Document:

form8k021512ex10-1.htm

BUCKEYE OIL & GAS, INC.

REGULATION S SUBSCRIPTION AGREEMENT

AND INVESTMENT REPRESENTATION

SECTION 1.

1.1           Subscription.                                The undersigned, intending to be legally bound, hereby irrevocably subscribes for and agrees to purchase _____________ shares (the “Shares”) of the common stock (the “Common Stock”) of Buckeye Oil & Gas, Inc., a Florida corporation (the "Company") in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”).

1.2           Purchase of Shares.                                The undersigned understands and acknowledges that the purchase price to be remitted to the Company in exchange for the Shares shall be an aggregate of _______________ dollars ($______) or $_____ per Share.  The Company shall deliver the Shares to the undersigned promptly after the acceptance of this Subscription Agreement by the Company.

1.3           Acceptance or Rejection.

(a)           The undersigned understands and agrees that the Company reserves the right to reject this subscription for the Shares if, in its reasonable judgment, it deems such action in the best interest of the Company, at any time prior to the Closing, notwithstanding prior receipt by the undersigned of notice of acceptance of the undersigned's subscription.

(b)           The undersigned understands and agrees that its subscription for the Shares is irrevocable.

(c)           In the event the sale of the Shares subscribed for by the undersigned is not consummated by the Company for any reason (in which event this Subscription Agreement shall be deemed to be rejected), this Subscription Agreement and any other agreement entered into between the undersigned and the Company relating to this subscription shall thereafter have no force or effect and the Company shall promptly return or cause to be returned to the undersigned the purchase price remitted to the Company by the undersigned, without interest thereon or deduction therefrom, in exchange for the Shares.

SECTION 2.

2.1           Closing.  The closing (the "Closing") of the purchase and sale of the Shares, shall occur simultaneously with the acceptance by the Company of the undersigned's subscription, as evidenced by the Company's execution of this Subscription Agreement.

  

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SECTION 3.

3.1           Investor Representations and Warranties.   The undersigned hereby acknowledges, represents and warrants to, and agrees with, the Company and its affiliates as follows:

(a)           Investment Purposes.  The undersigned is acquiring the Shares for his own account as principal, not as a nominee or agent, for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part and no other person has a direct or indirect beneficial interest in such Shares or any portion thereof.  Further, the undersigned does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to the Shares for which the undersigned is subscribing or any part of the Shares.

(b)           Authority.  The undersigned has full power and authority to enter into this Agreement, the execution and delivery of this Agreement has been duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the undersigned.

(c)           No General Solicitation.  The undersigned is not subscribing for the Shares as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting, or any solicitation of a subscription by person previously not known to the undersigned in connection with investment securities generally.

(d)           No Obligation to Register Shares.  The undersigned understands that the Company is under no obligation to register the Shares under the Securities Act, or to assist the undersigned in complying with the Securities Act or the securities laws of any state of the United States or of any foreign jurisdiction.

(e)           Investment Experience.  The undersigned is (i) experienced in making investments of the kind described in this Agreement, (ii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and (iii) able to afford the entire loss of its investment in the
Shares.

(f)           Exemption from Registration.  The undersigned acknowledges his understanding that the offering and sale of the Shares is intended to be exempt from registration under the Securities Act.  In furtherance thereof, in addition to the other representations and warranties of the undersigned made herein, the undersigned further represents and warrants to and agrees with the Company and its affiliates as follows:

(1)           The undersigned realizes that the basis for the exemption may not be present if, notwithstanding such representations, the undersigned has in mind merely acquiring the Shares for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise.  The undersigned does not have any such intention;

  

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(2)           The undersigned has the financial ability to bear the economic risk of his investment, has adequate means for providing for his current needs and personal contingencies and has no need for liquidity with respect to his investment in the Company; and

(3)           The undersigned has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment in the Shares.  The undersigned also represents it has not been organized for the purpose of acquiring the Shares; and

(4)           The undersigned has been provided an opportunity for a reasonable period of time prior to the date hereof to obtain additional information concerning the offering of the Shares, the Company and all other information to the extent the Company possesses such information or can acquire it without unreasonable effort or expense.

(g)           Economic Considerations.  The undersigned is not relying on the Company, or its affiliates or agents with respect to economic considerations involved in this investment.  The undersigned has relied solely on its own advisors.

(h)           No Other Company Representations.  No representations or warranties have been made to the undersigned by the Company, or any officer, employee, agent, affiliate or subsidiary of the Company, other than the representations of the Company contained herein, and in subscribing for Shares the undersigned is not relying upon any representations other than those contained herein.

(i)           Compliance with Laws.  Any resale of the Shares during the ‘distribution compliance period’ as defined in Rule 902(f) to Regulation S shall only be made in compliance with exemptions from registration afforded by Regulation S.  Further, any such sale of the Shares in any jurisdiction outside of the United States will be made in compliance with the securities laws of such jurisdiction.  The Investor will not offer to sell or sell the Shares in any jurisdiction unless the Investor obtains all
required consents, if any.

