Document:

CQB 10K - Exhibit 10.28 Huston Sep Agree

         Exhibit 10.28
SEPARATION AGREEMENT
The following is an agreement (the “Agreement”) executed as of December 11, 2012, between Joseph M. Huston (“Employee”) and Chiquita Brands International, Inc. (the “Company”) with respect to Employee’s separation from the Company.
In consideration of the mutual promises contained in this Agreement, the Company and Employee agree as follows:
1.Employee will separate from the service of, and will resign as an officer and employee of the Company and all of its subsidiaries and affiliates on December 31, 2012, which shall be his last day of employment with the Company (the “Separation Date”).  Effective as of the Separation Date, Employee hereby resigns all his positions as director, officer or otherwise with respect to the Company and its subsidiaries.  The Company and Employee agree that, from and after the Separation Date (and notwithstanding the provisions of Sections 4(a) and 4(f) hereof), Employee will not perform services for the Company or its subsidiaries and affiliates to any extent which would result in Employee's separation not being treated as a separation from service for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).
2.    In accordance with its normal payment schedule, the Company shall pay to Employee his normal salary through the close of business on the Separation Date, subject to all normal withholdings and taxes.  Employee shall accrue vacation through the Separation Date and the Company shall pay to Employee in a lump sum all remaining earned and accrued, banked and/or carryover vacation pay due in accordance with the Company’s paid time off policy.  Upon the payments of such amounts, Employee will have been paid all amounts due for salary and for earned and accrued, banked and/or carryover vacation pay as of the Separation Date.  Such amount shall be paid on the normal payment date for the pay period immediately following the Separation Date. 
3.    Company’s Obligations. Subject to Employee's satisfaction of Employee's obligations under Section 4 and 15 hereof:
(a)    Cash Benefit. The Company will pay Employee a cash benefit of $629,000 (“Cash Benefit”), which amount is equivalent to the sum of Employee’s current annual base salary and annual bonus target.  In order to ensure compliance with the provisions of Section 409A of the Internal Revenue Code, the Employee will receive his Cash Benefit as follows: (A) $314,500 will be paid in a lump sum on the first payroll date following the sixth month anniversary of the Separation Date and (B) the remainder of Employee’s Cash Benefit will be paid in equal bi-weekly installments, beginning with the first payroll date following the sixth month anniversary of the Separation Date and ending on the one year anniversary of the Separation Date.
(b)    Relocation Lump Sum Payment Forgiveness.  Company shall waive any rights of reimbursement or repayment with respect to the $46,550 lump sum 

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relocation expenses payment made to Employee in connection with his anticipated relocation to Charlotte, North Carolina.
(c)    Pro-Rata Annual Bonus.  Employee shall be eligible to receive a bonus for the 2012 performance year.  The amount will be determined as if Employee’s employment had not terminated and based on the Company’s actual performance for purposes of the Company’s Management Incentive Plan (“MIP”) as determined by the Company pursuant to the MIP for all other MIP-eligible employees.  The amount, if any, will be paid on February 15, 2013, or as soon as administratively feasible thereafter, or the date on which MIP bonus payments are made to other MIP-eligible employees for the 2012 performance year, whichever is later (but not later than December 31, 2013).  For purposes of determining the amount of the MIP bonus payment, if any, Employee shall be deemed to have performed at a “meets expectations” performance level carrying an “Individual Performance Factor” of 100 or better.
(d)    Health Benefits.  Employee will retain any health benefits coverage in which he is enrolled through the Separation Date.  If Employee extends the medical and/or dental and/or vision benefits in which he is enrolled as of the Separation Date by timely electing coverage under COBRA (which right is not contingent upon his effectiveness of this Agreement), the Company will pay the full premium for COBRA coverage for the first twelve months after the Separation Date.  For the remaining balance of the COBRA period, Employee will be responsible for paying the full premium for COBRA coverage in effect from time to time, in accordance with the ordinary terms and conditions applicable to COBRA coverage.  All other benefits in which Employee is enrolled or eligible as of the Separation Date will cease as of the Separation Date.
(e)    Outplacement Service; Legal Fees.  Employee will receive 12 months of career transition services through DHR International, commencing on the Separation Date.  The outplacement service will be forfeited if Employee does not initiate outplacement services within thirty (30) days following the Separation Date.  The outplacement service will not be exchangeable for any other payment or benefit.  The Company will reimburse Employee up to an aggregate of $10,000 for legal fees incurred by Employee in connection with the negotiation and execution of this Agreement, which reimbursement shall be made in a lump sum within 60 days following the Separation Date.
(f)    Restricted Stock.  17,346 shares of unvested restricted stock units previously granted to Employee under the Company’s Stock and Incentive Plan shall vest upon the satisfaction by Employee of his obligations under Section 15 hereof and will be delivered to Employee as soon as administratively practicable thereafter during 2013, provided, however that the shares will not be delivered to Employee until the earliest date permissible which would not result in a violation of Section 409A of the Internal Revenue Code.
(g)    Defined Contribution Plan Benefits.  The Company acknowledges that Employee is fully vested in his accounts under the Company’s Capital Accumulation Plan (the “CAP”).  The full amount of Employee’s Deferral Contribution account (including earnings therein) under the CAP, and the portions of his other accounts 

