Exhibit 10.3
 
 
 
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (this “Agreement”) is entered into to be
effective as of the 1st day of January 2016 between William B. Lloyd (the
“Executive”) and PetroShare Corp., a Colorado corporation (the “Company”). The
Executive and Company may be referred to in this Agreement as a “Party” or
collectively as the “Parties.”
BACKGROUND
The Company wishes to employ Executive as part of its executive management team
in the position described below, and to provide the Executive with compensation
and other benefits on the terms and subject to the conditions contained in this
Agreement.
Executive is willing to accept such employment and perform services for the
Company on the terms and subject to the conditions contained in this Agreement.
The Parties desire to set forth the terms and conditions upon which Executive
will be employed by the Company.
AGREEMENT

1. Employment; Devotion to Duties.

(a)            General. The Company will employ Executive as its Chief Operating
Officer reporting to the Company’s Chief Executive Officer (“CEO”) and its Board
of Directors (the “Board”), and Executive accepts employment to serve in this
capacity, all upon the terms and conditions in this Agreement. Executive will
have those duties and responsibilities that are consistent with Executive’s
position as Chief Operating Officer, as determined by the CEO and the Board. The
Company reserves the right, in its sole discretion, to change or modify
Executive’s position, title and duties during the term of this Agreement,
subject to Executive’s rights under Section 7(d).
(b)            Devotion to Duties. During the Term (defined in Section
2(b)), Executive (i) will faithfully, with diligence and to the best of his
ability, experience and talents, devote all of his business time and efforts to
the performance of his duties on the Company’s behalf, and (ii) will not at any
time or place or to any extent whatsoever, without the express written consent
of the Board, engage in any outside employment, or in any activity competitive
with or adverse to the Company’s business, or affairs, whether alone or as
partner, manager, member, officer, director, employee, or shareholder of any
entity or as a trustee, fiduciary, consultant or other representative.  This is
not intended to prohibit Executive from engaging in activities such as personal
investments, a family business or charitable work, so long as those activities
do not conflict with the Company and, in the case of positions on other boards
of directors or similar bodies, receive the prior written approval of the Board.
Participation to a reasonable extent in civic, social, community or charitable
activities is encouraged. Notwithstanding anything herein to the contrary, any
outside activities will be conducted in compliance with the Company’s corporate
governance policies and other policies and procedures as in effect from
time-to-time.
 
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2. Term.

(a)            Initial Term. Executive will commence employment with the Company
under the terms of this Agreement starting on January 1, 2016 (the “Commencement
Date”). Executive will be employed under this Agreement until December 31, 2018
(the “Initial Term”), unless the term is extended under Section 2(b), or
Executive’s employment is terminated earlier pursuant to Section 7.
(b)            Renewal Term. Following the Initial Term, the term of this
Agreement and the Executive’s employment shall renew automatically for
successive one-year periods (each, a “Renewal Term”), unless at least 90 days
before the end of the Initial Term or any Renewal Term, either party gives
notice to the other party that this Employment Agreement will terminate at the
end of the Initial Term or any Renewal Term (the Initial Term, together with any
Renewal Terms, the “Term”). Notwithstanding the above, the Executive’s
employment is subject to earlier termination under Section 7. If the Company
timely elects not to renew this Agreement at the end of the Initial Term or any
Renewal Term, the Executive’s termination of employment will be characterized as
a termination without Cause under Section 7(c).
3.            Location. The location of Executive’s principal place of
employment will be at the Company’s principal executive offices in Centennial,
Colorado;  provided, however, the Executive understands and agrees that he may
be required to travel and perform services outside of this area as reasonably
necessary to properly perform his duties under this Agreement. Travel away from
Colorado may be necessary for, among other things, meetings and presentations
with investors, potential investors, investment bankers and analysts.
4.            Base Salary. The Company will pay Executive an annual base salary
(“Base Salary”) in the amount of $12,500 per month ($150,000 per year). The Base
Salary will be paid in accordance with the Company’s payroll practices in effect
from time-to-time. Executive’s Base Salary will be reviewed at least annually in
accordance with the Company’s executive compensation review policies and
practices and may be increased in accordance with such review, looking to the
results of such review and the Company’s financial progress, among other things,
as guides in making any adjustments. All payments to Executive under this
Agreement will be subject to withholding as required by applicable law.
5.            Incentive Compensation.
(a)            Annual Bonus. Executive will be eligible to receive additional
cash compensation in the form of bonuses based on criteria established by and in
the sole discretion of the CEO, the Board or one of its committees. Unless
deferred pursuant to a plan that complies with Section 409A of the Internal
Revenue Code of 1986, as amended (“Code”), this bonus, if any, will be paid to
the Executive no later than two and one-half months following the end of the
relevant fiscal year in which the services were performed.
(b)            Equity Incentive. Executive will also be eligible to receive
equity grants under the Company’s Equity Incentive Plan(s) in accordance with
his position with the Company, as determined by the Board or a committee of the
Board in its sole and absolute discretion. In addition to any other grants for
which Executive may be eligible, upon execution of this Agreement, the Company
shall grant Executive options to acquire up to 875,000 shares of common stock at
an exercise price of $1.00 per share. The options shall be represented by an
agreement, the form of which is attached hereto as Exhibit A and incorporated
herein by reference.
 
