Document:

Exhibit 10.2

 

SRC/PDC MERGER

PERFORMANCE SHARE AGREEMENT

 

This SRC/PDC Merger
Performance Share Agreement (hereinafter referred to as this "Agreement") dated January 13, 2020 is by and between
SRC Energy Inc., a Colorado corporation (hereinafter referred to as the "Company") and Lynn A. Peterson (hereinafter
referred to as "Executive").

 

Article
1

 

MERGER; PURPOSE OF AGREEMENT

 

1.1           Merger. The Company and PDC Energy, Inc. (“PDC”) have entered into that certain Agreement and
Plan of Merger, dated as of August 25, 2019 (the “Merger Agreement”), pursuant to which the Company will merge
with and into PDC, with PDC being the surviving company (the “Merger”). Pursuant to the Merger Agreement, the
Company is to make a performance share award to Executive under the Company's 2015 Equity Incentive Plan, as amended (hereinafter
referred to as the "Plan"), and the Plan and the award set forth in this Agreement will be assumed by PDC upon
consummation of the Merger.

 

1.2           Grant.
In furtherance of same, and subject to the Plan and the additional terms and conditions herein set forth, the Company and Executive
hereby enter into this Agreement pursuant to which the Executive may earn performance shares (the “Performance Shares”).
Each Performance Share will initially represent the value of one share of $0.001 par value common stock of the Company, and upon
consummation of the Merger each Performance Share will be adjusted to represent the value of a number of shares of $0.01 par value
common stock of PDC (the “PDC Shares”) based on the “Exchange Ratio” set forth in the Merger Agreement,
as set forth in Section 2.2, below. Upon the achievement of pre-determined objectives for the specified performance period set
forth below (hereinafter referred to as the "Performance Period"), PDC will distribute to the Executive a number
of PDC Shares equal to the number of Performance Shares earned by the Executive for the Performance Period, or a cash payment
equal to the Fair Market Value of such number of PDC Shares.

 

1.3           Merger
not Consummated. In the event the Merger Agreement is terminated for any reason without consummation of the Merger, this Agreement
shall terminate immediately, and Executive shall have no further rights hereunder.

 

1.4           Administrator
Authority. The Plan is administered by the Administrator. Under the Plan, the Administrator has, among its other powers, the
authority to determine the final payout under this Agreement. Notwithstanding the foregoing, for avoidance of doubt, the Performance
Metrics (defined below) under this Agreement are intended to be the same as, and will be administered the same as, the performance
metrics applicable to the performance share awards granted by PDC to its executive officers on February 20, 2019.

 

     

     

    

 

Article
2

 

PERFORMANCE CONDITIONS

 

2.1           Performance
Period. Pursuant to this Agreement, the Performance Period will be the three-year period beginning January 1, 2019 and ending
on December 31, 2021, subject to Section 2.10(b).

 

2.2           Performance Award. Executive has a pre-Merger target of 423,453 Performance Shares, which pre-Merger target shall
be adjusted upon consummation of the Merger in accordance with the Merger Agreement so that the award applies to PDC Shares, with
the result being that Executive will have a post-Merger target of 66,906 Performance Shares (with each Performance Share applying
post-Merger to PDC Shares). The target number of Performance Shares, as adjusted to apply to PDC Shares following the Merger, is
hereinafter referred to as the "Target Award." The range of Performance Shares which may be earned by the Executive
is 0% to 200% of the Target Award.

 

2.3           Performance
Metric. Except as otherwise provided in this Agreement, Awards of Performance Shares will be paid out to the Executive, if
at all, following the close of the Performance Period based generally upon Total Shareholder Return ("TSR") of
PDC relative to TSR for the Peer Companies (defined below) for such Performance Period (the "Performance Metric").

 

2.4          Total Shareholder Return (TSR). For purposes of the Performance Metric, except as otherwise provided in this Agreement,
TSR for a company, including PDC, will be a percentage equal to (x) the “Performance Period Value Change” (as defined
below) divided by (y) the “Beginning Value” (as defined below).

 

(a)           “Performance
Period Value Change” shall mean:

 

(i)            Average Share Price for the last twenty (20) business days of the Performance Period,

 

minus

 

(ii)           Beginning
Value,

 

plus 

 

(iii)          Dividends
(cash or stock based on ex-dividend date) paid per share of company common stock over the Performance Period.

 

(b)           “Beginning
Value” shall mean the Average Share Price for the twenty (20) business days preceding the beginning of the Performance
Period.

 

2.5           Average
Share Price. For purposes of determining the TSR used in the Performance Metric, the "Average Share Price"
means the average daily closing price of the shares on the NASDAQ Global Select Market (or if the company is not listed on the
NASDAQ Global Select Market, then on the principal securities exchange on which such shares are tracked) as published by a reputable
source over the relevant measuring period.