(j)           Regulation S Exemption.  The undersigned understands that the Shares are being offered and sold to him in reliance on an exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the Securities Act and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the applicability of such exemptions and the suitability of
the Investor to acquire the Shares.  In this regard, the undersigned represents, warrants and agrees that:

(1)           The undersigned is not a U.S. Person (as defined below) and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of the Company and is not acquiring the Shares for the account or benefit of a U.S. Person.  A U.S. Person means any one of the following:

	
  

	
(A)

	
any natural person resident in the United States of America;

  

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(B)           any partnership or corporation organized or incorporated under the laws of the United States of America;

	
  

	
(C)

	
any estate of which any executor or administrator is a U.S. person;

	
  

	
(D)

	
any trust of which any trustee is a U.S. person;

(E)           any agency or branch of a foreign entity located in the United States of America;

(F)           any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

(G)           any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States of America; and

	
  

	
(H)

	
any partnership or corporation if:

(i) organized or incorporated under the laws of any foreign jurisdiction; and

(ii)           formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.

(2)           At the time of the origination of contact concerning this Agreement and the date of the execution and delivery of this Agreement, the undersigned was outside of the United States.

(3)           The undersigned will not, during the period commencing on the date of issuance of the Shares and ending on the first anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the “Restricted Period”), offer, sell, pledge or otherwise transfer the Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S.

(4)           The undersigned will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Shares only pursuant to registration under the Securities Act or an available exemption therefrom and, in accordance with all applicable state and foreign securities laws.

  

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(5)           The undersigned was not in the United States, engaged in, and prior to the expiration of the Restricted Period will not engage in, any short selling of or any hedging transaction with respect to the Shares, including without limitation, any put, call or other option transaction, option writing or equity swap.

(6)           Neither the undersigned nor or any person acting on his behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Shares and the Investor and any person acting on his behalf have complied and will comply with the “offering restrictions” requirements of Regulation S under the Securities Act.

(7)           The transactions contemplated by this Agreement have not been pre-arranged with a buyer located in the United States or with a U.S. Person, and are not part of a plan or scheme to evade the registration requirements of the Securities Act.

(8)           Neither the undersigned nor any person acting on his behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Shares.  The undersigned agrees not to cause any advertisement of the Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and
only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

(9)           Each certificate representing the Shares shall be endorsed with the following legends, in addition to any other legend required to be placed thereon by applicable federal or state securities laws:

(A)           “THE SECURITIES ARE BEING OFFERED TO INVESTORS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“THE SECURITIES ACT”)) AND WITHOUT REGISTRATION WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON REGULATION S PROMULGATED UNDER THE SECURITIES ACT.”

(B)           “TRANSFER OF THESE SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE EXEMPTION FROM REGISTRATION.  HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”

(10)           The undersigned consents to the Company making a notation on its records or giving instructions to any transfer agent of the Company in order to implement the restrictions on transfer of the Shares set forth in this Section 2.

  

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Check if applicable, otherwise cross out:

(k)           Accredited Investor.  The undersigned is an “accredited investor” as that term is defined in Rule 501 of the General Rules and Regulations under the Securities Act by reason of Rule 501(a)(3).

(l)           Potential Loss of Investment; Risk Factors.  The undersigned understands that an investment in the Shares is a speculative investment which involves a high degree of risk and the potential loss of his entire investment. The undersigned understands that the following factors, among others, could cause the loss of any or all of his investment.

(1)           The Company is a development stage company with no operating history for the undersigned to evaluate its business.  The Company was incorporated in the State of Florida in April 12, 2010, and as a result is only in the very early stages of development.  Because the Company has no operating history, it is difficult to evaluate its business and future prospects.  The undersigned has also considered the uncertainties and difficulties frequently encountered by companies, such as the Company, in their early stages of development.  The Company’s revenue and
income potential is non-existent and its business model is still emerging.  If its business model does not prove to be profitable, the undersigned may lose all of his investment.

(2)           The Company currently does not have enough working capital to satisfy its capital needs.  The Company is dependent upon its management team to fund its ongoing operations, and cannot be certain that future financing will be available to it on acceptable terms when it needs it.  The Company can give no assurances that it will be able to sell any portion of this offering or that management will continue to fund its ongoing operations.  This, along with the possibility of other factors and circumstances the Company cannot predict, may require it to seek additional
financing faster than anticipated.  If the Company is unable to obtain financing to meet its needs, the undersigned may lose of his investment.

(3)           The Company’s officers and directors will only devote a limited amount of time to the Company.  Their divided interests may hinder the Company's ability to generate revenue.  This could result in missed business opportunities and worse-than-expected operating results.  The undersigned may lose his entire investment.

(m)           Investment Commitment.  The undersigned's overall commitment to investments which are not readily marketable is not disproportionate to the undersigned's net worth, and an investment in the Shares will not cause such overall commitment to become excessive.

(n)           Receipt of Information.  The undersigned has received all documents, records, books and other information pertaining to the undersigned’s investment in the Company that has been requested by the undersigned.