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(c)            Clawback. The compensation and benefits provided pursuant to this
Agreement are subject to any compensation recoupment policy or policies and
related practices that may be adopted by the Company and in effect from
time-to-time, designed to recover any amounts paid to the Executive based on
inaccurate or incomplete financial information (each, a “Clawback Policy”). By
signing this Agreement, Executive agrees to fully cooperate with the Company in
assuring compliance with such policies and the provisions of applicable law,
including, but not limited to, promptly returning any compensation subject to
recovery by the Company pursuant to a Clawback Policy and applicable law.
6.            Executive Benefits.
(a)            Fringe Benefits; Paid Time Off. The Company will provide
Executive with those fringe and other executive benefits on the same terms and
conditions as are generally available to senior management from time-to-time
(e.g., health and other insurance programs, etc.); provided, however, that the
Company reserves the right to amend or terminate any employee or executive
benefit plan or program at any time. Executive shall be entitled each year to
one or more vacations and other paid time off (“PTO”) in an amount not to exceed
30 days, or otherwise in accordance with the Company’s PTO policies as in effect
from time-to-time. Vacations and other PTO shall be scheduled so as to not
unreasonably interfere with the business of the Company.
(b)            Reimbursement of Expenses. Executive is entitled to be reimbursed
by the Company for reasonable business expenses incurred in performing his
duties under the Company’s expense reimbursement policies as in effect from
time-to-time or as otherwise approved by the CEO or the Board. 
7.            Termination of Employment During the Term of the Agreement. Upon,
and as of, the date of the Executive’s termination of employment with the
Company for any reason, the Executive will be deemed to have resigned from all
positions he then holds as an officer or director of the Company. The
Executive’s employment may be terminated during the Term of this
Agreement pursuant to the following terms and conditions: 
(a)            Disability. 
(i)            Should the Executive be unable to engage in any significant
activity required by the terms of this Agreement by reason of any
medically-determinable physical or mental impairment that can be expected to
result in death or to last for a continuous period of three months or more,
Executive shall be deemed “disabled” and the Company shall be entitled to
terminate his employment. The Board shall have the right to determine disability
for the purposes of this provision, relying where necessary on the advice of
qualified medical providers, and any such determination shall be evidenced by
the Board’s written opinion delivered to the Executive and shall be final and
binding on the Executive. Such written opinion shall specify with particularity
the reasons supporting such opinion and shall be signed by at least a majority
of the Board. The Executive’s employment will terminate on the first day
following the determination that the Executive is disabled.
 
