Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and
entered into this 8th day of April, 2011, by and between Synthesis Energy
Systems Inc., a Delaware corporation, having its principal executive office at
Three Riverway, Suite 300, Houston, Texas 77056 (hereinafter referred to as the
“Company”), and Robert W. Rigdon (hereinafter referred to as the “Employee”).
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Employee and the Employee desires to
enter the Company’s employ; and
WHEREAS, the Company and the Employee entered into an Employment Agreement dated
March 14, 2008, as amended (the “Original Agreement”), which the parties desire
to amend and restate and replace with this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Employee hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms have the meanings prescribed
below:
AAA shall have the meaning assigned thereto in Section 14.13 hereof.
Affiliate is used in this Agreement to define a relationship to a person or
entity and means a person or entity who, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, such person or entity.
Agreement shall have the meaning assigned thereto in the preamble to this
Agreement.
Outperformance Bonus shall have the meaning assigned thereto in Section 4.2(a)
hereof.
Base Salary shall have the meaning assigned thereto in Section 4.1 hereof.
Board means the board of directors of the Company.
Bonus Payment shall have the meaning assigned thereto in Section 13.2 hereof.
Cause shall have the meaning assigned thereto in Section 5.3 hereof.

 

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Change in Control of the Company shall be deemed to have occurred if any of the
events set forth in any one of the following paragraphs shall occur:
(a) any “person” (as defined in section 3(a)(9) of the Exchange Act, and as such
term is modified in sections 13(d) and 14(d) of the Exchange Act), excluding the
Company or any of its subsidiaries, a trustee or any fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries, an underwriter temporarily holding securities pursuant to an
offering of such securities or a corporation owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as their
ownership of the Company, is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then outstanding securities; or
(b) during any period of not more than two consecutive years, individuals who at
the beginning of such period constitute the Board and any new director (other
than a director designated by a person who has entered into an agreement with
the Company to effect a transaction described in clause (a), (c) or (d) of this
definition) whose election by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(c) the stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holder of securities under an employee benefit plan of the Company, at least 50%
of the combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
(ii) a merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires more than 50% of
the combined voting power of the Company’s then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.
Notwithstanding the foregoing, no Change in Control shall be deemed to have
occurred if there is consummated any transaction or series of integrated
transactions immediately following which, in the judgment of the Compensation
Committee, the holders of the Common Stock, immediately prior to such
transaction or series of transactions continue to have the same proportionate
ownership in an entity which owns all or substantially all of the assets of the
Company immediately prior to such transaction or series of transactions. The
Board may (i) deem any other corporate event affecting the Company (other than
those described in clauses (a)-(d) of this definition) to be a “Change in
Control,” and (ii) may amend this definition of “Change in Control” in
connection with an identical amendment being made to termination agreements
entered into by the Company and all of its senior executive officers.

 

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Code means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated by the Internal Revenue Service thereunder, all as in
effect from time to time during the Employment Period.
Common Stock means the Company’s common stock, par value $.01 per share.
Company shall have the meaning assigned thereto in the preamble to this
Agreement.
Compensation Committee means the Compensation Committee of the Board.
Competing Business means any individual, business, firm, company, partnership,
joint venture, organization, or other entity that is engaged in the actual or
intended business of the Company and/or its Affiliates during the Employment
Period and as of the date the Employee leaves the employment of the Company is
engaged in the development of projects based on a non-catalytic, fluidized bed
reactor that is fed by coal or mixtures of coal and biomass. Such business may
also be engaged in the provision of products or services, such as operation and
maintenance services to plants based on a non-catalytic, fluidized bed reactor
employed to partially oxidize coal or mixtures of coal and biomass.
Confidential Information shall have the meaning assigned thereto in Section 8.2
hereof.
Date of Termination means the earliest to occur of (i) the date of the
Employee’s death or (ii) the date of receipt of the Notice of Termination, or
such later date as may be prescribed in the Notice of Termination in accordance
with Section 5.6 hereof.
Disability means an illness or other disability that prevents the Employee from
discharging his responsibilities under this Agreement for a period of 180
consecutive calendar days, or an aggregate of 180 calendar days in any calendar
year, during the Employment Period, all as determined in good faith by the Board
(or a committee thereof).
Effective Date means April 1, 2011.
Employment Period shall have the meaning assigned thereto in Section 3 hereof.
Employee means Robert W. Rigdon, an individual residing at 11410 Long Pine
Drive, Houston, Texas 77077.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Securities and Exchange Commission
thereunder, all as in effect from time to time during the Employment Period.
Excise Taxes shall have the meaning assigned thereto in Section 13.1 hereof.
Good Reason shall have the meaning assigned thereto in Section 5.5 hereof.
Initial Term shall have the meaning assigned thereto in Section 3 hereof.
Losses shall have the meaning assigned thereto in Section 13.8 hereof.

 

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Notice of Termination shall have the meaning assigned thereto in Section 5.6
hereof.
Original Agreement shall have the meaning assigned thereto in the recitals to
this Agreement.
Plan means the Company’s Amended and Restated 2005 Incentive Plan, as amended.
Rules shall have the meaning assigned thereto in Section 14.13 hereof.
Successor Provisions shall have the meaning assigned thereto in Section 13.5
hereof.
Tax Consultant shall have the meaning assigned thereto in Section 13.6 hereof.
Technology shall have the meaning assigned thereto in Section 8.2(a) hereof.
Vacation Time shall have the meaning assigned thereto in Section 4.3 hereof.
Without Cause shall have the meaning assigned thereto in Section 5.4 hereof.
Unless otherwise stated herein, all “$” refer to United States dollars.
2. General Duties and Responsibilities of the Company and the Employee.
2.1 (a) The Company agrees to employ the Employee, and the Employee agrees to
accept employment by the Company, as President and Chief Executive Officer and
to be based in the Company’s offices in Houston, Texas. The Employee shall
report to and be subject to the direction of the Board. The Employee shall have
the authority, duties and responsibilities that are normally associated with and
inherent in the capacity in which the Employee will be performing, and shall
have such other or additional duties which are not inconsistent with the
Employee’s position, as may from time to time be reasonably assigned to the
Employee by the Board. While employed hereunder, the Employee shall devote full
time and attention during normal business hours to the affairs of the Company
and use his best efforts to perform faithfully and efficiently his duties and
responsibilities. The Employee agrees to cooperate fully with the Board and
other employees of the Company, and not to engage in any activity which
conflicts with or interferes with the performance of his duties hereunder.
During the Employment Period, the Employee shall devote his best efforts and
skills to the business and interests of the Company, do his utmost to further
enhance and develop the best interests and welfare of the Company, and endeavor
to improve his ability and knowledge of the business of the Company, in an
effort to increase the value of his services for the mutual benefit of the
parties hereto. During the Employment Period, it shall not be a violation of
this Agreement for the Employee to (i) serve on any corporate board or committee
thereof with the approval of the Board, (ii) serve on any civic, or charitable
boards or committees (except for boards or committees of a Competing Business
unless approved by the Board), (iii) deliver lectures, fulfill teaching or
speaking engagements, or (iv) testify as a witness in litigation involving a
former employer; provided, however, any such activities must not materially
interfere with performance of the Employee’s responsibilities under this
Agreement.

