Exhibit 10.2

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into effective the 18th
day of April 2013 (the “Effective Date”) by and between Nicholas Q. Dillon, a
resident of the State of Minnesota (“Employee”), and Dakota Plains Holdings,
Inc., a Nevada corporation (the “Company”).

WHEREAS, the Company’s primary business is developing, owning and operating rail
facilities and other means to support the loading, marketing and transporting of
crude oil and related products from, into and within the North Dakota Bakken oil
fields;

WHEREAS, the Company and Employee are party to that certain Employment Agreement
effective March 22, 2012 (the “Prior Agreement”) and each of Employee and
Company intend for this Agreement to replace and supersede the terms of the
Prior Agreement in their entirety;

WHEREAS, during his employment with the Company, Employee will have access to
the Company’s confidential, proprietary and trade secret information. Employee
and the Company agree that it is in the best interests of the Company to protect
its confidential, proprietary and trade secret information, to prevent unfair
competition by former executives following separation of their employment and to
secure cooperation from former executives with respect to matters related to
their employment with the Company; and

WHEREAS, Employee acknowledges that his receipt of benefits under this Agreement
depends on, among other things, his agreement to abide by the confidentiality,
non-competition, non-solicitation and other covenants contained in this
Agreement, including those in Sections 5 and 6 below.

NOW, THEREFORE, in consideration of the foregoing recitals and the respective
agreements of the Company and Employee as set forth below, the Company and
Employee, intending to be legally bound, agree as follows:

1. Employment.

1.1 Term. As of the Effective Date, the Company hereby employs Employee, and
Employee hereby accepts such employment on the terms and conditions set forth
herein, for the period commencing on the Effective Date and ending on the three
year anniversary of the Effective Date (the “Initial Term”), subject to earlier
termination pursuant to the terms of this Agreement. This Agreement will be
automatically extended after the end of the Initial Term for successive one year
terms (each a “Renewal Term”), subject to earlier termination pursuant to the
terms of this Agreement, unless either party delivers to the other party written
notice of non-renewal no fewer than ninety (90) days prior to the expiration of
the Initial Term or any Renewal Term then in effect stating that such party does
not wish to extend the Term beyond the end of the Initial Term or the Renewal
Term then in effect; provided, further, that if a Change in Control (as defined
in the Company’s 2011 Equity Incentive Plan) occurs prior to the expiration of
the Initial Term or the then-current Renewal Term, then the Initial Term or
then-current Renewal Term (as applicable) shall be extended through the one-year
anniversary of the Change in Control without any option for the Company to not
renew this Agreement prior to the end of such one-year period. The Initial Term
together with any Renewal Term(s) is herein referred to as the “Term.” If
Employee remains employed by the Company after the Term, then such employment
shall be according to such terms and conditions as the Company may establish
from time to time.

 

 

 

1.2 Services. The Company hereby agrees to employ Employee in the role of the
Company’s Vice President – Finance, and Employee hereby accepts such employment
with the Company on the terms and conditions set forth herein. Employee shall
perform all activities and services as the Company’s Vice President – Finance,
which shall include such duties and responsibilities as the Company’s Chief
Executive Officer and Chief Financial Officer may from time-to-time reasonably
prescribe consistent with the duties and responsibilities of the Vice President
– Finance of the Company (the “Services”). Employee shall use his best efforts
to make himself available to render such Services to the best of his abilities.
The Services shall be performed in a good, professional and workmanlike manner
by Employee, to the Company’s reasonable satisfaction, which shall include
duties and responsibilities as the Company’s Vice President – Finance.

2. At-Will Relationship. Employee’s employment with the Company shall be
entirely “at-will,” meaning that either Employee or the Company may terminate
such employment relationship at any time for any reason or for no reason at all,
subject to the provisions of this Agreement. The date upon which Employee’s
termination of employment with the Company occurs is the “Termination Date.” For
purposes of Section 8.2 (iv) of this Agreement only, with respect to the timing
of any payments thereunder, the “Termination Date” shall mean the date on which
a “separation from service” has occurred for purposes of Section 409A of the
Internal Revenue Code of 1986, as amended from time to time (the “Code”) and the
regulations and guidance thereunder.

