EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, effective as of June 1, 2013 between Synergy Resources
Corporation, a Colorado corporation (the "Company"), and Xx Xxxxxxxx (the
"Employee").
WHEREAS, the Company desires to employ the Employee, and the Employee
desires to accept such employment upon the terms and subject to the conditions
contained herein.
NOW, THEREFORE, in consideration of the foregoing, and for the mutual
promises of the parties hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby expressly
acknowledged, and parties hereto agree as follows:
1. Employment, Duties and Acceptance.
1.1 Subject to the terms and conditions of this Agreement, the Company
hereby employs the Employee for the Term (as hereinafter defined), as President
and Chief Executive Officer. The Employee will report to the Company's Board of
Directors. Employee will devote approximately 80% of his time to the business of
the Company. It is understood that the Employee has been, and will continue to
be, engaged in other business activities.
1.2 The Employee hereby accepts such employment and agrees to render the
services described above.
1.3 Any transactions or agreements between the Company and Petroleum
Management, LLC or Petroleum Exploration and Management, LLC will not be
considered a conflict of interest or a breach of fiduciary duty so long as the
transaction or agreement is approved by a majority of the Company's
disinterested directors in accordance with the Agreement Regarding Conflicting
Interest Transactions.
1.4 The Company will maintain officers and directors liability insurance,
specifying the Employee as a named insured, providing coverage for any single
claim in an amount which will not be less than $5,000,000.
2. Term of Employment.
2.1 The Term of this Agreement (the "Term") shall commence on June 1, 2013
and shall end on May 31, 2016, unless sooner terminated pursuant to Article 4 of
this Agreement.
3. Compensation.
3.1 The Company agrees to pay the Employee a salary of $420,000 per year
during the term of this Agreement.
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3.2 During the term of this agreement for every 50 net xxxxx that first
begin producing commercial quantities of oil and/or gas after June 1, 2013 but
before June 1, 2016, as a result of the successful drilling efforts or as the
result of a completed acquisition by the Company, the Employee will be paid a
bonus of $100,000, up to a maximum bonus of $300,000 during any twelve month
period ending on May 31, 2016, provided that:
o each horizontal well that meets the criteria above will count
toward seven xxxxx (as adjusted to reflect the Company's net
working interest in each horizontal well), and
o the unpaid balances pertaining to any xxxxx included in the
previous "50 well bonus program" that first began producing
commercial quantities of oil and/or gas as a result of the
successful drilling efforts, or as the result of a completed
acquisition by the Company, during the three year period ended
May 31, 2013, will be counted toward the 50 net well limit
applicable for the period beginning June 1, 2013.
3.3 The Employee will be entitled to participate in all benefit plans
generally available to the Company's employees, including group health insurance
and contributions to 401(k) plans.
3.4 During the term of this agreement, the Employee will be entitled to
eight weeks of paid vacation during any twelve month period ending on May 31.
3.5 For the term of the agreement, upon presentation of expense statements
or vouchers or such other supporting information as the Company may require, the
Company shall pay or reimburse the Employee for all reasonable business,
business related expenses and other reasonable expenses incurred and/or paid by
Employee during the Term in the performance of the Employee's services under
this Agreement.
4. Termination.
4.1 If the Employee should die during the Term, this Agreement shall
terminate as of the date of the Employee's death, except that the Employee's
legal representatives shall be entitled to receive all compensation otherwise
payable to Employee through the last day of the month in which Employee's death
occurs.
4.2 If, during the Term, the Employee shall become physically or mentally
disabled, whether totally or partially, so that the Employee is unable
substantially to perform his services hereunder for (i) a period of two
consecutive months, or (ii) for shorter periods aggregating four months during
any twelve-month period, the Company may, at any time after the last day of the
second consecutive month of disability or the day on which the shorter periods
of disability shall have equaled an aggregate of four months, by written notice
to the Employee (but before the Employee has recovered from such disability),
terminate this Agreement. Notwithstanding such disability, the Company shall
continue to pay the Employee his full salary up to and including the date of
such termination.
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4.3 In the event of (i) conviction of the Employee of any crime or offense
involving the property of the Company, or any of its subsidiaries or affiliates,
fraud or moral turpitude, and such crime or offense significantly xxxxx the
business operations of the Company, (ii) the refusal of Employee to follow the
lawful directions of the Company's Board of Directors within a reasonable period
after delivery to Employee of written notice of such directions (iii) the
Employee's gross negligence, and such gross negligence significantly xxxxx the
business operations of the Company (gross negligence does not include errors of
judgment, mistakes, or discretionary decisions, but is conduct which shows a
reckless or willful disregard for reasonable business practices), or (iv) a
breach of this Agreement by Employee which Employee fails to cure within thirty
days after notice from the Company's Board of Directors, or fails to diligently
pursue a cure if the breach is not able to reasonably be cured within 30 days,
then the Company may terminate Employee's employment hereunder by written notice
to Employee in which event Employee shall be compensated as set forth herein
through the date of termination.