 

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2.6           Peer
Companies. For purposes of the Performance Metric for the relevant Performance Period, "Peer Companies" means
the companies listed on Schedule A. In the event a Peer Company ceases to be publicly traded at any point during the Performance
Period, the Administrator shall have full discretion to take any action it deems necessary or advisable in its sole and absolute
discretion in order to preserve the integrity of the Performance Metric and the incentive intended by this Agreement, including,
but not limited to, determining whether the Peer Company will be replaced with a new Peer Company, dropping such Peer Company
from the list of Peer Companies and calculating the Performance Metric without designating a replacement, treating the Peer Company
as being ranked in last place on the TSR list for the Performance Period (e.g. for bankrupt or other delisted companies), or determining
an alternate method of calculating TSR for such Peer Company (e.g. by calculating TSR through the date of acquisition of such
Peer Company, and then assuming TSR for the remainder of the period is determined based on an index). The Administrator need not
take the same action with respect to all Peer Companies that cease to be publicly traded during the Performance Period.

 

2.7           Award
Determination.

 

(a)           General.
At the end of the Performance Period, the Peer Companies and PDC shall be ranked together based on their TSR for the Performance
Period with the highest TSR being number 1 and the lowest TSR being the number of Peer Companies, including PDC, remaining in
the group at the end of the Performance Period. Based on PDC’s relative TSR rank among the Peer Companies for the Performance
Period, Executive will have earned Performance Shares as determined by PDC’s rank as follows:

 

		·	If PDC is ranked at or above the 90th percentile of the Peer Companies, including PDC, 200% of the Target Award

 

		·	If PDC is ranked at the 50th percentile or median of the Peer Companies, including PDC, 100% of the Target Award

 

		·	If PDC is ranked at the 25th percentile of the Peer Companies, including PDC, 50% of the Target Award

 

		·	If PDC is ranked below the 25th percentile of the Peer Companies, including PDC, no award will be paid

 

If PDC is ranked between
any of these payout levels, the percentage multiple of the Target Award will be interpolated based on the actual percentile ranking
of PDC (rounded to the nearest whole percentile) in relation to the payout levels.

 

(b)          Cap
if TSR is Negative. Notwithstanding Section 2.7(a), if PDC’s overall TSR is negative for the Performance Period, then
the number of Performance Shares earned will be the lesser of (i) one hundred percent (100%) of the Target Award, or (ii) the
number of Performance Shares determined in accordance with Section 2.7(a) based on PDC’s relative TSR rank during the Performance
Period.

 

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(c)           Floor
if TSR Meets Minimum Level. Notwithstanding Section 2.7(a), if PDC’s TSR over the Performance Period is at least 52.0875%
(i.e. 15% annualized), then the number of Performance Shares earned will be the greater of (i) 50% of the Target Award, or (ii)
the number of Performance Shares determined in accordance with Section 2.7(a) based on PDC’s relative TSR rank during the
Performance Period.

 

2.8          Termination of Continuous Employment Prior to End of Performance Period.

 

(a)           General.
If Executive’s continuous employment terminates for any reason other than for “Cause” (as defined in the Executive’s
employment agreement or severance compensation agreement with the Company, as applicable), then the Target Award and the right
to earn Performance Shares hereunder shall remain outstanding and unaffected by such termination of continuous employment. At
the end of the Performance Period, the Company shall determine the number of Performance Shares earned based on achievement of
the Performance Metric (without proration) and shall make payment to Executive pursuant to Section 2.9, below, or if earlier,
pursuant to Section 2.10(b) below. The Administrator shall determine in its reasonable discretion whether and when Executive’s
continuous employment with the Company or a Subsidiary (PDC and its Subsidiaries, post-Merger) has ended (including as a result
of any leave of absence).

 

(b)          Termination
for Cause. If Executive’s continuous employment is terminated for Cause, then Executive shall immediately forfeit any
and all rights under this Agreement and shall not be entitled to receive any PDC Shares or any other payment hereunder.

 

2.9           Payment
of Performance Shares.

 

(a)           Determination
of Results. Performance Shares earned for the Performance Period will be paid to the Executive only following the Administrator's
formal review and certification of the actual TSR performance results for the Performance Period, which formal review and certification
shall occur in time for payout to occur at the times set forth below.

 

(b)          Timing. Performance Shares payable to Executive pursuant to Section 2.3 or, except as otherwise provided for in Section
2.10(b) below, Section 2.8(a), will be paid in a lump sum to the Executive between January 1, 2022 and March 15, 2022.

 

(c)           Form
of Settlement. Payment in respect of earned Performance Shares pursuant to this Section 2.9 shall be made by distributing
a number of PDC Shares equal to the number of Performance Shares earned, or through payment of cash equal to the Fair Market Value
of such number of PDC Shares determined as of the last day of the Performance Period, or any combination thereof, as determined
by the Administrator in its sole discretion.

 

2.10         Change in Control.

 

(a)           Merger not a Change in Control. The Merger shall not be deemed to be a Change in Control under the Plan and shall
not affect in any way the earning, vesting, or payout of the Performance Shares.