3. Compensation and Incentive Awards. In consideration for Employee entering
into this Agreement with the Company and performing the Services required
hereunder during the Term, the Company shall provide Employee with the following
compensation while Employee is employed by the Company during the Term:

3.1 Annual Salary. The Company shall pay Employee an annualized base salary
according to this Section 3.1 (the “Salary”), which Salary shall be paid monthly
on the 15th day of each calendar month, or the last business day immediately
preceding the 15th day of each calendar month, in the event the 15th falls on a
weekend or a holiday. Employee’s initial annualized Salary as of the Effective
Date shall be $115,000.

3.2 Annual Bonus. For each calendar year during the Term, Employee shall be
eligible to receive an annual incentive bonus in the discretion of the Company’s
Compensation Committee or Board based upon Employee meeting or exceeding
mutually agreed upon performance goals, with a target annual incentive bonus
equal to 50% of Employee’s annualized Salary payable in the form of cash, equity
or a combination of both, subject to all applicable corporate approvals, to be
issued no later than March 15 of the calendar year immediately following the
calendar year for which such bonus is earned; provided, however, that nothing
herein shall obligate the Company to pay any bonus to Employee at any time.

4. Benefits. In consideration for Employee entering into this Agreement with the
Company and performing the Services required hereunder during the Term, the
Company shall provide Employee with the following employee benefits while
Employee is employed by the Company during the Term:

4.1 Retirement Plans. Employee shall be entitled to participate in the Company’s
401(k), profit sharing and other retirement plans (the “Plan”) presently in
effect or hereafter adopted by the Company, to the extent that such Plan relates
generally to all employees of the Company. Employee shall be able to contribute
up to the legal limit, as a percentage of his annualized Salary, into any such
Plan, of which the Company shall match Employee’s contribution up to a maximum
of eight percent (8.0%) of Employee’s annualized Salary.

4.2 Vacation. Employee shall be entitled to three weeks paid vacation pursuant
to such general policies and procedures of the Company consistent with past
practices as are from time to time adopted by the Company.

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4.3 Expense Reimbursement. Employee shall be reimbursed by the Company for all
ordinary and customary business expenses, including travel. Employee shall
provide such appropriate documentation regarding such expenses and disbursements
as Company may reasonably require. Reimbursement shall occur once per month and
must be paid within thirty (30) days after the Company receives appropriate
documentation from Employee related to such expenses but in no event later than
the end of the Company’s taxable year following the taxable year in which such
expenses are incurred.

4.4 Health Insurance. Employee, Employee’s spouse and any children of Employee
(the “Employee’s Family”) shall be entitled to participate in health,
hospitalization, disability, dental and other such health-related benefits
and/or insurance plans that the Company may have in effect from time-to-time and
provided Employee and Employee’s Family meets the eligibility requirements for
each such individual plan or program, all of which insurance premiums shall be
paid by the Company on behalf of Employee and Employee’s Family. The Company
provides no assurance as to the adoption or continuance of any particular
health, hospitalization, disability, dental and other such health-related
benefits and/or insurance plans or programs and Employee and Employee’s Family’s
participation in any such plan or program shall be subject to the provisions,
rules and regulations applicable thereto.

4.5 Other Benefits. Employee shall also be entitled to such other benefits as
the Company may from time-to-time generally provide to its personnel, at the
discretion of and as permitted by the Company’s management.

5. Confidential Information.

5.1 Employee shall maintain the confidentiality of all trade secrets, (whether
owned or licensed by the Company) and related or other interpretative materials
and analyses of the Company’s projects, or knowledge of the existence of any
material, information, analyses, projects, proposed joint ventures, mergers,
acquisitions, divestitures and other such anticipated or contemplated business
ventures of the Company, and other confidential or proprietary information of
the Company (“Confidential Information and Materials”) obtained by Employee as
result of Employee’s employment with the Company and for two (2) years following
termination of Employee’s employment with the Company for any reason, whether
such termination is at the initiative of Employee or the Company or before or
after expiration of the Term.