 

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(b) The Employee 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 Employee
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 Employee hereunder. The Employee 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,
which would affect his ability to perform his responsibilities hereunder.
2.2 The Employee acknowledges and agrees that he owes a fiduciary duty of
loyalty, fidelity and allegiance to act at all times in the best interests of
the Company and its Affiliates and to do no act and to make no statement, oral
or written, which would injure the business, interests or reputation of the
Company or its Affiliates.
3. Term. Unless sooner terminated pursuant to other provisions hereof, the
Employee’s period of employment under this Agreement shall be a period of three
years beginning on the Effective Date (the “Initial Term”). The Employee’s
period of employment under this Agreement shall be automatically renewed for
successive one year terms on each anniversary of the Effective Date (the Initial
Term and any and all renewals thereof are referred to herein collectively as the
“Employment Period”), unless written notice of nonrenewal is delivered by the
Company to the Employee at least 30 days before the end of the Initial Term or
any such one-year renewal term.
4. Compensation and Benefits.
4.1 Base Salary. As compensation for services to the Company, the Company shall
pay to the Employee from the Effective Date until the Date of Termination an
annual base salary of $300,000 (the “Base Salary”). The Board will conduct an
annual review of the Employee’s compensation and, in its sole discretion, may
increase the Base Salary based upon relevant circumstances. The Base Salary
shall be payable in equal semi-monthly installments or in accordance with the
Company’s established policy, subject only to such payroll and withholding
deductions as may be required by law and other deductions (consistent with the
Company’s policy for all employees) relating to the Employee’s election to
participate in the Company’s insurance and other employee benefit plans.
4.2 Bonus.
(a) In addition to the Base Salary, the Employee may be awarded, for each fiscal
year until the Date of Termination, a performance bonus, with the amount and
payment of such bonus to be determined by, and to be at the sole discretion of,
the Compensation Committee (the “Outperformance Bonus”). The criteria for the
Outperformance Bonus shall be agreed to annually by the Compensation Committee
and the Employee and shall include, among other things, consideration for any
significant transactions which the Company may enter into during such year. For
the purposes of this Agreement, the term “Outperformance Bonus” will refer only
to the cash bonus, and not to long-term equity incentives to be paid pursuant to
any compensation plan then in effect. Each such Outperformance Bonus shall be
payable in an amount and at a time to be determined by the Board in its sole
discretion.

 

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(b) The Employee shall also be entitled to an annual bonus of $120,000 payable
in two equal payments within ten days after January 1 and July 1 of each year
until the Date of Termination.
4.3 Stock Options. Subject to the terms and conditions of a Nonstatutory Stock
Option Agreement to be entered into between the Company and the Employee, the
Company shall grant to the Employee options to acquire 400,000 shares of the
Common Stock which will vest in four equal annual amounts with the first vesting
occurring on the effective date of the grant. The Company acknowledges and
agrees that the Employee will be eligible for additional grants after the
Effective Date in the sole discretion of the Compensation Committee.
4.4 Vacation. Until the Date of Termination, the Employee shall be entitled to
annual paid vacation equal to twenty days during each one-year period commencing
on the date of execution hereof (the “Vacation Time”). The use of any Vacation
Time not taken during the applicable one-year period will be subject to the
Company’s vacation policy as in effect from time to time.
4.5 Incentive, Savings and Retirement Plans.
(a) Until the Date of Termination, the Employee shall be eligible to participate
in and shall receive all benefits under all incentive, savings and retirement
plans and programs currently maintained or hereinafter established by the
Company for the benefit of its employees.
(b) To the extent it is determined that the stock options granted to the
Employee are subject to Section 409A of the Code, then the Employee shall be
entitled to receive additional payments from the Corporation in amounts
necessary to cover the taxes (including any interest or penalties imposed with
respect to such taxes) imposed upon the Employee as a result of (i) Section 409A
of the Code covering the grant of options hereunder, and (ii) receiving such
additional payments to cover the taxes imposed under Section 409A of the Code.
4.6 Benefit Plans. Until the Date of Termination, the Employee and/or the
Employee’s family, as the case may be, shall be eligible to participate in and
shall receive all benefits under each welfare benefit plan of the Company
currently maintained or hereinafter established by the Company for the benefit
of its employees. Such welfare benefit plans may include, without limitation,
medical, dental, disability, group life, accidental death and travel accident
insurance plans and programs. The Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing, any such
employee benefit program or plan, so long as such actions are similarly
applicable to covered employees generally.

 

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4.7 Reimbursement of Business Expenses. The Employee may from time to time until
the Date of Termination incur various business expenses customarily incurred by
persons holding positions of like responsibility, including, without limitation,
travel, entertainment and similar expenses incurred for the benefit of the
Company. Subject to the Employee complying with the Company’s policy regarding
the reimbursement of such expenses as in effect from time to time during the
Employment Period, which does not necessarily allow reimbursement of all such
expenses, the Company shall reimburse the Employee for such expenses from time
to time, at the Employee’s request, and the Employee shall account to the
Company for all such expenses.
4.8 Reimbursement of Certain Other Travel Expenses. The Company shall reimburse
the Employee for the cost of airline travel for his spouse to accompany him to
China on his trips for Company work; provided that the Employee shall only be
entitled to such reimbursement twice in any twelve-month period and such
reimbursement shall be subject to the Company’s applicable policies on airline
expense reimbursement.
4.9 Indemnification Agreement. The Company has entered into an Indemnification
Agreement regarding indemnification of the Employee in the form of such
agreements entered into with the Company’s other executive officers. The Company
will also cause the Employee to be covered by its director and officer insurance
policies as they are in effect from time to time for its executive officers.
4.10 Rule 10b5-1 Plan. If requested by the Employee, the Company acknowledges
and agrees that it will enter into good faith negotiations with the Employee to
establish a Rule 10b5-1 plan for trading in the Common Stock by the Employee.
5. Termination.
5.1 Death. This Agreement shall terminate automatically upon the death of the
Employee.
5.2 Disability. The Company may terminate this Agreement, upon written notice to
the Employee delivered in accordance with Sections 5.6 and 13.1 hereof, upon the
Disability of the Employee.
5.3 Cause. The Company may terminate this Agreement, upon written notice to the
Employee delivered in accordance with Sections 5.6 and 13.1 hereof, for Cause.
For purposes of this definition of “Cause,” the term “Company” shall mean the
Company and/or its Affiliates. For purposes of this Agreement, subject to the
notice provisions set forth below, “Cause” means (i) the conviction (or plea of
nolo contendere or equivalent plea) of the Employee of a felony which, through
lapse of time or otherwise, is not subject to appeal, (ii) the Employee having
engaged in misconduct causing a violation by the Company of any state or federal
laws which results in an injury to the business, condition (financial or
otherwise), results of operations or prospects of the Company as determined in
good faith by the Board or a committee thereof, (iii) the Employee having
engaged in a theft of corporate funds or corporate assets of the Company or in
an act of fraud upon the Company, (iv) an act of personal dishonesty taken by
the Employee that was intended to result in personal enrichment of the Employee
at the expense of the Company, (v) the Employee’s refusal, without proper legal
cause, to perform his duties and responsibilities as contemplated in this
Agreement or any other breach by the Employee of this Agreement, (vi) the
Employee’s engaging in activities which would constitute a breach of the
Company’s policies described in Section 7 of this Agreement or any other
applicable policies, rules or regulations of the Company, and (vii) the Employee
fails to adequately perform, as determined in the sole discretion of the Board,
the scope of the duties and responsibilities of his position. If the Company
desires to terminate the Employee for Cause pursuant to the provisions of this
Section 5.3, the Employee will be given a written notice by the Board of the
facts and circumstances providing the basis for termination for Cause, and the
Employee will have 30 days from the date of such notice to remedy, cure or
rectify the situation giving rise to termination for Cause to the reasonable
satisfaction of the Board (except in the event of termination for Cause pursuant
to subparagraph (i) above as to which no cure period will be permitted).

