vested U.S. Energy
equity grants or any other vested accrued employee benefits under any of U.S. Energy’s health, welfare, or retirement benefit plans
as of the Separation Date or unemployment claims (which U.S. Energy agrees not to contest); (ii) any rights or claims Kessel may have
for indemnification, and/or contribution, advancement or payment of related expenses pursuant to any Indemnification Agreement entered
into with U.S. Energy (“Indemnification Agreement”), or any other written agreement with the Company, the Company’s
Bylaws or other organizing documents, and/or under applicable law; (iii) benefits or rights to seek benefits under applicable workers’
compensation (except as to claims under Labor Code sections 132a and 4553), unemployment insurance or indemnification statutes or pursue
claims which by law cannot be waived by signing this Agreement; (iv) enforce or challenge the validity of this Agreement; (v) coverage
under any directors and officers liability insurance, other insurance policies of U.S. Energy, COBRA or any similar state law; (vi) as
a shareholder of U.S. Energy, if applicable; and (vii) any claims arising after the date of this Agreement.
Separation and Release Agreement |
Page 3 of 10 |
8.
No Admission. Neither this Agreement and Release, nor anything contained herein, shall be construed as an admission by the Released
Parties of any liability or unlawful conduct whatsoever. The Parties hereto agree and understand that the consideration set forth in
Paragraph 1 and the RSA Vesting is in excess of that which U.S. Energy is obligated to provide to Kessel, and that it is provided
solely in consideration of Kessel’s execution of this Agreement and Release. U.S. Energy and Kessel agree that the consideration
set forth in Paragraph 1 and the RSA Vesting is sufficient consideration for the release being given by Kessel in Paragraph
5, and for Kessel’s other promises herein, including, but not limited to in Paragraphs 9 and 10 hereof.
9.
Return of U.S. Energy’s Property. Kessel’s signature below constitutes Kessel’s agreement to return any originals
and all copies of all files, minutes and board consents, U.S. Energy documents, shareholder and option information, notes, programs,
intellectual property, documents, slides, computer disks, printouts, reports, lists of U.S. Energy’s clients or leads or referrals
to prospective clients, and other media or property in Kessel’s possession or control which contain or pertain to Confidential
Information (as defined below) and other items provided to Kessel by U.S. Energy, developed or obtained by Kessel in connection with
Kessel’s employment with U.S. Energy, or otherwise belonging to U.S. Energy, including all property of U.S. Energy, such as supplies,
keys, access devices, books, identification cards, computers, cell phones, laptops, PDAs, telephones, and other equipment by the Separation
Date, and that Kessel has not supplied and shall not supply prior to the Separation Date, any such Confidential Information to any person,
except as was required to carry out Kessel’s duties as a former employee of U.S. Energy. Furthermore, Kessel has provided U.S.
Energy all login ids and passwords relating to U.S. Energy and any websites, programs or software associated with U.S. Energy or Kessel’s
prior services performed on behalf of U.S. Energy. Kessel shall immediately delete all files, programs, source code, notes, documents,
slides, computer disks, electronically stored information, physically stored information, printouts and other media or property in Kessel’s
possession or control which contain or pertain to Confidential Information, to the extent not delivered as discussed above on or prior
to the Separation Date.
10.
Restrictive Covenants:
a.
Confidential Information. Kessel understands and agrees that Kessel may have learned or had access to, or assisted in the development
of, highly confidential and sensitive information and trade secrets about U.S. Energy, its operations and its clients, and that providing
its clients with appropriate assurances that their confidences will be protected is crucial to U.S. Energy’s ability to obtain
clients, maintain good client relations, and conform to contractual obligations. “Confidential Information”
means, as of the Separation Date, any non-public information that relates to the actual business or research and development of U.S.
