EXHIBIT 10.34
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 27, 2015, between Synergy Resources Corporation,
a Colorado corporation (the "Company"), and Xxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Company desires to obtain the services of the Executive, and
the Executive desires to accept such employment upon the terms and subject to
the conditions contained herein.
WHEREAS, the Company also desires that Executive be appointed to the Board
of Directors of the Company, and Executive consents to serve as a Director of
the Company.
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:
Employment, Duties and Acceptance.
Subject to the terms and conditions of this Agreement, the Company hereby
employs the Executive for the Term (as hereinafter defined), as its President.
The Executive will report to the Directors of the Company. Executive will devote
100% of his time to the business of the Company.
The Executive hereby accepts such employment and agrees to render the
services described above.
The Company will maintain officers and directors liability insurance,
specifying the Executive as a named insured, providing coverage for any single
claim in an amount which will not be less than $5,000,000.
1.4 The Company shall nominate Executive for election or appointment as a
Director of the Board of Directors of the Company for the duration of
Executive's employment with the Company.
Term of Employment.
The Term of this Agreement (the "Term") shall commence on the date hereof
(the "Effective Date") and shall end on May 31, 2020, unless sooner terminated
pursuant to Article 4 of this Agreement.
Compensation.
The Company agrees to pay the Executive a gross salary of $50,000.00 per
month during the term of this Agreement.
The Company agrees to pay to Executive a signing bonus in the amount of
$250,000.00 ("Signing Bonus"), such Signing Bonus to be paid within 14 days of
the Effective Date of this Agreement, subject to withholding of all taxes
required by law.
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The Company hereby awards to Executive a grant of 250,000 restricted shares
of the Company's common stock (the "Restricted Stock Award") pursuant to the
Company's incentive stock plan. The Restricted Stock Award shall vest as
follows:
(i) 50,000 shares shall fully vest of the date hereof; and
(ii) 200,000 shares shall vest at a rate of 50,000 shares on each of the
four following anniversaries of the date hereof. The award of shares
to the Executive by the Company shall be subject to the Company's
right to withhold and deduct from the share award all federal, state,
local and other taxes as may be required pursuant to any law or
governmental regulation or ruling.
The Company hereby awards to Executive a nonstatutory stock option to
acquire an aggregate of 1,750,000 shares of the Company's common stock at the
exercise price of $11.46 per share (the "Option Award"), pursuant to the
Company's incentive stock option plan. The Option Award shall vest as follows:
(i) 350,000 shall vest of the date hereof; and
(ii) 350,000 shares shall vest on each of the four following anniversaries
of the date hereof.
The Option Award shall have a term of (10) years.
The Executive will be entitled to participate in all benefit plans
generally available to the Company's employees, including group health insurance
and 401(k) plans.
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 Executive for all reasonable business,
business related, and other reasonable expenses incurred and/or paid by
Executive during the Term in the performance of the Executive's services under
this Agreement.
The Company shall provide the Employee with a cellular telephone and the
Company shall be responsible for the costs and expenses in connection with such
telephone, including, but not limited to, monthly service charges and
maintenance, usage charges and long distance, whether these be incurred for
personal or Company business.
In addition to the compensation set forth in this agreement, the Company
may conduct periodic performance reviews and, subject to the oversight of the
Compensation Committee of the Company's Board of Directors, may elect to grant
either cash based or equity based performance awards to the Executive.
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Termination.
If the Executive should die during the Term, this Agreement shall terminate
as of the date of the Executive's death, except that the Executive's legal
representatives shall be entitled to receive all compensation otherwise payable
to Executive through the last day of the month in which Executive's death occurs
and unvested equity grants or stock options, if any, shall immediately vest. The
Executive's legal representatives shall have the right to exercise outstanding
options, if any, for the first to occur of a period of one year or the tenth
anniversary of their grant.
If, during the Term, the Executive shall become physically or mentally
disabled, whether totally or partially, so that the Executive 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 Executive (but before the Executive has recovered from such disability),
terminate this Agreement. Notwithstanding such disability, the Company shall
continue to pay the Executive his full salary up to and including the date of
such termination. Upon termination for disability, unvested equity grants and
stock options, if any, shall immediately vest. The Executive shall have the
right to exercise outstanding options, if any, for the first to occur of a
period of one year or the tenth anniversary of their grant.