 

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5.4 Without Cause. The Company may terminate this Agreement Without Cause, upon
written notice to the Employee delivered in accordance with Sections 5.6 and
13.1 hereof. For purposes of this Agreement, the Employee will be deemed to have
been terminated “Without Cause” if the Employee is terminated by the Company for
any reason other than Cause, Disability or death of this Agreement pursuant to
Section 3 hereof; provided, however, that the Employee may only be terminated
Without Cause by a majority vote of the Board (with the Employee recusing
himself from such vote, if the Employee is on the Board).
5.5 Good Reason. The Employee may terminate this Agreement for Good Reason, upon
written notice to the Company delivered in accordance with Sections 5.6 and 13.1
hereof. For purposes of this definition of “Good Reason,” the term “Company”
shall mean the Company and/or its Affiliates. For purposes of this Agreement,
“Good Reason” means: (i) the assignment to the Employee of any duties materially
inconsistent in any respect with the Employee’s duties or responsibilities as
contemplated in this Agreement, provided that the Employee specifically
terminates his employment for Good Reason hereunder within 120 days from the
date that he has actual notice of such assignment; (ii) requiring the Employee
to relocate to any office or location more than 50 miles outside of the Houston,
Texas metropolitan area without his consent; (iii) any other action by the
Company which results in a material diminishment in the Employee’s position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities, provided that the Employee specifically terminates
his employment for Good Reason hereunder within 120 days from the date that he
has actual notice of such diminishment; (iv) any material breach by the Company
of any of the provisions of this Agreement, provided that the Employee
specifically terminates his employment for Good Reason hereunder within 120 days
from the date that he has actual notice of such material breach; (v) a 5% or
more reduction, or attempted reduction, at any time during the Employment
Period, of the Base Salary of the Employee unless such reduction is also applied
to all employees of the Company; or (vi) the taking of any action by the Company
which would adversely affect the Employee’s participation in or materially
reduce the Employee’s benefits provided under Section 4.6 hereof, unless
(A) there is substituted a comparable benefit that is at least economically
equivalent (in terms of the benefit offered to the Employee) to the benefit in
which the Employee’s participation is being adversely affected or to the
Employee’s benefits that are being materially reduced, or (B) the taking of such
action affects all employees of the Company. Notwithstanding sections (i) and
(iii) of the definition of Good Reason to the contrary, if the Company proposes
an assignment or diminishment in the Employee’s position to another senior
executive position in the Houston, Texas metropolitan area with reasonably
acceptable terms and conditions, Employee acknowledges and agrees that he will
negotiate with the Company in good faith a reasonable amendment to this
Agreement and such event shall not be deemed a Good Reason for the Employee to
terminate this Agreement. Notwithstanding the preceding provisions of this
Section 5.5, if the Employee desires to terminate his employment for Good
Reason, he shall first give written notice of the facts and circumstances
providing the basis for Good Reason to the Board, and allow the Company thirty
(30) days from the date of such notice to remedy, cure or rectify the situation
giving rise to Good Reason to the reasonable satisfaction of the Employee.

 

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5.6 Notice of Termination. Any termination of this Agreement by the Company or
the Employee, shall be communicated by Notice of Termination to the other party
hereto given in accordance with this Agreement. For purposes of this Agreement,
a “Notice of Termination” means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee’s employment under the provision so indicated and
(iii) specifies the termination date, if such date is other than the date of
receipt of such notice (which termination date shall not be more than 60 days
after the giving of such notice, unless otherwise provided herein).
Notwithstanding the foregoing, the Company may elect to consider the Employee as
an employee after the Date of Termination for purposes of complying with the
provisions of Section 6 hereof.
6. Obligations of the Company upon Termination.
6.1 Cause; Other Than Good Reason. If this Agreement shall be terminated either
by the Company for Cause or by the Employee for any reason other than Good
Reason, including by the Employee by delivery of a notice of nonrenewal of this
Agreement pursuant to Section 3 hereof, the Company shall pay to the Employee,
in a lump sum in cash within 30 days after the Date of Termination, the
aggregate of the Employee’s Base Salary (as in effect on the Date of
Termination) through the Date of Termination, if not theretofore paid, and, in
the case of compensation previously deferred by the Employee, all amounts of
such compensation previously deferred and not yet paid by the Company. All other
obligations of the Company and rights of the Employee hereunder shall terminate
effective as of the Date of Termination, except as provided for in any benefit
plans, incentive stock plans or other compensation plans and as otherwise
provided in this Agreement.
6.2 Death or Disability. If this Agreement is terminated as a result of the
Employee’s death or Disability, the Company shall pay to the Employee or his
estate, in a lump sum in cash within 30 days of the Date of Termination, the
Employee’s Base Salary (as in effect on the Date of Termination) through the
Date of Termination, if not theretofore paid, and, in the case of compensation
previously deferred and bonuses previously earned by the Employee, all amounts
of such compensation previously deferred and earned and not yet paid by the
Company. In addition, all unvested options will be fully vested and thereafter,
all such fully vested stock options will be exercisable by the Employee until
the earlier to occur of the expiration of the term of each stock option or one
year after the date they become fully vested. All other obligations of the
Company and rights of the Employee hereunder shall terminate effective as of the
Date of Termination, except as provided for in any benefit plans, incentive
stock plans or other compensation plans and as otherwise provided in this
Agreement.

 

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6.3 Good Reason; Without Cause; Notice of Nonrenewal. If this Agreement shall be
terminated either (i) by the Employee for Good Reason, (ii) by the Company
Without Cause or (iii) by the Company by delivery of a notice of nonrenewal of
this Agreement pursuant to Section 3 hereof:
(a) The Company shall pay to the Employee in a lump sum in cash within 30 days
after the Date of Termination, if not theretofore paid, the Employee’s Base
Salary (as in effect on the Date of Termination) through the Date of
Termination, and in the case of compensation previously deferred and bonuses
previously earned by the Employee, all amounts of such compensation previously
deferred and earned and not yet paid by the Company.
(b) The Company shall pay to the Employee, in equal semi monthly installments
over twelve months in accordance with its normal payroll practices, an amount
equal to the Base Salary (as in effect on the Date of Termination). The Employee
accepts the obligation to notify the Company upon securing employment outside
the Company and to communicate to the Company the effective start date of such
employment at which time the payments pursuant to this subsection (b) will
cease. Failure to do so may result in a claim by the Company to return excess
payments paid to the Employee. Notwithstanding anything to the contrary herein,
in the event that payments under this Section 6.3(a) are delayed until the 181st
day following the Employee’s termination date pursuant to Section 409A of the
Code (as described in Section 6.6 below), the Company agrees to pay to the
Employee, in a lump sum within five business days of such 181st day, the twelve
installments of the Base Salary that would have otherwise been paid during such
181 day period; provided, that if the Employee secures employment outside of the
Company during such 181 day period, the Company agrees to pay to the Employee,
in a lump sum within five business days of such 181st day, the amount of the
Base Salary that would have otherwise been paid to the Employee during such
181 day period prior to his securing employment outside of the Company.