  

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(o)           Investor Questionnaire.  The undersigned represents and warrants to the Company that all information that the undersigned has provided to the Company, including, without limitation, the information in the Investor Questionnaire attached hereto or previously provided to the Company (the “Investor Questionnaire”), is correct and complete as of the date hereof.

(p)           No Reliance.  Other than as set forth herein, the undersigned is not relying upon any other information, representation or warranty by the Company or any officer, director, stockholder, agent or representative of the Company in determining to invest in the Shares.  The undersigned has consulted, to the extent deemed appropriate by the undersigned, with the undersigned’s own advisers as to the financial, tax, legal and related matters concerning an investment in the Shares and on that basis believes that his
or its investment in the Shares is suitable and appropriate for the undersigned.

(q)           No Governmental Review.  The undersigned is aware that no federal or state agency has (i) made any finding or determination as to the fairness of this investment, (ii) made any recommendation or endorsement of the Shares or the Company, or (iii) guaranteed or insured any investment in the Shares or any investment made by the Company.

(r)           Price of Shares.  The undersigned understands that the price of the Shares offered hereby bear no relation to the assets, book value or net worth of the Company and were determined arbitrarily by the Company.  The undersigned further understands that there is a substantial risk of further dilution on his or its investment in the Company.

SECTION 4.

4.1           Company’s Representations and Warranties.  The Company represents and warrants to the undersigned as follows:

(a)            Organization of the Company.  The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of Florida.

(b)           Authority.   (a)  The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue the Shares; (b) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization of the Company or its Board of Directors or stockholders is required; and (c) this Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such  enforceability  may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application.

  

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(c)           Exemption from Registration; Valid Issuances.  The sale and issuance of the Shares, in accordance with the terms and on the bases of the representations and warranties of the undersigned set forth herein, may and shall be properly issued by the Company to the undersigned pursuant to any applicable federal or state law. When issued and paid for as herein provided, the Shares shall be duly and validly issued, fully paid, and nonassessable. Neither the sales of the Shares pursuant to, nor the Company's performance of its
obligations under, this Agreement shall (a) result in the creation or imposition of any liens, charges, claims or other encumbrances upon the Shares or any of the assets of the Company, or (b) entitle the other holders of the Common Stock of the Company to preemptive or other rights to subscribe to or acquire the Common Stock or other securities of the Company. The Shares shall not subject the undersigned to personal liability by reason of the ownership thereof.

(e)           No General Solicitation or Advertising in Regard to this Transaction. Neither the Company nor any of its affiliates nor any person acting on its or their behalf (a) has conducted or will conduct any general solicitation (as that term is used in Rule 502(c) of Regulation D) or general advertising with respect to any of the Shares, or (b) made any offers or sales of any security or solicited any offers to buy any security under any circumstances that would require registration of the Common Stock under the Securities Act.

SECTION 5.

5.1             Indemnity.  The undersigned agrees to indemnify and hold harmless the Company, its officers and directors, employees and its affiliates and their respective successors and assigns and each other person, if any, who controls any thereof, against any loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating, preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any false representation or warranty
or breach or failure by the undersigned to comply with any covenant or agreement made by the undersigned herein or in any other document furnished by the undersigned to any of the foregoing in connection with this transaction.

5.2           Modification.  Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.

5.3           Notices.  Any notice, demand or other communication which any  party hereto may be required, or may elect, to give to anyone interested hereunder shall be sufficiently given if (a) deposited, postage prepaid, in a United States mail letter box, registered or certified mail, return receipt requested, addressed to such address as may be given herein, or (b) delivered personally at such address.

5.4           Counterparts.  This Agreement may be executed through the use of separate signature pages or in any number of counterparts and by facsimile, and each of such counterparts shall, for all purposes, constitute one agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart. Signatures may  be facsimiles.

  

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5.5           Binding Effect.  Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and their heirs, executors, administrators, successors, legal representatives and assigns.  If the undersigned is more than one person, the obligation of the undersigned shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators and successors.

5.6           Entire Agreement.  This Agreement and the documents referenced herein contain the entire agreement of the parties and there are no representations, covenants or other agreements except as stated or referred to herein and therein.

5.7           Assignability.  This Agreement is not transferable or assignable by the undersigned.

5.8           Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without giving effect to conflicts of law principles.

5.9           Pronouns.  The use herein of the masculine pronouns "him" or "his" or similar terms shall be deemed to include the feminine and neuter genders as well and the use herein of the singular pronoun shall be deemed to include the plural as well.

5.10           Further Assurances.  Upon request from time to time, the undersigned shall execute and deliver all documents, take all rightful oaths and do all other acts that may be necessary or desirable, in the reasonable opinion of the Company or its counsel, to effect the subscription for the Shares in accordance herewith.

  

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IN WITNESS WHEREOF, the undersigned has executed this Agreement on the 15th day of February, 2012.