Energy, technical data, trade secrets or know-how, and includes, but is not limited to: (i) financial and business information related
to U.S. Energy, such as strategies and plans for future business, new business, product or other development, potential acquisitions
or divestitures, and new marketing ideas; (ii) product and technical information related to U.S. Energy, such as product formulations,
methods, intellectual property, patented technology, patent pending technology, and technology which may be patented in the future, new
and innovative product ideas, methods, procedures, devices, equipment, machines, data processing programs, software, software codes,
source codes, computer models, and research and development projects; (iii) client and supplier information, such as the identity of
U.S. Energy’s clients and suppliers, the names of representatives of U.S. Energy’s clients and suppliers responsible for
entering into contracts with U.S. Energy, the amounts paid by such clients and suppliers to U.S. Energy, specific client needs and requirements,
and leads and referrals to prospective clients and suppliers; (iv) personnel information, such as the identity and number of U.S. Energy’s
other employees, their salaries, bonuses, benefits, skills, qualifications, and abilities; (v) any and all information in whatever form
relating to any client or client of U.S. Energy, including but not limited to its business, employees, operations, systems, assets, liabilities,
finances, products, and marketing, selling, and operating practices; (vi) any information not included in (i) or (ii) above which Kessel
knows or should know is subject to a restriction on disclosure or which Kessel knows or should know is considered by U.S. Energy or U.S.
Energy’s clients or suppliers or prospective clients or suppliers to be confidential, sensitive, proprietary, or a trade secret
or is not readily available to the public; (vii) intellectual property, including inventions and copyrightable works; and (viii) any
information related to any governmental investigations. Confidential Information is not generally known or available to the general public,
but has been developed, compiled or acquired by U.S. Energy at its great effort and expense. Confidential Information can be in any form:
oral, written, or machine readable, including electronic files. For the avoidance of doubt, any information which is disclosed in the
filings that U.S. Energy has made or makes in the future with the U.S. Securities and Exchange Commission is not considered Confidential
Information.
Separation and Release Agreement |
Page 4 of 10 |
b.
Confidentiality Requirements. Kessel acknowledges and agrees that U.S. Energy is engaged in a highly competitive business and
that its competitive position depends upon its ability to maintain the confidentiality of the Confidential Information, which was developed,
compiled and acquired by U.S. Energy at its great effort and expense. Kessel further acknowledges and agrees that any disclosing, divulging,
revealing or using of any of the Confidential Information, other than as specifically authorized by U.S. Energy, will be highly detrimental
to U.S. Energy and will cause it to suffer serious loss of business and pecuniary damage. Accordingly, Kessel agrees that Kessel will
not, for any purpose whatsoever, directly or indirectly use, disseminate, or disclose to any person, organization, or entity Confidential
Information, except as expressly authorized by the highest executive officer of U.S. Energy or by order of a court of competent jurisdiction
or any competent judicial, governmental, supervisory or regulatory body or by the laws or regulations of any country with jurisdiction
over the affairs of U.S. Energy, after providing U.S. Energy with reasonable notice to contest such order (the “Confidentiality
Requirements”).
c.
Non-Use of Confidential Information. Kessel agrees to return immediately to U.S. Energy all of U.S. Energy’s property, including
all files related to U.S. Energy, upon termination of Kessel’s employment. Kessel shall not retain any copy or other reproduction
whatsoever of any U.S. Energy property after the termination of Kessel’s employment, provided that Kessel shall not be required
to delete any automatically created back-up files, provided that such file is not generally accessible beyond the need for disaster recovery
or similar operation.
d.
Mutual Non-Disparagement. U.S. Energy, Kessel and Released Parties agree not to say, write or cause to be said, disseminated,
published, issued, communicated or written, any statement that may be considered defamatory, derogatory, or disparaging of each other
concerning Kessel, U.S. Energy or any Released Party, Kessel’s employment with U.S. Energy,
acts occurring before the signing of this Agreement and Release related to U.S. Energy, before the Separation Date and relating to U.S.