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(including earnings therein) under the CAP which vested prior to January 1, 2005, if any, shall be paid to Employee in accordance with the terms of the CAP, as amended so as to comply with the provisions of Section 409A of the Internal Revenue Code.  The Company acknowledges that Employee is fully vested in his accounts under the Company’s Savings and Investment Plan (the “SIP”).  The full amount of Employee’s accounts (including earnings therein) under the SIP shall be paid to Employee in accordance with the terms of the SIP. Notwithstanding any provision of the CAP or SIP to the contrary, Employee shall remain eligible to receive any Company matching contributions or credits to the CAP and the SIP with respect to the 2012 plan year, with the amount of any such match to be based on compensation paid to Employee through the Separation Date and otherwise eligible for Company matching contributions under the terms of the applicable plan. Any such contributions or credits shall be credited under the CAP and the SIP, as the case may be at the time applicable to active plan participants under the applicable plan and shall only be made if such contributions or credits are provided to active plan participants with respect to the 2012 plan year.  Notwithstanding the foregoing, Company reserves the right to pay Employee an equivalent amount outside the CAP or SIP.  
(h)    Insurance.  The Company shall not cancel any coverage for Employee under any director and officer liability insurance policy otherwise maintained by the Company with respect to any other current or former officers and directors and shall not discriminate against Employee vis-à-vis other officers and former officers in any purchase or renewal of any such policy or any purchase of an extended reporting period under a policy that is not renewed.
(i)    Tax Assistance.  Due to the continuing potential tax impact of Employee’s prior expatriate posting to the United Kingdom, Company will provide tax assistance and payment or equalization benefits, including tax assistance and tax return preparation and filing, for the 2012 tax year, to the same extent as such benefits would have been provided to Employee had his employment not been terminated.  
4.    Employee’s Obligations.
(a)    Employee will transfer his responsibilities in an appropriate manner and use reasonable best efforts to effect a smooth transition;
(b)    Employee will not following the date hereof represent or bind the Company or any of its subsidiaries or enter into any agreement on behalf of the Company or any of its subsidiaries;
(c)    Employee will return to the Company no later than the Separation Date his Company credit cards, keys, identification cards, iPad and laptop computer (if applicable);
(d)    Employee will return to the Company no later than the Separation Date all other Company property and materials, including but not limited to computer hardware and accessories, computer software disks or other media, computer files, books, documents, records and memoranda;

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(e)    Employee will no later than the Separation Date repay all cash advances and file a final expense report;
(f)    Employee will fully cooperate and assist the Company with any litigation matters or agency proceedings for which Employee’s testimony or cooperation is requested (including following the Separation Date), provided that Employee is compensated for any reasonable and necessary expenses incurred or actual income lost as a result of his cooperation and assistance.
(g)    At the Company's request, Employee will (i) sign all necessary documents to effect Employee’s resignation from all director, officer or other positions with the Company and its subsidiaries, as well as any such positions with joint venture companies and other companies in which the Company and its subsidiaries have a direct or indirect ownership interest and (ii) sign all documentation, and take any other action, necessary to transfer to the Company’s designee all title or other interest Employee has in “nominee” or similar shares of any company in which Chiquita has a direct or indirect ownership interest, if any. 
(h)     Without limiting the provisions of any confidentiality or similar agreement in effect between Employee and the Company or a subsidiary, from and after the Separation Date, Employee will hold in a fiduciary capacity for the sole benefit of the Company all information, knowledge or data relating to the Company or any of its subsidiaries and their respective businesses and investments, including investments in joint ventures, which information, knowledge or data the Company or any of its subsidiaries consider to be proprietary, confidential, or not public knowledge (including but not limited to trade secrets) that Employee obtains or has previously obtained during Employee’s employment by the Company or any of its subsidiaries (“Proprietary, Confidential or Non-Public Information”), provided, however, that Proprietary, Confidential or Non-Public Information shall not include information that is now or later becomes part of the public domain, unless such information becomes part of the public domain as a result of any action or inaction on the part of Employee.  Until and from and after the Separation Date, Employee will not, except as required by applicable law, directly or indirectly use, communicate, divulge or disseminate any Proprietary, Confidential or Non-Public Information for any purpose not authorized by the Company or its subsidiaries, or for any purpose not related to the performance of Employee’s work for the Company or any of its subsidiaries.  Neither the Company’s senior executive officers or directors nor Employee shall by speech or actions disparage the other party; provided, however, that nothing herein shall prevent either party from responding truthfully in any legal or regulatory proceeding.  At any time requested by the Company or any of its subsidiaries, and in any event on or prior to the Separation Date, Employee shall return all copies of all documents, materials or information in any form, written or electronic or otherwise, that constitute, contain, refer or relate to any Proprietary, Confidential or Non-Public Information.