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(ii)            Upon a determination that the Executive is disabled, the Company
shall pay to the Executive (1) all earned but unpaid Base Salary through the
date of termination, prorated for any partial period of employment, (2) any
benefits to which Executive is entitled under any benefit plan maintained by the
Company to the date of termination; (3) any accrued but unused vacation or PTO
in accordance with Company policy, and (4) any unreimbursed business expenses in
accordance with the applicable policies of the Company (collectively, the
“Accrued Obligations”). Upon payment of the Accrued Obligations, the Company’s
obligations to Executive under this Agreement shall cease.
(b)            Company Terminates Executive’s Employment for Cause. 
(i)            Definition. For purposes of this Agreement,  Cause means (1) the
Executive’s failure to substantially perform his reasonably assigned duties
(other than on account of disability); (2) any conviction of Executive of a
felony or crime of moral turpitude; (3) the Executive engages in the use of
alcohol or narcotics to the extent that the performance of his duties is
materially impaired; (4) the Executive materially breaches the terms of this
Agreement; (5) the Executive engages in willful misconduct that is materially
injurious to the Company, other than business decisions made in good faith; (6)
the Executive commits an act which constitutes in fact and/or law a breach of
fiduciary duty; or (7) any act or omission not described above that constitutes
material and willful misfeasance, malfeasance, or gross negligence in the
performance of his duties to the Company.
(ii)            Effective Date of Termination. Executive’s employment will
terminate immediately upon written notice by the Company to Executive stating
that Executive’s employment is being terminated for Cause.
 
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(iii)            Compensation and Benefits. If the Company terminates the
Executive’s employment for Cause, the Company will pay Executive the Accrued
Obligations, following which the Company’s obligations to Executive shall cease.
(c)            Company Terminates Executive’s Employment Without Cause. 
(i)            Effective Date of Termination. Executive’s employment will
terminate on the 30th day after the Company gives written notice to Executive
stating that Executive’s employment is being terminated without Cause. The
Company may, at its discretion, place Executive on a paid administrative leave
during all or any part of the notice period. During the administrative leave,
the Company may bar Executive’s access to its offices or facilities or may
provide Executive with access subject to such terms and conditions as the
Company chooses to impose.
(ii)            Compensation and Benefits. If the Company terminates Executive’s
employment without Cause on or before December 31, 2016, the Company shall pay
to the Executive the Accrued Obligations, following which the Company’s
obligations to Executive shall cease.  If the Company terminates Executive’s
employment without Cause (subject to all of the terms and conditions of this
Agreement, including without limitation Section 7(h)) after December 31, 2016,
the Company will pay or provide Executive the sum of:
(1)            the Accrued Obligations; plus
(2)            12 months of Executive’s then-current Base Salary, payable
monthly in accordance with the Company’s then-current payroll practice (unless
otherwise delayed under Section 7(h) below), unless such termination is within
six months before or at any time following a Change in Control, in which case
the payments described in this Section 7(c)(ii) shall be paid in full within 60
days of the date of termination. For purposes of this Section 7, “Change in
Control” shall mean (A) a tender offer made and consummated for the ownership of
50% or more of the outstanding voting securities of the Company; (B) the sale of
50% or more of the outstanding voting securities of the Company in a single
transaction or a series of transactions occurring during a period of not more
than twelve months; (C) the Company is merged or consolidated with another
corporation and as a result of such merger or consolidation less than 50% of the
outstanding securities of the surviving or resulting corporation is owned in the
aggregate by the shareholders of the Company that existed immediately prior the
merger or consolidation; (D) the Company sells substantially all of its assets
to another corporation that is not a wholly-owned subsidiary of the Company; or
(E) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board.  Notwithstanding the foregoing, a Change in
Control shall not include a public offering of the Company’s common stock or a
transaction with its sole purpose to change the state of the Company’s
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company’s securities
immediately before such transaction; plus
(3)            The continuation of all Company welfare benefits, including any
medical, dental, vision, life and disability benefits pursuant to plans
maintained by the Company under which the Executive and/or the Executive’s
family were receiving benefits and/or coverage, for the 12-month period
following the date of the Executive’s termination, with such benefits provided
to the Executive at no less than the same coverage level as in effect as of the
date of termination and the Executive shall pay any portion of such cost as was
required to be borne by key executives of the Company generally on the date of
termination; provided, however, that, the coverage for any plan subject to COBRA
will discontinue if such coverage terminates under Section 4980B of the Code;
and
(iii)            Release Agreement. The Company will not make any payment to
Executive or furnish any benefit under this Section 7(c) unless Executive signs
(and does not revoke) a legal release (“Release Agreement”), in the form and
substance reasonably requested by the Company.  The Release Agreement will
require Executive to release the Company, directors, officers, employees, agents
and other affiliates with the Company from any and all claims, including claims
relating to Executive’s employment with the Company and the termination of
Executive’s employment.  The Release Agreement must be executed and returned to
the Company within either the 21 or 45 day period described in the Release
Agreement (if applicable) and it must not be revoked by Executive within the
seven-day revocation period described in the Release Agreement (if applicable).
 Notwithstanding anything in this Agreement to the contrary, (1) the Company
will provide the Release Agreement to the Executive in a timely manner to comply
with the provisions under Code Section 409A, and (2) if the Company concludes,
in the exercise of its discretion, that the payments due pursuant to this
Agreement are subject to Section 409A of the Code, and if the consideration
period, plus the revocation period described in the Release Agreement, spans two
calendar years, the payments will be begin in the second calendar year.
 