 

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(c) During the twelve-month period commencing on the Date of Termination, the
Company shall continue benefits (other than disability benefits), at the
Company’s expense, to the Employee and/or the Employee’s family at least equal
to those which would have been provided to them under Section 4.6 hereof if the
Employee’s employment had not been terminated. Benefits otherwise receivable by
the Employee pursuant to this Section shall be reduced to the extent
substantially similar benefits are actually received by or made available to the
Employee by any other employer during the same time period for which such
benefits would be provided pursuant to this Section 6.3 at a cost to the
Employee that is commensurate with the cost incurred by the Employee immediately
prior to the Date of Termination; provided, however, that if the Employee
becomes employed by a new employer which maintains a medical plan that either
(i) does not cover the Employee or a family member or dependent with respect to
a preexisting condition which was covered under the applicable Company medical
plan, or (ii) does not cover the Employee or a family member or dependent for a
designated waiting period, the Employee’s coverage under the applicable Company
medical plan shall continue (but shall be limited in the event of noncoverage
due to a preexisting condition, to such preexisting condition) until the earlier
of the end of the applicable period of noncoverage under the new employer’s plan
or the six-month anniversary of the Date of Termination. The Employee agrees to
report to the Company any coverage and benefits actually received by the
Employee or made available to the Employee from such other employer(s). The
Employee shall be entitled to elect to change his level of coverage and/or his
choice of coverage options (such as Employee only or family medical coverage)
with respect to the benefits to be provided by the Company to the Employee to
the same extent that active employees of the Company are permitted to make such
changes; provided, however, that in the event of any such changes the Employee
shall pay the amount of any cost increase that would actually be paid by an
active employees of the Company by reason of making the same change in his level
of coverage or coverage options.
(d) All unvested options will be fully vested and thereafter, all such fully
vested stock options will be exercisable by the Employee until the earlier to
occur of the expiration of the term of each stock option or one year after the
date they become fully vested.
Notwithstanding any of the above to the contrary, the Employee will not be
entitled to any of the benefits or payments provided in Section 6.3(b) or
(c) hereof if (i) the Employee breaches this Agreement including the provisions
of Sections 8 through 12 hereof or (ii) the Employee fails to execute a release
from liability and waiver of right to sue the Company or its Affiliates in a
form reasonably acceptable to the Company.
6.4 Termination of Employment Following a Change in Control. If this Agreement
shall be terminated for any reason (other than by the Company for Cause) within
sixty days after a Change in Control which occurs during the term of this
Agreement, in lieu of any other obligation the Company may have pursuant to
Section 6 hereof:
(a) The Company shall pay to the Employee in a lump sum in cash within 30 days
after the Date of Termination, if not theretofore paid, the Employee’s Base
Salary (as in effect on the Date of Termination) through the Date of
Termination, and in the case of compensation previously deferred and bonuses
previously earned by the Employee, all amounts of such compensation previously
deferred and earned and not yet paid by the Company.
(b) The Company shall pay to the Employee, in equal semi monthly installments
over twelve months in accordance with its normal payroll practices, an amount
equal to the Base Salary (as in effect on the Date of Termination). The Employee
accepts the obligation to notify the Company upon securing employment outside
the Company and to communicate to the Company the effective start date of such
employment at which time the payments pursuant to this subsection (b) will
cease. Failure to do so may result in a claim by the Company to return excess
payments paid to the Employee.

 

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(c) During the twelve-month period commencing on the Date of Termination, the
Company shall continue benefits (other than disability benefits), at the
Company’s expense, to the Employee and/or the Employee’s family at least equal
to those which would have been provided to them under Section 4.6 hereof if the
Employee’s employment had not been terminated. Benefits otherwise receivable by
the Employee pursuant to this Section shall be reduced to the extent
substantially similar benefits are actually received by or made available to the
Employee by any other employer during the same time period for which such
benefits would be provided pursuant to this Section 6.3 at a cost to the
Employee that is commensurate with the cost incurred by the Employee immediately
prior to the Date of Termination; provided, however, that if the Employee
becomes employed by a new employer which maintains a medical plan that either
(i) does not cover the Employee or a family member or dependent with respect to
a preexisting condition which was covered under the applicable Company medical
plan, or (ii) does not cover the Employee or a family member or dependent for a
designated waiting period, the Employee’s coverage under the applicable Company
medical plan shall continue (but shall be limited in the event of noncoverage
due to a preexisting condition, to such preexisting condition) until the earlier
of the end of the applicable period of noncoverage under the new employer’s plan
or the six-month anniversary of the Date of Termination. The Employee agrees to
report to the Company any coverage and benefits actually received by the
Employee or made available to the Employee from such other employer(s). The
Employee shall be entitled to elect to change his level of coverage and/or his
choice of coverage options (such as Employee only or family medical coverage)
with respect to the benefits to be provided by the Company to the Employee to
the same extent that active employees of the Company are permitted to make such
changes; provided, however, that in the event of any such changes the Employee
shall pay the amount of any cost increase that would actually be paid by an
active employees of the Company by reason of making the same change in his level
of coverage or coverage options.
(d) All unvested options will be fully vested and thereafter, all such fully
vested stock options will be exercisable by the Employee until the earlier to
occur of the expiration of the term of each stock option or one year after the
date they become fully vested.
Notwithstanding any of the above to the contrary, the Employee will not be
entitled to any of the benefits or payments provided in Section 6.4(b) or
(c) hereof if (i) the Employee breaches this Agreement including the provisions
of Sections 8, 9, 10 and 12 hereof or (ii) the Employee fails to execute a
release from liability and waiver of right to sue the Company or its Affiliates
in a form reasonably acceptable to the Company.
6.5 Post-Termination Advisory Role. In the event of a termination of this
Agreement other than by the Company for Cause, the Company acknowledges and
agrees that it will enter into good faith negotiations with the Employee for an
advisory agreement whereby the Employee will provide services to the Company for
a transition period following such termination of this Agreement, which advisory
agreement shall be on terms which are reasonably acceptable to the Compensation
Committee and to the Employee.

 

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6.6 Specified Employee. If the Employee is a “specified employee” as such term
is defined under Section 409A of the Code on the date of such Employee’s
termination of employment and if the benefit to be provided under this Section 6
is subject to Section 409A of the Code and is payable on account of a
termination of employment for reasons other than death or disability (as defined
in such Section 409A), payment in respect of such benefit shall not commence
until the 181st day following the Employee’s termination date.
7. Employee’s Obligation to Comply with Company Policies. For purposes of this
Section 7, the term “Company” shall mean the Company and/or its Affiliates. The
Employee 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 Business and Ethical Conduct and
policies regarding compliance with the U.S. Foreign Corrupt Practices Act, each
as in effect from time to time during the Employment Period.
8. Employee’s Confidentiality Obligation.
8.1 For purposes of this Section 8, the term “Company” shall mean the Company
and/or its Affiliates. The Employee hereby acknowledges, understands and agrees
that all Confidential Information, as defined in Section 8.2 hereof, whether
developed by the Employee or others employed by or in any way associated with
the Employee or the Company, is the exclusive and confidential property of the
Company and shall be regarded, treated and protected as such in accordance with
this Agreement. The Employee acknowledges that all such Confidential Information
is in the nature of a trade secret. Failure to mark any writing confidential
shall not affect the confidential nature of such writing or the information
contained therein.
8.2 For purposes of this Agreement, “Confidential Information” means
information, which is used in the business of the Company and (i) is proprietary
to, about or created by the Company, (ii) gives the Company some competitive
business advantage or the opportunity of obtaining such advantage or the
disclosure of which could be detrimental to the interests of the Company,
(iii) is designated as Confidential Information by the Company, is known by the
Employee to be considered confidential by the Company, or from all the relevant
circumstances should reasonably be assumed by the Employee to be confidential
and proprietary to the Company, or (iv) is not generally known by non-Company
personnel. Confidential Information excludes, however, any information that is
lawfully in the public domain or has been publicly disclosed by the Company.
Such Confidential Information includes, without limitation, the following types
of information and other information of a similar nature (whether or not reduced
to writing or designated as confidential):
(a) Information related to all proprietary information developed, licensed or
otherwise acquired by the Company, including, but not limited to, relating to
the U-GAS coal gasification technology, the manufacture of synthesis gas and
other energy products in a proprietary process (the “Technology”).
(b) Internal personnel and financial information of the Company, vendor
information (including vendor characteristics, services, prices, lists and
agreements), purchasing and internal cost information, internal service and
operational manuals, and the manner and methods of conducting the business of
the Company;