Amount of Investment:

$_______________

INDIVIDUAL INVESTOR:

______________________

Signature:

______________________

Print Name:

PARTNERSHIP, CORPORATION, TRUST,

CUSTODIAL ACCOUNT, OTHER INVESTOR

______________________________

 (Name of Entity)

By:           __________________

Name:

Title:

Address:

Taxpayer Identification Number:_____________

  

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ACCEPTANCE OF SUBSCRIPTION

(to be filed out only by the Company)

The Company hereby accepts the above application for subscription for Shares on behalf of the Company.

Dated: February 15, 2012

BUCKEYE OIL & GAS, INC.

By:______________________________

	
Name:

	
Pol Brisset

	
Title:

	
President and CEO

  

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BUCKEYE OIL & GAS, INC.

INVESTOR QUESTIONNAIRE

	
A.

	
General Information

 

	  
	  	  	  
	
1.

	
Print Full Name of Investor:

	
Individual:

	  	  	
______________________________

	  	  	
First, Middle, Last

	  	  	  
	  	  	
Partnership, Corporation, Trust, Custodial Account, Other:

	  	  	  
	  	  	
____________________________________________________________

	  	  	
Name of Entity

	  	  	  
	
2.

	
Address for Notices:

	
____________________________________________________________

	  	  	
______________________________

	  	  	
____________________________________________________________

	  	  	  
	
3.

	
Name of Primary Contact Person:

Title:

	
____________________________________________________________

	  	  	  
	
4.

	
Telephone Number:

	
______________________________

	  	  	  
	
5.

	
E-Mail Address:

	
____________________________________________________________

	  	  	  
	
6.

	
Facsimile Number:

Permanent Address:

 

	
____________________________________

	
 

7.

	
 

Permanent Address:

(if different from Address for Notices above)

 

	
 

____________________________________________________________

  

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8.

	
Authorized Signatory:

Title:

	
____________________________________

____________________________________

	  	
Telephone Number:

	
____________________________________

	  	
Facsimile Number:

 

	
____________________________________

B.           Accredited Investor Status

The Investor represents and warrants that the Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”), and has checked the box or boxes below which are next to the categories under which the Investor qualifies as an accredited investor:

 

	
FOR INDIVIDUALS:

 

	
o

	
A natural person with individual net worth (or joint net worth with spouse) in excess of $1 million. For purposes of this item, “net worth” means the excess of total assets at fair market value, including home, home furnishings and automobiles (and including property owned by a spouse), over total liabilities.

	  
	  	  	  
	
o

	
A natural person with individual income (without including any income of the Investor’s spouse) in excess of $200,000, or joint income with spouse of $300,000, in each of the two most recent years and who reasonably expects to reach the same income level in the current year.

	  
	  	  	  	  
	
FOR ENTITIES:

	  
	  	  	  
	
o

	
A bank as defined in Section 3(a)(2) of the Securities Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity.

	  
	  	  	  
	
o

	
An insurance company as defined in Section 2(13) of the Securities Act.

	  
	  	  	  
	
o

	
A broker-dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934.

	  
	  	  	  
	
o

	
An investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If an Investor has checked this box, please contact David Lubin, Esq. at (516) 569-9629 for additional information that will be required.

	  
	  	  	  

  

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o

	
A business development company as defined in Section 2(a)(48) of the Investment Company Act.

	  	  
	
o

	
A small business investment company licensed by the Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958.

	  	  
	
o

	
A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940. If an Investor has checked this box, please contact David Lubin, Esq. at (516) 569-9629 for additional information that will be required.

	  	  
	
o

	
An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the Shares, with total assets in excess of $5 million.

	  	  
	
o

	
A trust with total assets in excess of $5 million not formed for the specific purpose of acquiring the Shares, whose purchase is directed by a person with such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company and the purchase of the Shares.

	  	  
	
o

	
An employee benefit plan within the meaning of ERISA if the decision to invest in the Shares is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5 million or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

	  	  
	
o

	
A plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if the plan has total assets in excess of $5 million.

	  	  
	
o

	
An entity, including a grantor trust, in which all of the equity owners are accredited investors as determined under any of the foregoing paragraphs (for this purpose, a beneficiary of a trust is not an equity owner, but the grantor of a grantor trust is an equity owner).

  

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C.           Confirmation of Relationship

(For Directors, Senior Officers and Control Persons and 

Their Close Personal Friends, Close Business Associates and Relatives)

 

The Subscriber represents and warrants to the Company that the Subscriber has read the following definitions from Multilateral Instrument 45-103 Capital Raising Exemptions and certifies that the Subscriber has the relationship(s) to the Company or its directors, senior officers or control persons by virtue of the Subscriber being:

 

(initial one or more as appropriate)

 

	
  

	
_____(a)a director, senior officer or control person of the Company, or of an affiliate of the Company;

 

	
  

	
_____

	
(b)

	
a spouse, parent, grandparent, brother, sister or child of a director, senior officer or control person of the Company, or of an affiliate of the company;

 

	
  