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(d)            Death. 
(i)            Effective Date of Termination. Executive’s employment will
terminate immediately upon the Executive’s death.
(ii)            Compensation and Benefits. Upon Executive’s death, the Company
will pay or provide to Executive’s surviving spouse, or if none, to Executive’s
heirs or devisees, the same compensation and benefits as if Executive was
terminated by the Company without cause as set forth in Section 7(c)(ii).
(e)            Executive Voluntarily Resigns With Good Reason. 
(i)            Definition. For purposes of this Agreement,  Good Reason means
(1) any material diminution or alteration of Executive’s position, authority or
duties under this Agreement without Executive’s prior written consent;
(2) removing Employee from his position as described in Section 1 without his
prior written consent, except for a termination of employment for death,
disability or termination by the Company with or without Cause; (3) a reduction
of Executive’s Base Salary, or any other failure of the Company to comply with
Sections 4, 5 or 6; or (4) any material breach of this Agreement by the Company.
Notwithstanding the above provisions, a condition is not considered Good Reason
unless (X) Executive gives the Company written notice of such condition within
30 days after the condition comes into existence;  (Y) the Company fails to cure
the condition within 30 days after receiving Executive’s written notice; and
(Z) Executive terminates his employment within 60 days after the expiration of
the Company’s cure period if the termination is to be treated as for Good Reason
based on the uncured Good Reason event.
(ii)            Effective Date of Termination. Executive’s employment will
terminate on the earlier to occur as determined in the sole discretion of the
Company of (x) the date that Executive terminates his employment or (y) the 60th
day after the expiration of the Company’s cure period as specified in Section
7(e)(i).
(iii)            Compensation and Benefits. If the Executive voluntarily resigns
his employment for Good Reason (subject to all of the terms and conditions of
this Agreement, including without limitation Section 7(h)), Company will pay or
provide Executive the same compensation and benefits as if the Executive was
terminated by the Company without Cause as set forth in Section 7(c)(ii).
(iv)            Release Agreement. The Company will not make any payment to
Executive or furnish any benefit under this Section 7(e) unless Executive signs
(and does not revoke) a Release Agreement pursuant to the same terms and
conditions as set forth in Section 7(c)(iii).
 