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(i)    For a period of one year after the Separation Date, Employee will not, without the written consent of the Company, directly or indirectly, engage in, invest in or participate in any business or activity conducted by those entities listed on Appendix A hereto (any such company a “Competing Business”), whether as an employee, officer, director, partner, joint venturer, consultant, independent contractor, agent, representative, shareholder or in any other capacity (other than as a holder of less than five percent (5%) of any class of publicly traded securities of any such Competing Business).   
(j)    For a period of one year after the Separation Date, Employee will not, without the written consent of the Company, directly or indirectly, solicit, entice, persuade or induce, or attempt to solicit, entice, persuade or induce (i) any customer, supplier, distributor or other person or entity that has a business relationship, contractual or otherwise, with the Company or any of its subsidiaries (or any of their respective joint ventures) to direct or transfer away from the Company or any of its subsidiaries (or such joint ventures), or eliminate, interfere with, disrupt or reduce or modify to the detriment of the Company or any of its subsidiaries (or such joint ventures) any business, patronage or source of supply, or (ii) any person to leave the employment or service of the Company or any of its subsidiaries (or any such joint ventures) (other than persons employed in a clerical, non-professional or non-managerial position).
(k)    Employee understands and agrees that the restrictions set forth in paragraphs (h), (i) and (j) above, including, without limitation, the duration and scope of such restrictions, are reasonable and necessary to protect the legitimate business interests of the Company and its subsidiaries.  Employee further agrees that the Company will be entitled to seek and obtain injunctive relief against Employee in the event of any actual or threatened breach of such restrictions, and Employee hereby consents to the exercise of personal jurisdiction and venue in a federal or state court of competent jurisdiction located in Mecklenberg County, North Carolina, and Employee agrees not to initiate any legal action relating to the subject matter hereof in any other forum.  Employee understands and agrees that this Agreement shall be construed and enforced in accordance with the laws of the State of Ohio applicable to contracts executed in and to be performed in that State.  If any provision of this Agreement is determined to be unenforceable or unreasonable by any Court, then such provision will be modified or omitted only to the extent necessary to make such provisions and the remaining provisions of this Agreement enforceable.
5.    General Release.  In exchange for the payments and benefits identified in the Agreement, which Employee acknowledges are in addition to anything of value to which he is already entitled, Employee hereby releases, settles and forever discharges the Company, its parent, subsidiaries, affiliates, joint venture companies, successors and assigns, together with their past and present directors, officers, employees, agents, insurers, attorneys, and any other party associated with the Company, to the fullest extent permitted by applicable law, from any and all claims, causes of action, rights, demands, debts, liens, liabilities or damages of whatever nature, whether known or unknown, suspected or unsuspected, which Employee ever had or may now have against the Company or any of the foregoing.  This includes, without limitation, any claims, liens, demands, or liabilities arising out of or in any way connected with Employee’s 