	
_____

	
(c)

	
a close personal friend of a director, senior officer or control person of the Company, or of an affiliate of the Company;

 

	
  

	
_____

	
(d)

	
a close business associate of a director, senior officer or control person of the Company, or of an affiliate of the Company;

 

	
  

	
_____

	
(e)

	
a person or company that is wholly-owned by any combination of persons or companies described in paragraphs (a) to (d),

 

	
  

	
and if (b), (c), (d) or (e) is initialed the director, senior officer or control person is:

 

	
  

	
________________________________________

	
  

	
(Print name of director, senior officer or control person)

 

The foregoing representations and warranties are true and accurate as of the date of this certificate and will be true and accurate as of Closing.  If any such representations and warranties shall not be true and accurate prior to Closing, the Subscriber shall give immediate written notice of such fact to the Company.

 

For the purposes hereof, the following definitions are included for convenience:

 

	
a.  

	
“close business associate” means an individual who has had sufficient prior business dealings with the director, senior officer or control person to be in a position to assess the capabilities and trustworthiness of the director, senior officer or control person.

 

A casual business associate or a person introduced or solicited for the purpose of purchasing securities is not a close business associate.  An individual is not a close business associate solely because the individual is a client or former client.  For example, an individual is not a close business associate of a registrant or former registrant solely because the individual is a client or former client of that registrant or former registrant.

  

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The relationship between the purchaser and the director, senior officer or control person must be direct.  For example, the exemption is not available for a close business associate of a close business associate or a director, senior officer or control person.

 

	
b.  

	
“close personal friend” means an individual who has known the director, senior officer or control person for a sufficient period of time to be in a position to assess the capabilities and trustworthiness of the director, senior officer or control person.

 

An individual is not a close personal friend solely because

 

	
·  

	
the individual is a member of the same organization, association or religious group, or

 

	
·  

	
the individual is a client or former client.

 

The relationship between the purchaser and the director, senior officer or control person must be direct.  For example, the exemption is not available for a close personal friend or a close personal friend of the director, senior officer or control person.

 

	
c.  

	
“company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization.

 

	
d.  

	
“person” means and individual, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal representative.

 

	
e.  

	
“spouse” means, in relation to an individual, another individual to whom that individual is married, or another individual of the opposite sex or the same sex with whom that individual is living in a conjugal relationship outside marriage.

  

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The Investor understands that the foregoing information will be relied upon by the Company for the purpose of determining the eligibility of the Investor to purchase the Shares. The Investor agrees to notify the Company immediately if any representation or warranty contained in this Subscription Agreement, including this Investor Questionnaire, becomes untrue at any time. The Investor agrees to provide, if requested, any additional information that may reasonably be required to substantiate the Investor’s status as an accredited investor or to otherwise determine the eligibility of the Investor to purchase the Shares. The Investor agrees to indemnify and hold harmless the Company and each officer, director,
shareholder, agent and representative of the Company and their respective affiliates and successors and assigns from and against any loss, damage or liability due to or arising out of a breach of any representation, warranty or agreement of the Investor contained herein.

	  	
INDIVIDUAL:

	  	  
	  	
____________________________________

	  	
(Signature)

	  	  
	  	
____________________________________

	  	
(Print Name)

	  	  
	  	
PARTNERSHIP, CORPORATION, TRUST, CUSTODIAL ACCOUNT, OTHER:

	  	  
	  	
___________________________________

	  	
(Name of Entity)

	  	  
	  	
By:  ________________________________

	  	
(Signature)

	  	  
	  	
       ________________________________

	  	
(Print Name and Title)

17ex10_1form8k21512.htm

ENERGY SERVICES OF AMERICA CORPORATION

 

EMPLOYMENT AGREEMENT

FOR

EDSEL R. BURNS

 

This employment agreement (“Agreement”) by and between Energy Services of America Corporation, a Delaware corporation (the “Company”) and Edsel R. Burns (“Employee”), is made to be effective as of February 15, 2012 (the “Effective Date”).

 

WHEREAS, Employee is the President and Chief Executive Officer of the Company; and

 

WHEREAS, the Company wishes to assure itself of the continued services of Employee for the period provided in this Agreement; and

 

WHEREAS, in order to induce Employee to remain in the employ of the Company and to provide further incentive for Employee to achieve the financial and performance objectives of the Company, the parties desire to enter into this Agreement; and

 

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

 

	
1.

	
POSITION AND RESPONSIBILITIES.

During the Term (as herein defined), Employee agrees to serve as the President and Chief Executive Officer of the Company.

 

	
2.

	
TERM AND DUTIES.

(a) The period of Employee’s employment under this Agreement shall begin as of the Effective Date and shall continue thereafter for twenty-four (24) full calendar months (the “Term”). Commencing on the day following execution of this Agreement, the Term shall extend for one day each day until such time as the board of directors of the Company (the “Board”) or Employee elects not to extend the term of this Agreement by giving written notice to the other party of non-renewal (“Non-Renewal Notice”), in which case the term of this Agreement shall become fixed and shall
end twenty-four (24) full calendar months following such Non-Renewal Notice.