In the event of (i) conviction of the Executive 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 Executive to follow the
lawful directions of the Company's Board of Directors (the "Board") within a
reasonable period after delivery to Executive of written notice of such
directions, (iii) the Executive'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 Executive which Executive
fails to cure within thirty days after notice from the Board, or fails to
diligently pursue a cure if the breach is not able to reasonably be cured within
30 days (any such event, a "Cause Event"), then the Company may terminate
Executive's employment hereunder by written notice to Executive in which event
Executive shall be entitled to receive all compensation otherwise payable to
Executive through the date of termination.
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 Executive the compensation which the
Executive would have received had this Agreement not been terminated.
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In the event the Company shall terminate Executive's employment hereunder
without the occurrence of a Cause Event and not due to death or disability, and
not in connection with or within twelve (12) months following a Change of
Control, the Company shall promptly, but in no event later than sixty (60) days,
pay to Executive by certified check, wire transfer funds, or other form of
payment reasonably acceptable to Executive, a lump sum amount to the sum of (i)
two (2) times the Executive's annual salary at such compensation rate as is then
in effect under the terms of this Agreement, and any extension or renewal
thereof, plus (ii) Executive's most recent bonus. Such payment shall not be
reduced by any charges, expenses, debts, set-offs or other deductions of any
kind whatsoever except for required withholding taxes. All of Executive's unpaid
or unvested equity grants and stock options shall be immediately vested.
Constructive Termination shall occur if the Executive resigns his
employment within ninety (90) days of the occurrence of any of the following
events: (i) a relocation (or demand for relocation) of Executive's place of
employment to a location more than thirty-five (35) miles from Executive's
current place of employment, (ii) the Board materially interferes with the
performance of the Executive's duties, (iii) if a Change of Control event has
occurred; (iv) the Company shall fail to nominate the Executive for nomination
or appointment to the Board of Directors of the Company; (v) the Company's
material breach of this Agreement or any other written agreement between
Executive and the Company; provided the Company is given notice of said breach
and provided an opportunity to cure such breach for 30 days from the date of
such notice; (vi) the material diminution of the Executive's duties
responsibilities, authority, offices or titles in effect as of the Effective
Date; or (vii) a reduction of Executive's salary, or adverse modifications to
the stock awarded to Executive under this Agreement, or to the Company's stock
plan (or any other similar plan), or a material reduction in Executive's total
compensation under this Agreement, except for any reductions equally applicable
to all executive officers of the Company as approved by the Board.
"Change of Control" shall mean a change in ownership or control of the
Company as a result of any of the following transactions:
a merger, consolidation or other business combination transaction
of the Company with or into another corporation entity or person,
whether or not approved by the Board of Directors of the Company,
other than a transaction that would result in the holders of at least
50% of the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding
or by being converted or into voting securities of the surviving
entity or the parent of the surviving entity) at least 50% of the
total voting power represented by the voting securities of the Company
or such surviving entity (or the parent of any such surviving entity)
outstanding immediately after such transaction; or
any stockholder-approved transfer or other disposition of all or
substantially all of the Company's assets, or
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
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Rule 13d-3 of the 0000 Xxx) of securities possessing more than fifty
percent (50%) of the total voting power of the Company's outstanding
securities; or
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 event has occurred, other than in
connection with or within twelve (12) months following a Change of Control,
Executive may, in his sole discretion, provide Company with his written notice
of resignation within ninety (90) days of the occurrence of any of the
Constructive Termination events, to be effective not less than thirty (30) days
after receipt by Company, whereupon Executive shall cease to be employed by the
Company. Upon receipt of such notice of resignation, Company shall promptly, but
in no event later than sixty (60) days after the effective date of the
termination, pay to Executive by certified check, wire transfer funds, or other
form of payment reasonably acceptable to Executive, a lump sum amount equal to
the sum of (i) two (2) times the Executive's annual salary at such compensation
rate as is then in effect under the terms of this Agreement, and any extension
or renewal thereof, plus (ii) Executive's most recent bonus. Such payment shall
not be reduced by any charges, expenses, debts, set-offs or other deductions of
any kind whatsoever except for required withholding taxes. All of Executive's
unpaid or unvested Restricted Stock Awards and Option Awards shall be
immediately vested.