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employment with the Company and the termination of that employment, pursuant to any federal, state or local laws regulating employment such as the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993 and the Civil Rights Act known as 42 USC 1981, the Employee Retirement Income Security Act of 1974 (“ERISA”), the Worker Adjustment and Retraining Notification Act (“WARN”), the Fair Labor Standards Act of 1938, as well as all federal, state and local laws, except that this release shall not affect any rights of Employee for benefits payable under any Social Security, Worker’s Compensation or Unemployment laws.  Employee acknowledges and agrees that the payments and benefits payable pursuant to this Agreement are in lieu of any payments or benefits which may otherwise be due to Employee in connection with Employee's separation or termination of employment, including the Chiquita Brands International, Inc. Executive Officer Severance Pay Plan.  Employee shall not be entitled to any recovery, in any action or proceeding that may be commenced on the Employee's behalf in any way arising out of or relating to the matters released under Section 5 or Section 6 hereof.  Notwithstanding the foregoing, nothing herein shall release the Company from any claim based on (i) Employee's vested benefits under the employee benefit plans of the Company or (ii) Employee's eligibility for indemnification in accordance with applicable laws or the certificate of incorporation or by-laws of the Company (or any affiliate or subsidiary).
6.    Waiver and Release Under ADEA and OWBPA.  Employee further expressly and specifically waives any and all rights or claims under the Age Discrimination in Employment Act of 1967 and the Older Workers Benefit Protection Act (collectively the “Act”).  Employee acknowledges and agrees that this waiver of any right or claim under the Act (the “Waiver”) is knowing and voluntary, and specifically agrees as follows: (a) that this Agreement and this Waiver is written in a manner which he understands; (b) that this Waiver specifically relates to rights or claims under the Act; (c) that he does not waive any rights or claims under the Act that may arise after the date of execution of this Agreement; (d) that he waives rights or claims under the Act in exchange for consideration in addition to anything of value to which he is already entitled; and (e) that he is advised in writing to consult with an attorney prior to executing this Agreement.
7.    It is understood and agreed that for purposes of this Agreement, the term “Company” as used herein, shall include not only Chiquita Brands International, Inc., but also all of its direct or indirect subsidiaries or affiliated companies.
8.    This Agreement shall bind the Employee’s heirs, executors, administrators, personal representatives, spouse, dependents, successors and assigns.
9.    This Agreement shall not be construed as an admission by the Company of any wrongdoing or any violation of any federal, state or local law, regulation or ordinance, and the Company specifically disclaims any wrongdoing whatsoever against Employee on the part of itself, its employees, representatives or agents.
10.    Neither this Agreement, nor any right or interest hereunder, shall be assignable by Employee, his beneficiaries or legal representatives without the prior written consent of an officer of the Company.  

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11.    This Agreement shall in all respects be interpreted, enforced and governed by the laws of the State of North Carolina.  Except as otherwise provided in paragraph 4(k) of this Agreement, the parties agree that any controversy or claim arising out of or relating in any manner to this Agreement or to Employee’s relationship with the Company shall be settled by arbitration administered by the American Arbitration Association under its Employment Dispute Resolution Rules and in accordance with the Due Process Protocol for Mediation and Arbitration of Statutory Disputes Arising Out of the Employment Relationship, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
12.    If any provision of this Agreement is determined to be unenforceable by any court, then such provision will be modified or omitted to the extent necessary to make the remaining provisions of this Agreement enforceable.
13.    The Company may withhold from amounts payable under this Agreement all federal, state, local, and foreign taxes that are required to be withheld by applicable laws or regulations.  
14.    Employee and the Company intend for the provisions of this Agreement to comply with the requirements of Section 409A and the Company and Employee have no reason to believe that the provisions of this Agreement violate such section.
15.    This Agreement is effective as of the date hereof.  However, the obligations of the Company under Section 3 hereof will not become effective unless following the Separation Date Employee re-affirms in writing his agreement to the provisions of this Agreement and re-executing Sections 5 and 6 hereof, as of a date following the Separation Date.  Employee acknowledges that he understands that (a) he has twenty one (21) days after receipt of this Agreement to decide whether to accept it and that he may revoke any acceptance of this Agreement within (7) days of such acceptance and (b) he will have 21 days following the Separation Date to decide whether to complete the re-execution and re-affirmation described in the preceding sentence and may revoke such re-execution and re-affirmation within 7 days of such re-execution and re-affirmation.  The obligations of the Company under this Agreement shall not become effective until the second seven (7) day revocation period has expired.  
Notwithstanding the foregoing, and provided that the obligations set forth in this Agreement have otherwise been complied with fully, the provisions of this Section 15 shall be subject to the following:
(a)If Employee dies or becomes disabled prior to the Separation Date, this Agreement shall remain in full force and effect notwithstanding the fact that Employee has not executed a document re-affirming his agreement to the provisions of this Agreement and re-executing Sections 5 and 6 hereof; and
(b)Upon Employee’s re-affirmation of his agreement to the provisions of this Agreement and re-execution of Sections 5 and 6 hereof effective as of the Separation Date, the Agreement shall remain in full force and effect.