 

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(c) Marketing and development plans, price and cost data, price and fee amounts,
pricing and billing policies, quoting procedures, marketing techniques,
forecasts and forecast assumptions and volumes, and future plans and potential
strategies (including, without limitation, all information relating to any
acquisition prospect and the identity of any key contact within the organization
of any acquisition prospect) of the Company which have been or are being
discussed;
(d) Names of customers, suppliers and their representatives, contracts
(including their contents and parties), customer services, and the type,
quantity, specifications and content of products and services purchased, leased,
licensed or received by customers or suppliers of the Company;
(e) Confidential and proprietary information provided to the Company by any
actual or potential customer, supplier, government agency or other third party
(including businesses, consultants and other entities and individuals); and
(f) Work product resulting from or related to the research or development of the
Technology.
8.3 Notwithstanding anything to the contrary, the provisions of this Section 8
shall not apply to information that: (a) was, is now, or becomes generally
available to the public (but not as a result of a breach of any duty of
confidentiality by which the Employee is bound); (b) was disclosed to the
Employee by a third party not subject to any duty of confidentiality to the
Company prior to its disclosure to the Employee; or (c) is disclosed by the
Employee in the ordinary course of the Company’s business as a proper part of
his employment in connection with communications with customers, vendors and
other proper parties, provided that it is for a proper purpose solely for the
benefit of the Company. The Employee further agrees that he shall not make any
statement or disclosure that (i) would be prohibited by applicable Federal or
state laws, or (ii) is intended or reasonably likely to be detrimental to the
Company or any of its subsidiaries or Affiliates.
8.4 As a consequence of the Employee’s acquisition or anticipated acquisition of
Confidential Information, the Employee shall occupy a position of trust and
confidence with respect to the affairs and business of the Company. In view of
the foregoing and of the consideration to be provided to the Employee, the
Employee agrees that it is reasonable and necessary that the Employee make each
of the following covenants:
(a) At any time during the Employment Period and thereafter, the Employee shall
not disclose Confidential Information to any person or entity, either inside or
outside of the Company, other than as necessary in carrying out his duties and
responsibilities as set forth in Section 2 hereof, without first obtaining the
Company’s prior written consent (unless such disclosure is compelled pursuant to
court orders or subpoena, and at which time the Employee shall give prior
written notice of such proceedings to the Company).
(b) At any time during the Employment Period and thereafter, the Employee shall
not use, copy or transfer Confidential Information other than as necessary in
carrying out his duties and responsibilities as set forth in Section 2 hereof,
without first obtaining the Company’s prior written consent.

 

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(c) On the Date of Termination, the Employee shall promptly deliver to the
Company (or its designee) all written materials, records and documents made by
the Employee or which came into his possession prior to or during the Employment
Period concerning the business or affairs of the Company, including, without
limitation, all materials containing Confidential Information.
9. Disclosure of Information, Ideas, Concepts, Improvements, Discoveries and
Inventions.
As part of the Employee’s fiduciary duties to the Company and its Affiliates,
the Employee agrees that during his employment by the Company and thereafter
following the Date of Termination, the Employee shall promptly disclose in
writing to the Company all information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, and whether or not
reduced to practice, which are conceived, developed, made or acquired by the
Employee during the Employment Period, either individually or jointly with
others, and which relate to the business, products or services of the Company or
its Affiliates, irrespective of whether the Employee used the Company’s time or
facilities and irrespective of whether such information, idea, concept,
improvement, discovery or invention was conceived, developed, discovered or
acquired by the Employee on the job, at home, or elsewhere. This obligation
extends to all types of information, ideas and concepts, including, but not
limited to, information, ideas and concepts relating to the Technology, the
development of coal gasification and syngas production and the provision of
distributed power, utility services and coal gasification plant development,
operations and maintenance based on the Technology, new types of services, other
corporate opportunities, acquisition prospects, prospective names or service
marks for the Company’s business activities, and the like.

10.  
Ownership of Information, Ideas, Concepts, Improvements, Discoveries and
Inventions, and all Original Works of Authorship.

10.1 All references in this Section 10 to the term “Company” shall mean the
Company and/or its Affiliates. All information, ideas, concepts, improvements,
discoveries and inventions, whether patentable or not, which are conceived,
made, developed or acquired by the Employee or which are disclosed or made known
to the Employee, individually or in conjunction with others, during the
Employee’s employment by the Company and which relate to the business, products
or services of the Company or its Affiliates (including, without limitation, all
such information relating to corporate opportunities, research, financial and
sales data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customers’ organizations, marketing and
merchandising techniques, and prospective names and service marks) are and shall
be the sole and exclusive property of the Company. Furthermore, all drawings,
memoranda, notes, records, files, correspondence, manuals, models,
specifications, computer programs, maps and all other writings or materials of
any type embodying any of such information, ideas, concepts, improvements,
discoveries and inventions are and shall be the sole and exclusive property of
the Company.

 

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10.2 In particular, the Employee hereby specifically sells, assigns, transfers
and conveys to the Company all of his worldwide right, title and interest in and
to all such information, ideas, concepts, improvements, discoveries or
inventions, and any United States or Chinese or other foreign applications for
patents, inventor’s certificates or other industrial rights which may be filed
in respect thereof, including divisions, continuations, continuations-in-part,
reissues and/or extensions thereof, and applications for registration of such
names and service marks. The Employee shall assist the Company and its nominee
at all times, during the Employment Period and thereafter, in the protection of
such information, ideas, concepts, improvements, discoveries or inventions, in
the United States, China and all other foreign countries, which assistance shall
include, but shall not be limited to, the execution of all lawful oaths and all
assignment documents requested by the Company or its nominee in connection with
the preparation, prosecution, issuance or enforcement of any applications for
United States, China or other foreign letters patent, including divisions,
continuations, continuations-in-part, reissues and/or extensions thereof, and
any application for the registration of such names and service marks.
10.3 In the event the Employee creates, during the Employment Period, any
original work of authorship fixed in any tangible medium of expression which is
the subject matter of copyright (such as, videotapes, written presentations on
acquisitions, computer programs, drawings, maps, architectural renditions,
models, manuals, brochures or the like) relating to the Company’s business,
products or services, whether such work is created solely by the Employee or
jointly with others, the Company shall be deemed the author of such work if the
work is prepared by the Employee in the scope of his employment; or, if the work
is not prepared by the Employee within the scope of his employment but is
specially ordered by the Company as a contribution to a collective work, as a
part of a motion picture or other audiovisual work, as a translation, as a
supplementary work, as a compilation or as an instructional text, then the work
shall be considered to be work made for hire, and the Company shall be the
author of such work. If such work is neither prepared by the Employee within the
scope of his employment nor a work specially ordered and deemed to be a work
made for hire, then the Employee hereby agrees to sell, transfer, assign and
convey, and by these presents, does sell, transfer, assign and convey, to the
Company all of the Employee’s worldwide right, title and interest in and to such
work and all rights of copyright therein. The Employee agrees to assist the
Company and its Affiliates, at all times, during the Employment Period and
thereafter, in the protection of the Company’s worldwide right, title and
interest in and to such work and all rights of copyright therein, which
assistance shall include, but shall not be limited to, the execution of all
documents requested by the Company or its nominee and the execution of all
lawful oaths and applications for registration of copyright in the United States
and foreign countries.
11. Employee’s Non-Disparagement Obligation.
During the Employment Period and thereafter, the Employee shall not defame or
disparage the Company, its Affiliates and their officers, directors, members or
executives. The Employee agrees to cooperate with the Company in refuting any
defamatory or disparaging remarks by any third party made in respect of the
Company or its Affiliates or their directors, members, officers or executives.
The Company further agrees not to defame or disparage the Employee and agrees to
cooperate with the Employee in refuting any defamatory or disparaging remarks by
any third party made with respect to his employment with the Company.