 

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(b)          PDC
Change in Control. In the event of a “PDC Change in Control” (which shall mean a “Change in Control”
as defined in the PDC Energy, Inc. 2018 Equity Incentive Plan, as may be amended from time to time, that also qualifies as a “change
in control event” pursuant to Treasury Regulation 1.409A-3(i)(5)) prior to the end of the Performance Period, the Performance
Period shall be deemed to have ended on the date of the PDC Change in Control, and the Administrator shall determine the number
of Performance Shares to which Executive is entitled based on actual results through the date of the PDC Change in Control, with
the Performance Metric calculated by reference to the Average Share Price for the twenty (20) business days prior to the PDC Change
in Control (the number of Performance Shares determined pursuant to the foregoing being the “CIC Calculated Shares”).
The CIC Calculated Shares shall be paid within seventy-four (74) days following the date of the PDC Change in Control, by distributing
to the Executive a number of PDC Shares equal to the number of CIC Calculated Shares, or through payment of cash equal to the
Fair Market Value of the CIC Calculated Shares determined as of the date of the PDC Change in Control, or any combination thereof,
as determined by the Administrator in its sole discretion. Notwithstanding anything herein to the contrary, in the event the PDC
Shares cease to be outstanding or publicly traded as a result of a PDC Change in Control, the Administrator shall make such adjustments
as it deems necessary or appropriate in its sole and absolute discretion in order to preserve the incentive intended under this
Agreement, including, but not limited to, providing that payments of the CIC Calculated Shares shall be made solely in cash or
property (or any combination thereof) and that such payout shall be determined by reference to any of the following: (i) the Fair
Market Value of PDC Shares as of the date of the consummation of the PDC Change in Control, (ii) the consideration received in
the PDC Change in Control, (iii) securities of the acquirer or any parent or affiliate thereof, or (iv) such other metric as the
Administrator may determine in its discretion.

 

2.11        Tax
Withholding. Executive shall make arrangements with PDC to satisfy all applicable income and employment tax withholdings that
may result from the issuance of PDC Shares or the payment of cash hereunder, which withholdings may, if payment under Section
2.9 or 2.10 is made all or in part through the issuance of PDC Shares, be satisfied (at the election of Executive made prior to
the payment date): (i) by Executive paying to PDC directly in cash the amount of such withholdings, (ii) by having PDC withhold
from PDC Shares paid to Executive a number of PDC Shares necessary to satisfy such tax withholding obligations, or (iii) by a
combination of the foregoing methods; provided, however, that in the absence of an affirmative election by Executive prior to
the payment date, PDC shall satisfy such tax obligations pursuant to subsection (ii), above. In addition, to the extent provided
by the Plan, the Executive may elect to have PDC perform additional voluntary tax withholding through the withholding of PDC Shares
up to the maximum statutory tax rates in the Executive’s applicable jurisdictions.

 

2.12         Dividend
Equivalents. Executive shall be entitled to a cash payment with respect to each Performance Share earned and payable under
this Agreement in an amount equal to the ordinary cash dividends that would have been payable to Executive had Executive been
the owner of an actual PDC Share of stock (as opposed to a Performance Share) from the first day of the Performance Period through
the date the Performance Share is paid. Such cash payment shall be made in a single lump sum on the date on which payment is made
in respect of the related Performance Share.

 

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2.13         Stockholder
Rights. An Executive will not have any voting or other stockholder rights with respect to any Performance Shares. Executive
shall have full stockholder rights with respect to any PDC Shares issued as payment for Performance Shares.

 

2.14         Fractional Shares. PDC will not be required to issue any fractional PDC Shares pursuant to this Agreement. The Administrator
may provide for the elimination of fractions or for the settlement of fractions in cash.

 

Article
3

 

GENERAL

 

3.1           Capitalized
Terms. All capitalized terms shall have the meaning ascribed to them under this Agreement or, if not otherwise defined in
this Agreement, then such capitalized terms will have the meaning ascribed to them under the Plan.

 

3.2           Construction.
The provisions of this Agreement will be construed in a manner consistent with the Plan. In the event of any inconsistency between
the terms of this Agreement and the terms of the Plan, the terms of the Plan will control.

 

3.3           Compliance
with Section 409A of the Internal Revenue Code. Notwithstanding anything herein to the contrary, this Agreement, the Performance
Shares and all payments made hereunder are intended to comply with or be exempt from the requirements and provisions of Section
409A of the Code and the regulations promulgated thereunder and shall be construed and interpreted in a manner consistent with
such intent. Notwithstanding the foregoing, the Company does not guarantee that any payment under this Agreement complies with
or is exempt from Section 409A of the Code and the regulations promulgated thereunder, and neither the Company, its Subsidiaries
or affiliates, nor their respective executives, members, partners, directors, officer, or affiliates shall have any liability
with respect to any failure of any payments or benefits under this Agreement to comply with or be exempt from Section 409A of
the Code and the regulations promulgated thereunder. Notwithstanding anything in this Agreement to the contrary, if any provision
of this Agreement would result in the imposition of taxes under Section 409A of the Code and the regulations promulgated thereunder,
that provision may be reformed unilaterally by the Administrator, to the extent permissible under Section 409A of the Code and
the regulations promulgated thereunder, to avoid the imposition of the additional tax, and no such action shall be deemed to adversely
affect Executive’s rights with respect to the Performance Shares granted hereunder; provided, however that the Administrator
has no affirmative obligation to make any such reformation. In no event may Executive, directly or indirectly, designate the calendar
year of any payment made under this Agreement which constitutes a “deferral of compensation” within the meaning of
Section 409A of the Code and the regulations promulgated thereunder. Executive is solely responsible and liable for the satisfaction
of all taxes and penalties that may be imposed on or in respect of Executive in connection with the Performance Shares granted
hereunder (including any taxes or penalties under Section 409A of the Code).