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16.    No modification or amendment of this Agreement will be valid unless made in writing and signed by or on behalf of each party by a duly authorized representative of Employee and the Company. 
  

	
					
	TAKE THIS AGREEMENT HOME, READ IT AND CAREFULLY CONSIDER ALL OF ITS PROVISIONS BEFORE SIGNING IT.  IT INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS.
	 

	 
	

IN WITNESS WHEREOF, the Company hereby offers this Agreement to Employee on this 11th day of December, 2012.  

	 
	 
	 

	 
	 
	CHIQUITA BRANDS INTERNATIONAL, INC.

	 
	 
	By:
	/s/ James E. Thompson

	 
	 
	

Its:
	James E. Thompson
Senior Vice President, General Counsel and Secretary

	 
	 
	 
	

	 
	ACCEPTANCE

	 
	

I hereby agree to the terms of this Agreement and acknowledge my acceptance of it this 31 day of December, 2012.

	 
	 

	 
	WITNESS:

	 
	 
	 
	/s/ Joseph M. Huston

	 
	 
	 
	Joseph M. Huston

	 
	 
	 
	 

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APPENDIX A

The Competing Businesses consist of:

(A) the following companies and their subsidiaries and affiliates, as well as any company which acquires all or substantially all of the banana, fresh fruit or fresh cut fruit business, as the case may be, of any of the following companies:

Dole Food Company, Inc.
Fresh Del Monte Produce Inc.
Fyffes plc
Noboa Group. 

(B) any company in which Employee holds a management position in which Employee’s primary responsibility is to manage or supervise the retail sale of bananas and which sources such bananas, in any amount whatsoever, from (x) farms in which it has any direct or indirect economic or similar interest, or (y) third-parties whose principal business is the wholesale distribution of bananas from farms in which they have a direct or indirect economic or similar interest.

and 

(C) any company that was, at the time of your termination of employment with the Company or one of its subsidiaries, in direct competition with the Company or any of its subsidiaries or joint ventures in the bagged or packaged salad businesses in the United States, provided that you were employed in or provided substantial services to such business or businesses conducted by the Company or any of its subsidiaries or joint ventures within two years prior to the date of your termination of employment, and provided further that your primary responsibility at such company would be to manage or supervise such company’s bagged or packaged salad business.

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Exhibit 10.5.1

 

U.S. ENERGY CORP.

2012 EQUITY AND PERFORMANCE INCENTIVE PLAN

 

INCENTIVE STOCK OPTION AWARD AGREEMENT

 

	
Name of Participant:

	 	 

	
Grant Date:

	
,

	 	 

	
Number of Options Subject to Award:

	 	 

 

THIS AGREEMENT (together with Schedule A attached hereto, this "Agreement"), made the ____ day of ______________, ____ (as defined below, the "Grant Date"), between U.S. Energy Corp., a Wyoming corporation (the "Company"), and  , an employee of the Company or a Subsidiary (the "Participant").

 

R E C I T A L S :

 

The purpose of the Agreement is to encourage and enable employees of the Company and its Subsidiaries to acquire or to increase their effective holdings of Common Stock of the Company in order to promote a closer identification of their interests with those of the Company and its shareholders, thereby further stimulating their efforts to enhance the efficiency, soundness, profitability, growth and shareholder value of the Company.

 

In furtherance of the purposes of this Agreement and the purposes of the U.S. Energy Corp. 2012 Equity and Performance Incentive Plan, as it may be hereafter amended (the "Plan"), and in consideration of the services of the Participant, and such other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Participant hereby agree as follows:

 

1. Incorporation of Plan.  The rights and duties of the Company and the Participant under this Agreement shall in all respects be subject to and governed by the provisions of the Plan, a copy of which is delivered herewith or has been previously provided to the Participant and the terms of which are incorporated herein by reference.  In the event of any conflict between the provisions in the Agreement and those of the Plan, the provisions of the Plan shall govern.  Unless otherwise defined herein, capitalized terms in this Agreement shall have the same definitions as set forth in the Plan.

