UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 19, 2019

 

FALCON MINERALS CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware   001-38158   82-0820780

(State or other jurisdiction of
incorporation or organization)

  (Commission File Number)   (I.R.S. Employer
Identification Number)

 

1845 Walnut Street, 10th Floor

Philadelphia, PA

  19103

(Address of principal executive offices)

  (Zip Code)

 

Registrant’s telephone number, including area code: (215) 832-4161

 

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Item 1.01. Entry into a Material Definitive Agreement.

 

The information in Item 5.02 under the heading “Employment Agreement” is incorporated herein by reference.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On April 25, 2019, Blackstone Management Partners, L.L.C. (“Blackstone”), in accordance with its rights under that certain Shareholders’ Agreement dated as of August 23, 2018 by and among the Company, Blackstone and the other parties thereto (the “Shareholders’ Agreement”), designated, and the Board appointed, (i) Mr. Eric Liaw to the Board to fill the vacancy created by Mr. Acconcia’s resignation discussed below, and (ii) Mr. Alan Hirshberg to the Board to fill the vacancy created in December 2018 when Mr. David Foley resigned as a member of the Board. Mr. Liaw has been appointed as the Chairman of the Board’s Compensation Committee and Mr. Hirshberg has been appointed to the Board’s Nominating and Corporate Governance Committee.

 

On April 25, 2019, Angelo G. Acconcia resigned as a member of the Board of Directors (the “Board”) of Falcon Minerals Corporation (the “Company”). Mr. Acconcia’s resignation was not the result of a disagreement with the Company or its management.

 

Employment Agreement

 

On April 19, 2019, the Company entered into an employment agreement (the “Employment Agreement”) with Daniel C. Herz, outlining the terms of his employment as Chief Executive Officer and President of the Company. The Employment Agreement will be effective as of April 19, 2019 (the “Effective Date”) and has an initial term ending on August 24, 2021 (the “Initial Term”) that will automatically renew for successive one-year periods until terminated. The Employment Agreement provides for (i) an annual base salary of $500,000, (ii) a target annual bonus amount of $1,000,000 (the “Target Annual Bonus”) consisting of: (a) an annual cash bonus (the “Annual Cash Bonus”) upon the attainment of one or more pre-established performance goals established in good faith by the Board, or Compensation Committee thereof, in its sole discretion, with a target of $500,000 (provided that the Annual Cash Bonus may, at the Company’s election, be paid in fully-vested and freely tradeable shares of common stock of the Company), and (b) an annual equity award grant (the “Annual LTIP Award”) under the 2018 Long-Term Incentive Plan (the “Plan”) with a target grant date fair market value of $500,000.

 

Pursuant to the Employment Agreement, in the event Mr. Herz’s employment is terminated (i) by the Company without “cause,” (ii) by Mr. Herz for “good reason” (each quoted term as defined in the Employment Agreement) or (iii) as a result of the Company’s non-extension of the Employment Agreement, where the notice of such non-extension provided by the Company pursuant to the Employment Agreement does not include notice that the Company is waiving enforcement of the noncompetition provision of the Employment Agreement, he would be entitled to (A) the “Accrued Benefits” (as defined in the Employment Agreement), (B) a lump-sum cash payment equal to the “Severance Multiple” (as defined below) multiplied by the sum of (I) his base salary and (II) the Target Annual Bonus, (C) a pro-rata portion of the Target Annual Bonus for the fiscal year in which termination occurs (the “Pro Rata Bonus”), (D) if Mr. Herz were to elect to continue coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), reimbursement of COBRA premiums for the number of years equal to the Severance Multiple (but not to exceed eighteen months) (the “COBRA Reimbursement”) and (E) the prior year’s bonus, to the extent unpaid. The “Severance Multiple” means (x) two, in the event termination occurs during the Initial Term and (y) one, in the event termination occurs after the expiration of the Initial Term. In the event Mr. Herz is terminated by reason of death or “disability” (as such term is defined in the Employment Agreement), he would be entitled to the Accrued Benefits, the Pro Rata Bonus and the COBRA Reimbursement.

 

The Employment Agreement also contains certain restrictive covenants, which require Mr. Herz to preserve and protect certain confidential information and, for a two-year period following his termination of employment (one year in the event of a termination after the expiration of the Initial Term), to refrain from competing with the Company, soliciting its customer and employees and interfering with its vendors, joint venturers and licensors. Additionally, the Employment Agreement includes a mutual non-disparagement covenant, and requires the execution of a release and continued compliance with these restrictive covenants to receive the severance benefits described above.

 

The Employment Agreement requires the Company to indemnify Mr. Herz to the greatest extent permitted by law or as provided under the Bylaws of the Company against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages resulting from Mr. Herz’s good faith performance of his duties and obligations with the Company, and provides for the advancement of expenses to the greatest extent permitted under applicable law.

 

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The foregoing description of the Employment Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Employment Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated into this Item 5.02 by reference.

 

Equity Grant Awards

 

In addition, on the Effective Date, Mr. Herz will receive an award of 133,333 shares of restricted stock (the “Restricted Stock Awards”), an award of 266,667 performance stock units (the “Base PSU Awards”), with an opportunity to earn a maximum of 533,334 performance stock units, and an award of 500,000 super performance stock units (the “Super PSU Awards” and, together with the Restricted Stock Awards and the Base PSU Awards, the “Initial Awards”). The Initial Awards will be subject to the terms and conditions set forth in the applicable award agreements and the Plan.

 

Subject to the terms of the Plan and the award agreement evidencing the Restricted Stock Awards, the Restricted Stock Awards will vest as follows: (i) 25% on August 23, 2019, (ii) 25% on August 23, 2020 and (iii) the remaining 50% on August 23, 2021, in each case, so long as Mr. Herz remains continuously employed by the Company through each such vesting date except as otherwise provided below.

 

Subject to the terms of the Plan and the award agreement evidencing the Base PSU Awards, the Base PSU Awards are subject to both time vesting and performance vesting. The awards will time vest on August 23, 2021 and performance vest if the following performance targets are met on or prior to August 23, 2025: (i) 133,333.5 on the date the Company achieves a 30-day volume weighted average price of $10.00 per share, (ii) an additional 200,000.25 performance stock units on the date the Company achieves a 30-day volume weighted average price of $12.50 per share, provided that the percentage of performance stock units vesting shall be subject to increase based on a dividend builder concept in the same proportion as provided to the earn-out for Royal Resources L.P., a Delaware limited partnership (“Royal Resources”) under that certain Contribution Agreement, dated as of June 3, 2018, by and among the Company, Royal Resources and such other parties thereto named therein (the “Contribution Agreement”) and (iii) an additional 200,000.25 performance stock units on the date the Company achieves a 30-day volume weighted average price of $15.00 per share, provided that the $15.00 threshold shall be subject to reduction based on a dividend buydown concept in the same proportion as provided to the earn-out for Royal Resources under the Contribution Agreement, in each case, so long as Mr. Herz remains continuously employed by the Company through each such vesting date, except as otherwise provided below.

 

Subject to the terms of the Plan and the award agreement evidencing the Super PSU Awards are subject to both time vesting and performance vesting. The awards will time vest on August 23, 2021 and fully performance vest if the following performance targets are met on or prior to August 23, 2025: (i) the Company achieves a 30-day volume weighted average price of $20.00 per share and (ii) the aggregate market value of the voting stock held by stockholders (other than affiliates of Royal Resources) on such date is greater than $2.0 billion, provided that the $20.00 threshold shall be subject to reduction based on a dividend buydown concept in the same proportion as provided to the earn-out for Royal Resources under the Contribution Agreement, so long as Mr. Herz remains continuously employed by the Company through each vesting date, except as otherwise provided below.

 

Additionally, in the event Mr. Herz’s employment is terminated (i) (A) by the Company without cause or (B) by Mr. Herz for good reason, in each case, on the effective date of or during the twelve-month period following a Change in Control (as defined in the Plan) or (ii) by reason of Mr. Herz’s death or disability at any time, any Restricted Stock Awards that have not yet vested would immediately vest. In the event Mr. Herz’s employment is terminated at any time (i) by the Company without cause, (ii) by Mr. Herz for good reason or (iii) by reason of Mr. Herz’s death or disability, any Base PSU Awards or Super PSU Awards would time vest as of the date of termination and performance vest, to the extent not yet performance vested, if the applicable performance conditions are achieved on or within 30 days following the date of termination.

 

Upon a “Liquidity Event” (as such term is defined in the Contribution Agreement), all unvested outstanding Base PSU Awards and Super PSU Awards held by Mr. Herz would, to the extent not assumed, immediately become time-vested and shall performance vest based on the actual achievement of the applicable performance conditions measured based on the highest price per share of Class A common stock in the Company paid in the Liquidity Event. In the event of a Liquidity Event resulting in distributions to stockholders or that involves shares of the Company being acquired pursuant to a tender offer or other agreement, performance shall be measured as provided in the previous sentence rather than based on the volume-weighted average price. To the extent that the foregoing would not cause the Base PSU Awards or the Super PSU Awards to vest, the applicable performance conditions would continue to apply following the Liquidity Event.

 

The foregoing descriptions of the Initial Awards does not purport to be complete and is qualified in its entirety by reference to the full text of the Restricted Stock Award Agreement, Performance Stock Unit Award Agreement and Super Performance Stock Unit Agreement, which are attached as Exhibits 10.2, 10.3 and 10.4, respectively, and incorporated into this Item 5.02 by reference.

 

Item 7.01. Regulation FD Disclosure.

 

On April 25, 2019, the Company issued a press release announcing the appointment of Messrs. Hirshberg and Liaw to the Board. A copy of the press release is furnished hereto as Exhibit 99.1.

 

Information furnished pursuant to Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or subject to the liabilities of that Section. This information shall not be incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in such filing.

 

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Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.   Description of Exhibit
     
10.1   Employment Agreement, dated April 19, 2019, by and between Falcon Minerals Corporation and Daniel C. Herz.
     
10.2   Restricted Stock Award Agreement, dated April 19, 2019, by and between Falcon Minerals Corporation and Daniel C. Herz.
     
10.3   Performance Stock Unit Agreement, dated April 19, 2019, by and between Falcon Minerals Corporation and Daniel C. Herz.
     
10.4   Super Performance Stock Unit Agreement, dated April 19, 2019, by and between Falcon Minerals Corporation and Daniel C. Herz.
     
99.1   Press Release

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: April 25, 2019 FALCON MINERALS CORPORATION
   
  By: /s/ Jeffrey F. Brotman
    Name: Jeffrey F. Brotman
    Title:

Chief Financial Officer,

Chief Legal Officer and Secretary

 

 

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Exhibit 10.1

 

FALCON MINERALS CORPORATION

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”) dated as of April 19, 2019, between Falcon Minerals Corporation, a Delaware corporation (the “Company”), and Daniel C. Herz (the “Executive”).