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(f)            Executive Voluntarily Resigns Without Good Reason. 
(i)            Effective Date of Termination. Executive’s employment will
terminate on the 30th day after Executive gives written notice to the Company
stating that Executive is resigning his employment with the Company for any
reason other than Good Reason, unless the Company waives in writing all or part
of this notice period (in which case the termination of employment is effective
as of the date of the waiver).
(ii)            Compensation and Benefits. If the Executive voluntarily resigns
without Good Reason, the Company will pay Executive the Accrued Obligations.
(g)            Leave of Absence. At the Company’s sole discretion, Executive may
be placed on a paid administrative leave of absence for a reasonable period of
time (not to exceed 60 days unless otherwise reasonably required to resolve
matters under investigation) should the Board believe it necessary for any
reason, including, but not limited to confirm that reasonable grounds exist for
a termination for Cause, for example, pending the outcome of any internal or
other investigation or any criminal charges.  During this leave, the Company may
bar Executive’s access to the Company’s or any affiliate’s offices or facilities
or may provide Executive with access subject to terms and conditions as the
Company chooses to impose.  The Company’s decision to place Executive on a paid
leave of absence will not constitute grounds for Executive to terminate his
employment for Good Reason and receive any severance payments or benefits
pursuant to Section 7(e).
(h)            Compliance with Code Section 409A.  
(i)            Capitalized terms in this Section 7(h) not otherwise defined in
this Agreement shall have the meaning assigned to them in the Code and the rules
and regulations promulgated thereunder.
(ii)            This Agreement is intended to comply with Section 409A of the
Code and shall be construed and operated accordingly. The Company may amend this
Agreement at any time to the extent necessary to comply with Section 409A. The
Executive shall perform any act, or refrain from performing any act, as
reasonably requested by the Company to comply with any correction procedure
promulgated pursuant to Section 409A.
(iii)            To the extent required to avoid the imposition of penalties or
interest under Section 409A, any payment or benefit to be paid or provided on
account of the Executive’s Separation from Service within the meaning of Section
409A if the Executive is a specified employee (within the meaning of Section
409A(a)(2)(B) of the Code) that would be paid or provided prior to the first day
of the seventh month following the Executive’s Separation from Service shall be
paid or provided on the first day of the seventh month following the Eligible
Individual’s Separation from Service or, if earlier, the date of the Executive’s
death. Further, if required to avoid imposition of penalties or interest under
409A, the amounts payable under this Agreement and subject to 409A(a)(2)(B)(i)
may not be paid before the later of (1) 18 months following the date of this
Agreement, or (2) six months following the payment event.
(iv)            Each payment to be made under this Agreement is a separately
identifiable or designated amount for purposes of Section 409A.
 