5.2 In the event that such Confidential Information and Materials are
memorialized on any computer hardware, software, CD-ROM, disk, tape, or other
media, Company shall have the right, subject to the rights of third parties
under contract, copyright, or other law, to view, use, and copy for safekeeping
or backup purposes such Confidential Information and Materials. During the
period of confidentiality, Employee shall make no use of such Confidential
Information and Materials for his own financial or other benefit, and shall not
retain any originals or copies, or reveal or disclose any Confidential
Information and Materials to any third parties, except as otherwise expressly
agreed by the Company. Except in the performance of the Services, Employee shall
have no right to use the Company’s corporate logos, trademarks, service marks,
or other intellectual property without prior written permission of the Company
and subject to any limitations or restrictions upon such use as the Company may
require.

5.3 Upon expiration or termination of this Agreement, Employee shall turn over
to a designated representative of the Company all property in Employee’s
possession and custody and belonging to the Company. Employee shall not retain
any copies or reproductions of correspondence, memoranda, reports, notebooks,
drawings, photographs or other documents relating in any way to the affairs of
the Company and containing Confidential Information and Materials which came
into Employee’s possession at any time during the term of Employee’s employment
with the Company.

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5.4 Employee acknowledges that the Company is a public company subject to the
reporting requirements of the Exchange Act and that this Agreement may be
subject to the filing requirements of the Exchange Act. Employee acknowledges
and agrees that the applicable insider trading rules and limitations on
disclosure of non-public information set forth in the Exchange Act and rules and
regulations promulgated by the SEC shall apply to this Agreement and Employee’s
employment with the Company. Employee (on behalf of himself as well as his
executors, heirs, administrators and assigns) absolutely and unconditionally
agrees to indemnify and hold harmless the Company and all of its past, present
and future affiliates, executors, heirs, administrators, shareholders,
employees, officers, directors, attorneys, accountants, agents, representatives,
predecessors, successors and assigns from any and all claims, debts, demands,
accounts, judgments, causes of action, equitable relief, damages, costs,
charges, complaints, obligations, controversies, actions, suits, proceedings,
expenses, responsibilities and liabilities of every kind and character
whatsoever (including, but not limited to, reasonable attorneys’ fees and costs)
in the event of Employee’s breach or alleged breach of any obligation under the
Exchange Act, any rules promulgated by the SEC and any other applicable Federal
or state laws, rules, regulations or orders.

5.5 The foregoing obligations of confidentiality shall not apply to any
Confidential Information and Materials that: (i) are now or subsequently become
generally publicly known, other than as a direct or indirect result of the
breach by Employee of this Agreement, (ii) are independently made available to
Employee in good faith by a third party who has not violated a confidential
relationship with the Company, or (iii) are required to be disclosed by law or
legal process. Employee understands and agrees that Employee’s obligations under
this Agreement to maintain the confidentiality of the Company’s Confidential
Information are in addition to any obligations of Employee under applicable
statutory or common law. The parties agree that the provisions of this Section 5
shall survive any termination of Employee’s employment with the Company and this
Agreement.

6. Non-Competition and Non-Solicitation.

6.1 Employee agrees that he will not:

(i) anywhere the Company does business, including but not limited to Williston
Basin and the Rocky Mountain Region, engage, directly or indirectly, alone or as
a shareholder (other than as a holder of less than ten percent (10%) of the
common stock of any publicly traded corporation), partner, officer, director,
employee, consultant or advisor, or otherwise in any way participate in or
become associated with, any other business organization that is engaged or
becomes engaged in any business that is the same or substantially identical
business of the Company, or is directly competitive with, any business activity
that the Company is conducting at the time of Employee’s termination or has
notified Employee that it proposes to conduct and for which the Company has,
prior to the time of such termination, expended substantial resources (the
“Designated Industry”),

(ii) divert to any competitor of the Company any customer of the Company, or

(iii) solicit any employee, consultant or independent contractor of the Company
to change its relationship with the Company, or hire or offer employment to, or
a consulting or independent contractor relationship with, any person to whom
Employee actually knows the Company has offered employment; provided, however,
that this provision does not apply to any employee, consultant or independent
contractor of the Company who responds to a general solicitation for an
advertised position provided Employee has not otherwise engaged in conduct
prohibited by this Section 6.