 

W I T N E S S E T H

 

WHEREAS, the Company desires to continue to employ the Executive as the Chief Executive Officer and President of the Company; and

 

WHEREAS, the Company and the Executive desire to enter into this Agreement as to the terms of the Executive’s employment with the Company.

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1. POSITION AND DUTIES.

 

(a) During the Employment Term (as defined in Section 2 hereof), the Executive shall serve as the Chief Executive Officer and President of the Company. In this capacity, the Executive shall have the duties, authorities and functions commensurate with the duties, authorities and functions of persons holding such titles in similarly-sized companies, subject to the authority of the Board to expand or limit such duties, authorities and functions. The Executive’s principal place of employment with the Company shall be in New York, New York, provided that the Executive understands and agrees that the Executive may be required to travel from time to time for business purposes. The Executive shall report directly to the Board. The Executive shall be designated a non-voting observer of the Board of Directors of the Company (the “Board”), entitled to attend all meetings of the board, participate in all deliberations of the Board and receive copies of all materials of the Board (except where (and only to the extent) such meetings (including executive sessions), deliberations and/or materials pertain to matters that, if the Executive had been a member of the Board, he would have been required to recuse himself).

 

(b) During the Employment Term, the Executive shall devote substantially all of the Executive’s business time, energy, business judgment, knowledge and skill and the Executive’s best efforts to the performance of the Executive’s duties with the Company, provided that the foregoing shall not prevent the Executive from (i) serving on the boards of directors of non-profit organizations and, with the prior written approval of the Board, other for profit companies, (ii) participating in charitable, civic, educational, professional, community or industry activities, and (iii) managing the Executive’s passive personal investments so long as such activities in the aggregate do not interfere or conflict with the Executive’s duties hereunder or create a business or fiduciary conflict.

 

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2. EMPLOYMENT TERM. The Company agrees to employ the Executive pursuant to the terms of this Agreement, and the Executive agrees to be so employed, for a term commencing as of the date hereof (the “Effective Date”) and ending on August 24, 2021 (the “Initial Term”). On August 24, 2021 and each anniversary of such date, the term of this Agreement shall be automatically extended for successive one-year periods, provided, however, that either party hereto may elect not to extend this Agreement by giving written notice to the other party at least sixty (60) days prior to any such anniversary date. Notwithstanding the foregoing, the Executive’s employment hereunder may be earlier terminated in accordance with Section 6 hereof, subject to Section 7 hereof. The period of time between the Effective Date and the termination of the Executive’s employment hereunder shall be referred to herein as the “Employment Term.”

 

3. BASE SALARY. The Company agrees to pay the Executive a base salary at an annual rate of not less than $500,000, payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly. The Executive’s Base Salary shall be subject to annual review by the Board (or a committee thereof), and may be increased, but not decreased (unless such decrease is part of a company-wide or management-wide reduction), from time to time by the Board. The base salary as determined herein and as may be increased from time to time shall constitute “Base Salary” for purposes of this Agreement.

 

4. INITIAL AWARD; ANNUAL BONUS.

 

(a) On the Effective Date, the Executive will be granted, an award of 133,333 shares of restricted stock (the “Restricted Shares”), an award of 266,667 performance share units (the “Base PSUs”), with an opportunity to earn a maximum of 650,000 PSUs, and an award of 500,000 performance share units (the “Super PSUs” and, together with the Restricted Shares and the Base PSUs, the “Initial Award”). The Initial Award will be subject to the terms and conditions set forth in the applicable award agreements and the Falcon Minerals Corporation 2018 Long-Term Incentive Plan (the “Plan”).

 

(b) For each fiscal year of the Company during the Employment Term the Executive shall be eligible to receive a target annual bonus of $1,000,000 (the “Target Annual Bonus”), consisting of: (i) an annual cash bonus (the “Annual Cash Bonus”) upon the attainment of one or more pre-established performance goals established in good faith by the Board or the Company’s Compensation Committee (the “Committee”) in its sole discretion, with a target of $500,000 (provided that the Annual Cash Bonus may, at the Company’s election, be paid in fully-vested and freely tradable shares of common stock of the Company), and (ii) an annual equity award grant under the Plan (the “Annual LTIP Award”) with a target grant date fair market value of $500,000. The Annual Cash Bonus for each fiscal year of the Company shall be paid in next succeeding fiscal year on or before March 15 of such fiscal year.

 

5. EMPLOYEE BENEFITS.

 

(a) BENEFIT PLANS. During the Employment Term, the Executive shall be eligible to participate in any employee benefit plan that the Company has adopted or may adopt, maintain or contribute to for the benefit of its employees generally, subject to satisfying the applicable eligibility requirements, except to the extent such plans are duplicative of the benefits otherwise provided to hereunder. The Executive’s participation will be subject to the terms of the applicable plan documents and generally applicable Company policies. Notwithstanding the foregoing, the Company may modify or terminate any employee benefit plan at any time.

 

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(b) VACATIONS. During the Employment Term, the Executive shall be entitled to four (4) weeks of paid vacation per calendar year (as prorated for partial years) in accordance with the Company’s policy on accrual and use applicable to executives of the Company as in effect from time to time, without carryforward of unused vacation time from any calendar year to any future calendar year. Vacation may be taken at such times and intervals as the Executive determines, subject to the business needs of the Company.

 

(c) BUSINESS EXPENSES. Upon presentation of reasonable substantiation and documentation as the Company may specify from time to time, the Executive shall be reimbursed in accordance with the Company’s expense reimbursement policy, for all reasonable out-of-pocket business expenses incurred and paid by the Executive during the Employment Term and in connection with the performance of the Executive’s duties hereunder.

 

6. TERMINATION. The Executive’s employment and the Employment Term shall terminate on the first of the following to occur:

 

(a) DISABILITY. Upon ten (10) days’ prior written notice by the Company to the Executive of termination due to Disability. For purposes of this Agreement, “Disability” means, a permanent and total disability as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”). A Disability shall only be deemed to occur if the Executive has been unable to perform the Executive’s principal duties and responsibilities hereunder for ninety consecutive days or one hundred and twenty (120) days during any period of three hundred and sixty-five (365) consecutive calendar days. Notwithstanding the foregoing, for payments that are subject to Code Section 409A (as defined in Section 24 hereof), Disability shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii) of the Code.

 

(b) DEATH. Automatically upon the date of death of the Executive.

 

(c) CAUSE. Immediately upon written notice by the Company to the Executive of a termination for Cause. “Cause” shall mean:

 

(i) the Executive’s continued and willful failure to substantially perform his duties (other than as a result of Disability), which continues beyond fifteen (15) days after a written demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes that the Executive has not substantially performed his duties;

 

(ii) grossly negligent or illegal conduct, or gross misconduct, by the Executive that is reasonably likely to result in material damage to the Company;

 

(iii) the Executive’s conviction of, or the plea of guilty or nolo contendere or the equivalent in respect to, any felony or a misdemeanor involving an act of dishonesty, moral turpitude, deceit or fraud; or

 

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(iv) the Executive’s material breach of any non-competition, non-solicitation, confidentiality, non-disparagement or other restrictive covenant provision relating to the Company, which breach is not cured (if capable of cure) within fifteen (15) days following notice of such breach provided by the Company that specifically identifies the manner in which the Company believes that the Executive breached any such provisions.

 

In order to terminate the Executive’s employment for Cause, the Company must provide the Executive with written notice of its intention to terminate his employment for Cause setting forth in reasonable detail the specific conduct allegedly constituting Cause and the specific provisions of this Agreement on which such claim is based.

 

(d) WITHOUT CAUSE. Immediately upon written notice by the Company to the Executive of an involuntary termination without Cause (other than for death or Disability).

 

(e) GOOD REASON. Upon written notice by the Executive to the Company of a termination for Good Reason. “Good Reason” shall mean the occurrence of any of the following events, without the express written consent of the Executive, unless such events are fully corrected in all material respects by the Company within thirty (30) days following written notification by the Executive to the Company of the occurrence of one of the reasons set forth below:

 

(i) a material diminution in the Executive’s titles, duties or authorities, including (A) a change in the Executive’s reporting such that he no longer reports directly to the Board and (B) any material diminution in duties and/or authorities such that the Executive no longer has such duties and/or authorities typically associated with the chief executive officer of a public company;

 

(ii) a material diminution in the Executive’s Base Salary or Target Annual Bonus opportunity unless such diminution is part of a company-wide or management-wide reduction;

 

(iii) a material breach of this Agreement by the Company; or

 

(iv) a relocation of the Executive’s primary office location by more than thirty (30) miles if such relocation materially increases the Executive’s commute.

 

The Executive shall provide the Company with a written notice detailing the specific circumstances alleged to constitute Good Reason within forty-five (45) days after the first occurrence of such circumstances, and actually terminate employment within thirty (30) days following the expiration of the Company’s thirty (30)-day cure period described above. Otherwise, any claim of such circumstances as “Good Reason” shall be deemed irrevocably waived by the Executive.

 

(f) WITHOUT GOOD REASON. Upon thirty (30) days’ prior written notice by the Executive to the Company of the Executive’s voluntary termination of employment without Good Reason (which the Company may, in its sole discretion, make effective earlier than any notice date).

 

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(g) EXPIRATION OF EMPLOYMENT TERM; NON-EXTENSION OF AGREEMENT. Upon the expiration of the Employment Term due to the delivery of a non-extension notice by the Company or the Executive in accordance with Section 2 hereof.