 

2. Grant of Incentive Stock Option.  Subject to the terms of this Agreement and the Plan, the Company hereby grants the Participant Incentive Stock Options to purchase ________ shares of Common Stock of the Company at a purchase price of $______ per share.  It is intended that the Options qualify as “Incentive Options” to the maximum extent permissible under section 422 of the Code.  To the extent that an Option is designated as an incentive stock option but does not qualify as such under the Code, the Option (or portion thereof) shall be treated as a nonqualified Option.

 

  

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3. Exercisability.  Subject to the further terms of this Agreement, the Incentive Stock Options shall vest and become exercisable in accordance with Schedule A hereto.  Unless earlier terminated pursuant to the provisions of the Plan or this Agreement, the unexercised portion of the Incentive Stock Options shall expire and cease to be exercisable ten years from the date of this Agreement (or five years with respect to Incentive Stock Options granted to a Participant who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company).

 

An Incentive Stock Option may be exercised by giving written notice to the Company in form acceptable to the Board at such place and subject to such conditions as may be established by the Board or its designee.  Such notice shall specify the number of shares to be purchased pursuant to an Incentive Stock Option and the aggregate purchase price to be paid therefor and shall be accompanied by payment of such purchase price.  Such payment shall be in the form of cash or cash equivalent; provided that, where permitted by the Board and Applicable Laws (and subject to such terms and conditions as may be established by the Board), payment may also be made:

 

(a)           By delivery to the Company (by either actual delivery or attestation) of other Common Stock, duly endorsed for transfer to the Company, with a Market Value per Share on the date of delivery equal to the Option Price (or portion thereof) due for the number of Shares being acquired;

 

(b)           By reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such Option with a Market Value per Share equal to the aggregate Option Price at the time of exercise;

 

(c)           A “cashless” exercise program established with a broker;

 

(d)           By any other form of legal consideration that may be acceptable to the Board (and subject to such terms as may be established by the Board), including but not limited to “net” or “immaculate exercise,” and which methods are acceptable under applicable laws; or

 

(e)           By any combination of the foregoing methods.

 

Shares tendered or withheld in payment on the exercise of an Incentive Stock Option shall be valued at their Fair Market Value on the date of exercise, as determined by the Board.

4. No Right of Continued Employment or Service; Forfeiture of Award.  Neither the Plan, the grant of an Award nor any other action related to the Plan shall confer upon the Participant any right to continue in the service of the Company or a Subsidiary as an employee, Director or independent contractor or to interfere in any way with the right of the Company or a Subsidiary to terminate the Participant's employment or service at any time.  Except as otherwise provided in the Plan, an Agreement, or as may be determined by the Board, all rights of a Participant with respect to an unvested Award shall terminate upon the Termination of Employment.

 

  

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5. Nontransferability of Award.  Unless the Board determines otherwise, the Award shall not be transferable (including by sale, assignment, pledge or hypothecation) other than by will or the laws of intestate succession or to a trust for the exclusive benefit of the Participant and/or his or her beneficiaries, and the Participant shall not sell, transfer, assign, pledge or otherwise encumber options subject to the Award until the restriction period has expired and until all conditions to vesting have been met.  The designation of a beneficiary in accordance with the Plan does not constitute a transfer.

 

6. Superseding Agreement; Binding Effect.  This Agreement supersedes any statements, representations or agreements of the Company with respect to the grant of the Award or any related rights, and the Participant hereby waives any rights or claims related to any such statements, representations or agreements.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective executors, administrators, next-of-kin, successors and assigns.  This Agreement does not supersede or amend any non-competition agreement, non-solicitation agreement, employment agreement, consulting agreement or any other similar agreement between the Participant and the Company, including but not limited to any restrictive covenants contained in such agreements.

 

7. Representations and Warranties of Participant.  The Participant represents and warrants to the Company as follows:

 

(a) Agrees to Terms of the Plan and Agreement.  The Participant has received a copy of the Plan, has read and understands the terms of the Plan and this Agreement, and agrees to be bound by their terms and conditions.

 

(b) Access to Information.  The Participant has had access to all information regarding the Company and its present and prospective business, assets, liabilities and financial condition that the Participant reasonably considers important in making a decision to acquire the Incentive Stock Options subject to the Award, and the Participant has had ample opportunity to ask questions of, and to receive answers from, the Company's representatives concerning such matters and this investment.