Energy or relating to this Agreement and Release and the matters covered hereby, or any other matter whatsoever, provided that nothing
shall prohibit Kessel from communicating any concerns about potential violations of law, rule or regulation to the Securities and Exchange
Commission, Occupational Safety and Health Administration, EEOC, Department of Justice, Congress, and any agency inspector general or
any other government authority or self-regulatory agency (each, an “Agency,” and collectively, “Agencies”),
or prohibit Kessel from discussing any such matters with any Agency (collectively, the “Non-Disparagement Requirements”).
Nothing in this agreement prevents Kessel from discussing or disclosing information about unlawful acts in the workplace, such as harassment
or discrimination or any other conduct that Kessel has reason to believe is unlawful. Nothing in this Agreement prevents or restricts
Kessel from disclosing factual information relating to claims of harassment, discrimination, or retaliation under the Fair Employment
and Housing Act (FEHA), the Equal Employment Opportunity Commission, or a state or local commission on human rights, or any self-regulatory
organization regarding possible violations of law, including claims based on race, sexual orientation, religion, color, national origin,
ancestry, disability, medical condition, and age. Further, nothing in this Agreement or any other agreement by and between U.S. Energy
and Kessel shall prohibit or restrict Kessel from (i) voluntarily communicating with an attorney retained by Kessel, (ii) initiating,
testifying, assisting, complying with a subpoena from, or participating in any manner with an investigation conducted by any Agencies,
(iii) recovering a Securities and Exchange Commission whistleblower award as provided under Section 21F of the Securities Exchange Act
of 1934, (iv) disclosing any confidential information to a court or other administrative or legislative body in response to a subpoena,
provided that Kessel first promptly notifies and provides U.S. Energy with the opportunity to seek, and join in its efforts at the sole
expense of U.S. Energy, to challenge the subpoena or obtain a protective order limiting its disclosure, or other appropriate remedy,
or (v) filing or disclosing any facts necessary to receive unemployment insurance, Medicaid or other public benefits to which Kessel
is entitled.
Separation and Release Agreement |
Page 5 of 10 |
e.
Non-Interference. For a period of one (1) year from the Separation Date (the “Non-Solicitation
Period”), Kessel agrees to not interfere with U.S. Energy’s and any
of its affiliates’ business relationships with their employees, consultants, representatives, customers, researchers or suppliers
by directly and actively soliciting, recruiting or encouraging same for employment with Kessel or any future employer of Kessel or to
leave the service of U.S. Energy or its affiliate(s
f.
Reasonableness. Kessel acknowledges and agrees that the restrictions set forth in this Paragraph
10 (which shall survive the termination of the employment of Kessel and the transactions contemplated by this Agreement and Release)
are critical and necessary to protect U.S. Energy’s legitimate business interests (including the protection of its Confidential
Information); are reasonably drawn to this end with respect to duration, scope, and otherwise; are not unduly burdensome; are not injurious
to the public interest; and are supported by adequate consideration. Kessel also acknowledges and agrees that U.S. Energy would be irreparably
damaged if Kessel were to breach the covenants set forth in this Paragraph 10 and in the event that Kessel breaches any of the
provisions in Paragraph 10, U.S. Energy will be entitled to injunctive relief, in addition to any other damages to which it may
be entitled as well as the costs and reasonable attorneys’ fees it incurs in enforcing its rights under this section. Kessel further
acknowledges that any breach or claimed breach of the provisions set forth in this Agreement will not be a defense to enforcement of
the restrictions set forth in this Paragraph 10.
g.
Invalid or Unenforceable Provisions. Each word, phrase, sentence, Paragraph or provision
(each a “Provision”) of this Paragraph 10 is severable. If any Provision of this Paragraph 10 is
invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of the remaining Provisions
of this Agreement and Release or this Paragraph 10. If any Provision is deemed invalid or unenforceable for any reason, it is
the Parties’ intention that such covenants be equitably reformed, stricken or modified to the extent necessary to render them valid
and enforceable in all respects. In the event that the time period and/or geographic scope referenced above is deemed unreasonable, overbroad,
or otherwise invalid, it is the Parties’ intention that the enforcing court reduce or modify the time period and/or geographic
scope to the extent necessary to render such covenants reasonable, valid, and enforceable in all respects.
h.