6.2 Employee agrees to be bound by the provisions of this Section 6 in
consideration for the Company’s employment of Employee, payment of the
compensation and benefits provided under Section 3 and Section 4 above and the
covenants and agreements set forth herein. The provisions of this Section 6
shall apply during the term of Employee’s employment with the Company and for a
period of one (1) year following termination of Employee’s employment with the
Company for any reason, whether such termination is at the initiative of
Employee or the Company or before or after expiration of the Term. The parties
agree that the provisions of this Section 6 shall survive any termination of
this Agreement, Employee will continue to be bound by the provisions of this
Section 6 until their expiration and Employee shall not be entitled to any
compensation from the Company with respect thereto except as provided under this
Agreement.

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6.3 Employee acknowledges that the provisions of this Section 6 are essential to
protect the business and goodwill of the Company. If at any time the provisions
of this Section 6 shall be determined to be invalid or unenforceable by reason
of being vague or unreasonable as to area, duration or scope of activity, this
Section 6 shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter; and Employee agrees that this Section 6 as so amended shall be
valid and binding as though any invalid or unenforceable provision had not been
included herein.

7. Non-Disparagement. Both the Company and Employee agree that neither they nor
any of their respective affiliates, predecessors, subsidiaries, partners,
principals, officers, directors, authorized representatives, agents, employees,
successors, assigns, heirs or family members shall disparage or defame any other
party hereto relating in any respect to this Agreement, their relationship or
the Company’s employment of Employee.

8. Rights Upon Termination of Employment.

8.1 If Employee’s employment with the Company is terminated by the Company or
Employee for any reason upon or following the expiration of the Term, or if
Employee’s employment with the Company is terminated during the Term by the
Company for Cause (as defined below) or by Employee for any reason other than
Good Reason (as defined below), or if Employee’s employment with the Company is
terminated during the Term by reason of Employee’s death or Disability (as
defined below), then: (i) the Company shall pay to Employee or his beneficiary
or his estate, as the case may be, Employee’s Salary through the Termination
Date, (ii) the Company shall pay any unpaid expense reimbursement that might
have accrued prior to the Termination Date; and (iii) any securities held in the
name of Employee, or any portion thereof, may be exercised to the extent
Employee was entitled to do so as of the Termination Date in accordance with the
terms of the applicable grant agreements and plan document(s) governing such
securities.

8.2 If Employee’s employment with the Company is terminated during the Term by
the Company for any reason other than for Cause or by the Employee for Good
Reason, then: (i) the Company shall pay Employee’s Salary through the
Termination Date, (ii) the Company shall pay any unpaid expense reimbursement
that might have accrued prior to the Termination Date, (iii) any securities held
in the name of Employee, or any portion thereof, may be exercised to the extent
Employee was entitled to do so as of the Termination Date in accordance with the
terms of the applicable grant agreements and plan document(s) governing such
securities, and (iv) subject to Section 8.7, the Company shall pay Employee an
amount equal to one (1) times the sum of Employee’s annualized Salary as of the
Termination Date, less applicable withholdings. Such sum will be payable in 12
substantially equal monthly installments on or about the 15th day of each of the
12 months immediately following the Termination Date; provided, however, that
any installments that otherwise would be payable between the Termination Date
and the 60th day after the Termination Date shall be delayed until the 15th day
of the calendar month that is more than 60 days after the Termination Date and
included with the installment payable on such date.

8.3 Termination of Employee for “Cause” shall mean any of the following acts by
Employee:

(i) an intentional act of fraud, embezzlement, theft or any other material
violation of law;

(ii) intentional damage to the Company’s assets;

(iii) the willful and continued failure to substantially perform required duties
for the Company (other than as a result of incapacity due to physical or mental
illness); or

(iv) willful conduct that is demonstrably and materially injurious to the
Company, monetarily or otherwise.