 

7. CONSEQUENCES OF TERMINATION.

 

(a) DEATH. In the event that the Executive’s employment and the Employment Term ends on account of the Executive’s death, the Executive or the Executive’s estate, as the case may be, shall be entitled to the following (with the amounts due under Sections 7(a)(i) through 7(a)(iii) and 7(a)(v) hereof to be paid within sixty (60) days following termination of employment, or such earlier date as may be required by applicable law):

 

(i) any unpaid Base Salary through the date of termination;

 

(ii) reimbursement for any unreimbursed business expenses incurred through the date of termination;

 

(iii) any accrued but unused vacation time in accordance with Company policy;

 

(iv) all other payments, benefits or fringe benefits to which the Executive shall be entitled under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan or program or grant or this Agreement, payable in accordance with the terms of each such plan, program, or grant or as provided in this Agreement;

 

(v) a pro-rata portion of the Executive’s Target Annual Bonus for the fiscal year in which the Executive’s termination occurs (determined by multiplying the amount of such bonus which would be due for the full fiscal year by a fraction, the numerator of which is the number of days during the fiscal year of termination that the Executive is employed by the Company and the denominator of which is 365), payable in cash or fully-vested and freely tradeable shares of the Company’s common stock, as determined by the Board in its sole discretion (the “Pro Rata Bonus”);

 

(vi) the earned Annual Cash Bonus and the Annual LTIP Award for any completed fiscal year ending prior to the date of termination, to the extent not previously paid (the “Prior Year Bonus”), payable as and when such Annual Cash Bonus and Annual LTIP Award would have been paid had the Executive’s employment not terminated; and

 

(vii) subject to (A) the Executive’s (or his covered dependents’) timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) and (B) the Executive’s (or, if applicable, his estate’s) continued compliance with the obligations in Sections 8, 9 and 10 hereof, reimbursement of the Executive’s COBRA premiums at the same level (including coverage for dependents, if applicable) and cost as if the Executive were an employee of the Company (excluding, for purposes of calculating cost, an employee’s ability to pay premiums with pre-tax dollars) participating in the Company’s group health plan for the number of years equal to the Severance Multiple (but not to exceed eighteen (18) months); provided that the Company may modify the continuation coverage contemplated by this Section 7(a)(vii) to the extent reasonably necessary to avoid the imposition of any excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and/or the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable) in a manner with the least economic impact to the Executive; and provided, further, that in the event that the Executive obtains other employment that offers comparable group health benefits, such reimbursements by the Company under this Section 7(a)(vii) shall immediately cease (the benefits described in this Section 7(a)(vii), the “COBRA Reimbursement”).

 

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Collectively, Sections 7(a)(i) through 7(a)(iv) hereof shall be hereafter referred to as the “Accrued Benefits.” For the purposes of this Agreement, the “Severance Multiple” shall mean two (2) in the event the Executive’s termination of employment occurs during the Initial Term and one (1) if the Executive’s termination of employment occurs after the expiration of the Initial Term.

 

(b) DISABILITY. In the event that the Executive’s employment and/or the Employment Term ends on account of the Executive’s Disability, the Company shall pay or provide the Executive with the Accrued Benefits, the Pro Rata Bonus, the Prior Year Bonus, and the COBRA Reimbursement.

 

(c) TERMINATION FOR CAUSE OR WITHOUT GOOD REASON OR AS A RESULT OF A NON-EXTENSION OF THIS AGREEMENT BY THE EXECUTIVE OR AS A RESULT OF A NON-EXTENSION OF THIS AGREEMENT AND WAIVER OF SECTION 9(b) BY THE COMPANY. If the Executive’s employment is terminated (I) by the Company for Cause, (II) by the Executive without Good Reason, (III) as a result of the Executive’s non-extension of the Employment Term as provided in Section 2 hereof, or (IV) as a result of the Company’s non-extension of the Employment Term as provided in Section 2 hereof and in the notice provided in accordance with Section 2 the Company states that it is waiving enforcement of, and the Executive shall have no obligation under, Section 9(b) hereof, the Company shall pay to the Executive the Accrued Benefits. In addition, in the event of a termination as a result of Company’s non-extension of the Employment Term pursuant to Section 7(c)(IV), the Executive shall be entitled to be paid a Pro Rata Bonus and the Prior Year Bonus.

 

(d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON OR AS A RESULT OF A NON-EXTENSION OF THIS AGREEMENT BY THE COMPANY WITH NO WAIVER OF SECTION 9(b). If the Executive’s employment by the Company is terminated (I) by the Company other than for Cause, (II) by the Executive for Good Reason, or (III) as a result of the Company’s non-extension of the Employment Term as provided in Section 2 hereof and the Company does not state in the notice provided in accordance with Section 2 that it is waiving enforcement of, and the Executive shall have no obligation under, Section 9(b) hereof, subject to the provisions of Section 24 hereof, the Company shall pay to the Executive:

 

(i) the Accrued Benefits;

 

(ii) subject to the Executive’s continued compliance with the obligations in Sections 8, 9 and 10 hereof, the Pro Rata Bonus;

 

(iii) subject to the Executive’s continued compliance with the obligations in Sections 8, 9 and 10 hereof, an amount equal to the product of (A) the Severance Multiple and (B) the sum of (I) the Executive’s Base Salary and (II) the Target Annual Bonus (with the portion attributed to such Target Annual Bonus payable in cash or in fully-vested and freely tradeable shares of the Company’s common stock as determined by the Board in its sole discretion), with such sum payable (or, to the extent applicable, deliverable) in a single lump sum within ten (10) business days following the Release Effective Date (as defined Section 8 hereof); provided that to the extent that the payment of any amount constitutes “nonqualified deferred compensation” for purposes of Code Section 409A (as defined in Section 24 hereof), any such payment scheduled to occur during the first sixty (60) days following the termination of employment shall not be paid until the first regularly scheduled pay period following the sixtieth (60th) day following such termination and shall include payment of any amount that was otherwise scheduled to be paid prior thereto;

 

(iv) the Prior Year Bonus; and

 

(v) the COBRA Reimbursement.

 

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Payments and benefits provided in this Section 7(d) shall be in lieu of any termination or severance payments or benefits for which the Executive may be eligible under any of the plans, policies or programs of the Company or under the Worker Adjustment Retraining Notification Act of 1988 or any similar state statute or regulation.

 

(e) OTHER OBLIGATIONS. Upon any termination of the Executive’s employment with the Company, the Executive shall be deemed to have resigned from any position as an officer, director or fiduciary of any Company-related entity, and shall execute any documentation as requested by the Company to effectuate the foregoing.

 

(f) EXCLUSIVE REMEDY. The amounts payable to the Executive following termination of employment and the Employment Term hereunder pursuant to Sections 6 and 7 hereof shall be in full and complete satisfaction of the Executive’s rights under this Agreement and any other claims that the Executive may have in respect of the Executive’s employment with the Company or any of its affiliates, and the Executive acknowledges that such amounts are fair and reasonable, and are the Executive’s sole and exclusive remedy, in lieu of all other remedies at law or in equity, with respect to the termination of the Executive’s employment hereunder or any breach of this Agreement.

 

8. RELEASE; NO MITIGATION; NO SET-OFF. Any and all amounts payable and benefits or additional rights provided pursuant to this Agreement beyond the Accrued Benefits and any Prior Year Bonus shall only be payable if the Executive delivers to the Company and does not revoke a general release of claims in favor of the Company in substantially the form attached on Exhibit B hereto. Such release shall be executed and delivered (and no longer subject to revocation, if applicable) within sixty (60) days following termination (the “Release Effective Date”). In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, nor shall the amount of any payment hereunder be reduced by any compensation earned by the Executive as a result of employment by a subsequent employer, except as provided in Section 7(a)(viii) hereof. The Company’s obligations to pay the Executive amounts hereunder shall not be subject to set-off, counterclaim or recoupment of amounts owed by the Executive to the Company or any of its affiliates.

 

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9. RESTRICTIVE COVENANTS.

 

(a) CONFIDENTIALITY. During the course of the Executive’s employment with the Company, the Executive will have access to Confidential Information. For purposes of this Agreement, “Confidential Information” means all data, information, ideas, concepts, discoveries, trade secrets, inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, developments, techniques, methods, processes, treatments, drawings, sketches, specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary information or trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter existing, relating to or arising from the past, current or potential business, activities and/or operations of the Company or any of its affiliates, including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel, customers, suppliers, vendors, raw partners and/or competitors. The Executive agrees that the Executive shall not, directly or indirectly, other than in the good faith performance of his duties hereunder, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Executive’s assigned duties and for the benefit of the Company, either during the period of the Executive’s employment or at any time thereafter, any Confidential Information or other confidential or proprietary information received from third parties subject to a duty on the Company’s and its subsidiaries’ and affiliates’ part to maintain the confidentiality of such information, and to use such information only for certain limited purposes, in each case, which shall have been obtained by the Executive during the Executive’s employment by the Company (or any predecessor). The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to the Executive; (ii) becomes generally known to the public subsequent to disclosure to the Executive through no wrongful act of the Executive or any representative of the Executive; (iii) is independently developed by Executive, or comes into possession of the Executive, other than in connection with his employment hereunder; or (iv) the Executive is required to disclose by applicable law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

 

(b) NONCOMPETITION. The Executive acknowledges that (i) the Executive performs services of a unique nature for the Company that are irreplaceable, and that the Executive’s performance of such services to a competing business will result in irreparable harm to the Company, (ii) the Executive has had and will continue to have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company or any of its affiliates, (iii) in the course of the Executive’s employment by a competitor, the Executive would inevitably use or disclose such Confidential Information, (iv) the Company and its affiliates have substantial relationships with their customers and the Executive has had and will continue to have access to these customers, (v) the Executive has received and will receive specialized training from the Company and its affiliates, and (vi) the Executive has generated and will continue to generate goodwill for the Company and its affiliates in the course of the Executive’s employment. Accordingly, during the Executive’s employment hereunder and the Restricted Period (as defined below), the Executive agrees that the Executive will not engage in any Competitive Activities (as defined below) in any basin or location in which the Company or any of its subsidiaries owns any Hydrocarbon Interests (as defined below) (or otherwise makes any direct or indirect investment in any Hydrocarbon Interests or has demonstrable plans to commence any activities or direct or indirect investment in Hydrocarbon Interests or any Competitive Activities in any other basin or location in North America. Notwithstanding the foregoing, nothing herein shall prohibit the Executive from being a passive owner of not more than one percent (1%) of the equity securities of a publicly traded corporation engaged in a business that is in competition with the Company or any of its subsidiaries or affiliates, so long as the Executive has no active participation in the business of such corporation, or owning a passive investment in any mutual, private equity or hedge fund or similar pooled investment vehicle. For the purposes of this Agreement, (A) “Competitive Activities” shall mean owning any interest in, participating in (whether as a director, officer, employee, member, or partner), consulting with, rendering services for (including as an employee), or in any manner engaging in any business or enterprise involving or related to (I) the acquisition, ownership, operation, finance, maintenance, exploration, production and development of Hydrocarbon Interests, (II) the production and sale of oil, gas and other hydrocarbons produced from such Hydrocarbon Interests, (III) the sale or other disposition of such Hydrocarbon Interests or (IV) any upstream business or activities or oil or gas marketing activities or other energy-related activities; (B) “Hydrocarbon Interests” shall mean (I) all oil, gas and/or mineral leases, oil, gas or mineral properties, mineral servitudes and/or mineral rights of any kind (including fee mineral interests, lease interests, farmout interests, overriding royalty and royalty interests, net profits interests, oil payment interests, production payment interests and other types of mineral interests), including any rights to acquire any of the foregoing and (II) all oil and gas gathering, treating, compression, storage, processing and handling assets of any kind, including all rigs, platforms, pipelines, wells, wellhead equipment, pumping units, flowlines, tanks, injection facilities, compression facilities, gathering systems, processing facilities and other related equipment or materials of any kind; and (C) “Restricted Period” means the period beginning on the Executive’s last day of employment with the Company and ending (I) on the second anniversary thereof, if such termination of employment occurs prior to the expiration of the Initial Term and (II) on the first anniversary thereof, if such termination occurs upon or after the expiration of the Initial Term.