Immunity from Liability: The Defend Trade Secrets Act (“DTSA”) provides
Kessel shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret
that is made in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney, and is
made solely for the purpose of reporting or investigating a suspected violation of law. The DTSA provides the same immunity for the disclosure
of a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under
seal. Under the DTSA, an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may
disclose the trade secret to the individual’s attorney and use the trade secret information in the court proceeding if the individual
files any document containing the trade secret under seal and does not disclose the trade secret, except pursuant to court order.
Separation and Release Agreement |
Page 6 of 10 |
11.
Company Credit Cards. U.S. Energy acknowledges and agrees that Kessel has been personally liable for its credit cards. Within
10 days of the Separation Date or a mutually agreed upon date, all credit cards will be removed from Kessel and established on the account
of U.S. Energy. After such [10] day period, U.S. Energy acknowledges and agrees that Kessel may terminate such accounts at his convenience.
12.
Kessel Property. U.S. Energy acknowledges and agrees that Kessel shall have thirty days from the Separation Date to remove all
of his personal items from the executive officers of U.S. Energy as well as its office in Liberty, Texas. Further U.S. Energy acknowledges
and agrees that it will either directly pay to Kessel, or promptly reimburse Kessel, for the expenses of moving such personal items to
Kessel’s home.
13.
Requests for References. U.S. Energy will confirm Kessel’s job title, dates of employment and, with written authorization
from Kessel, Kessel’s salary in connection with any requests for references for Kessel’s potential future employers.
14.
Non-Disclosure. Kessel agrees and promises not to disclose, either directly or indirectly, in any manner whatsoever, any information
regarding the existence or terms of this Agreement and Release, to any person or entity, except to members of Kessel’s immediate
family, Kessel’s attorney and Kessel’s accountant and/or financial advisor, provided that such persons agree to keep this
information confidential, and except as may be required by law.
15.
Costs and Fees Incurred. Each Party shall bear its own costs and attorneys’ fees, if any, incurred in connection with this
Agreement and Release.
16.
Modifications. This Agreement and Release contains the full agreement of the Parties and may not be modified, altered, changed
or terminated except upon the express prior written consent of Kessel and U.S. Energy or their authorized agents.
17.
Acknowledgements. Kessel acknowledges and agrees that: (a) no promise or inducement for this Agreement and Release has been made
except as set forth in this Agreement and Release; (b) this Agreement and Release is executed by Kessel without reliance upon any statement
or representation by U.S. Energy except as set forth herein; (c) Kessel is legally competent to execute this Agreement and Release and
to accept full responsibility therefor; (d) Kessel has been given twenty-one (21) days within which to consider this Agreement and Release;
(e) Kessel has used all or as much of that twenty-one (21) day period as Kessel deemed necessary to consider fully this Agreement and
Release and, if Kessel has not used the entire twenty-one (21) day period, Kessel waives that period not used; (f) Kessel has read and
fully understands the meaning of each provision of this Agreement and Release; (g) U.S. Energy has advised Kessel to consult with an
attorney concerning this Agreement and Release and has provided Kessel notice and an opportunity to retain an attorney; (h) Kessel knowingly,
freely and voluntarily enters into this Agreement and Release; and (i) no fact, evidence, event, or transaction currently unknown to
Kessel but which may hereafter become known to Kessel shall affect in any manner the final and unconditional nature of the release stated
above.
18.