 

(c) Understanding of Risks.  The Participant is fully aware of: (i) the speculative nature of the investment in shares of common stock; (ii) the financial hazards involved in investment in shares of common stock; (iii) the lack of liquidity of the Incentive Stock Options subject to the Award and the restrictions on transferability of such Incentive Stock Options; (iv) the qualifications and backgrounds of the management of the Company; and (v) the tax consequences of acquiring shares of common stock through exercising the Incentive Stock Options.  The Participant is capable of evaluating the merits and risks of this investment, has the ability to protect his own interests in this transaction and is financially capable of bearing a total loss from such acquisition.

 

(d) No General Solicitation.  At no time was the Participant presented with or solicited by any publicly issued or circulated newspaper, mail, radio, television or other form of general advertising or solicitation in connection with the offer, sale or purchase of the Incentive Stock Options subject to the Award.

 

  

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(e) Compliance with Securities Laws.  Notwithstanding any other provision of this Agreement or the Plan to the contrary, the right to acquire any shares of common stock pursuant to the exercise of Incentive Stock Options subject to this Award is expressly conditioned upon compliance with all applicable federal and state securities laws.  The Participant agrees to cooperate with the Company to ensure compliance with such laws.

 

(f) Income Tax Consequences.  The Company has made no warranties or representations to the Participant with respect to the tax consequences (including but not limited to income tax consequences) related to the transactions contemplated by this Agreement, and the Participant is in no manner relying on the Company or its representatives for an assessment of such tax consequences.  Except as provided in Section 11 of this Agreement, the Participant acknowledges that the Company has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for the Participant.

 

8. Restrictions on Award and Shares.

 

(a) Other Agreements.  As a condition to the issuance and delivery of Incentive Stock Options subject to the Award or stock subject to the Award, or the grant of any benefit pursuant to the terms of the Plan, the Company may require the Participant or other person to become a party to an employment agreement, consulting agreement, non-competition agreement, confidentiality agreement, non-solicitation agreement or other agreements imposing such restrictions as may be required by the Company.  In addition, without in any way limiting the effect of the foregoing, the Participant or other holder of the Incentive Stock Options shall be permitted to transfer such Incentive Stock Options only if such transfer is in accordance with the terms of the Plan, this Agreement, and any other applicable agreements.  The acquisition of the Incentive Stock Options or stock subject to an Award by the Participant or any other holder of the Incentive Stock Options shall be subject to, and conditioned upon, the agreement of the Participant or other holder of such Incentive Stock Options to the restrictions described in the Plan, this Agreement, and any other applicable agreements.

 

(b) Compliance with Applicable Laws, Rules and Regulations. The Company may impose such restrictions on the Award and any Incentive Stock Options or other benefits issuable pursuant to the Award as it may deem advisable, including without limitation restrictions under the federal securities laws, the requirements of any stock exchange or similar organization or any blue sky, state or foreign securities laws applicable to such securities.  Notwithstanding any other provision in the Plan or the Agreement to the contrary, the Company shall not be obligated to issue, deliver or transfer Incentive Stock Options, make any other distribution of benefits, or take any other action, unless such delivery, distribution or action is in compliance with applicable law (including but not limited to the requirements of the Securities Act).

 

9. Applicable Law.  Except as otherwise provided in the Plan or herein, this Agreement shall be construed and enforced according to the laws of the State of Wyoming, without regard to the principles of conflicts of laws, and in accordance with applicable federal laws of the United States.

 

  

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10. Amendment and Termination; Waiver.  Subject to the terms of the Plan, this Agreement may be amended, altered and/or terminated at any time by the Board; provided, however, that any such amendment, alteration or termination of the Award shall not, without the consent of the Participant, materially adversely affect the rights of the Participant with respect to the Award.  Notwithstanding the foregoing, the Board shall have unilateral authority to amend the Plan and this Agreement (without Participant consent and without shareholder approval, unless such approval is required by Applicable Laws) to the extent necessary to comply with Applicable Laws or changes to Applicable Laws (including but not limited to Code section 409A or related regulations or other guidance and federal securities laws).  The Board shall have unilateral authority to make adjustments to the terms and conditions of the Award in recognition of unusual or nonrecurring events affecting the Company or any Subsidiary, or the financial statements of the Company or any Subsidiary, or of changes in accounting principles, if the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or necessary or appropriate to comply with applicable accounting principles.  The waiver by the Company of a breach of any provision of the Agreement by the Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant.