 

(b) During the Term, except for periods of absence occasioned by illness, or vacation periods, Employee shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties.

 

(c) Employee’s principal place of employment shall be Huntington, West Virginia, though that might change as needed and by mutual agreement of the parties.

 

  

  

  

 

	
3.

	
COMPENSATION AND BENEFITS.

(a) The compensation specified under this Agreement shall constitute the salary and benefits paid for the duties described in Section 2(b).  The Company shall pay Employee as compensation a salary of not less than One hundred fifty one thousand Dollars ($151,000) per year (“Base Salary”) beginning on the Effective Date.  Such Base Salary shall be payable semi-weekly, or with such other frequency as employees are generally paid in accordance with the Company’s normal payroll practices.  In addition to the Base Salary provided in this Section 3 (a), the Company shall provide Employee with all such other benefits as are provided or made available to Company
employees generally, including, but not limited to, participation in Company health and medical plans or paid vacation periods at the Company’s discretion.

 

(b) In consideration of Employee’s efforts in performing the requirements of the position set forth in Section 1, and in addition to Base Salary and other benefits to which Employee may be entitled as set forth in Section 3(a) hereof, Employee will receive an annual incentive payment (“Incentive Bonus”) during the Term, or until such later period as Employee leaves the employ of the Company or an affiliate or subsidiary of the Company.  Such payment is discretionary based upon the performance of the Company. The annual Incentive Bonus shall be payable by the Company within ninety days after the end of the Company’s year end. .  Notwithstanding the foregoing, no
Incentive Bonus will be payable to Employee at any time after he leaves the employ of the Company, or any affiliate or subsidiary of the Company.  For the purpose of this Agreement, pre-tax earnings shall be computed in accordance with the Company’s normal accounting practices in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) consistently applied.

 

	
4.

	
TERMINATION FOR CAUSE

The term “Termination for Cause” shall mean termination because of Employee’s (i) conviction of, or the entering into a plea of guilty to, a crime involving a felonious act or acts, including dishonesty, fraud or moral turpitude, and which is detrimental to the business, reputation, character of the Company or any of its subsidiaries; (ii) willful misconduct by Employee in the performance of his duties, any material breach of fiduciary duty involving personal profit, or the intentional failure to perform his stated duties; or (iii) a repeated and material breach of any provision of this Agreement.  For purposes of this paragraph, no act or failure to act on the part of Employee
shall be considered “willful” unless done, or omitted to be done, by Employee not in good faith and without reasonable belief that Employee’s action or omission was in the best interest of the Company.  Notwithstanding the foregoing, Employee shall not be deemed to have been Terminated for Cause unless and until there shall have been delivered to him a letter after not less than ten (10) business days notice to Employee and a reasonable opportunity for him, together with counsel, to be heard before a representative of the Company, finding that in the good faith opinion of management, Employee was guilty of conduct justifying Termination for Cause and specifying the particulars thereof in detail.  Employee shall not have the right to receive compensation or other benefits for any period after Termination for Cause.

 

  

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5.

	
RESIGNATION.

Employee shall provide not less than sixty (60) days’ advance written notice of resignation.  In the event of Employee’s voluntary resignation from the Company, Employee shall not be entitled to receive his Base Salary or any other benefits to which he may be entitled under this Agreement for any period thereafter, provided, however, that if the Company and Employee mutually agree that the Employee’s voluntary resignation is due to his “retirement” or “early retirement,” then the Company shall provide the Employee and the Employee’s spouse with continued non-taxable medical and dental insurance coverage substantially comparable (and on substantially the
same terms and conditions) to the coverage maintained by the Company for the Employee and the Employee’s spouse immediately prior to the Employee’s date of termination until the Employee and the Employee’s Spouse attains Medicare eligibility age, respectively.

 

	
6.

	
CHANGE IN CONTROL

(a)  “Change in Control” shall mean a change in control of the Company  as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder, including the following:

	
  

	
(1)

	
Change in ownership: A change in ownership of the Company occurs on the date any one person or group of persons accumulates ownership of more than 50% of the total fair market value or total voting power of the Company;  or

	
  

	
(2)

	
Change in effective control: A change in effective control occurs when either (i) any one person or more than one person acting as a group acquires within a twelve (12)-month period ownership of stock of the Company possessing 30% or more of the total voting power of the Company; or (ii) a majority of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed in advance by a majority of the Board (as applicable), or

	
  

	
(3)

	
Change in ownership of a substantial portion of assets: A change in the ownership of a substantial portion of the Company's assets occurs if, in a twelve (12)-month period, any one person or more than one person acting as a group acquires assets from the Company having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of the Company’s entire assets immediately before the acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

(b)  Upon the occurrence of a Change in Control during the term of this Agreement, the Company shall pay Employee a lump sum cash payment equal to one and one-half (1.5) times Employee’s Base Salary (determined on an annualized basis) that is in effect immediately prior to the Change in Control, subject to applicable withholding taxes, within thirty (30) days following the date of the Change in Control.  Such payment hereunder shall be made in lieu of any payments pursuant to Section 13(a)(2) hereof.