 

3.4           Consent
Relating to Personal Data. Executive voluntarily acknowledges and consents to the collection, use, processing and transfer
of personal data as described in this Section even though Executive is not obliged to consent to such collection, use, processing
and transfer of personal data. The Company and its subsidiaries (PDC and its subsidiaries, post-Merger) hold, for the purpose
of managing and administering the Plan, certain personal information about Executive, including Executive’s name, home address
and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job
title, any shares or directorships held in the Company (or PDC, post-Merger), details of all equity awards or any other entitlement
to shares awarded, canceled, purchased, vested, unvested or outstanding in Executive’s favor (“Data”).
The Company and/or its subsidiaries (PDC and its subsidiaries, post-Merger) will transfer Data among themselves as necessary for
the purpose of implementation, administration and management of Executive’s participation in the Plan and the Company and/or
any of its subsidiaries (PDC and its subsidiaries, post-Merger) may each further transfer Data to any third parties assisting
in the implementation, administration and management of the Plan. These recipients may be located throughout the world, including
the United States. Executive authorizes them to receive, possess, use, retain and transfer the Data, in electronic or other form,
for the purposes of implementing, administering and managing Executive’s participation in the Plan, including any requisite
transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of PDC Shares on Executive’s
behalf to a broker or other third party with whom Executive may elect to deposit any PDC Shares acquired pursuant to the Plan.
Executive may, at any time, review Data, require any necessary amendments to it or withdraw the consents herein in writing by
contacting the Company (or PDC, post-Merger).

 

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3.5           Other
Employee Benefits. Except as specifically provided otherwise in any relevant employee benefit plan, program, or arrangement,
any amounts payable hereunder are not part of normal or expected compensation for purposes of calculating any severance, resignation,
redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments.

 

3.6           Electronic Delivery. EXECUTIVE HEREBY CONSENTS TO ELECTRONIC DELIVERY OF THE PLAN, AND ANY DISCLOSURE OR OTHER DOCUMENTS
RELATED TO THE PLAN, INCLUDING FUTURE GRANT DOCUMENTS (COLLECTIVELY, THE “PLAN DOCUMENTS”). THE COMPANY (OR
PDC, POST-MERGER) WILL DELIVER THE PLAN DOCUMENTS ELECTRONICALLY TO EXECUTIVE BY E-MAIL, BY POSTING SUCH DOCUMENTS ON ITS INTRANET
WEBSITE OR BY ANOTHER MODE OF ELECTRONIC DELIVERY AS DETERMINED BY THE COMPANY (OR PDC, POST-MERGER) IN ITS SOLE DISCRETION. EXECUTIVE
ACKNOWLEDGES THAT HE OR SHE IS ABLE TO ACCESS, VIEW AND RETAIN AN E-MAIL ANNOUNCEMENT INFORMING EXECUTIVE THAT THE PLAN DOCUMENTS
ARE AVAILABLE IN EITHER HTML, PDF OR SUCH OTHER FORMAT AS THE COMPANY (OR PDC, POST-MERGER) DETERMINES IN ITS SOLE DISCRETION.

 

3.7           Notices.
Any notice required or permitted to be given hereunder shall be in writing and shall be given by hand delivery, by e-mail, by
facsimile, or by first class registered or certified mail, postage prepaid, addressed, if to the Company (or PDC, post-Merger),
to its Corporate Secretary, and if to Executive, to Executive’s address now on file with the Company (or with PDC, post-Merger),
or to such other address as either may designate in writing. Any notice shall be deemed to be duly given as of the date delivered
in the case of personal delivery, e-mail, or facsimile, or as of the second day after enclosed in a properly sealed envelope and
deposited, postage prepaid, in a United States post office, in the case of mailed notice.

 

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3.8           Amendment.
This Agreement may be amended by the Administrator at any time without Executive’s consent if such amendment does not reduce
the benefits to which Executive was entitled. In all other cases, this Agreement may not be amended or otherwise modified unless
evidenced in writing and signed by the Company (or PDC, post-Merger) and Executive.

 

3.9           Construction;
Severability. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning
or interpretation of this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision hereof, and each other provision hereof shall be severable and enforceable to
the extent permitted by law.

 

3.10         Waiver.
Any provision contained in this Agreement may be waived, either generally or in any particular instance, by the Administrator
appointed under the Plan, but only to the extent permitted under the Plan.

 

3.11         Binding
Effect. This Agreement shall be binding upon and inure to the benefit of the Company (and to PDC, post-Merger) and to Executive
and their respective heirs, executors, administrators, legal representatives, successors and assigns.

 

3.12         Rights
to Employment. Nothing contained in this Agreement shall be construed as giving Executive any right to be retained in the
employ of the Company (or PDC, post-Merger) and this Agreement is limited solely to governing the parties’ rights and obligations
with respect to the Performance Shares.

 

3.13         Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado, without regard
to the choice of law principles thereof.

 

3.14         PDC
Policies to Apply. The sale of any PDC Shares received as payment hereunder is subject to PDC’s policies regulating
securities trading by employees, all relevant federal and state securities laws and the listing requirements of any stock exchange
on which the shares of the PDC’s common stock are then traded. In addition, Executive’s participation in the Plan
and receipt of remuneration as a result of the Performance Shares is subject in all respects to any relevant compensation clawback
policies that may be in effect from time to time.