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(i)            Mitigation/Offset. The Executive is under no obligation to seek
other Employment or to otherwise mitigate the obligations of the Company under
this Agreement, and the Company may not offset against amounts or benefits due
Executive under this Agreement or otherwise on account of any claim (other than
any preexisting debts then due in accordance with their terms) the Company or
its affiliates may have against him or any remuneration or other benefit earned
or received by Executive after such termination.
8.            Other Obligations. 
(a)            Ownership of Work, Materials and Documents. The Executive will
disclose promptly to the Company any and all inventions, discoveries, and
improvements (whether or not patentable or registrable under copyright or
similar statutes), and all patentable or copyrightable works, initiated,
conceived, discovered, reduced to practice, or made by him, either alone or in
conjunction with others, during the Executive’s employment with the Company and
related to the business or activities of the Company and its affiliates (the
“Developments”). Except to the extent any rights in any Developments constitute
a work made for hire under the U.S. Copyright Act, which the parties acknowledge
are owned by the Company and/or its applicable affiliate, the Executive assigns
all of his right, title and interest in all Developments (including all
intellectual property rights) to the Company or its nominee without further
compensation, including all rights or benefits, including, without limitation,
the right to sue and recover for past and future infringement.  Whenever
requested by the Company, the Executive will execute any and all applications,
assignments or other instruments which the Company deems necessary to apply for
and obtain trademarks, patents or copyrights of the United States or any foreign
country or otherwise protect its interests. These obligations continue beyond
the end of the Executive’s employment with the Company with respect to
inventions, discoveries, improvements or copyrightable works initiated,
conceived or made by the Executive while employed by the Company, and are
binding upon the Executive’s employers, assigns, executors, administrators and
other legal representatives. Immediately upon the Company’s request at any time
during or following the Term, Executive is required to return to the Company any
and all Confidential and Proprietary Information (as defined hereinafter) and
any other property of the Company then within Executive’s possession, custody
and/or control. Failure to return this property, whether during the term of this
Agreement or after its termination, is a breach of this Agreement.
(b)            Confidential and Proprietary Information. During the course of
Executive’s employment, Executive will be exposed to a substantial amount of
confidential and proprietary information, including, but not limited to,
financial information, annual reports, audited and unaudited financial reports,
operational budgets and strategies, geologic and well data, methods of
operation, customer lists, strategic plans, business plans, marketing plans and
strategies, new business strategies, merger and acquisition strategies,
management systems programs, computer systems, personnel and compensation
information and payroll data, and other such reports, documents or information
(collectively the “Confidential and Proprietary Information”).  Due to
Executive’s senior position with the Company and its affiliates, Executive
acknowledges that he regularly receives Confidential and Proprietary Information
with respect to the Company and/or its affiliates; for the avoidance of doubt,
all such information is expressly included in Confidential and Proprietary
Information. Executive promises that Executive will not retain, take with
Executive or make any copies of such Confidential and Proprietary Information in
any form, format, or manner whatsoever (including paper, digital or other
storage in any form) nor will Executive disclose the same in whole or in part to
any person or entity, in any manner either directly or indirectly, either while
the Executive is employed by the Company or following termination of his
employment for any reason. Excluded from this Agreement is information that (i)
is or becomes publicly known through no violation of this Agreement; (ii) is
lawfully received by the Executive from any third party without restriction on
disclosure or use; (iii) is required to be disclosed by law; or (iv) is
expressly approved in writing by the Company for release or other use by the
Executive. Executive and the Company also acknowledge that because Executive is
a senior executive he will have access to information (some of which is
Confidential and Proprietary Information and some of which is not), employees
and knowledge about the Company that is extremely valuable to the Company and
which the Company needs to protect for a period of time after Executive
terminates employment. Additionally, the Parties agree that the covenants in
this Section 8 are reasonable and necessary to protect the Company’s legitimate
business interests. Executive and the Company agree that the foregoing
restrictive covenants are fair and reasonable and are freely, voluntarily and
knowingly entered into. Further, each party has been given the opportunity to
consult with legal counsel before entering into this Agreement.
 
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(c)            Judicial Amendment. If the scope of any provision of this Section
8 of this Agreement is found by a court to be too broad to permit enforcement to
its full extent, then that provision will be enforced to the maximum extent
permitted by law. The parties agree that, if legally permissible, the scope of
any provision of this Agreement may be modified by a judge in any proceeding to
enforce this Section 8, so that the provision can be enforced to the maximum
extent permitted by law. If any provision of this Agreement is found to be
invalid or unenforceable for any reason, the parties agree that it will not
affect the validity and enforceability of the remaining provisions of this
Agreement.
(d)            Injunctive Relief, Damages and Forfeiture. Due to the nature of
Executive’s position with the Company, and with full realization that a
violation of this Section 8 may cause immediate and irreparable injury and
damage, which is not readily measurable, and to protect the parties’ interests,
the parties understand and agree that either party may also seek injunctive
relief to enforce this Agreement in a court of competent jurisdiction to cease
or prevent any actual or threatened violation of this Agreement.  In any action
brought pursuant to this Section 8(d), the prevailing party will be entitled to
an award of attorney’s fees and costs.
(e)            Survival. The provisions of this Section 8 survive the
termination of this Agreement. 
(f)            Cooperation; No Disparagement. So long as Executive is receiving
any payments from the Company, Executive agrees to provide reasonable assistance
to the Company (including assistance with litigation matters), upon the
Company’s request, concerning the Executive’s previous employment
responsibilities and functions with the Company. Company will reimburse
Executive for his reasonable out-of-pocket expenses Executive incurs in
connection with such cooperative efforts. Additionally, at all times after the
Executive’s employment with the Company has terminated, Company (defined for
these purpose only as any Company press release and the Board, the CEO and the
CEO’s direct reports, and no other employees) and Executive agree to refrain
from making any disparaging or derogatory remarks, statements and/or
publications regarding the other, its employees or its services. 
 