Effective Date. This Agreement and Release shall become effective and enforceable on the eighth (8th) day following
execution hereof by Kessel unless Kessel revokes it by so advising U.S. Energy in writing before the end of the seventh (7th)
day after its execution by Kessel (the “Effective Date”). In the event this Agreement is revoked prior to the
Effective Date, Kessel shall immediately repay/return the Severance Payment (if paid prior to such date), and shall forfeit such Severance
Payment and RSA Vesting.
19.
[Intentionally Removed].
20.
Vesting of Restricted Stock Awards. As additional consideration for Kessel agreeing to the terms of this Agreement and Release,
all unvested Restricted Stock shares held by Kessel , notwithstanding their terms, vested in full as of the Separation Date and become
non-forfeitable (the “RSA Vesting”). Kessel shall be solely responsible for the taxes due in connection with
the RSA Vesting and agrees to timely pay all such taxes due, and U.S. Energy has not provided Kessel any tax or other advice whatsoever
in connection with the RSA Vesting.
Separation and Release Agreement |
Page 7 of 10 |
21.
Governing Law and Venue. The terms of this Agreement shall be governed by the laws of the State of Texas, and shall be construed
and enforced thereunder. Any dispute arising under this Agreement shall be determined exclusively by a Texas court of appropriate jurisdiction,
and the parties acknowledge the existence of sufficient contacts to the State of Texas to confer exclusive jurisdiction upon courts in
that state.
22.
Notices. Any notice or communication required or permitted to be given hereunder shall be in writing and deemed duly served on
and given (i) when delivered personally; (ii) three (3) business days after having been sent by priority or certified mail, return receipt
requested, postage prepaid; (iii) upon delivery by fax with written facsimile confirmation and electronically by email with written delivery
receipt; or (iv) one (1) business day after deposit with a commercial overnight carrier, with written verification of receipt. Such notices
shall be in writing and delivered to the address set forth below or to such other notice address as the other Party has provided by written
notice:
|
If
to Former Employer: |
If
to Former Employee: |
|
|
|
|
U.S.
Energy Corp. |
Donald
A. Kessel |
|
1616
S. Voss, Suite 725, |
|
|
|
3507
Audubon Place, Unit A |
|
Houston,
Texas 77057 |
Houston,
TX 77006 |
|
|
|
|
Email: |
Email:
dkessel@bdogconsulting.com |
23.
Waiver. The waiver by a Party of a breach of any provision herein shall not operate or be construed as a waiver of any subsequent
breach by the other Party.
24.
Severability. The provisions of this Agreement and Release are severable. Should any provision herein be declared invalid by a
court of competent jurisdiction, the remainder of this Agreement and Release will continue in force, and the Parties agree to renegotiate
the invalidated provision in good faith to accomplish its objective to the extent permitted by law.
25.
No Benefit for Others. The Parties acknowledge that Kessel’s right to the Severance Pay and RSA Vesting described herein
shall be determined exclusively under the provisions stated herein, and this Agreement and Release is not intended to, and does not,
create rights for the benefit of any other employee or person.
26.
No Wrongful Conduct. Kessel represents, warrants and covenants to each of the Released Parties that at no time prior to or contemporaneous
with its execution of this Agreement and Release has he (i) knowingly engaged in any wrongful conduct against, on behalf of or as the
representative or agent of U.S. Energy; (ii) breached any material agreement or policies of U.S. Energy; or (iii) violated in any material
way any state, federal, local or other law, including any securities laws or regulations.
27.
No Assignment or Transfer. Kessel warrants and represents that Kessel has not heretofore assigned or transferred to any person
not a party to this Agreement and Release any released matter or any part or portion thereof and he shall defend, indemnify and hold
U.S. Energy and each Released Party harmless from and against any claim (including the payment of attorneys’ fees and costs actually
incurred whether or not litigation is commenced) based on or in connection with or arising out of any such assignment or transfer made,
purported or claimed.
Separation and Release Agreement |
Page 8 of 10 |
28.