 

3.15         Non-Compete.
As consideration for the Performance Share award granted hereunder, the Executive hereby acknowledges and agrees that Executive
shall not, either during the term of Executive’s employment by the Company (or PDC, post-Merger) or for a period of two
(2) year thereafter, engage in any Competitive Business (as defined below) within any county or parish in which the Company or
an affiliate owns an interest (whether by ownership, leasehold or otherwise) in any oil or natural gas properties or other properties
utilized by the Company in the operation of its business, or in any oil and gas property that is adjacent to or overlapping with
any such county or parish, in each case determined as of the closing of the Merger; provided, however, that the ownership of less
than five percent (5%) of the outstanding capital stock of a corporation whose shares are traded on a national securities exchange
or on the over-the-counter market shall not be deemed engaging in a Competitive Business. “Competitive Business”
shall mean the acquisition, development or production of crude oil and/or natural gas, or any other business activities that are
the same as or similar to the Company’s or an affiliate’s business operations as their business exists as of the closing
of the Merger.

 

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IN WITNESS WHEREOF,
the Company and Executive hereby execute this Agreement to be effective as of the day and year first above written.

 

	 	SRC ENERGY INC.
	 	 
	 	By:	 /s/ James P. Henderson
	 	 	James P. Henderson, Chief Financial Officer
	 	 
	 	Date: January 13, 2020

 

	 	EXECUTIVE
	 	 
	 	/s/ Lynn A. Peterson
	 	Lynn A. Peterson
	 	 
	 	Date:	 January 13, 2020

 

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SCHEDULE A

 

PEER COMPANIES

 

The following 14 companies
compromise the Peer Companies for the 2019 – 2021 Performance Period:

 

		·	Callon Petroleum Company (CPE)

		·	Carrizo Oil & Gas Inc. (CRZO)

		·	Centennial Resource Development Inc. (CDEV)

		·	Cimarex Energy Co. (XEC)

		·	Extraction Oil and Gas, Inc. (XOG)

		·	Jagged Peak Energy Inc. (JAG)

		·	Laredo Petroleum Holdings, Inc. (LPI)

		·	Matador Resources Company (MTDR)

		·	Oasis Petroleum Inc. (OAS)

		·	Parsley Energy, Inc. (PE)

		·	QEP Resources, Inc. (QEP)

		·	SM Energy Company (SM)

		·	SRC Energy Inc. (SRCI)

		·	WPX Energy, Inc. (WPX)ulh-ex101_7.htm

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

 

 

This Agreement (“Agreement”) is entered into as of January 10, 2020, by and between Universal Management Services, Inc. ("COMPANY") and Tim Phillips (“EMPLOYEE”), and the parties therefore agree as follows:

 

Subject to the terms and conditions contained in this Agreement and during the Term of this Agreement (as defined below), COMPANY hereby employs EMPLOYEE in the position of “President & Chief Executive Officer” with such duties and responsibilities as are commensurate with such office and may from time-to-time be assigned to EMPLOYEE by COMPANY.  

 

EMPLOYEE hereby accepts such employment as a full time employee, and while employed, shall devote his or her full business time, skills, energy and attention to the business of COMPANY, shall perform his duties in a diligent, loyal, businesslike and efficient manner, all for the sole purpose of enhancing the business of COMPANY, and in a manner consistent with all COMPANY policies, resolutions and directives from time to time stated or made by the COMPANY.  Moreover, EMPLOYEE shall perform such services and duties as are consistent with EMPLOYEE’s position, are necessary or appropriate for the operation and management of COMPANY, and as are normally expected of persons appointed to executive positions in the business in which COMPANY is engaged.  

 

1.Compensation for Services.

 

COMPANY shall pay to EMPLOYEE an annual base salary of $500,032.00 (“Base Salary”) as COMPANY’s President & Chief Executive Officer.

 

Your 2019 Bonus Award which will be paid out in the March / April, 2020 time frame will be for $240,000.00 which is paid according to our standard executive bonus plan, 20% at time of payout and 20% over the following 4 years. 

You will be awarded 60,000 shares of restricted stock:

2020 – 20,000 shares that would mature in 2024

2021 – 20,000 shares that would mature in 2026

2022 – 10,000 shares that would mature in 2027

2023 – 10,000 shares that would mature in 2028

You have to be and an active employee or retired at age 65 or older to receive your residual bonus payouts and for your restricted stock to vest. We have agreed to an exception in your case that you may retire at age 62 with the understanding that Section 5, Covenant Not To Compete extends to November 6, 2030.

 

 

 

 

Base Salary shall be payable in equal installments pursuant to COMPANY’s payroll system in effect from time to time, less all applicable taxes required to be withheld by COMPANY pursuant to federal, state or local law. 

 

EMPLOYEE will be reviewed annually for changes in Base Salary and eligibility for a performance bonus, if any.  Your next review for a Base Salary change will be in December 2021.

 

2.Benefits.

 

EMPLOYEE shall be entitled to fringe benefits provided by COMPANY for its employees in the normal course of business.  

 

3.Business Expenses.