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8.4 “Disability” hereunder shall mean the inability of Employee to perform on a
full-time basis the duties and responsibilities of his employment with the
Company by reason of his illness or other physical or mental impairment or
condition, if such inability continues for an uninterrupted period of 180 days
or more during any 360-day period. A period of inability shall be
“uninterrupted” unless and until Employee returns to full-time work, with or
without an accommodation, for a continuous period of at least thirty (30) days.

8.5 “Good Reason” hereunder shall mean the occurrence of any of the following
during the Term without Employee’s consent: (i) a material reduction in
Employee’s duties that is inconsistent with Employee’s position as Vice
President – Finance of Company; (ii) Employee is no longer the Vice President –
Finance of Company; (iii) any material reduction in Employee’s annual base
salary or bonus compensation (other than in connection with a general decrease
in the salary or bonuses for other employees of Company); (iv) material breach
by Company of any of its obligations hereunder; or (v) a requirement by Company
that Employee relocate Company’s principal office to a facility more than fifty
(50) miles from Company’s principal office as of the Effective Date; provided,
however that Employee must provide written notice to the Company that Good
Reason exists within fifteen (15) days of the occurrence of the circumstances
giving rise to Good Reason, the Company must fail to cure such circumstances
within thirty (30) days after its receipt of such notice from Employee and the
Company engaging in good faith negotiations with Employee to resolve the alleged
Good Reason circumstances or to confirm with Employee that the facts Employee
has identified support a Good Reason resignation, and Employee must resign no
later than ninety (90) days after expiration of the Company’s 30-day cure period
in order for Employee’s resignation to be for Good Reason.

8.6 In the event of termination of Employee’s employment, the sole obligation of
the Company shall be its obligation to make the payments called for by Section
8.1 or Section 8.2 hereof, as the case may be, and the Company shall have no
other obligation to Employee or to his beneficiary or his estate, except for
compensation earned for services performed through the Termination Date or as
otherwise provided by law, under the terms of any other applicable agreement
between Employee and the Company or under the terms of any employee benefit
plans or programs then maintained by the Company in which Employee participates.

8.7 Notwithstanding the foregoing provisions of this Section 8, the Company
shall not be obligated to provide the consideration under Section 8.2 (iv)
hereof unless Employee shall have signed a release of claims in favor of the
Company in a form to be prescribed by the Company, all applicable consideration
periods and rescission periods provided by law shall have expired and Employee
is in strict compliance with the terms of this Agreement as of the dates of the
payments.

9. Notices. Any notice required or permitted under this Agreement shall be
personally delivered or sent by recognized overnight courier or by certified
mail, return receipt requested, postage prepaid, and shall be effective when
received (if personally delivered or sent by recognized overnight courier) or on
the third day after mailing (if sent by certified mail, return receipt
requested, postage prepaid) to Employee at the address indicated on the
signature page of this Agreement and to the Company at its headquarters or
principal place of business. Either party may designate a different person to
whom notices should be sent at any time by notifying the other party in writing
in accordance with this Agreement.

10. Survival of Certain Provisions. Those provisions of this Agreement which by
their terms extend beyond the termination or non-renewal of this Agreement
(including all representations, warranties, and covenants of the parties) shall
remain in full force and effect and survive such termination or non-renewal.

11. Severability. Each provision of this Agreement shall be considered severable
such that if any one provision or clause conflicts with existing or future
applicable law, or may not be given full effect because of such law, this shall
not affect any other provision which can be given effect without the conflicting
provision or clause.

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12. Entire Agreement. This Agreement and any equity award agreements relating to
issuances hereunder collectively contain the entire agreement and understanding
between the parties, and supersede all prior agreements and understandings
relating to the subject matter hereof. including without limitation the Prior
Agreement. There are no understandings, conditions, representations or
warranties of any kind between the parties except as expressly set forth herein.

13. Assignability. Employee may not assign this Agreement to any third party for
whatever purpose without the express written consent of the Company. The Company
may not assign this Agreement to any third party without the express written
consent of Employee except by operation of law, or through merger, liquidation,
recapitalization or sale of all or substantially all of the assets of the
Company, provided that the Company may assign this Agreement at any time to an
affiliate of the Company. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their respective representatives,
successors, and assigns. Any third party to which the Company assigns this
Agreement by operation of law, or through merger, liquidation, recapitalization
or sale of all or substantially all of the assets of the Company, or because
such third party is an affiliate of the Company, shall thereafter be deemed the
“Company” for the purposes of this Agreement.