4.4 If an arbitrator or an arbitration panel determines that the Company
was not justified in terminating this Agreement pursuant to Section 4.2 or 4.3
the Company will be obligated to pay the Employee the compensation which the
Employee would have received had this Agreement not been terminated.
4.5 Constructive Termination shall occur if Employee resigns his employment
within ninety (90) days of the occurrence of any of the following events: (i) a
relocation (or demand for relocation) of Employee's place of employment to a
location more than thirty-five (35) miles from Employee's current place of
employment, (ii) the Company's Board of Directors materially interferes with the
performance of the Employee's duties or (iii) if a Change of Control event has
occurred.
"Change of Control" shall mean a change in ownership or control of the
Company as a result of any of the following transactions:
a. a merger, consolidation or reorganization approved by the Company's
stockholders, unless securities representing more than 50% of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly, and in
substantially the same proportion, by the persons who beneficially owned the
company's outstanding voting securities immediately prior to such transaction,
or
b. any stockholder-approved transfer or other disposition of all or
substantially all of the Company's assets, or
c. the acquisition, directly or indirectly by any person or related group
of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company), of
beneficial ownership (within the meaning of Rule 13d-3 of the 0000 Xxx) of
securities possessing more than fifty percent (50%) of the total voting power of
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the Company's outstanding securities pursuant to a tender or exchange offer made
directly to the Company's shareholders which was not approved by a majority of
the Company's directors or
d. a change in the composition of the Board over a period of thirty-six
(36) months or less such that a majority of the Board members, by reason of one
or more contested elections for Board membership, are no longer comprised of
individuals who (A) were Board members at the beginning of such period or (B)
have been elected or nominated for election as Board members during such period
by at least a majority of Board members described in clause (A).
In the event a Constructive Termination has occurred, other than Change of
Control, Employee may, in his sole discretion, provide Company with his written
notice of resignation to be effective not less than 30 days after receipt by
Company, whereupon Employee shall cease to be employed by the Company and both
parties shall be relieved of further responsibility or liability to the other
except as provided by this Agreement.
In the event of a Change of Control, Employee may in his sole discretion,
provide Company with his written notice of resignation to be effective not less
than 30 days after receipt by Company, whereupon Employee shall cease to be
employed by the Company. Upon receipt of such notice of resignation, Company
shall promptly pay to Employee by certified check, wire transfer funds, or other
form of payment reasonably acceptable to Employee, a lump sum amount equal to
the larger of twelve month's salary of the Employee at such compensation rate as
is then in effect under the terms of this Agreement, and any extension or
renewal thereof, or the amount of all salary and benefits which would otherwise
by payable pursuant to this Agreement, whichever is greater (the "Payment"). The
Payment shall not be reduced by any charges, expenses, debts, set-offs or other
deductions of any kind whatsoever except for required withholding taxes.
In the event of a Constructive Termination, whether or not followed by
termination of Employee's employment, any options or bonus shares of the Company
then held by Employee shall become fully vested. The expiration date of any
options which would expire during the six month period following the date of the
Constructive Termination will be extended to the date which is twelve months
after the date of the Constructive Termination.
5. Confidential Information, Competition.
5.1 In view of the fact that the Employee's work for the Company will bring
him into close contact with many confidential affairs of the Company not readily
available to the public, the Employee agrees:
o To keep secret and retain in the strictest confidence, all
confidential matters of the Company, including, without
limitation, all information concerning oil and gas properties
owned by the Company or which are under consideration by the
Company, and all other confidential and proprietary information
of the Company and its affiliates, and not to disclose such
confidential and proprietary information to anyone outside the
Company, or to ever use such confidential and proprietary
information for the personal gain or benefit of the Employee
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except in the course of performing his duties hereunder or with
the Company's express written consent. Notwithstanding the above,
confidential information does not include information which is
known, or becomes known, to the Employee through means other than
his employment with the Company.
o That all records of the Company, are and shall remain the
property of the Company at all times and to furnish on demand,
all books, records, letters, vouchers, maps, drawings, notes or
any other information that is written, photographed, or stored in
any manner containing data regarding oil and gas properties in
which the Company has an interest or which are under
consideration by the Company and all other Company records
whether in original, duplicated, copied, transcribed, or any
other form.