 

COMPANY shall reimburse EMPLOYEE for all reasonable and necessary business expenses incurred by EMPLOYEE  in the performance of his or her duties hereunder with respect to travel, entertainment and other business expenses, subject to COMPANY’s business expense policies in effect from time to time, including its procedures with respect to the manner of incurring, reporting and documenting such expenses.

 

4.Proprietary Information

 

a.EMPLOYEE shall forever hold in the strictest confidence and not disclose to any person, firm, corporation or other entity any of COMPANY’s Proprietary Information (as defined below) or any of COMPANY’s Records (as defined below) except as such disclosure may be required in connection with EMPLOYEE’s work for COMPANY and as expressly authorized by COMPANY in writing.

 

b.For the purposes of this Agreement, the term “Proprietary Information” shall mean intercompany publications, unpublished works, plans, policies, computer and information systems, software and other information and knowledge relating or pertaining to the products, services, sales or other business of COMPANY or its successor, affiliates and customers in any way which is of a confidential or proprietary nature, the prices it obtains or has obtained from the sale of its services, its manner of operation, its plans, processes or other data, contracts, information about contracts, contract forms, business applications, costs, profits, tax information, marketing information, advertising methods, customers, potential customers, brokers, potential brokers, employees, matters of a technical nature (including inventions, computer programs, concepts, developments, contributions, devices, discoveries, software and documentations, secret processes or machines, including any improvements thereto and know-how related thereto, and research projects, etc.), and other information not generally available to the public, without regard to whether all of the foregoing matters will be deemed confidential, material or important.  Anything to the contrary notwithstanding, the parties hereto stipulate that any and all knowledge, data and information gathered by EMPLOYEE through this Agreement, his employment with COMPANY and the operation of the business of COMPANY is deemed important, material or confidential, and gravely affects the effective and successful conduct of the business of COMPANY and COMPANY 's good will; could not without great expense and difficulty be obtained or duplicated 

2

 

 

by others who have not been able to acquire such information by virtue of employment with COMPANY; and that any breach of the terms of this Paragraph 4 shall be deemed a material breach of this Agreement.  

 

c.EMPLOYEE agrees that all creative work, including without limitation, designs, drawings, specifications, techniques, models, processes and software prepared or originated by EMPLOYEE during or within the scope of employment whether or not subject to protection under the federal copyright or other law constitutes work made for hire all rights to which are owned by COMPANY.  Moreover, EMPLOYEE hereby assigns to COMPANY all right, title and interest whether by way of copyright, trade secret, patent or otherwise, and all such work whether or not subject to protection by copyright or other law.  

 

d.Upon termination of employment with COMPANY or at any other time requested by COMPANY, EMPLOYEE shall immediately return to COMPANY and not retain any copies of, any records, data, lists, plans, policies, publications, computer and information systems, files, diagrams and documentation, data, papers, drawings, memos, customer records, reports, correspondence, note books, service listing and any other business record of any kind or nature (including without limitation records in machine-readable or computer-readable forms) relating to Proprietary Information (“Records”).

 

e.EMPLOYEE acknowledges that, to the extent COMPANY derives independent economic value from any of its Proprietary Information and takes reasonable measures to maintain its secrecy, such Proprietary Information will be considered a trade secret under applicable law. EMPLOYEE further acknowledges that under the Defend Trade Secrets Act of 2016, an individual may not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (1) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (2) is made in a complaint or other document that is filed under seal in a lawsuit or other proceeding. EMPLOYEE further acknowledges that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the employer's trade secrets to the attorney and use the trade secret information in the court proceeding if the individual: (1) files any document containing the trade secret under seal; and (2) does not disclose the trade secret, except pursuant to court order.

 

5.Covenant Not To Compete / Not To Solicit:

 

a.As a material part of the consideration for this Agreement, EMPLOYEE agrees for a twelve (12) month period following the termination of EMPLOYEE's employment with COMPANY for any reason; Employee agrees he will not directly or indirectly, in whole or in part, as an employee, employer, owner, operator, manager, advisor, consultant, agent, partner, director, stockholder, officer, volunteer, or intern, compete in any other similar capacity to an entity engaged in the same or similar business as the COMPANY, including those that specialize in the multiple facets of supply chain including but not limited to Intermodal Transportation, Truckload Transportation, Value Added Services, Brokerage Services and Supply Chain Management within Mexico, The United States and Canada.  EMPLOYEE also agrees that he or she will not, either solely or jointly with, or as manager or agent for, any person, corporation, trust, joint venture, 

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partnership, or other business entity, directly or indirectly, approach or solicit for business, accept business from, divert business from, or otherwise interfere with any COMPANY or Affiliated Companies relationship with, any person or entity (or legal successor to such person or entity) that Employee had any direct contact with while employed by the COMPANY and that: (a) has been a customer of COMPANY or any of the Affiliated Companies at any time within the six (6) month period prior to EMPLOYEE’s termination; or (b) to whom COMPANY or one of the Affiliated Companies had made a proposal within the six (6) month period prior to EMPLOYEE’s termination.  In the event EMPLOYEE is terminated pursuant to Section 8 subsection (d) the Covenant Not to Compete will be for a period of twelve (12) months.  Anything contrary notwithstanding, this Paragraph 5 shall survive after the termination or the earlier cancellation of this Agreement.