 

  

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7.

	
NOTICE.

(a) Any purported termination by the Company for Cause shall be communicated by Notice of Termination to Employee.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Employee’s employment under the provision so indicated.

 

(b) Any other purported termination by the Company or by Employee shall be communicated by a Notice of Termination to the other party. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated.

 

	
8.

	
SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid in cash, check or direct deposit from the general funds of the Company.

 

	
9.

	
NON-COMPETE/CONFIDENTIALITY.

 

(a)  For a period of two (2) years from the date the Employee’s employment under this Agreement terminates,, Employee will not, directly or indirectly, compete in any manner with the Company or its subsidiaries, including, but not limited to: (i) soliciting any client of the Company or its subsidiaries to transact business; (ii) transacting business with a competitor of the Company or its subsidiaries; (iii) interfering or damaging a relationship between the Company or its subsidiaries and any of their customers; (iv) soliciting an employee of the Company or its subsidiaries; or (v) selling products similar to the products sold by the Company or its subsidiaries in their market
area.  The parties acknowledge that this Agreement shall not preclude the Employee from entering into an agreement with another company that does not compete, directly or indirectly with the Company or its subsidiaries.  Moreover, Employee shall treat as confidential information, all information pertaining to the Company or its subsidiaries.  Notwithstanding the foregoing, in the event the Employee’s employment under this Agreement is terminated Without Cause or With Good Reason in accordance with Section 13(a) hereof, or in the event the Employee’s employment under this Agreement terminates for Cause in accordance with Section 4 hereof, terminates Without Cause or With Good Reason in accordance with Section 13(a) hereof, or terminates due to Disability in accordance with Section 13(c) hereof at anytime on or after the effective date of a Change
in Control, the provisions of this Section 9(a), except for the preceding sentence herein related to confidential information, shall become null and void

(b)  The parties hereto acknowledge that the potential restrictions on Employee’s future activities as set forth at Section 9(a) is reasonable in both duration and geographic scope and in all other respects.  In the event that the provisions of Section 9(a) should ever be deemed to exceed the duration or geographic limitations or scope permitted by applicable law, then such provisions shall be reformed to the maximum time or geographic limitations or scope, as the case may be, permitted by applicable law, and the parties agree that the restrictions and prohibitions contained herein shall be effective to the fullest extent allowed under applicable law in such jurisdiction.

 

 

  

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(c)  The parties acknowledge that it would be impossible to determine the amount of damages that would result from any breach of any of the provisions of Section 9(a) and that the remedy at law for any breach, or threatened breach, of any of such provisions would likely be inadequate and accordingly, each party agrees that in addition to any other rights or remedies which it may have at law or in equity, the non-breaching party would be entitled to seek such equitable and injunctive relief as may be available from any court of competent jurisdiction to restrain a party from violating any of the provisions of this Agreement.  In connection with any action or proceeding for such equitable or
injunctive relief, each party hereby waives any claim or defense that a remedy at law alone is adequate and agrees, to the maximum extent permitted by law, to have each such provision of Section 9(a) specifically enforced against a violating party, without the necessity of posting bond or other security against the violating party, and consents to the entry of equitable or injunctive relief against the violating party enjoining or restraining any breach or threatened breach of Section 9(a).

 

	
10.

	
EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

 

This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof and supersedes any prior employment agreement between the Company or any predecessor of the Company and Employee, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Employee of a kind elsewhere provided.  No provision of this Agreement shall be interpreted to mean that Employee is subject to receiving fewer benefits than those available to him without reference to this Agreement.

 

	
11.

	
NO ATTACHMENT; BINDING ON SUCCESSORS.

 

(a) Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

 

(b) This Agreement shall be binding upon, and inure to the benefit of, Employee and the Company and their respective successors and assigns.

 

	
12.

	
MODIFICATION AND WAIVER.

(a) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

 

(b) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.  No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived.

 

  

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13.

	
MISCELLANEOUS PROVISIONS

(a) Termination Without Cause or With Good Reason.

 

	
  

	
(1)

	
The Company may, by written notice to Employee, immediately terminate his employment at any time for a reason other than a Termination for Cause (a termination “Without Cause”), and Employee may, by written notice to the Company, terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason,” as defined below (a termination “With Good Reason”); provided, however, that the Company shall have thirty (30) days to cure the “Good Reason” condition, but the Company may waive its right to cure.

	
  

	
(2)

	
In the event of termination under this Section 13(a), the Company shall pay Employee, or in the event of Employee’s subsequent death, Employee’s beneficiary or estate, as the case may be, as severance pay, a single cash lump sum payment equal to one and one-half (1.5) times Employee’s Base Salary (determined on an annualized basis) that is in effect immediately prior to the Employee’s date of termination, subject to applicable withholding taxes.  Such payment shall be payable within thirty (30) calendar days following his date of termination.