5.2 If the Employee commits a breach, or threatens to commit a breach, of
any of the provisions of Section 5.1 hereof, the Company shall have the
following rights and remedies:
5.2.1 The right to have the provisions of this Agreement specifically
enforced by any court of competent jurisdiction, it being acknowledged that any
such breach or threatened breach shall cause irreparable injury to the Company
and that money damages shall not provide an adequate remedy to the Company;
5.2.2 The right to recover from the Employee all money damages, direct,
consequential, or incidental, suffered by the Company as a result of any acts
constituting a breach of any of the provisions of Section 5.1.
Each of the rights and remedies enumerated above shall be independent of
the other and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
5.3 All inventions made by the Employee during the employment term, which
inventions apply to the Company's business, including any improvements to any
invention in existence as of the date of this Agreement, will be assigned to the
Company. In the event any of such inventions are of a patentable nature,
Employee agrees to apply for a patent on the invention and assign any patent
rights relating to the invention to the Company. The Company will bear the costs
of any such patent applications.
5.4 Employee understands that the Company's duties may involve writing or
drafting various documents, for the Company. Employee hereby assigns any and all
rights to such documents, to the Company, together with the right to secure
copyright therefor and all extensions and renewals of copyright throughout the
entire world. The Company shall have the right to make any and all versions,
omissions, additions, changes, specifications and adaptions, in whole or in
part, with respect to such documents, brochures or publications.
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6. Indemnification.
The Company shall indemnify the Employee to the extent permitted by
Colorado law against all costs, charges and expenses including attorneys' fees,
incurred or sustained by his in connection with any action, suit or proceeding
to which he may be made a party by reason of his being an officer, director or
employee of the Company or of any subsidiary or affiliate of the Company.
7. Notices.
All notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by prepaid electronic
transmission or mailed first class, postage prepaid, by registered or certified
mail or delivered by an overnight courier service (notices sent by electronic
transmission, mail or courier service shall be deemed to have been given on the
date sent), as follows (or to such other address as either party shall designate
by notice in writing to the other):
If to the Company:
Synergy Resources Corporation
00000 Xxxxxxx 00
XxxxxxxxxXxxxxxxxxxx, XxxxxXX PostalCode80651
If to the Employee:
Xx Xxxxxxxx
00000 Xxxxxxx 00
Xxxxxxxxxxx, XX 00000
8. General.
8.1 This Agreement shall be governed by, and enforced in accordance with,
the laws of the State of Colorado. If any part of this Agreement is contrary to,
prohibited by or deemed invalid under any applicable law or regulation, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given full force and effect so far as possible.
8.2 The article and section headings in this Agreement are for reference
only and shall not in any way affect the interpretation of this Employment
Agreement.
8.3 This Agreement sets forth the entire agreement and understanding of the
parties relating to the subject matter hereof and supersedes all prior
agreements, arrangements and understandings, written or oral, relating to the
subject matter hereof. This Agreement replaces, in its entirety, any other the
employment agreement between the Company and the Employee.
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8.4 This Agreement, and the Employee's rights and obligations hereunder,
may not be assigned by the Employee. The Company may assign this Agreement and
its rights, together with its obligations, hereunder in connection with any
sale, transfer or other disposition of all or substantially all of its business
or assets and in such event, the obligations of the Company hereunder shall be
binding on its successors or assigns, whether by merger, consolidation or the
acquisition of all or substantially all of the Company's business or assets.
8.5 This Agreement may be amended, modified, superseded, cancelled, renewed
or extended, and the terms hereof may be waived, only by a written instrument
executed by both of the parties hereto or, in the case of a waiver, by the party
waiving compliance. The failure of either party at any time or times to require
performance of any provision in this Agreement (whether by conduct or otherwise)
shall in no manner be deemed to be, or construed as, a further or continuing
waiver of any such breach, or a waiver of the breach of any other term or
covenant of this Agreement.
8.6 As used herein, the term "subsidiary" shall mean any corporation or
other business entity controlled by the Company; and the term "affiliate" shall
mean and include any corporation or other business entity controlling,
controlled by, or under common control with the Company.
8.7 Following Employee's termination of employment and as a director, any
actions taken by Employee involving the oil and gas industry will not be deemed
any conflict of interest, or other violation of this agreement, even if Employee
is a shareholder, so long as the Employee does not use any trade secrets or
confidential information, as defined herein, of the Company in order to engage
in such activity.
8.8 All disputes arising out of or in connection with this agreement, or in
respect of any legal relationship associated with or derived from this
agreement, shall be arbitrated and finally resolved in Denver, Colorado,
pursuant to the commercial arbitration rules of the American Arbitration
Association.
IN WITNESS WHEREOF, the parties have executed this Agreement as of June 6,
2013.
SYNERGY RESOURCES CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx, Principal Financial
Officer
EMPLOYEE
/s/ Xx Xxxxxxxx
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Xx Xxxxxxxx