 

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12. Employee’s Non-Competition and Non-Solicitation Obligations.
12.1 (a) All references in this Section 12 to the term “Company” shall mean the
Company and/or its Affiliates. During the Employment Period and for the 12 month
period following the Date of Termination hereof, the Employee shall not, acting
alone or in conjunction with others, directly or indirectly, in the People’s
Republic of China, the United States and any other business territories in which
the Company is presently or from time to time during the Employment Period
conducting business, invest or engage, directly or indirectly, in any Competing
Business or accept employment with or render services to such a Competing
Business as a director, officer, agent, employee or consultant or in any other
capacity; provided, however, that this Section 12.1(a) shall not be deemed
violated if the Employee is or becomes the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of up to five percent of the voting stock of
any corporation subject to the periodic reporting requirements of the Exchange
Act. Notwithstanding the above, the Employee may serve as an officer, director,
agent, employee or consultant to a Competing Business whose business is
diversified and which is, as to the part of its business to which the Employee
is providing services, not a Competing Business; provided, that prior to
accepting employment or providing services to such a Competing Business, the
Employee and the Competing Business will provide written assurances satisfactory
to the Company that the Employee will not render services directly or indirectly
for a 12-month period to any portion of the Competing Business which competes
directly or indirectly with the Company.
(b) In addition to the other obligations agreed to by the Employee in this
Agreement, the Employee agrees that for 12 months following the Date of
Termination hereof, he shall not directly or indirectly, (i) hire or attempt to
hire any employee of the Company, or induce, entice, encourage or solicit any
employee of the Company to leave his or her employment, or (ii) contact,
communicate or solicit any distributor, customer or acquisition or business
prospect or business opportunity of the Company for the purpose of causing them
to terminate or alter or amend their business relationship with the Company to
the Company’s detriment.
Notwithstanding the foregoing, if the Company fails to make the payments to the
Employee set forth in Section 6.3 hereof, then the terms of this Section 12.1
will not be effective from the date of such nonpayment; provided, that if the
Company subsequently makes any such payments, this Section 12.1 will become
effective in accordance with its terms for so long as the Company continues to
make the payments required by Section 6.3 hereof.
12.2 (a) The Employee hereby specifically acknowledges and agrees that:
(1) The Company has expended and will continue to expend substantial time, money
and effort in developing its business;
(2) The Employee will, in the course of his employment, be personally entrusted
with and exposed to Confidential Information;

 

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(3) The Company, during the Employment Period and thereafter, will be engaged in
a highly competitive business;
(4) The Employee could, after having access to the Company’s financial records,
contracts, and other Confidential Information and know-how and, after receiving
training by and experience with the Company, become a competitor;
(5) The temporal and other restrictions contained in this Section 12 are in all
respects reasonable and necessary to protect the business goodwill, trade
secrets, prospects and other reasonable business interests of the Company;
(6) The enforcement of this Agreement in general, and of this Section 12 in
particular, will not work an undue or unfair hardship on the Employee or
otherwise be oppressive to him; it being specifically acknowledged and agreed by
the Employee that he has activities and other business interests and
opportunities which will provide him adequate means of support if the provisions
of this Section 12 are enforced after the Termination Date; and
(7) The enforcement of this Agreement in general, and of this Section 12 in
particular, will neither deprive the public of needed goods or services nor
otherwise be injurious to the public.
(b) The Employee agrees that if an arbitrator (pursuant to Section 14.13 hereof)
or a court of competent jurisdiction determines that the length of time or any
other restriction, or portion thereof, set forth in this Section 12 is overly
restrictive and unenforceable, the arbitrator or court shall reduce or modify
such restrictions to those which it deems reasonable and enforceable under the
circumstances, and as so reduced or modified, the parties hereto agree that the
restrictions of this Section 12 shall remain in full force and effect. The
Employee further agrees that if an arbitrator or court of competent jurisdiction
determines that any provision of this Section 12 is invalid or against public
policy, the remaining provisions of this Section 12 and the remainder of this
Agreement shall not be affected thereby, and shall remain in full force and
effect.
(c) In the event of any pending, threatened or actual breach of any of the
covenants or provisions of Sections 8 through 12 hereof, as determined by a
court of competent jurisdiction, it is understood and agreed by the Employee
that the Company shall be entitled to seek a restraining order or injunctive
relief in addition to any other remedies at law and in equity, as determined by
a court of competent jurisdiction. Should a court of competent jurisdiction or
an arbitrator (pursuant to Section 14.13 hereof) declare any provision of
Sections 8 through 12 hereof to be unenforceable due to an unreasonable
restriction of duration or geographical area, or for any other reason, such
court or arbitrator is hereby granted the consent of each of the Employee and
the Company to reform such provision and/or to grant the Company any relief, at
law or in equity, reasonably necessary to protect the reasonable business
interests of the Company or any of its Affiliates. The Employee hereby
acknowledges and agrees that all of the covenants and other provisions of
Sections 8 through 12 hereof are reasonable and necessary for the protection of
the Company’s reasonable business interests.

 

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(d) It is acknowledged, understood and agreed by and between the parties hereto
that the covenants made by the Employee in this Section 12 are essential
elements of this Agreement and that, but for the agreement of the Employee to
comply with such covenants, the Company would not have entered into this
Agreement.
13. Certain Payments by the Company
13.1 In the event that the Employee is deemed to have received an “excess
parachute payment” (as defined in Section 280G(b) of the Code) which is subject
to the excise taxes (the “Excise Taxes”) imposed by Section 4999 of the Code in
respect of any payment pursuant to this Agreement or any other agreement, plan,
instrument or obligation, in whatever form, the Company shall make the Bonus
Payment (defined below) to the Employee notwithstanding any contrary provision
in this Agreement or any other agreement, plan, instrument or obligation.
13.2 The term “Bonus Payment” means a cash payment in an amount equal to the sum
of (i) all Excise Taxes payable by the Employee, plus (ii) all additional Excise
Taxes and federal or state income taxes to the extent such taxes are imposed in
respect of the Bonus Payment, such that the Employee shall be in the same
after-tax position and shall have received the same benefits that he would have
received if the Excise Taxes had not been imposed. For purposes of calculating
any income taxes attributable to the Bonus Payment, the Employee shall be deemed
for all purposes to be paying income taxes at the highest marginal federal
income tax rate, taking into account any applicable surtaxes and other generally
applicable taxes which have the effect of increasing the marginal federal income
tax rate and, if applicable, at the highest marginal state income tax rate, to
which the Bonus Payment and the Employee are subject. An example of the
calculation of the Bonus Payment is set forth below. Assume that the Excise Tax
rate is 20%, the highest federal marginal income tax rate is 40% and the
Employee is not subject to state income taxes. Further assume that the Employee
has received an excess parachute payment in the amount of $200,000, on which
$40,000 ($200,000 x 20%) in Excise Taxes are payable. The amount of the required
Bonus Payment is thus computed to be $100,000, i.e., the Bonus Payment of
$100,000, less additional Excise Taxes on the Bonus Payment of $20,000 (i.e.,
20% x $100,000) and income taxes of $40,000 (i.e., 40% x $100,000), yields
$40,000, the amount of the Excise Taxes payable in respect of the original
excess parachute payment.
13.3 The Employee agrees to reasonably cooperate with the Company to minimize
the amount of the excess parachute payments, including, without limitation,
assisting the Company in establishing that some or all of the payments received
by the Employee that are “contingent on a change,” as described in
Section 280G(b)(2)(A)(i) of the Code, are reasonable compensation for personal
services actually rendered by the Employee before the date of such change or to
be rendered by the Employee on or after the date of such change. Notwithstanding
the foregoing, the Employee shall not be required to take any action which his
attorney or tax advisor advises him in writing (i) is improper or (ii) exposes
the Employee to personal liability. The Employee may require the Company to
deliver to the Employee an indemnification agreement in form and substance
reasonably satisfactory to the Employee as a condition to taking any action
required by this Section 13.3; provided that such agreement is exempt from the
requirements of Code Section 409A.