In the event of a Change of Control, if the Company shall terminate
Executive's employment hereunder without the occurrence of a Cause Event on or
before the first anniversary of the Change of Control and not due to death or
disability, then the Company shall promptly, but in no event later than sixty
(60) days, pay to Executive by certified check, wire transfer funds, or other
form of payment reasonably acceptable to Executive, a lump sum amount equal to
the sum of (i) three (3) times the Executive's annual salary at such
compensation rate as is then in effect under the terms of this Agreement, and
any extension or renewal thereof, plus (ii) Executive's most recent bonus. Such
payment shall not be reduced by any charges, expenses, debts, set-offs or other
deductions of any kind whatsoever except for required withholding taxes. All of
Executive's unpaid or unvested equity grants and stock options shall immediately
vest in such event.
4.7 Except as otherwise provided in Section 4.6 hereof, in the event of a
Change of Control, whether or not followed by termination of Executive's
employment, all of Executive's unpaid or unvested equity grants and stock
options shall be immediately 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 the earlier to occur of twelve
months after the date of the Constructive Termination or the tenth anniversary
of the date of grant.
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4.8 In the event of a Change of Control and subject to the Executive being
terminated from employment, Executive shall receive the value of 18 months of
COBRA premiums paid in a cash lump sum no later than sixty (60) days after the
date of termination.
4.9 If the Executive is a "specified employee" as such term is defined
under Section 409A of the Internal Revenue Code of 1986, as amended (the
"Code"), on the date of his termination of employment and if the benefits to be
provided under this Agreement are subject to Section 409A of the Code and are
payable on account of a termination of employment, payment in respect of such
benefits shall not be paid or commence until the earliest of (i) the first
business day that is six months after the date of termination of employment,
(ii) Executives date of death, or (iii) such other earlier date for which such
payment will not be subject to additional tax or interest imposed by Section
409A of the Code, and shall otherwise be paid as provided in this Agreement.
4.10 Notwithstanding any of the above to the contrary, the Executive will
not be entitled to any of the payments provided in this Article 4 (other than in
connection with a Change of Control) if (i) the Executive materially breaches
this Agreement, including the provisions of Article 5, or (ii) the Executive
fails to execute and return an effective release from liability and waiver of
right to xxx the Company or its affiliates in a form reasonably acceptable to
the Company waiving all claims the Executive may have against the Company, its
affiliates, and their predecessors, successors, assigns, employees, officers and
directors and such other parties and in such form as determined by the Company
in its sole discretion within sixty (60) days after the date of termination of
the Executive's employment (or such shorter period as may be required to be
provided by law or as determined by the Company and provided in the release),
and the release becoming effective.
4.11 To the extent any amount payable under this Article 4 is deferred
compensation subject to the Code, if the period during which the Executive has
discretion to execute or revoke the general release of claims straddles two of
your taxable years, then the Company shall make the severance payments starting
in the second of such taxable years, regardless of which taxable year the
Executive actually deliver the executed general release of claims to the
Company. The Executive may not, directly or indirectly, designate the calendar
year or timing of payments.
Confidential Information, Competition.
In view of the fact that the Executive'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 Executive agrees:
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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 Executive 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 Executive through
means other than his employment with the Company.
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.
If the Executive 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:
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;
The right to recover from the Executive 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.
All inventions made by the Executive 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,
Executive 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.
Executive understands that the Company's duties may involve writing or
drafting various documents, for the Company. Executive 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
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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.
Executive agrees that he will not, during the term of this Agreement and
for a period of 12 months from and after the date of termination of this
Agreement, directly or indirectly, (i) knowingly acquire or own in any manner
any interest in any entity which competes for properties with the Company, or
any of its subsidiaries or affiliates, (ii) be employed by or serve as an
employee, agent, officer, or director of, or as a consultant to, any entity
which competes for properties with the Company or its subsidiaries or
affiliates, or (iii) acquire, directly or through an entity affiliated with the
Executive, an interest in any property which is located within 50 miles of any
property owned by the Company or which is under consideration by the Company,
unless accepted by the Company in writing. The foregoing provisions of this
Section 5.5 shall not prevent the Executive from acquiring and owning not more
than 5% of the equity securities of any entity whose securities are listed for
trading on a national securities exchange or are regularly traded in the
over-the-counter securities market.