 

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(c) NONSOLICITATION; NONINTERFERENCE.

 

(i) During the Executive’s employment with the Company and the Restricted Period, the Executive agrees that the Executive shall not, except in the furtherance of the Executive’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer.

 

(ii) During the Executive’s employment with the Company and the Restricted Period, the Executive agrees that the Executive shall not, except in the furtherance of the Executive’s duties hereunder, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any employee, representative or agent of the Company or any of its subsidiaries or affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company or any of its subsidiaries or affiliates and any of their respective vendors, joint venturers or licensors. An employee, representative or agent shall be deemed covered by this Section 9(c)(ii) while so employed or retained and for a period of six (6) months thereafter. Notwithstanding the foregoing, a general solicitation that is not targeted at employees, representatives, or agents of the Company shall not constitute a breach of this Section 9(c)(ii).

 

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(d) NONDISPARAGEMENT. The Executive agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees, shareholders, agents or products other than in the good faith performance of the Executive’s duties to the Company while the Executive is employed by the Company. The Company agrees to instruct its officers and directors at the time of the Executive’s termination and, to the extent the Executive is terminated in connection with a Change in Control (as defined in the Plan), its officers and directors in the ninety (90)-day period following such Change in Control, not to make negative comments about or otherwise disparage the Executive other than in the good faith performance of duties to the Company. This Section 9(d) shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 

(e) INVENTIONS.

 

(i) The Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products, developments, software, know-how, processes, techniques, works of authorship and other work product, whether patentable or unpatentable, (A) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of the Executive’s work with the Company or that relate to the business, operations or actual or demonstrably anticipated research or development of the Company, and that are made or conceived by the Executive, solely or jointly with others, during the Employment Term, or (B) suggested by any work that the Executive performs in connection with the Company, either while performing the Executive’s duties with the Company or on the Executive’s own time, shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual property protection are filed thereon (the “Inventions”). The Executive will keep full and complete written records (the “Records”), in the manner prescribed by the Company, of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and exclusive property of the Company, and the Executive will surrender them upon the termination of the Employment Term, or upon the Company’s request. The Executive irrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rights that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the right to file, in the Executive’s name or in the name of the Company (or its designee), applications for patents and equivalent rights (the “Applications”). The Executive will, at any time during and subsequent to the Employment Term, make such applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company to perfect, record, enforce, protect, patent or register the Company’s rights in the Inventions, all without additional compensation to the Executive from the Company but at the Company’s sole expense. The Executive will also execute assignments to the Company (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company’s benefit, all without additional compensation to the Executive from the Company.

 

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(ii) In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of the Company and the Executive agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to the Executive. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the Company, the Executive hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of the Executive’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom. In addition, the Executive hereby waives any so-called “moral rights” with respect to the Inventions. To the extent that the Executive has any rights in the results and proceeds of the Executive’s service to the Company that cannot be assigned in the manner described herein, the Executive agrees to unconditionally waive the enforcement of such rights. The Executive hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations for intellectual property that may issue thereon including, without limitation, any rights that would otherwise accrue to the Executive’s benefit by virtue of the Executive being an employee of or other service provider to the Company.

 

(iii) 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

 

(f) RETURN OF COMPANY PROPERTY. Promptly following the Executive’s termination of employment with the Company for any reason (or at any time prior thereto at the Company’s request), the Executive shall return all property belonging to the Company or its affiliates (including, but not limited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other equipment, or documents and property belonging to the Company). The Executive may retain the Executive’s Outlook contacts and calendar (or similar items) provided that such items only include contact and calendar information.

 

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(g) REASONABLENESS OF COVENANTS. In signing this Agreement, the Executive gives the Company assurance that the Executive has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 9 hereof. The Executive agrees that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates and their Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Executive from obtaining other suitable employment during the period in which the Executive is bound by the restraints. The Executive agrees that, before providing services, whether as an employee or consultant, to any entity during the period of time that the Executive is subject to the constraints in Section 9(a) hereof, the Executive will provide a copy of Section 9 of this Agreement to such entity. The Executive acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and its affiliates and that the Executive has sufficient assets and skills to provide a livelihood while such covenants remain in force. The Executive further covenants that the Executive will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 9, and that the Executive will reimburse the Company and its affiliates for all costs (including reasonable attorneys’ fees) incurred in connection with any action to enforce any of the provisions of this Section 9 if either the Company and/or its affiliates prevails on any material issue involved in such dispute or if the Executive challenges the reasonableness or enforceability of any of the provisions of this Section 9. It is also agreed that each of the Company’s affiliates will have the right to enforce all of the Executive’s obligations to that affiliate under this Agreement, including without limitation pursuant to this Section 9.

 

(h) REFORMATION. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state.

 

(i) TOLLING. In the event of any violation of the provisions of this Section 9, the Executive acknowledges and agrees that the post-termination restrictions contained in this Section 9 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.

 

(j) SURVIVAL OF PROVISIONS. The obligations contained in Sections 9 and 10 hereof shall survive the termination or expiration of the Employment Term and the Executive’s employment with the Company and shall be fully enforceable thereafter.

 

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10. COOPERATION. Upon the receipt of reasonable notice from the Company or its outside counsel, the Executive agrees that while employed by the Company and thereafter, the Executive will respond and provide information with regard to matters in which the Executive has knowledge as a result of the Executive’s employment with the Company, and will provide reasonable assistance to the Company, its affiliates and their respective representatives in defense of any claims that may be made against the Company or its affiliates (other than any claims asserted by the Executive), and will assist the Company and its affiliates in the prosecution of any claims that may be made by the Company or its affiliates (other than any claims that may be asserted against the Executive), to the extent that such claims may relate to the period of the Executive’s employment with the Company (collectively, the “Claims”). The Executive agrees to promptly inform the Company if the Executive becomes aware of any lawsuits involving Claims that may be filed or threatened against the Company or its affiliates. The Executive also agrees to promptly inform the Company (to the extent that the Executive is legally permitted to do so) if the Executive is asked to assist in any investigation of the Company or its affiliates (or their actions) or another party attempts to obtain information or documents from the Executive (other than in connection with any litigation or other proceeding in which the Executive is a party-in-opposition) with respect to matters the Executive believes in good faith to relate to any investigation of the Company or its affiliates, in each case, regardless of whether a lawsuit or other proceeding has then been filed against the Company or its affiliates with respect to such investigation, and shall not do so unless legally required. During the pendency of any litigation or other proceeding involving Claims, the Executive shall not communicate with anyone (other than the Executive’s attorneys and tax and/or financial advisors and except to the extent that the Executive determines in good faith is necessary in connection with the performance of the Executive’s duties hereunder) with respect to the facts or subject matter of any pending or potential litigation or regulatory or administrative proceeding involving the Company or any of its affiliates without giving prior written notice to the Company or the Company’s counsel. Upon presentation of appropriate documentation, the Company shall pay or reimburse the Executive for all reasonable out-of-pocket travel, duplicating or telephonic expenses and all reasonable legal expenses incurred by the Executive in complying with this Section 10. To the extent such cooperation occurs subsequent to the termination of the Executive’s employment (and, if the Executive received payment pursuant to Section 7(d)(iii), hereof, subsequent to the expiration of a number of years thereafter equal to the Severance Multiple), the Company shall compensate the Executive for such cooperation at a daily rate equal to (i) the sum of the Executive’s final Base Salary divided by (ii) three hundred and sixty-five (365).

 

11. WHISTLEBLOWER PROTECTION. Notwithstanding anything to the contrary contained herein, no provision of this Agreement shall be interpreted so as to impede the Executive (or any other individual) from reporting possible violations of federal law or regulation to, or discussing any possible violations with, any governmental agency or entity or self-regulatory organization, including but not limited to the Department of Justice, the Securities and Exchange Commission, the Congress, any agency Inspector General, and FINRA, or making other disclosures under the whistleblower provisions of federal law or regulation. The Executive does not need the prior authorization of the Company to make any such reports or disclosures and the Executive shall not be not required to notify the Company that such reports or disclosures have been made.

 

12. EQUITABLE RELIEF AND OTHER REMEDIES. The Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 9 or Section 10 hereof would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond or other security, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available, without the necessity of showing actual monetary damages. In the event of a violation by the Executive of Section 9 or Section 10 hereof, any severance being paid to the Executive pursuant to this Agreement or otherwise shall immediately cease, and any severance previously paid to the Executive shall be immediately repaid to the Company.

 

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13. NO ASSIGNMENTS. This Agreement is personal to each of the parties hereto. Except as provided in this Section 13 hereof, no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto. The Company may assign this Agreement to any successor to all or substantially all of the business and/or assets of the Company, provided that the Company shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company and any successor to its business and/or assets, which assumes and agrees to perform the duties and obligations of the Company under this Agreement by operation of law or otherwise.

 

14. NOTICE. For 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 (a) on the date of delivery, if delivered by hand, (b) on the date of transmission, if delivered by confirmed facsimile or electronic mail, (c) on the first business day following the date of deposit, if delivered by guaranteed overnight delivery service, or (d) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

At the address (or to the facsimile number) shown
in the books and records of the Company.

 

If to the Company:

 

510 Madison Aveneue 8th Floor

New York, NY 10022

Attention: Chief Legal Officer

  

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

15. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. In the event of any inconsistency between the terms of this Agreement and any form, award, plan or policy of the Company, the terms of this Agreement shall govern and control.

 

16. SEVERABILITY. The provisions of this Agreement shall be deemed severable. The invalidity or unenforceability of any provision of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by applicable law.

 

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17. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

18. ARBITRATION. Any dispute or controversy arising under or in connection with this Agreement or the Executive’s employment with the Company, other than injunctive relief under Section 12 hereof, shall be settled exclusively by arbitration, conducted before a single arbitrator in New York, New York in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association then in effect. The decision of the arbitrator will be final and binding upon the parties hereto. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. The parties acknowledge and agree that in connection with any such arbitration, (a) the arbitration costs shall be borne entirely by the Company, (b) each party shall pay all of its own costs and expenses, including, without limitation, its own legal fees and expenses, provided that the Company will reimburse the Executive for all costs (including reasonable attorneys’ fees) incurred in a dispute if the Executive prevails on any material issue involved in such dispute.