 

11. Withholding.  The Company shall withhold all required local, state, federal, foreign and other taxes and any other amount required to be withheld by any governmental authority or law from any amount payable with respect to an Award.  Prior to the delivery or transfer of any shares of common stock receivable pursuant to exercise of the Incentive Stock Options subject to the Award or any other benefit conferred under the Plan, the Company shall require any recipient of an Award to pay to the Company in cash the amount of any tax or other amount required by any governmental authority to be withheld and paid over by the Company to such authority for the account of such recipient.  Notwithstanding the foregoing, the Participant may satisfy such obligation in whole or in part, and any local, state, federal, foreign or other income tax obligations relating to such an Award, by electing (the "election") to have the Company withhold shares of Common Stock from the shares to which the recipient is entitled and effectively repurchase the shares subject to the terms of an Award Agreement.  The number of shares to be withheld shall have a Fair Market Value as of the date that the amount of tax to be withheld is determined as nearly equal as possible to (but not exceeding) the minimum amount of such statutory obligations being satisfied.  Each election must be made in writing to the Board in accordance with election procedures established by the Board.

 

12. Administration.  The authority to construe and interpret this Agreement and the Plan, and to administer all aspects of the Plan, shall be vested in the Board, and the Board shall have all powers with respect to this Agreement as are provided in the Plan.  Any interpretation of the Agreement by the Board and any decision made by it with respect to the Agreement shall be final and binding.

 

13. Notice.  Any notice or filing required or permitted to be given to the Company or Board under this Agreement and/or the Plan shall be sufficient if made in accordance with the requirements for notice in the Plan.

 

14. Severability.  The provisions of this Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

  

5

  

15. Counterparts; Further Instruments.  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 instrument.  The parties hereto agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

16. Opportunity to Consult with Independent Advisors.  The Participant acknowledges that he has been afforded the opportunity to consult with independent advisors of his choosing including, without limitation, accountants or tax advisors and counsel regarding both the benefits granted to him under the terms of this Agreement and the (a) terms and conditions which may affect the Participant’s right to these benefits and (b) personal tax effects of such benefits including, without limitation, the effects of any federal and/or state taxes, section 280G of the Code, section 409A of the Code and guidance or regulations thereunder, and any other taxes, costs, expenses, or liabilities whatsoever related to such benefits.  The Participant further acknowledges that he has read, understands and consents to all of the terms and conditions of this Agreement, and that he enters into this Agreement with a full understanding of its terms and conditions.

 

IN WITNESS WHEREOF, this Agreement has been executed in behalf of the Company and by the Participant on the day and year first above written.

 

U.S. ENERGY CORP.

 

By:         

 

 

Printed Name:  Keith G. Larsen

 

 

Title:  Chairman & CEO

 

 

Secretary

 

 

PARTICIPANT

 

 

By:         

 

 

Printed Name:                                                                           

 

  

6

  

U.S. ENERGY CORP.

2012 EQUITY AND PERFORMANCE INCENTIVE PLAN

 

INCENTIVE STOCK OPTION AWARD AGREEMENT

 

SCHEDULE A

	
Grant Date:

	
___________________, _______.

Number of Incentive Stock Options Subject to Award: _______ options.

Option Exercise Price per option:  $________.

 

The Incentive Stock Options subject to the Award shall vest and be earned in tranches determined as provided below, subject to the continued employment or service of the Participant and such other terms and conditions as may be imposed by the Plan or the Agreement:

 

All Incentive Stock Options granted pursuant to this Award shall vest, if at all, only to the extent the withholding requirements of Section 11 of the Agreement are satisfied.

 

	
1.  

	
Award Amount.                            Your Award is __________ Incentive Stock Options.

	
2.  

	
Vesting.                 The Incentive Stock Options granted will be subject to a three-year contingent time vesting schedule requiring continuous service through the vesting date.  The awards will vest on a tranche-by-tranche basis, when the following tranche-specific time requirements are satisfied, provided that the Participant has provided continuous service through that date.  No additional Options subject to the Incentive Stock Option Award will vest after a Participant’s Termination of Employment, except as otherwise provided in the Plan.

	
a.  

	
Vesting Schedule.

	
i.  

	
One-third of the Incentive Stock Options subject to this award will vest on the 1st anniversary of the Grant Date.

	
ii.  

	
One-third of the Incentive Stock Options subject to this award will vest on the 2nd anniversary of the Grant Date.

	
iii.  

	
One-third of the Incentive Stock Options subject to this award will vest on the 3rd anniversary of the Grant Date.

Acceleration:  Pursuant to Plan Sections 11 and 19, the Board may accelerate the above described vesting schedule, if at all, not inconsistent with the Participant’s employment agreement, if any, as effective at the time of the potentially accelerating events.

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