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9.            General Provisions.
(a)            Severability. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any applicable law, then, if legally
permissible, such provision will be deemed to be modified to the extent
necessary to render it legal, valid and enforceable, and if no modification will
make the provision legal, valid and enforceable, then this Agreement will be
construed as if not containing the provision held to be invalid, and the rights
and obligations of the parties will be construed and enforced accordingly.
(b)            Assignment by Company. Nothing in this Agreement precludes the
Company from consolidating or merging into or with, or transferring all or
substantially all of its assets to, another corporation or entity that assumes
this Agreement and all obligations and undertakings hereunder. Upon any
consolidation, merger or transfer of assets and assumption, the term “Company”
means any other corporation or entity, as appropriate, and this Agreement will
continue in full force and effect.
(c)            Entire Agreement. This Agreement and any agreements concerning
equity compensation or other benefits, embody the Parties’ complete agreement
with respect to the subject matter in this Agreement and supersede any prior
written or contemporaneous oral, understandings or agreements between the
parties that may have related in any way to the subject matter in this
Agreement, including but not limited to any offer letter provided to or signed
by Executive. This Agreement may be amended only in writing executed by the
Company and Executive. 
(d)            Governing Law. Because the Company is a Colorado corporation, and
because it is mutually agreed that it is in the best interests of the Company
and all of its employees that a uniform body of law consistently interpreted be
applied to the employment agreements to which the Company is a party, this
Agreement will be deemed entered into by the Company and Executive in Colorado.
The law of the State of Colorado will govern the interpretation and application
of all of the provisions of this Agreement.
(e)            Notice. Any notice required or permitted under this Agreement
must be in writing and will be deemed to have been given when delivered
personally or by overnight courier service or three days after being sent by
mail, postage prepaid, at the address indicated below or to such changed address
as such person may subsequently give such notice of:

if to the Company: PetroShare Corp. 

7200 S. Alton Way, Suite B-220
Centennial, CO 80112
Attention:  Chairman

if to Executive: 1990 Wolfensberger Court

Castle Rock, CO 80109
 
 
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(f)            Non-Waiver; Construction; Counterparts. The failure in any one or
more instances of a party to insist upon performance of any of the terms,
covenants or conditions of this Agreement, to exercise any right or privilege
conferred in this Agreement, or the waiver by that party of any breach of any of
the terms, covenants or conditions of this Agreement,  will not be construed as
a subsequent waiver of any such terms, covenants, conditions, rights or
privileges, but the waiver will continue and remain in full force and effect as
if no such forbearance or waiver had occurred.  No waiver is effective unless it
is in writing and signed by an authorized representative of the waiving party.
This Agreement will be construed fairly as to both parties and not in favor of,
or against, either party, regardless of which party prepared the Agreement. This
Agreement may be executed in multiple counterparts, each of which will be deemed
to be an original, and all such counterparts will constitute but one instrument.
(g)            Successors and Assigns. This Agreement is solely for the benefit
of the parties and their respective successors, assigns, heirs and legatees.
Nothing in this Agreement will be construed to provide any right to any other
entity or individual.
(h)            Indemnification. The Company agrees to indemnify the Executive to
the fullest extent provided under the Company’s Bylaws, on the same terms and
conditions as indemnification is generally provided to the Company’s officers
and directors, in the event that he was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
by reason of the fact that the Executive is or was a director, officer, employee
or agent of the Company or any of its affiliates; provided, however, that the
Executive is not entitled to indemnification under this Section 9(h) relating to
any claims, actions, suits or proceedings arising from his breach of this
Agreement. 
 
 
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
January 28, 2016 and effective as of the date first above written.
 
 
 
 
PETROSHARE CORP.,
a Colorado corporation
 
 
 
 
By:
/s/ Stephen J. Foley
 
 
 
 
Name:
Stephen J. Foley
 
 
 
 
Title:
Chief Executive Officer
 
 
 
 
EXECUTIVE
 
 
 
 
 
 
 
/s/ William B. Lloyd
 
William B. Lloyd

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EXHIBIT A

Form of Stock Option Agreement

 
 
 
 
 
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