 

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13.4 The Company shall make any payment required to be made under Section 13
hereof in a cash lump sum within 30 days after the date on which the Employee
received or is deemed to have received any such excess parachute payment.
Notwithstanding the foregoing, in no event will any Bonus Payment be paid later
than the end of Employee’s taxable year next following Employee’s taxable year
in which he remits the taxes to which such Bonus Payment relates.
13.5 In the event that there is any change to the Code which results in the
recodification of Section 280G or Section 4999 of the Code, or in the event that
either such section of the Code is amended, replaced or supplemented by other
provisions of the Code of similar import (“Successor Provisions”), then this
Agreement shall be applied and enforced with respect to such new Code provisions
in a manner consistent with the intent of the parties as expressed herein, which
is to assure that the Employee is in the same after-tax position and has
received the same benefits that he would have been in and received if any taxes
imposed by Section 4999 (or any Successor Provisions) had not been imposed.
13.6 All determinations required to be made under Section 13 hereof including,
without limitation, whether and when a Bonus Payment is required, and the amount
of such Bonus Payment and the assumptions to be utilized in arriving at such
determinations, unless otherwise expressly set forth in this Agreement, shall be
made within 30 days from the Date of Termination by the independent tax
consultant(s) selected by the Company and reasonably acceptable to the Employee
(the “Tax Consultant”). The Tax Consultant must be a qualified tax attorney or
certified public accountant. All fees and expenses of the Tax Consultant shall
be paid in full by the Company. Any Excise Taxes as determined pursuant to
Section 13 hereof shall be paid by the Company to the Internal Revenue Service
or any other appropriate taxing authority on the Employee’s behalf within five
(5) business days after receipt of the Tax Consultant’s final determination by
the Company and the Employee.
13.7 If the Tax Consultant determines that there is substantial authority
(within the meaning of Section 6662 of the Code) that no Excise Taxes are
payable by the Employee, the Tax Consultant shall furnish the Employee with a
written opinion that failure to disclose or report the Excise Taxes on the
Employee’s federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a
negligence or any other penalty.
13.8 The Company shall indemnify and hold harmless the Employee, on an after-tax
basis, from any costs, expenses, penalties, fines, interest or other liabilities
(“Losses”) incurred by the Employee with respect to the exercise by the Company
of any of its rights under Section 13 hereof, including, without limitation, any
Losses related to the Company’s decision to contest a claim of any imputed
income to the Employee or if the determination in Section 13.7 is incorrect. The
Company shall pay all fees and expenses incurred under Section 13 hereof, and
shall promptly reimburse the Employee for the reasonable expenses incurred by
the Employee in connection with any actions taken by the Company or required to
be taken by the Employee hereunder within 30 days after the Employee provides
reasonable documentation of such expenses. Notwithstanding the foregoing,
expenses incurred by Employee, including without limitation, attorneys’ fees,
due to a tax audit or litigation in connection with any excise tax (including
penalties and interest or other excise taxes thereon) under Code Section 4999 or
Code Section 280G shall be reimbursed by the Company no later than the end of
the Employee’s tax year following the tax year in which such taxes that are
subject to the audit or litigation are remitted to the taxing authority, or
where as a result of such audit or litigation no taxes are remitted, by the end
of the Employee’s tax year following the tax year in which the audit is
completed or there is a final nonappealable settlement or other resolution of
the litigation. The Employee’s right to payment or reimbursement pursuant to
this Section 13.8 shall not be subject to liquidation or exchange for any other
benefit.

 

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13.9 Furthermore, with respect to any payments that are taxable and includable
in income to be paid under this Section 13 and to the extent such payments are
not for the Bonus Payment or due to tax audit or litigation expenses described
in the preceding paragraph then such payments shall only be payable if such
expenses are incurred during the 15 year period commencing on the Date of
Termination; amounts payable in one calendar year will not affect amounts
payable in another calendar year; in no event will any payment be paid later
than the end of Employee’s taxable year following the Employee’s taxable year in
which the expenses were incurred; and such payments cannot be substituted for
any other benefits or subject to liquidation.
14. Miscellaneous.
14.1 Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given when (i) delivered by hand or sent by
facsimile, or (ii) on the third business day following deposit in the United
States mail by registered or certified mail, return receipt requested, to the
addresses as follows (provided that notice of change of address shall be deemed
given only when received):
If to the Company to:
Synthesis Energy Systems, Inc.
Three Riverway, Suite 300
Houston, Texas 77056
Attention: Chief Accounting Officer
Facsimile No.: (713) 579-0610
If to the Employee to:
Robert W. Rigdon
11410 Long Pine Drive
Houston, Texas 77077
or to such other names or addresses as the Company or the Employee, as the case
may be, shall designate by notice to the other party hereto in the manner
specified in this Section 14.1.

 

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14.2 Waiver of Breach. The waiver by any party hereto of a breach of any
provision of this Agreement shall neither operate nor be construed as a waiver
of any subsequent breach by any party. Except as expressly provided for herein,
the failure of either party hereto to take any action by reason of any breach
will not deprive such party of the right to take action at any time while such
breach occurs.
14.3 Assignment. This Agreement shall be binding upon and inure to the benefit
of the Company, and its respective successors, legal representatives and
assigns, and upon the Employee, his heirs, executors, administrators,
representatives and assigns; provided, however, the Employee agrees that his
rights and obligations hereunder are personal to him and may not be assigned
without the express written consent of the Company. Any reference to “Company”
herein shall mean the Company as well as any successors thereto.
14.4 Entire Agreement; No Oral Amendments. This Agreement, together with any
exhibit attached hereto and any document, policy, rule or regulation referred to
herein, replaces all previous agreements and discussions relating to the same or
similar subject matter between the Employee and the Company, including the
Original Agreement, and constitutes the entire agreement between the Employee
and the Company with respect to the subject matter of this Agreement; provided,
however, that the Indemnification Agreement between the Company and the Employee
dated the date hereof shall remain in full force and effect after the date
hereof. This Agreement may not be modified in any respect by any verbal
statement, representation or agreement made by any executive, officer, or
representative of the Company or by any written agreement unless signed by an
officer of the Company who is expressly authorized by the Company to execute
such document.
14.5 Enforceability. If any provision of this Agreement or application thereof
to anyone or under any circumstances shall be determined to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provisions or applications of this Agreement which can be given effect without
the invalid or unenforceable provision or application.
14.6 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES
OF CONFLICTS OF LAW.
14.7 Corporate Authority. The Company has all corporate power and authority
necessary to enter into this Agreement and to perform its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by the Company.
14.8 Defense of Claims. The Employee agrees that, during the Employment Period
and for a period of two (2) years after his Termination Date, upon request from
the Company, he will reasonably cooperate with the Company and its Affiliates in
the defense of any claims or actions that may be made by or against the Company
or any of its Affiliates that affect his prior areas of responsibility, except
if the Employee’s reasonable interests are adverse to the Company or its
Affiliates in such claim or action. To the extent travel is required to comply
with the requirements of this Section 14.8, the Company shall, to the extent
possible, provide the Employee with notice at least 10 days prior to the date on
which such travel would be required. The Company agrees to promptly pay or
reimburse the Employee upon demand for all of his reasonable travel and other
direct expenses incurred, or to be reasonably incurred, to comply, with his
obligations under this Section 14.8.