 

19. INDEMNIFICATION. The Company hereby agrees to indemnify the Executive and hold the Executive harmless to the greatest extent permitted by law or provided under the By-Laws of the Company against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages resulting from the Executive’s good faith performance of the Executive’s duties and obligations with the Company, and shall provide advancement of expenses to the greatest extent permitted under applicable law. This obligation shall survive the termination of the Executive’s employment with the Company.

 

20. LIABILITY INSURANCE. The Company shall cover the Executive under directors’ and officers’ liability insurance both during and, while potential liability exists, after the term of this Agreement in the same amount and to the same extent as the Company covers its other officers and directors.

 

21. GOVERNING LAW; WAIVER OF JURY TRIAL. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware (without regard to its choice of law provisions). As a specifically bargained for inducement for each of the parties hereto to enter into this Agreement (after having the opportunity to consult with counsel), each party hereto expressly waives the right to trial by jury in any lawsuit or proceeding relating to or arising in any way from this Agreement or the matters contemplated hereby.

 

22. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer or director as may be designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement together with all exhibits hereto sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes any and all prior agreements or understandings between the Executive and the Company with respect to the subject matter hereof. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

 

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23. REPRESENTATIONS. The Executive represents and warrants to the Company that (a) the Executive has the legal right to enter into this Agreement and to perform all of the obligations on the Executive’s part to be performed hereunder in accordance with its terms, and (b) the Executive is not a party to any agreement or understanding, written or oral, and is not subject to any restriction, which, in either case, could prevent the Executive from entering into this Agreement or impair in any way the performance of the Executive’s duties and obligations hereunder. In addition, the Executive acknowledges that the Executive is aware of Section 304 (Forfeiture of Certain Bonuses and Profits) of the Sarbanes-Oxley Act of 2002 and the right of the Company to be reimbursed for certain payments to the Executive in compliance therewith.

 

24. TAX MATTERS.

 

(a) WITHHOLDING. The Company may withhold from any and all amounts payable under this Agreement or otherwise such federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.

 

(b) DELIVERY OF SHARES ON NET BASIS. In the event the Executive is to be issued shares of common stock in accordance with this Agreement, the Company shall, upon the Executive’s election, retain a sufficient number of such shares to satisfy the Executive’s tax withholding obligations and deliver the remaining shares on a net share settlement basis.

 

(c) SECTION 409A COMPLIANCE.

 

(i) The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section 409A and the regulations and guidance promulgated thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. To the extent that any provision hereof is modified in order to comply with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Code Section 409A. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or damages for failing to comply with Code Section 409A.

 

(ii) A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” Notwithstanding anything to the contrary in this Agreement, if the Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall not be made or provided until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such “separation from service” of the Executive, and (B) the date of the Executive’s death, to the extent required under Code Section 409A to avoid imposition of any additional taxes or interest. Upon the expiration of the foregoing delay period, all payments and benefits delayed pursuant to this Section 24(c)(ii) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

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(iii) To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Code Section 409A, (A) all expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive, (B) any right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (C) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

 

(iv) For purposes of Code Section 409A, the Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.

 

(v) Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes “nonqualified deferred compensation” for purposes of Code Section 409A be subject to offset by any other amount unless otherwise permitted by Code Section 409A.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

  COMPANY
   
  By: /s/ Jonathan Z. Cohen
  Name: Jonathan Z. Cohen
  Title: Chairman of the Board
   
  EXECUTIVE
   
  /s/ Daniel C. Herz
  Daniel C. Herz

 

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EXHIBIT A

 

GENERAL RELEASE

 

I, Daniel C. Herz, in consideration of and subject to the performance by Falcon Minerals Corporation (together with its subsidiaries, the “Company”) of its obligations under the Employment Agreement dated as of April 19, 2019 (the “Agreement”) do hereby release and forever discharge as of the date hereof the Company and its respective affiliates and all present, former and future managers, directors, officers, employees, successors and assigns of the Company and its affiliates and direct or indirect owners (collectively, the “Released Parties”) to the extent provided below (this “General Release”). The Released Parties are intended to be third-party beneficiaries of this General Release, and this General Release may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such Released Parties hereunder. Terms used herein but not otherwise defined shall have the meanings given to them in the Agreement.

 

1.My employment or service with the Company and its affiliates terminated as of [________], 201[●], and I hereby resign from any position as an officer, member of the board of managers or directors (as applicable) or fiduciary of the Company or its affiliates (or reaffirm any such resignation that may have already occurred). I understand temployment or service with the Company and its affiliatesto me under Section 7 of the Agreement represent, in part, consideration for signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive certain of the payments and benefits specified in Section 7 of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter. I understand and agree that such payments and benefits are subject to Sections 9 and 10 of the Agreement, which (as noted below) expressly survive my termination of employment and the execution of this General Release. Such payments and benefits will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates.

 

2.Except as provided in paragraphs 4 and 5 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’ fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date that this General Release becomes effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my spouse, or any of my heirs, executors, administrators or assigns, may have against the Company or any of the Released Parties that arise out of or are connected with my employment with, or my separation or termination from, the Company (including, but not limited to, any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).

 

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3.I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by paragraph 2 above.

 

4.I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

 

5.I agree that I hereby waive all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Parties of any kind whatsoever in respect of any Claim, including, without limitation, reinstatement, back pay, front pay, and any form of injunctive relief. Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under law, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however, that I disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding. Additionally, I am not waiving any claims or rights (i) to the Accrued Benefits or any severance benefits to which I am entitled under the Agreement, (ii) relating to directors’ and officers’ liability insurance coverage or any right of indemnification or advancement of expenses under the Company’s organizational documents, the Agreement or otherwise, (iii) as an equity or security holder in the Company or its affiliates, (iv) arising under Section 9(d) of the Agreement; or (v) with respect to vested benefits under any of the Company’s benefit plans.

 

6.In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state or local statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law. I further agree that I am not aware of any pending claim of the type described in paragraph 2 above as of the execution of this General Release.

 

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7.I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

 

8.I agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of defending against the suit incurred by the Released Parties, including reasonable attorneys’ fees.

 

9.I agree that this General Release and the Agreement are confidential and agree not to disclose any information regarding the terms of this General Release or the Agreement, except to my immediate family and any tax, legal or other counsel I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone.

 

10.Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from discussing any issue with the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-regulatory organization or any governmental entity.

 

11.I hereby acknowledge that Sections 7 through 14, 19 through 22 and 24 of the Agreement shall survive my execution of this General Release.

 

12.I represent that I am not aware of any claim by me other than the claims that are released by this General Release. I acknowledge that I may hereafter discover claims or facts in addition to or different than those which I now know or believe to exist with respect to the subject matter of the release set forth in paragraph 2 above and which, if known or suspected at the time of entering into this General Release, may have materially affected this General Release and my decision to enter into it.

 

13.Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.

 

14.Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

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BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

1.I HAVE READ IT CAREFULLY;

 

2.I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

3.I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

4.I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

5.I HAVE HAD AT LEAST [21][45] DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE TO CONSIDER IT, AND THE CHANGES MADE SINCE MY RECEIPT OF THIS RELEASE ARE NOT MATERIAL OR WERE MADE AT MY REQUEST AND WILL NOT RESTART THE REQUIRED [21][45]-DAY PERIOD;

 

6.I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

 

7.I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

8.I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

SIGNED:   DATED:  

 

 

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Exhibit 10.2

 

RESTRICTED STOCK AWARD AGREEMENT

 

PURSUANT TO THE

 

FALCON MINERALS CORPORATION

 

2018 LONG-TERM INCENTIVE PLAN

 

* * * * *

 

Participant: Daniel C. Herz

 

Grant Date: April 19, 2019

 

Number of Shares of Restricted Stock Granted: 133,333

 

* * * * *

 

THIS RESTRICTED STOCK AWARD AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Falcon Minerals Corporation, a Delaware (the “Company”), and the Participant specified above, pursuant to the Falcon Minerals Corporation 2018 Long-Term Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee; and

 

WHEREAS, the Committee has determined in accordance with the Plan that it would be in the best interests of the Company to grant the shares of Restricted Stock provided herein to the Participant.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto hereby mutually covenant and agree as follows:

 

1. Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan as of the date hereof. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control; provided, however, that any provisions with respect to treatment of the Restricted Stock upon the Participant’s Termination (as defined below) shall be as provided in this Agreement.

 

2. Grant of Restricted Stock Award. The Company hereby grants to the Participant, as of the Grant Date specified above, the number of shares of Restricted Stock specified above. Except as otherwise provided by the Plan and this Agreement (including Section 5 hereof), the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan or this Agreement.

 

3. Vesting.

 

(a) Subject to the further provisions of this Section 3, the Restricted Stock subject to this grant shall become unrestricted and vested as follows, provided that the Participant has not incurred a Termination prior to each such vesting date:

   

Vesting Date  Number of Shares 
August 23, 2019   33,333 
August 23, 2020   33,333 
August 23, 2021   66,667 

 

 

 

 

There shall be no proportionate or partial vesting in the periods prior to each vesting date and all vesting shall occur only on the appropriate vesting date, except for acceleration as provided herein or in the Plan, subject to the Participant’s continued service with the Company or any of its Subsidiaries on each applicable vesting date.

 

(b) Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the Restricted Stock at any time and for any reason.

 

(c) Change in Control. Upon the Participant’s Termination by the Company without Cause (as defined in that certain Employment Agreement, dated as of April 19, 2019, between the Company and the Participant (as amended, amended and restated, or supplemented from time to time, the “Employment Agreement”)) or by the Participant for Good Reason (as defined in the Employment Agreement), in each case, on the effective date of or during the twelve (12)-month period following a Change in Control (any such termination, a “Qualifying Termination”), any Restricted Stock that has not theretofore vested as of the date of such Qualifying Termination shall immediately vest.

 

(d) Forfeiture. Subject to the Committee’s discretion to accelerate vesting hereunder,

 

(i) Except in the event of a Qualifying Termination or as set forth in (ii) below, upon the Participant’s Termination for any reason before all of the Restricted Stock subject to this grant vests, any unvested Restricted Stock shall automatically terminate and shall be forfeited as of the date of the Participant’s Termination.

 

(ii) Upon the Participant’s Termination by reason of death or Disability, any unvested Restricted Stock shall immediately vest.

 

4. Period of Restriction; Delivery of Unrestricted Shares. Until the Restricted Stock vests in accordance with Section 3, the Restricted Stock shall bear a legend as described in Section 8.2(c) of the Plan. When shares of Restricted Stock awarded by this Agreement become vested, the Participant shall be entitled to receive unrestricted shares and if the Participant’s stock certificates contain legends restricting the transfer of such shares, the Participant shall be entitled to receive new stock certificates free of such legends (except any legends requiring compliance with securities laws).

