EXHIBIT 10.11
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of March 7, 2011 between Synergy Resources Corporation,
a Colorado corporation (the "Company"), and Frank L. Jennings (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
its Principal Financial and Accounting Officer. The Employee will report to the
officers of the company. Employee will devote 100% of his time to the business
of the Company.
1.2 The Employee hereby accepts such employment and agrees to render
the services described above.
1.3 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 March
7, 2011 and shall end on March 7, 2014, unless sooner terminated pursuant to
Article 4 of this Agreement.
3. Compensation.
3.1 The Company agrees to pay the Employee a salary of $15,000 per
month during the term of this Agreement.
3.2 Effective March 7, 2011 the Employee will be issued 50,000
shares of the Company's common stock.
3.3 Effective March 7, 2011 the Employee will be issued 10 year
options to purchase 150,000 shares of the Company's common stock. The options
will be exercisable at a price per share equal to the OTCBB closing price on
March 7, 2011, and will expire on March 7, 2021. The vesting schedule is as
follows:
Options to purchase the first 50,000 shares will first be exercisable on
March 6, 2012.
Options to purchase the next 50,000 shares will first be exercisable on
March 6, 2013.
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Options to purchase the last 50,000 shares will first be exercisable on
March 6, 2014.
3.4 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.
3.5 During each twelve month period the Employee shall be entitled
to 3 weeks of vacation which, to the extent not used, will carry over into the
following year; provided, however, that the Employee shall use reasonable
judgment with regard to appropriate vacation scheduling.
3.6 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,
3.7 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.
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.
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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, or (ii) 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 that 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 1934 Act) of
securities possessing more than fifty percent (50%) of the total voting power of
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
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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 12 months 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.
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;
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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.
5.5 Employee agrees that he will not, during the term of this
Agreement and for a period of 1 year 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
Employee, 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 5.2 shall not prevent the Employee 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.
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
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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
Platteville, CO 80651
If to the Employee:
Frank L. Jennings
1050 Princeton Drive
Longmont, CO 80503
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.
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.
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8.7 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 the
date first above written.
SYNERGY RESOURCES CORPORATION
By /s/ Ed Holloway
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Ed Holloway, President
EMPLOYEE
Frank L. Jennings
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Frank L. Jennings