Indemnification.
The Company shall indemnify the Executive to the extent permitted by
Colorado law against all costs, charges and expenses including attorneys' fees,
incurred or sustained by him 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. The
Company shall also enter into an indemnification agreement regarding
indemnification of the Executive in the form of such agreements entered into
with the Company's other executive officers.
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
Xxxxxxxxxxx, XX 00000
If to the Executive:
Xxxx X. Xxxxxxxx
0000 Xxxxxxx Xx., #000
Xxxxxx, XX 00000
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Code Section 409A Compliance
This Agreement is intended to comply with Section 409A of the Code to the
extent any payment hereunder constitutes nonqualified deferred compensation
under Section 409A of the Code.
The Company shall undertake to administer, interpret, and construe this
letter agreement in a manner that does not result in the imposition on the
Executive of any additional tax, penalty, or interest under Section 409A of the
Code and to comply with Code Section 409A to the extent applicable.
If the Company determines in good faith that any provision of this
Agreement would cause the Executive to incur an additional tax, penalty, or
interest under Section 409A of the Code, the Board of Directors of the Company
(or its delegate) and the Executive shall use reasonable efforts to reform such
provision, if possible, in a mutually agreeable fashion to maintain to the
maximum extent practicable the original intent of the applicable provision
without violating the provisions of Section 409A of the Code or causing the
imposition of such additional tax, penalty, or interest under Section 409A of
the Code.
The preceding provisions, however, shall not be construed as a guarantee by
the Company of any particular tax effect to the Executive under this Agreement.
The Company shall not be liable to the Executive for any payment made under this
Agreement that is determined to result in an additional tax, penalty, or
interest under Section 409A of the Code, nor for reporting in good faith any
payment made under this Agreement as an amount includible in gross income under
Section 409A of the Code.
With respect to any reimbursement of expenses, as specified under this
Agreement, such reimbursement of expenses shall be subject to the following
conditions: (1) the expenses eligible for reimbursement in one taxable year
shall not affect the expenses eligible for reimbursement in any other taxable
year; (2) the reimbursement of an eligible expense shall be made no later than
the end of the year after the year in which such expense was incurred; and (3)
the right to reimbursement shall not be subject to liquidation or exchange for
another benefit.
"Termination of employment," "resignation," or words of similar import, as
used in this Agreement means, for purposes of any payments under this Agreement
that are payments of nonqualified deferred compensation subject to Section 409A
of the Code, the Executive's "separation from service" as defined in Section
409A of the Code.
General.
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. If any part of this
Agreement is deemed to trigger inadvertent tax consequences, the Agreement shall
be modified to mitigate, so far as possible, the negative tax consequences to
the Company and to the Executive.
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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.
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.
The Executive agrees to execute and comply at all times during the
Employment Period with all applicable policies, rules and regulations of the
Company, including, without limitation, the Company's Code of Ethics, Xxxxxxx
Xxxxxxx Policy, and other similar polices, each as in effect from time to time
during the Term.
The Executive represents and covenants to the Company that he is not
subject or a party to any employment agreement, noncompetition covenant,
nondisclosure agreement, or any similar agreement or covenant that would
prohibit the Executive from executing this Agreement and fully performing his
duties and responsibilities hereunder, or would in any manner, directly or
indirectly, limit or affect the duties and responsibilities that may now or in
the future be assigned to the Executive hereunder. The Executive further
represents and warrants that he is not presently subject to any legal actions,
claims or administrative proceedings, including bankruptcy proceedings or IRS
audits or proceedings that would affect his ability to perform his
responsibilities hereunder.
This Agreement, and the Executive's rights and obligations hereunder, may
not be assigned by the Executive. 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.
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.
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.
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.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SYNERGY RESOURCES CORP.
/s/ Xxxxxxx X. Xxxxx, Xx.
------------------------------------------------
Xxxxxxx X. Xxxxx, Xx. Co-Chief Executive Officer
EXECUTIVE
/s/ Xxxx X. Xxxxxxxx
------------------------------------------------
Xxxx X. Xxxxxxxx
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