 

5. Dividends and Other Distributions; Voting. The Participant shall be entitled to receive all dividends and other distributions paid with respect to such shares, provided that any such dividends or other distributions will be subject to the same vesting requirements as the underlying Restricted Stock and shall be paid at the time the Restricted Stock becomes vested pursuant to Section 3 hereof. If any dividends or distributions are paid in shares, the shares shall be deposited with the Company and shall be subject to the same restrictions on transferability and forfeitability as the Restricted Stock with respect to which they were paid. The Participant may exercise full voting rights with respect to the Restricted Stock granted hereunder.

 

6. Non-Transferability. The shares of Restricted Stock, and any rights and interests with respect thereto, issued under this Agreement and the Plan shall not, prior to vesting, be sold, exchanged, transferred, assigned or otherwise disposed of in any way by the Participant (or any beneficiary of the Participant), other than by testamentary disposition by the Participant or the laws of descent and distribution. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise dispose of or hypothecate in any way any of the Restricted Stock, or the levy of any execution, attachment or similar legal process upon the Restricted Stock, contrary to the terms and provisions of this Agreement and/or the Plan shall be null and void and without legal force or effect.

 

7. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.

 

8. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the Restricted Stock and, if the Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. In the discretion of the Participant, any such withholding obligation with regard to the Participant may be satisfied by reducing the amount of cash or shares of Common Stock otherwise deliverable to the Participant hereunder.

 

9. Section 83(b). If the Participant properly elects (as required by Section 83(b) of the Code) within 30 days after the issuance of the Restricted Stock to include in gross income for federal income tax purposes in the year of issuance the Fair Market Value of such shares of Restricted Stock, the Participant shall pay to the Company or make arrangements satisfactory to the Company to pay to the Company upon such election, any federal, state or local taxes required to be withheld with respect to the Restricted Stock. If the Participant shall fail to make such payment, the Company shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Participant any federal, state or local taxes of any kind required by law to be withheld with respect to the Restricted Stock, as well as the rights set forth in Section 8 hereof. The Participant acknowledges that it is the Participant’s sole responsibility, and not the Company’s, to file timely and properly the election under Section 83(b) of the Code and any corresponding provisions of state tax laws if the Participant elects to make such election, and the Participant agrees to timely provide the Company with a copy of any such election.

 

10. Legend. All certificates, if any, representing the Restricted Stock shall have endorsed thereon the legend set forth in Section 8.2(c) of the Plan. Notwithstanding the foregoing, in no event shall the Company be obligated to deliver to the Participant a certificate representing the Restricted Stock prior to the vesting dates set forth above.

 

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11. Securities Representations. The shares of Restricted Stock are being issued to the Participant and this Agreement is being made by the Company in reliance upon the following express representations and warranties of the Participant. The Participant acknowledges, represents and warrants that:

 

(a) The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 11.

 

(b) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the shares of Restricted Stock must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to the shares of Restricted Stock and the Company is under no obligation to register the shares of Restricted Stock (or to file a “re-offer prospectus”).

 

(c) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of vested Restricted Stock hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.

 

12. Restrictive Covenants.

 

(a) Confidentiality. During the course of the Participant’s employment with the Company, the Participant will have access to Confidential Information. For purposes of this Agreement, “Confidential Information” means all data, information, ideas, concepts, discoveries, trade secrets, inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, developments, techniques, methods, processes, treatments, drawings, sketches, specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary information or trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter existing, relating to or arising from the past, current or potential business, activities and/or operations of the Company or any of its affiliates, including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel, customers, suppliers, vendors, raw partners and/or competitors. The Participant agrees that the Participant shall not, directly or indirectly, other than in the good faith performance of his duties hereunder, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Participant’s assigned duties and for the benefit of the Company, either during the period of the Participant’s employment or at any time thereafter, any Confidential Information or other confidential or proprietary information received from third parties subject to a duty on the Company’s and its subsidiaries’ and affiliates’ part to maintain the confidentiality of such information, and to use such information only for certain limited purposes, in each case, which shall have been obtained by the Participant during the Participant’s employment by the Company (or any predecessor). The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to the Participant; (ii) becomes generally known to the public subsequent to disclosure to the Participant through no wrongful act of the Participant or any representative of the Participant; (iii) is independently developed by Participant, or comes into possession of the Participant, other than in connection with his employment by the Company; or (iv) the Participant is required to disclose by applicable law, regulation or legal process (provided that the Participant provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

  

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(b) Noncompetition. The Participant acknowledges that (i) the Participant performs services of a unique nature for the Company that are irreplaceable, and that the Participant’s performance of such services to a competing business will result in irreparable harm to the Company, (ii) the Participant has had and will continue to have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company or any of its affiliates, (iii) in the course of the Participant’s employment by a competitor, the Participant would inevitably use or disclose such Confidential Information, (iv) the Company and its affiliates have substantial relationships with their customers and the Participant has had and will continue to have access to these customers, (v) the Participant has received and will receive specialized training from the Company and its affiliates, and (vi) the Participant has generated and will continue to generate goodwill for the Company and its affiliates in the course of the Participant’s employment. Accordingly, during the Participant’s employment hereunder and the Restricted Period (as defined below), the Participant agrees that the Participant will not engage in any Competitive Activities (as defined below) in any basin or location in which the Company or any of its subsidiaries owns any Hydrocarbon Interests (as defined below) (or otherwise makes any direct or indirect investment in any Hydrocarbon Interests or has demonstrable plans to commence any activities or direct or indirect investment in Hydrocarbon Interests or any Competitive Activities in any other basin or location in North America. Notwithstanding the foregoing, nothing herein shall prohibit the Participant from being a passive owner of not more than one percent (1%) of the equity securities of a publicly traded corporation engaged in a business that is in competition with the Company or any of its subsidiaries or affiliates, so long as the Participant has no active participation in the business of such corporation, or owning a passive investment in any mutual, private equity or hedge fund or similar pooled investment vehicle. For the purposes of this Agreement, (A) “Competitive Activities” shall mean owning any interest in, participating in (whether as a director, officer, employee, member, or partner), consulting with, rendering services for (including as an employee), or in any manner engaging in any business or enterprise involving or related to (I) the acquisition, ownership, operation, finance, maintenance, exploration, production and development of Hydrocarbon Interests, (II) the production and sale of oil, gas and other hydrocarbons produced from such Hydrocarbon Interests, (III) the sale or other disposition of such Hydrocarbon Interests or (IV) any upstream business or activities or oil or gas marketing activities or other energy-related activities; (B) “Hydrocarbon Interests” shall mean (I) all oil, gas and/or mineral leases, oil, gas or mineral properties, mineral servitudes and/or mineral rights of any kind (including fee mineral interests, lease interests, farmout interests, overriding royalty and royalty interests, net profits interests, oil payment interests, production payment interests and other types of mineral interests), including any rights to acquire any of the foregoing and (II) all oil and gas gathering, treating, compression, storage, processing and handling assets of any kind, including all rigs, platforms, pipelines, wells, wellhead equipment, pumping units, flowlines, tanks, injection facilities, compression facilities, gathering systems, processing facilities and other related equipment or materials of any kind; and (C) “Restricted Period” means the period beginning on the Participant’s last day of employment with the Company and ending (I) on the second anniversary thereof, if such termination of employment occurs prior to the expiration of the Initial Term and (II) on the first anniversary thereof, if such termination occurs upon or after the expiration of the Initial Term.

 

(c) Nonsolicitation; Noninterference.

 

(i) During the Participant’s employment with the Company and the Restricted Period, the Participant agrees that the Participant shall not, except in the furtherance of the Participant’s duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer.

 

(ii) During the Participant’s employment with the Company and the Restricted Period, the Participant agrees that the Participant shall not, except in the furtherance of the Participant’s duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any employee, representative or agent of the Company or any of its subsidiaries or affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company or any of its subsidiaries or affiliates and any of their respective vendors, joint venturers or licensors. An employee, representative or agent shall be deemed covered by this Section 12(c)(ii) while so employed or retained and for a period of six (6) months thereafter. Notwithstanding the foregoing, a general solicitation that is not targeted at employees, representatives, or agents of the Company shall not constitute a breach of this Section 12(c)(ii).

 

(d) Nondisparagement. The Participant agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees, shareholders, agents or products other than in the good faith performance of the Participant’s duties to the Company while the Participant is employed by the Company. The Company agrees to instruct its officers and directors at the time of the Participant’s termination and, to the extent the Participant is terminated in connection with a Change in Control, its officers and directors in the ninety (90)-day period following such Change in Control, not to make negative comments about or otherwise disparage the Participant other than in the good faith performance of duties to the Company. This Section 12(d) shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 

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(e) Inventions.

 

(i) The Participant acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products, developments, software, know-how, processes, techniques, works of authorship and other work product, whether patentable or unpatentable, (A) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of the Participant’s work with the Company or that relate to the business, operations or actual or demonstrably anticipated research or development of the Company, and that are made or conceived by the Participant, solely or jointly with others, during the Employment Term (as defined in the Employment Agreement), or (B) suggested by any work that the Participant performs in connection with the Company, either while performing the Participant’s duties with the Company or on the Participant’s own time, shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual property protection are filed thereon (the “Inventions”). The Participant will keep full and complete written records (the “Records”), in the manner prescribed by the Company, of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and exclusive property of the Company, and the Participant will surrender them upon the termination of the Employment Term, or upon the Company’s request. The Participant irrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rights that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the right to file, in the Participant’s name or in the name of the Company (or its designee), applications for patents and equivalent rights (the “Applications”). The Participant will, at any time during and subsequent to the Employment Term, make such applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company to perfect, record, enforce, protect, patent or register the Company’s rights in the Inventions, all without additional compensation to the Participant from the Company but at the Company’s sole expense. The Participant will also execute assignments to the Company (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company’s benefit, all without additional compensation to the Participant from the Company.

 

(ii) In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of the Company and the Participant agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to the Participant. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the Company, the Participant hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of the Participant’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom. In addition, the Participant hereby waives any so-called “moral rights” with respect to the Inventions. To the extent that the Participant has any rights in the results and proceeds of the Participant’s service to the Company that cannot be assigned in the manner described herein, the Participant agrees to unconditionally waive the enforcement of such rights. The Participant hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations for intellectual property that may issue thereon including, without limitation, any rights that would otherwise accrue to the Participant’s benefit by virtue of the Participant being an employee of or other service provider to the Company.