 

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14.9 Withholdings: Right of Offset. The Company may withhold and deduct from any
benefits and payments made or to be made pursuant to this Agreement (a) all
federal, state, local and other taxes as may be required pursuant to any law or
governmental regulation or ruling, (b) all other employee deductions made with
respect to the Company’s employees generally, and (c) any advances made to the
Employee and owed to the Company.
14.10 Nonalienation. The right to receive payments under this Agreement shall
not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge or encumbrance by the Employee, his dependents or
beneficiaries, or to any other person who is or may become entitled to receive
such payments hereunder. The right to receive payments hereunder shall not be
subject to or liable for the debts, contracts, liabilities, engagements or torts
of any person who is or may become entitled to receive such payments, nor may
the same be subject to attachment or seizure by any creditor of such person
under any circumstances, and any such attempted attachment or seizure shall be
void and of no force and effect.
14.11 Incompetent or Minor Payees. Should the Board determine that any person to
whom any payment is payable under this Agreement has been determined to be
legally incompetent or is a minor, any payment due hereunder may,
notwithstanding any other provision of this Agreement to the contrary, be made
in any one or more of the following ways: (a) directly to such minor or person;
(b) to the legal guardian or other duly appointed personal representative of the
person or estate of such minor or person; or (c) to such adult or adults as
have, in the good faith knowledge of the Board, assumed custody and support of
such minor or person; and any payment so made shall constitute full and complete
discharge of any liability under this Agreement in respect to the amount paid.
14.12 Title and Headings; Construction. Titles and headings to Sections hereof
are for the purpose of reference only and shall in no way limit, define or
otherwise affect the provisions hereof. Any and all Exhibits referred to in this
Agreement are, by such reference, incorporated herein and made a part hereof for
all purposes. The words “herein,” “hereof,” “hereunder” and other compounds of
the word “here” shall refer to the entire Agreement and not to any particular
provision hereof.
14.13 Arbitration.
(a) If any dispute or controversy arises between the Employee, the Company
relating to (1) this Agreement in any way or arising out of the parties’
respective rights or obligations under this Agreement or (2) the employment of
the Employee or the termination of such employment, then either party may submit
the dispute or controversy to arbitration under the then-current Commercial
Arbitration Rules (the “Rules”) of the American Arbitration Association (the
“AAA”). Any arbitration hereunder shall be conducted before a panel of three
arbitrators unless the parties mutually agree that the arbitration shall be
conducted before a single arbitrator. The arbitrators shall be selected (from
lists provided by the AAA) through mutual agreement of the parties, if possible.
If the parties fail to reach agreement upon appointment of arbitrators within
twenty (20) days following receipt by one party of the other party’s notice of
desire to arbitrate, then within five (5) days following the end of such 20-day
period, each party shall select one arbitrator who, in turn, shall within five
(5) days jointly select the third arbitrator to comprise the arbitration panel
hereunder. The site for any arbitration hereunder shall be in Harris County,
Texas, unless otherwise mutually agreed by the parties, and the parties hereby
waive any objection that the forum is inconvenient.

 

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(b) The party submitting any matter to arbitration shall do so in accordance
with the Rules. Notice to the other party shall state the question or questions
to be submitted for decision or award by arbitration. Notwithstanding any
provision of this Section 14.13, the Employee shall be entitled to seek specific
performance of the Employee’s right to be paid during the pendency of any
dispute or controversy arising under this Agreement. In order to prevent
irreparable harm, the arbitrator may grant temporary or permanent injunctive or
other equitable relief for the protection of property rights.
(c) The arbitrator shall set the date, time and place for each hearing, and
shall give the parties advance written notice in accordance with the Rules. Any
party may be represented by counsel or other authorized representative at any
hearing. The arbitration shall be governed by the Federal Arbitration Act, 9
U.S.C. Sections 1 et. seq. (or its successor). The arbitrator shall apply the
substantive law and the law of remedies, if applicable) of the State of Texas to
the claims asserted to the extent that the arbitrator determines that federal
law is not controlling.
(d) (1) Any award of an arbitrator shall be final and binding upon the parties
to such arbitration, and each party shall immediately make such changes in its
conduct or provide such monetary payment or other relief as such award requires.
The parties agree that the award of the arbitrator shall be final and binding
and shall be subject only to the judicial review permitted by the Federal
Arbitration Act.
(2) The parties hereto agree that the arbitration award may he entered with any
court having jurisdiction and the award may then be enforced as between the
parties, without further evidentiary proceedings, the same as if entered by the
court at the conclusion of a judicial proceeding in which no appeal was taken.
The Company and the Employee hereby agree that a judgment upon any award
rendered by an arbitrator may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
(e) Each party shall pay any monetary amount required by the arbitrator’s award,
and the fees, costs and expenses for its own counsel, witnesses and exhibits,
unless otherwise determined by the arbitrator in the award. The compensation and
costs and expenses assessed by the arbitrator(s) and the AAA shall be split
evenly between the parties unless otherwise determined by the arbitrator in the
award. If court proceedings to stay litigation or compel arbitration are
necessary, the party who opposes such proceedings to stay litigation or compel
arbitration, if such party is unsuccessful, shall pay all associated costs,
expenses, and attorney’s fees which are reasonably incurred by the other party
as determined by the arbitrator.

 

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14.14 Survival of Certain Provisions. Wherever appropriate to the intention of
the parties hereto, the respective rights and obligations of said parties,
including, but not limited to, the rights and obligations set forth in
Sections 8 through 12 hereof and this Section 14, shall survive any termination
or expiration of this Agreement.
14.15 No Strict Construction. The Employee represents to the Company that he is
knowledgeable and sophisticated as to business matters, including the subject
matter of this Agreement, that he has read the Agreement and that he understands
its terms and conditions. The parties hereto agree that the language used in
this Agreement shall be deemed to be the language chosen by them to express
their mutual intent, and no rule of strict construction shall be applied against
either party hereto. The Employee acknowledges that he has had the opportunity
to consult with counsel of his choice, independent of the counsel for the
Company, regarding the terms and conditions of this Agreement and has done so to
the extent that he, in his sole discretion, deemed to be appropriate.
[Signature page follows]

 

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IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first written above.

            Synthesis Energy Systems, Inc., a Delaware
corporation
      By:   /s/ Kevin Kelly         Name:   Kevin Kelly        Title:   Chief
Accounting Officer, Controller
and Secretary        Employee:
      /s/ Robert Rigdon       Robert Rigdon           

 

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