 

b.Both parties agree that the restrictions in this section are fair and reasonable in all respects including the length of time that they shall remain in effect and that COMPANY’s employment of EMPLOYEE upon the terms and conditions of this Agreement is fully sufficient consideration for EMPLOYEE's obligations under this section.  

 

c.If any provisions of this section are ever held by a Court to be unreasonable, the parties agree that this section shall be enforced to the extent it is deemed to be reasonable.

 

6.No Interference With Employment Relationships

	

	
EMPLOYEE agrees that, during his or her employment, and for a period of twenty-four (24) months after his employment has terminated, for any reason, EMPLOYEE will not, directly or indirectly, solicit for employment, hire, or offer employment to, or otherwise aid or assist any person or entity other than COMPANY, in soliciting for employment, hiring, or offering employment to: (a) any employee of COMPANY, Affiliated Companies, or any independent contractor engaged by COMPANY  or Affiliated Companies; or (b) any former employee or independent contractor of COMPANY or Affiliated Companies who was employed, or engaged, by COMPANY or Affiliated Companies within six (6) months before or after the cessation of EMPLOYEE’s employment.  In the event EMPLOYEE hires an employee of COMPANY, COMPANY shall be compensated at a fee equal to 30% of the EMPLOYEE's first year's gross compensation.  This paragraph 6 also applies to employees of companies on Exhibit A.  

 

7.Equitable Relief And Remedies At Law

 

EMPLOYEE acknowledges that COMPANY would suffer unique and irreparable injury in the event of a breach of the covenants contained in Sections 4, 5 and 6 of this Agreement, which breach could not be adequately compensated by the payment of damages alone.  Accordingly in the event of any such breach by EMPLOYEE, EMPLOYEE agrees that this Agreement may be enforced by a decree of specific performance or an injunction without the necessity of posting a bond in addition to any remedies available at law, including damages arising out of or relating to a breach of those covenants, and that any remedy which COMPANY might have at law would be inadequate by itself.  

 

8.Termination of Agreement

 

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a.Without limitation of any other remedy available to COMPANY, whether in law or in equity, EMPLOYEE’s employment relationship shall terminate immediately without any further liability of COMPANY to EMPLOYEE, upon written notice from COMPANY to EMPLOYEE, for Just Cause.  For purpose of this Agreement, “Just Cause” means:  conviction of a crime, moral turpitude, gross negligence in the performance of duties, intentional failure to perform duties, failure to perform duties as designated in this agreement, insubordination or dishonesty.  In the event of EMPLOYEE’s termination pursuant to this Section 8(a), COMPANY shall have no obligation to pay Base Salary, bonuses, or benefits after date the employment relationship is terminated.

 

b.EMPLOYEE’s employment relationship shall terminate immediately upon death of EMPLOYEE.

 

c.EMPLOYEE agrees to submit to a medical examination at any time at COMPANY's request and expense.  The medical examination will be related to EMPLOYEE's job and consistent with a business necessity of COMPANY.  This Agreement may be terminated by COMPANY immediately upon written notice to EMPLOYEE if the examination reveals that EMPLOYEE is unable to perform the essential functions of this Agreement even with a reasonable accommodation.  The Agreement may also be terminated if, for a period of three (3) consecutive months, EMPLOYEE is unable to perform the essential functions of the Agreement even with a reasonable accommodation. Upon such termination due to medical disability, EMPLOYEE's compensation shall be continued for three (3) months from the date of disability. In addition, EMPLOYEE will receive any residual bonus earned but not paid.  Residual bonus to be paid in normal course of business

 

d.Upon the determination by COMPANY that the best interests of COMPANY would be served, COMPANY shall have the further right to terminate EMPLOYEE’s employment relationship immediately or at any time, at its option upon written notice to EMPLOYEE, without Just Cause.  If EMPLOYEE is terminated pursuant to this Section 8(d), EMPLOYEE shall be entitled to receive only Base Salary and COBRA for a period of twleve (12) months following such termination, provided that EMPLOYEE signs the provided Separation Agreement (similar to the attached separation agreement) within 21 days.

 

e.Any compensation payable to EMPLOYEE pursuant to this Section 8 following termination pursuant to subsection (d) of this Section 8 shall be reduced by the amount of any compensation earned by EMPLOYEE in any employment or consulting he may undertake during said period that constitutes a violation of Section 7 respecting non-competition.

 

f.Upon three months’ prior written notice to COMPANY at any time, EMPLOYEE shall have the right to terminate his employment relationship with COMPANY at his option.  Upon receipt of such notice, COMPANY shall have the option to terminate EMPLOYEE’s employment relationship immediately upon written notice to EMPLOYEE.  In the event of termination pursuant to this Section 8(f), EMPLOYEE shall be entitled to receive Base Salary only through the three (3) month period following EMPLOYEE’s notice of termination.  The time period on the covenant not to compete shall commence at the end of the three (3) month period, and EMPLOYEE shall also be bound by the covenant not to compete during the three (3) month period he is receiving 

5

 

 

Base Salary.  EMPLOYEE shall be liable for all costs and expenses incurred by COMPANY for the failure to give three (3) months' notice.  