 

(iii) 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

 

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(g) Reasonableness of Covenants. In signing this Agreement, the Participant gives the Company assurance that the Participant has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 12 hereof. The Participant agrees that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates and their Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Participant from obtaining other suitable employment during the period in which the Participant is bound by the restraints. The Participant agrees that, before providing services, whether as an employee or consultant, to any entity during the period of time that the Participant is subject to the constraints in Section 12(a) hereof, the Participant will provide a copy of Section 12 of this Agreement to such entity. The Participant acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and its affiliates and that the Participant has sufficient assets and skills to provide a livelihood while such covenants remain in force. The Participant further covenants that the Participant will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 12, and that the Participant will reimburse the Company and its affiliates for all costs (including reasonable attorneys’ fees) incurred in connection with any action to enforce any of the provisions of this Section 12 if either the Company and/or its affiliates prevails on any material issue involved in such dispute or if the Participant challenges the reasonableness or enforceability of any of the provisions of this Section 12. It is also agreed that each of the Company’s affiliates will have the right to enforce all of the Participant’s obligations to that affiliate under this Agreement, including without limitation pursuant to this Section 12.

 

(h) Reformation. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 12 is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state.

 

(i) Tolling. In the event of any violation of the provisions of this Section 12, the Participant acknowledges and agrees that the post-termination restrictions contained in this Section 12 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.

 

(j) Survival of Provisions. The obligations contained in Sections 12 hereof shall survive the termination or expiration of the Employment Term and the Participant’s employment with the Company and shall be fully enforceable thereafter.

 

13. Entire Agreement; Amendment. This Agreement, the Employment Agreement and the Plan contain the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The rights of Participant under this Agreement may not be impaired or adversely affected in any manner by any amendment, suspension or termination of the Plan, except with the consent of the Participant. This Agreement shall only be modified or amended by a writing signed by both the Company and the Participant.

 

14. Notices. Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.

 

15. Acceptance. As required by Section 8.2 of the Plan, the Participant shall forfeit the Restricted Stock if the Participant does not execute this Agreement within a period of sixty (60) days from the date that the Participant receives this Agreement.

 

16. No Right to Employment. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in accordance with the Employment Agreement or, in the absence of an employment or similar agreement, in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or Affiliates to terminate the Participant’s employment or service at any time, for any reason and with or without Cause.

 

17. Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the Restricted Stock awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Participant.

 

18. Compliance with Laws. The issuance of the Restricted Stock or unrestricted shares pursuant to this Agreement shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law or regulation applicable thereto. The Company shall not be obligated to issue the Restricted Stock or any of the shares pursuant to this Agreement if any such issuance would violate any such requirements.

 

19. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the shares of Restricted Stock are intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.

 

20. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company, which consent shall not be unreasonably withheld.

 

21. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

 

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22. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

 

23. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.

 

24. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

 

25. Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time, to the extent provided in Article XIII of the Plan; (b) the award of Restricted Stock made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the Restricted Stock awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.

   

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

 

FALCON MINERALS CORPORATION

   
  By: /s/ Jonathan Z. Cohen
  Name: Jonathan Z. Cohen
  Title: Chairman of the Board
   
 

PARTICIPANT

   
   
  By: /s/ Daniel C. Herz
  Name: Daniel C. Herz

 

 

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Exhibit 10.3

 

PERFORMANCE STOCK UNIT AGREEMENT

 

PURSUANT TO THE

 

FALCON MINERALS CORPORATION

 

2018 LONG-TERM INCENTIVE PLAN

 

* * * * *

 

Participant: Daniel C. Herz

 

Grant Date: April 19, 2019

 

Target Number of Performance Stock Units Granted: 266,667

 

Maximum Number of Performance Stock Units Granted: 650,000

 

* * * * *

 

THIS PERFORMANCE STOCK UNIT AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Falcon Minerals Corporation, a Delaware (the “Company”), and the Participant specified above, pursuant to the Falcon Minerals Corporation 2018 Long-Term Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee; and

 

WHEREAS, the Committee has determined in accordance with the Plan that it would be in the best interests of the Company to grant the Performance Stock Units (“PSUs”) provided herein to the Participant.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto hereby mutually covenant and agree as follows:

 

1. Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan as of the date hereof. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control; provided, however, that any provisions with respect to treatment of the PSUs upon the Participant’s Termination (as defined below) shall be as provided in this Agreement.

 

2. Grant of Performance Stock Unit Award. The Company hereby grants to the Participant, as of the Grant Date specified above, the number of PSUs specified under Target Number of Performance Stock Units Granted above (i.e., 266,667 PSUs), provided that the Participant is eligible to earn PSUs up to the number of PSUs specified under Maximum Number of Performance Stock Units Granted above (i.e., 650,000 PSUs). Except as otherwise provided by the Plan and this Agreement, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan or this Agreement, including Section 3(b) below. Subject to Section 5 hereof, the Participant shall not have the rights of a stockholder in respect of the shares underlying this Award until such shares are delivered to the Participant in accordance with Section 4 hereof.

 

3. Vesting. The PSUs shall be subject to both time vesting and performance vesting.

 

(a) Subject to the further provisions of this Section 3, the PSUs subject to this grant shall time vest on August 23, 2021, provided that the Participant has not incurred a Termination prior to such date.

 

 

 

(b) The PSUs shall performance vest if the following performance targets are met on or prior to August 23, 2025, in accordance with the following schedules:

 

(i) 133,333.5 PSUs will vest on the date that the 30-Day VWAP (as such term is defined in that certain Contribution Agreement, dated as of June 3, 2018, by and among Royal Resources L.P., a Delaware limited partnership (“Royal Resources”), Osprey Energy Acquisition Corp., a Delaware corporation, and such other parties thereto named therein, as such agreement is in effect as of the date hereof (the “Contribution Agreement”)) equals or exceeds $10.00 per share (subject to adjustment in accordance with Section 12 hereof).

 

(ii) An additional 200,000.25 PSUs will vest on the date that the 30-Day VWAP equals or exceeds $12.50 per share (subject to adjustment in accordance with Section 12 hereof) (such target, the “Tier 1 Target” and any such date, the “Tier 1 Target Date”); provided that an additional number of PSUs shall vest under this Section 3(b)(ii) if any Extraordinary Dividends (as defined in the Contribution Agreement) were declared during the period commencing on the Grant Date and ending on the Tier 1 Target Date, with such additional number to be in the same proportion as the additional number of Common Units (as defined in the Contribution Agreement), if any, issued to Royal Resources under Section 2.6(a)(i) of the Contribution Agreement. Notwithstanding the foregoing, in no event will the amount of PSUs vesting pursuant to Section 3(b)(ii) exceed 316,666.25 in the aggregate.

 

(iii) An additional 200,000.25 PSUs will vest on date that the 30-day VWAP equals or exceeds $15.00 per share (subject to adjustment in accordance with Section 12 hereof) (such target, the “Tier 2 Target”, and together with the targets described in Section 3(b)(i) and Section 3(b)(ii), the “Targets”, and each, a “Target” and any such date, the “Tier 2 Target Date”); provided that the Tier 2 Target shall be decreased effective immediately after the declaration of any Extraordinary Dividend (as defined in the Contribution Agreement) during the period commencing on the Grant Date and ending on the Tier 2 Target Date, with such decrease in the Tier 2 Target, if any, to be the same as the decrease of the Adjusted Tier 2 Target for Royal Resources under the Contribution Agreement; provided further, that in no instance shall the Tier 2 Target be decreased below $12.50 (subject to adjustment in accordance with Section 12 hereof).

 

(iv) In the event of a Liquidity Event (as defined below) that results in distributions to stockholders or that involves shares of the Company being acquired pursuant to a tender offer or an agreement with the Company, the Price Target (to the extent not previously achieved) shall be applied using the Liquidity Event Price, as defined below, rather than the 30-Day VWAP as of the date of the Liquidity Event. For the avoidance of doubt, to the extent that the foregoing does not cause the PSUs to vest, the Targets shall continue to apply as set forth in clauses (i), (ii) and (iii) above.

 

(v) The term “Liquidity Event” shall have the meaning set forth in the Contribution Agreement.

 

(vi) The term “Liquidity Event Price” shall mean the highest price per share of Common Stock paid in any Liquidity Event.

 

There shall be no proportionate or partial vesting in the periods prior to each vesting date and all vesting shall occur only on the appropriate vesting date, except for acceleration as provided herein or in the Plan. For avoidance of doubt, once the 30-day VWAP targets set forth above are achieved, such PSU shall not become unvested if the trading price of the Company subsequently declines. Any PSUs that have not vested in accordance with the terms of this Agreement as of August 23, 2025 shall be forfeited for no consideration on August 23, 2025.

 

(c) Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the PSUs at any time and for any reason.

 

(d) Qualifying Termination. Upon the Participant’s Termination by the Company without Cause (as defined in that certain Employment Agreement, dated as of April 19, 2019, between the Company and the Participant (as amended, amended and restated, or supplemented from time to time, the “Employment Agreement”)) or by the Participant for Good Reason (as defined in the Employment Agreement) or upon the Participant’s Termination due to the Participant’s death or Disability (any such termination, a “Qualifying Termination”), the PSUs shall be time vested as of the date of termination and shall be performance vested, to the extent not yet performance vested, based on the achievement of one or more of the Targets, if any, achieved on or within 30 days following the Participant’s date of the Qualifying Termination. Any PSUs that have not vested in accordance with this Section 3(d) shall be forfeited for no consideration as of the date 30 days after the Qualifying Termination.

 

(e) Forfeiture. Subject to the Committee’s discretion to accelerate vesting hereunder, other than in the event of a Qualifying Termination, upon the Participant’s Termination for any reason before all of the PSUs subject to this grant have vested, any unvested PSUs shall automatically terminate and shall be forfeited as of the date of the Participant’s Termination.

 

4. Delivery of Shares or Cash.

 

(a) Within thirty (30) days following the date on which both the time and the performance vesting criteria have been met with respect to PSUs, the Participant shall receive the number of shares of Common Stock that correspond to the number of PSUs that have become vested on the applicable vesting date or, in the sole discretion of the Committee, an amount in cash equal to the Fair Market Value of a share of Common Stock on the date of vesting for each PSU. Whether payment is made in the form of Common Stock or cash, or a combination thereof, shall be determined in the sole discretion of the Committee.

 

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(b) Blackout Periods. If the Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 4(a) hereof, such distribution shall be instead made on the earlier of (i) the date that the Participant is not subject to any such policy or restriction and (ii) ninety (90) days following the date such distribution would otherwise have been made hereunder.

 

5. Dividends; Rights as Stockholder. Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any PSU, including any rights to cash dividends on shares of Common Stock issuable hereunder, unless and until the Participant has become the holder of record of such shares.

 

6. Non-Transferability. Subject to Section 19 hereof, no portion of the PSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the PSUs or in the event of the Participant’s death or disability, as provided herein, unless and until payment is made in respect of vested PSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder.

 

7. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.