	
  

	
(3)

	
In addition the Company shall continue to provide to Employee non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Company for Employee immediately prior to his date of termination for the remaining Term of the Agreement.  However, if any termination of employment (other than termination of employment for cause) occurs following a Change in Control, then the Company shall provide the Employee and the Employee’s spouse with continued non-taxable medical and dental insurance coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Company for the Employee and the Employee’s spouse immediately prior to
the Employee’s date of termination until the Employee and the Employee’s Spouse attains Medicare eligibility age, respectively.

	
  

	
 (4)

	
“Good Reason” exists if, without Employee’s express written consent, any of the following occurs:

	
(A)  

	
a material change in Employee’s position to become one of lesser responsibility, importance, or scope from the position described in Section 1 above;

 

 

  

6

  

 

	
(B)  

	
a liquidation or dissolution of the Company other than liquidations or dissolutions that are caused by reorganizations that do not negatively affect the status of Employee;

 

	
(C)  

	
a material reduction in Employee’s Base Salary or benefits provided in this Agreement (other than a reduction or elimination of Employee’s benefits under one or more benefit plans maintained by the Company as part of a good faith, overall reduction or elimination of such plans or benefits applicable to all participants in a manner that does not discriminate against Employee (except as such discrimination may be necessary to comply with applicable law));

 

	
(D)  

	
a relocation of Employee’s principal place of employment by more than fifty (50) miles from its location as of the date of this Agreement; or

 

	
(E)  

	
a material breach of this Agreement by the Company.

 

(b)  Death.  Employee’s employment under this Agreement will terminate upon his death during the term of this Agreement, in which event Employee’s estate or beneficiary will receive the compensation due to Employee through the last day of the calendar month in which his death occurred.

 

(c)  Disability.  In the event the Company determines that Employee has suffered a Disability (as defined herein), Employee will no longer be obligated to perform services under this Agreement.  Upon Employee’s termination due to Disability, the Company will cause to continue to provide to Employee non-taxable medical and dental coverage substantially comparable (and on substantially the same terms and conditions) to the coverage maintained by the Company for Employee immediately prior to his termination for Disability for the remaining Term of the
Agreement.  “Disability” shall mean termination because of any permanent and totally physical or mental impairment that restricts Employee from performing all the essential functions of normal employment.  A determination as to whether Employee has suffered a Disability shall be made by the Board with objective medical input.  In the event of termination due to Disability, Employee will be entitled to disability benefits, if any, provided under a disability plan sponsored by the Company, if any.

 

(d) Separation from Service.  Notwithstanding anything else in this Agreement, Employee’s employment shall not be deemed to have been terminated unless and until Employee has a Separation from Service within the meaning of Code Section 409A. For purposes of this Agreement, a “Separation from Service” shall have occurred if the Company and Employee reasonably anticipate that either no further services will be performed by Employee after the date of the termination (whether as an employee or as an independent contractor) or the level of further services performed is less than 50% of the average level of bona fide services in the thirty-six
(36) months immediately preceding the termination.  For all purposes hereunder, the definition of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii).

 

 

  

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(e)  Specified Employee.  Notwithstanding the foregoing, in the event Employee is a Specified Employee (as defined herein), then, solely, to the extent required to avoid penalties under Code Section 409A, Employee’s payments shall be delayed until the first day of the seventh month following Employee’s Separation from Service.  A “Specified Employee” shall be interpreted to comply with Code Section 409A and shall mean a key employee within the meaning of Code Section 416(i) (without regard to paragraph 5 thereof), but an individual shall be a “Specified Employee” only if the Company is or becomes a
publicly traded company.

	
14.

	
SEVERABILITY

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

 

	
15.

	
HEADINGS FOR REFERENCE ONLY.

 

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

 

	
16.

	
GOVERNING LAW.

 

This Agreement shall be governed by the laws of the State of West Virginia but only to the extent not superseded by federal law.

 

	
17.

	
NOTICE.  

 

For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

 

	
To the Company:

	
Marshall T. Reynolds

Chairman of the Board

Energy Services of America Corporation

100 Industrial Lane

Huntington, West Virginia  25702

	  	  
	
With a copy to:

	
Luse Gorman Pomerenk & Schick, P.C.

5335 Wisconsin Avenue NW, Suite 400

Washington, D.C. 20015

Attention: Alan Schick

	  	  
	
To Employee:

	
    Edsel R. Burns

                                           

  

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SIGNATURES

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and its seal to be affixed hereunto by its duly authorized officers, and Employee has signed this Agreement, on the day and date first above written.

 

	
ATTEST:

	
ENERGY SERVICES OF AMERICA CORPORATION

	  	  
	  	  
	  	  
	
Secretary

	
By:

Marshall Reynolds

Chairman of the Board 

	  	  
	  	  
	  	  
	  	  
	
WITNESS:

	
EMPLOYEE:

	  	  
	  	  
	  	  
	
 

Secretary

	
By:

Edsel R. Burns

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