 

g.Upon termination of this Agreement by COMPANY, EMPLOYEE shall, without a claim for compensation, provide COMPANY with written resignations from any and all offices held by his in or at the request of COMPANY, and in the event of his failure to do so, COMPANY is hereby irrevocably authorized to be, or designated as EMPLOYEE’s attorney in fact, to act in his name and in his behalf to execute such resignations.

 

9.No Restriction on Performance of Services Contemplated by Agreement

 

EMPLOYEE represents and warrants to COMPANY that:  (i) EMPLOYEE is under no contractual or other restriction which would give a third party a legal right to assert that EMPLOYEE would not be legally permitted to perform the services contemplated by this Agreement; and (ii) by entering into this Agreement EMPLOYEE has not breached, and by performing the services contemplated by this Agreement, shall not breach, any Agreement or duty relating to proprietary information of another person or entity. It shall be considered cause for termination under Section 8(a) if the EMPLOYEE is under a contractual or other restriction which prevents the EMPLOYEE from performing services upon which they are hired to perform.

 

10.Severability

 

In case any one or more of the provisions hereof shall be held to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.  To the extent possible, there shall be deemed substituted such other provision as will most nearly accomplish the intent of the parties, to the extent permitted by applicable law.

 

11.Entire Agreement

 

This Agreement embodies all the representations, warranties, covenants and agreements of the parties in relation to the subject matter hereof, and no representations, warranties, covenants, understandings, or agreements, unless expressly set forth herein or in an instrument in writing signed by the party to be bound thereby which makes reference to this Agreement, shall be considered effective.

 

12.No Rights in Third Parties

 

Nothing herein expressed or implied is intended to, or shall be construed to confer upon, or give to any person, firm or other entity other than the parties hereto any rights or remedies under this Agreement, except as provided in Section 14.

 

13.Assignment

 

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COMPANY may assign its rights and delegate its responsibilities under this Agreement to any affiliated company or to any corporation which acquires all or substantially all of the operating assets of COMPANY by merger, consolidation, dissolution, liquidation, combination, sale or transfer of assets or stock or otherwise. EMPLOYEE shall not be entitled to assign his or her rights or delegate his or her responsibilities under this Agreement to any person.

 

14.Payment to Estate

 

No person, firm or entity shall have any right to receive any payments owing to EMPLOYEE hereunder, except that EMPLOYEE’s estate shall be entitled to receive a final payment of installment of Base Salary for services rendered to COMPANY through date of death, reimbursement for any business expenses previously incurred by EMPLOYEE for which he or she would have been entitled to reimbursement hereunder, and any residual bonus earned but not paid.  Any residual bonus shall be paid in normal course of business.

 

15.Amendment

 

No modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto.

 

16.Survival of Covenants

 

Without limitation of any other provisions of this Agreement, all representations and warranties set forth in this Agreement and the covenants set forth in Sections 4, 5 and 6 shall survive the termination of this Agreement for any reason for the maximum period permitted by law.

 

17.Governing Law

 

This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Michigan. The parties agree that should any litigation arise out of, in connection with, or relating to this Agreement, such litigation will be commenced in a the Circuit Court for Macomb County Michigan or in the United States District Court for the Eastern District of Michigan provided such court has subject matter jurisdiction and venue.  

 

18.Notices.  

 

Service of all notices under this Agreement must be given personally to the party involved at the address set forth below or at such other address as such party shall provide in writing from time to time.  

 

 

 

COMPANY:Universal Management Services, Inc. 

12755 E. 9 Mile Rd.

Warren, MI  48089

7

 

 

 

EMPLOYEE:Tim Phillips           Tim Phillips

48250 Madeline Ct.  or     12755 E. 9 Mile Rd.

Canton, MI  48187            Warren, MI  48089

(existing address)           (principal executive offices)

 

19.Section Headings

 

The titles to the Sections of this Agreement are for convenience of the parties only and shall not affect in any way the meaning or construction of any Section of this Agreement.  

 

20.Non-Waiver.

 

No covenant or condition of this Agreement may be waived except by the written consent of COMPANY.  Forbearance or indulgence by COMPANY in any regard whatsoever shall not constitute a waiver of the covenants or conditions to be performed by EMPLOYEE to which the same may apply, and, until complete performance by EMPLOYEE of said covenant or condition, COMPANY shall be entitled to invoke any remedy available to COMPANY under this Agreement or by law or in equity, despite said forbearance or indulgence.  

 

21.Construction

 

Although this Agreement was drafted by COMPANY, the parties agree that it accurately reflects the intent and understanding of each party and should not be construed against COMPANY if there is any dispute over the meaning or intent of any provisions.  

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.

 

		
	
UNIVERSAL MANAGEMENT SERVICES, INC. 
	
 

	
 
	
 

	
 
	
 

	
/s/ Pete J. Dwyer Jr.                                   
	
By: /s/ Tim Phillips                                              

	
President HR-1 
	
Tim Phillips

	
On Behalf of Universal Mgt. Services
	
 

 

8

 

 

EXHIBIT A

 

1.Central Transport, LLC.

2.Universal Logistics Holdings Inc.

	
 
	
3.
	
P.A.M. Transport, Inc. Conlan Tire Co LLC

	
 
	
4.
	
Conlan Tire Co LLC

	
 
	
5.
	
This will include all entities under common ownership to the above companies and/or their successors.

 

 

 

 

 

 

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