14. Headings. The headings of the paragraphs and sections of this Agreement are
inserted solely for the convenience of reference. They shall in no way define,
limit, extend, or aid in the construction of the scope, extent, or intent of
this Agreement.

15. Waiver. The failure of a party to enforce the provisions of this Agreement
shall not be construed as a waiver of any provision or the right of such party
thereafter to enforce each and every provision of this Agreement.

16. Amendments. No amendments of this Agreement shall be binding upon the
Company or Employee unless made in writing, signed by the parties hereto, and
delivered to the parties at the addresses provided herein.

17. Governing Law. This Agreement shall be governed by and construed under the
internal laws of the State of Minnesota, without regard to the principles of
comity and/or the applicable conflicts of laws of any state that would result in
the application of any laws other than the State of Minnesota.

18. Jurisdiction. This Agreement, including the documents, instruments and
agreements to be executed and/or delivered by the parties pursuant hereto, shall
be construed, governed by and enforced in accordance with the internal laws of
the State of Minnesota, without giving effect to the principles of comity or
conflicts of laws thereof. Employee and the Company agree and consent that any
legal action, suit or proceeding seeking to enforce any provision of this
Agreement shall be instituted and adjudicated solely and exclusively in any
court of general jurisdiction in Minnesota, or in the United States District
Court having jurisdiction in Minnesota and Employee and the Company agree that
venue will be proper in such courts and waive any objection which they may have
now or hereafter to the venue of any such suit, action or proceeding in such
courts, and each hereby irrevocably consents and agrees to the jurisdiction of
said courts in any such suit, action or proceeding. Employee and the Company
further agree to accept and acknowledge service of any and all process which may
be served in any such suit, action or proceeding in said courts, and also agree
that service of process or notice upon them shall be deemed in every respect
effective service of process or notice upon them, in any suit, action,
proceeding, if given or made (i) according to applicable law, (ii) by a person
over the age of eighteen (18) who personally served such notice or service of
process on Employee or the Company, as the case may be, or (iii) by certified
mail, return receipt requested, mailed to employee or the Company, as the case
may be, at their respective addresses set forth in this Agreement.

19. Counterparts and Electronic Signatures. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same Agreement.

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20. Taxes and Section 409A. Company may withhold from any amounts payable under
this Agreement such federal, state and local income and employment taxes as
Company shall determine are required to be withheld pursuant to any applicable
law or regulation. Employee shall be solely responsible for the payment of all
taxes due and owing with respect to wages, benefits, and other compensation
provided to him hereunder. This Agreement and the compensation payable hereunder
is intended to satisfy, or be exempt from, the requirements of Section
409A(a)(2)(3) and (4) of the Code, including current and future guidance and
regulations interpreting such provisions, and should be interpreted accordingly.
Each payment under this Agreement is intended to be treated as one of a series
of separate payments for purposes of Code Section 409A and Treasury Regulation
§1.409A-2(b)(2)(iii) (or any similar or successor provisions). To the extent
that any payments under Section 8.2(iv) are subject to Code Section 409A and
Employee is a “Specified Employee” (as defined in Section 409A) as of the
Termination Date, such payments to Employee under Section 8.2(iv) may not be
made before the date that is six (6) months after the Termination Date or, if
earlier, the date of Employee’s death. Payments to which Employee would
otherwise be entitled during the first six (6) months following the Termination
Date will be accumulated and paid on the first day of the seventh month
following the Termination Date (or Employee’s death, if earlier).

[Signature Page Follows]

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

  DAKOTA PLAINS HOLDINGS, INC.       /s/ Craig M. McKenzie   Craig M. McKenzie
Chief Executive Officer       EMPLOYEE       /s/ Nicholas Q. Dillon   Nicholas
Q. Dillon

 

 

 

 

 

 

[Signature Page to Employment Agreement]