Not Assignable. This Agreement and Release is personal to Kessel and shall not, without the prior written consent of U.S. Energy,
be assignable by Kessel. This Agreement and Release shall inure to the benefit of and be binding upon U.S. Energy and its respective
successors and assigns and any such successor or assignee shall be deemed substituted for U.S. Energy under the terms of this Agreement
and Release for all purposes. As used herein, “successor” and “assignee” shall include
any person, firm, corporation or other business entity which at any time, whether by purchase, merger, acquisition of assets, or otherwise,
directly or indirectly acquires ownership of U.S. Energy, acquires all or substantially all of U.S. Energy’s assets, or to which
U.S. Energy assigns this Agreement and Release by operation of law or otherwise.
29.
Forfeiture of Severance Payment. Kessel agrees that he will forfeit (and be forced to return) the Severance Payment payable by
U.S. Energy pursuant to this Agreement and Release upon severance of Kessel’s employment with U.S. Energy if Kessel challenges
the validity of this Agreement and Release.
30.
Counterparts. This Agreement and Release may be signed in counterparts, and each counterpart shall be considered an original agreement
for all purposes.
31.
Clawback. Kessel agrees that, notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation
paid to Kessel under any other agreement or arrangement with U.S. Energy which is subject to recovery under any law, government regulation,
or stock exchange listing requirement will be subject to such deductions and clawback to the extent set forth in any policy adopted by
U.S. Energy pursuant to any law, government regulation or stock exchange listing requirement to the extent generally applicable to all
of U.S. Energy’s executive officers. With respect to any potential clawback or recovery effected or subject to a determination
by the Board of Directors (the “Board”), the Board will make its determination for clawback or recovery in
good faith, upon advice of counsel, and in accordance with any applicable law or regulation, and to the extent permitted by law, only
after (i) providing Kessel prior written notice of the deliberation of such potential clawback or recovery and (ii) providing Kessel
(and his counsel) an opportunity to present to the Board all relevant information related to such determination.
32.
Section 409A. It is intended that this Agreement comply with, or be exempt from, Internal Revenue Code Section 409A and the final
regulations and official guidance thereunder (“Section 409A”) and any ambiguities and ambiguous terms herein
will be interpreted to so comply and/or be exempt from Section 409A. Each payment and benefit to be paid or provided under this Agreement
(including without limitation any Severance Payment) is intended to constitute a series of separate payments for purposes of Section
1.409A-2(b)(2) of the Treasury Regulations. Kessel acknowledges that if any provision of this Agreement (or of any award of compensation
or benefits) would cause Kessel to incur any additional tax or interest under Section 409A and accompanying Treasury regulations and
other authoritative guidance, such additional tax and interest shall solely be his responsibility. U.S. Energy and Kessel will work together
in good faith to consider either (i) amendments to this Agreement; or (ii) revisions to this Agreement with respect to the payment of
any awards, which are necessary or appropriate to avoid imposition of any additional tax or income recognition prior to the actual payment
to Kessel under Section 409A. In no event will the Released Parties have any obligation, liability or responsibility to reimburse, indemnify
or hold harmless Kessel for any taxes imposed, or other costs incurred, as a result of Section 409A. The Separation Date is intended
to constitute Kessel’s “separation from service” within the meaning of Section 409A.
[Remainder
of page left intentionally blank. Signature page follows.]
Separation and Release Agreement |
Page 9 of 10 |
IN
WITNESS WHEREOF, the Parties have hereunto set their hands.
Donald
A. Kessel |
|
U.S.
Energy Corp. |
|
|
|
|
|
Signature: |
/s/
Donald A. Kessel |
|
Signature: |
/s/
Ryan Smith |
|
|
|
Printed
Name: |
Ryan
Smith |
|
|
|
Title: |
CEO |
July
28, 2023 |
|
July
31, 2023 |
Date |
|
Date |
Separation and Release Agreement |
Page 10 of 10 |
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