EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 1, 2010 between Synergy Resources Corporation,
a placeStateColorado corporation (the "Company"), and Ed Holloway (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 $2,000,000.
2. Term of Employment.
------------------
2.1 The Term of this Agreement (the "Term") shall commence on June
1, 2010 and shall end on May 31, 2013, unless sooner terminated pursuant to
Article 4 of this Agreement.
3. Compensation.
------------
3.1 The Company agrees to pay the Employee a salary of $25,000 per
month during the term of this Agreement.
3.2 For every 50 wells that first begin producing commercial
quantities of oil and/or gas after June 1, 2010, as a result of the successful
drilling efforts or as the result of a completed acquisition by the Company, the
Employee will be issued shares of the Company's common stock equal in number to
1
the amount determined by dividing $100,000 by the average closing price of the
Company's common stock for the 20 trading days immediately preceding the date
the 50th well was placed on production.
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 401(k) plans.
3.4 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.
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
harms 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 harms 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
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 The Employee may resign upon ten days notice if the Company's
Board of Directors materially interferes with the performance of the Employee's
duties.
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
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
3
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.
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
20203 Highway 60
CityplacePlatteville, StateCO PostalCode80651
If to the Employee:
Ed Holloway
20203 Highway 60
Platteville, CO 80651
4
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, the employment
agreement dated June 11, 2008 between the Company and the Employee.
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.
5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SYNERGY RESOURCES CORPORATION
By /s/ William E. Scaff, Jr.
----------------------------------
Authorized Officer
EMPLOYEE
/s/ Ed Holloway
----------------------------------
Ed Holloway
6