 

8. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the PSUs and, if the Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. In the discretion of the Participant, any such withholding obligation with regard to the Participant may be satisfied by reducing the amount of cash or shares of Common Stock otherwise deliverable to the Participant hereunder.

 

9. Legend. The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates, if any, representing shares of Common Stock issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section.

 

10. Securities Representations. The PSUs are being issued to the Participant and this Agreement is being made by the Company in reliance upon the following express representations and warranties of the Participant. The Participant acknowledges, represents and warrants that:

 

(a) The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 10.

 

(b) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, any shares of Common Stock issued to the Participant in respect of the PSUs must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares and the Company is under no obligation to register such shares (or to file a “re-offer prospectus”).

 

(c) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issued to the Participant in respect of the PSUs hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.

 

 

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11. Restrictive Covenants.

 

(a) Confidentiality. During the course of the Participant’s employment with the Company, the Participant will have access to Confidential Information. For purposes of this Agreement, “Confidential Information” means all data, information, ideas, concepts, discoveries, trade secrets, inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, developments, techniques, methods, processes, treatments, drawings, sketches, specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary information or trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter existing, relating to or arising from the past, current or potential business, activities and/or operations of the Company or any of its affiliates, including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel, customers, suppliers, vendors, raw partners and/or competitors. The Participant agrees that the Participant shall not, directly or indirectly, other than in the good faith performance of his duties hereunder, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Participant’s assigned duties and for the benefit of the Company, either during the period of the Participant’s employment or at any time thereafter, any Confidential Information or other confidential or proprietary information received from third parties subject to a duty on the Company’s and its subsidiaries’ and affiliates’ part to maintain the confidentiality of such information, and to use such information only for certain limited purposes, in each case, which shall have been obtained by the Participant during the Participant’s employment by the Company (or any predecessor). The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to the Participant; (ii) becomes generally known to the public subsequent to disclosure to the Participant through no wrongful act of the Participant or any representative of the Participant; (iii) is independently developed by Participant, or comes into possession of the Participant, other than in connection with his employment by the Company; or (iv) the Participant is required to disclose by applicable law, regulation or legal process (provided that the Participant provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

 

(b) Noncompetition. The Participant acknowledges that (i) the Participant performs services of a unique nature for the Company that are irreplaceable, and that the Participant’s performance of such services to a competing business will result in irreparable harm to the Company, (ii) the Participant has had and will continue to have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company or any of its affiliates, (iii) in the course of the Participant’s employment by a competitor, the Participant would inevitably use or disclose such Confidential Information, (iv) the Company and its affiliates have substantial relationships with their customers and the Participant has had and will continue to have access to these customers, (v) the Participant has received and will receive specialized training from the Company and its affiliates, and (vi) the Participant has generated and will continue to generate goodwill for the Company and its affiliates in the course of the Participant’s employment. Accordingly, during the Participant’s employment hereunder and the Restricted Period (as defined below), the Participant agrees that the Participant will not engage in any Competitive Activities (as defined below) in any basin or location in which the Company or any of its subsidiaries owns any Hydrocarbon Interests (as defined below) (or otherwise makes any direct or indirect investment in any Hydrocarbon Interests or has demonstrable plans to commence any activities or direct or indirect investment in Hydrocarbon Interests or any Competitive Activities in any other basin or location in North America. Notwithstanding the foregoing, nothing herein shall prohibit the Participant from being a passive owner of not more than one percent (1%) of the equity securities of a publicly traded corporation engaged in a business that is in competition with the Company or any of its subsidiaries or affiliates, so long as the Participant has no active participation in the business of such corporation, or owning a passive investment in any mutual, private equity or hedge fund or similar pooled investment vehicle. For the purposes of this Agreement, (A) “Competitive Activities” shall mean owning any interest in, participating in (whether as a director, officer, employee, member, or partner), consulting with, rendering services for (including as an employee), or in any manner engaging in any business or enterprise involving or related to (I) the acquisition, ownership, operation, finance, maintenance, exploration, production and development of Hydrocarbon Interests, (II) the production and sale of oil, gas and other hydrocarbons produced from such Hydrocarbon Interests, (III) the sale or other disposition of such Hydrocarbon Interests or (IV) any upstream business or activities or oil or gas marketing activities or other energy-related activities; (B) “Hydrocarbon Interests” shall mean (I) all oil, gas and/or mineral leases, oil, gas or mineral properties, mineral servitudes and/or mineral rights of any kind (including fee mineral interests, lease interests, farmout interests, overriding royalty and royalty interests, net profits interests, oil payment interests, production payment interests and other types of mineral interests), including any rights to acquire any of the foregoing and (II) all oil and gas gathering, treating, compression, storage, processing and handling assets of any kind, including all rigs, platforms, pipelines, wells, wellhead equipment, pumping units, flowlines, tanks, injection facilities, compression facilities, gathering systems, processing facilities and other related equipment or materials of any kind; and (C) “Restricted Period” means the period beginning on the Participant’s last day of employment with the Company and ending (I) on the second anniversary thereof, if such termination of employment occurs prior to the expiration of the Initial Term and (II) on the first anniversary thereof, if such termination occurs upon or after the expiration of the Initial Term.

 

(c) Nonsolicitation; Noninterference.

 

(i) During the Participant’s employment with the Company and the Restricted Period, the Participant agrees that the Participant shall not, except in the furtherance of the Participant’s duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer.

 

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(ii) During the Participant’s employment with the Company and the Restricted Period, the Participant agrees that the Participant shall not, except in the furtherance of the Participant’s duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any employee, representative or agent of the Company or any of its subsidiaries or affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company or any of its subsidiaries or affiliates and any of their respective vendors, joint venturers or licensors. An employee, representative or agent shall be deemed covered by this Section 11(c)(ii) while so employed or retained and for a period of six (6) months thereafter. Notwithstanding the foregoing, a general solicitation that is not targeted at employees, representatives, or agents of the Company shall not constitute a breach of this Section 11(c)(ii).

 

(d) Nondisparagement. The Participant agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees, shareholders, agents or products other than in the good faith performance of the Participant’s duties to the Company while the Participant is employed by the Company. The Company agrees to instruct its officers and directors at the time of the Participant’s termination and, to the extent the Participant is terminated in connection with a Change in Control, its officers and directors in the ninety (90)-day period following such Change in Control, not to make negative comments about or otherwise disparage the Participant other than in the good faith performance of duties to the Company. This Section 11(d) shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 

(e) Inventions.

 

(i) The Participant acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products, developments, software, know-how, processes, techniques, works of authorship and other work product, whether patentable or unpatentable, (A) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of the Participant’s work with the Company or that relate to the business, operations or actual or demonstrably anticipated research or development of the Company, and that are made or conceived by the Participant, solely or jointly with others, during the Employment Term (as defined in the Employment Agreement), or (B) suggested by any work that the Participant performs in connection with the Company, either while performing the Participant’s duties with the Company or on the Participant’s own time, shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual property protection are filed thereon (the “Inventions”). The Participant will keep full and complete written records (the “Records”), in the manner prescribed by the Company, of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and exclusive property of the Company, and the Participant will surrender them upon the termination of the Employment Term, or upon the Company’s request. The Participant irrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rights that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the right to file, in the Participant’s name or in the name of the Company (or its designee), applications for patents and equivalent rights (the “Applications”). The Participant will, at any time during and subsequent to the Employment Term, make such applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company to perfect, record, enforce, protect, patent or register the Company’s rights in the Inventions, all without additional compensation to the Participant from the Company but at the Company’s sole expense. The Participant will also execute assignments to the Company (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company’s benefit, all without additional compensation to the Participant from the Company.

 

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(ii) In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of the Company and the Participant agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to the Participant. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the Company, the Participant hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of the Participant’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom. In addition, the Participant hereby waives any so-called “moral rights” with respect to the Inventions. To the extent that the Participant has any rights in the results and proceeds of the Participant’s service to the Company that cannot be assigned in the manner described herein, the Participant agrees to unconditionally waive the enforcement of such rights. The Participant hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations for intellectual property that may issue thereon including, without limitation, any rights that would otherwise accrue to the Participant’s benefit by virtue of the Participant being an employee of or other service provider to the Company.

 

(iii) 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

 

(g) Reasonableness of Covenants. In signing this Agreement, the Participant gives the Company assurance that the Participant has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 11 hereof. The Participant agrees that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates and their Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Participant from obtaining other suitable employment during the period in which the Participant is bound by the restraints. The Participant agrees that, before providing services, whether as an employee or consultant, to any entity during the period of time that the Participant is subject to the constraints in Section 11(a) hereof, the Participant will provide a copy of Section 11 of this Agreement to such entity. The Participant acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and its affiliates and that the Participant has sufficient assets and skills to provide a livelihood while such covenants remain in force. The Participant further covenants that the Participant will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 11, and that the Participant will reimburse the Company and its affiliates for all costs (including reasonable attorneys’ fees) incurred in connection with any action to enforce any of the provisions of this Section 11 if either the Company and/or its affiliates prevails on any material issue involved in such dispute or if the Participant challenges the reasonableness or enforceability of any of the provisions of this Section 11. It is also agreed that each of the Company’s affiliates will have the right to enforce all of the Participant’s obligations to that affiliate under this Agreement, including without limitation pursuant to this Section 11.

  

(h) Reformation. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 11 is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state.

 

(i) Tolling. In the event of any violation of the provisions of this Section 11, the Participant acknowledges and agrees that the post-termination restrictions contained in this Section 11 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.

 

(j) Survival of Provisions. The obligations contained in Sections 11 hereof shall survive the termination or expiration of the Employment Term and the Participant’s employment with the Company and shall be fully enforceable thereafter.

 

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12. Adjustments for Certain Events. In the event that a transaction or change in capitalization described in Section 4.2(b) of the Plan occurs, without limiting the application of Sections 4.2 and 12.1 of the Plan, the Company shall equitably adjust the Targets to reflect the applicable event. In the event of a Liquidity Event, the PSUs either (i) shall be assumed by the surviving entity, with equitable adjustments to the number of PSUs and the Targets or (ii) shall be fully vested with respect to time vesting and with respect to performance vesting, shall be vested to the extent Targets are achieved as of the date of the Liquidity Event, and the shares of Common Stock to be paid in respect of the PSUs shall be treated in the Liquidity Event as are other shares of Common Stock.

 

13. Entire Agreement; Amendment. This Agreement, the Employment Agreement and the Plan, contain the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersede all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The rights of Participant under this Agreement may not be impaired or adversely affected in any manner by any amendment, suspension or termination of the Plan, except with the prior written consent of the Participant. This Agreement shall only be modified or amended by a writing signed by both the Company and the Participant.

 

14. Notices. Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.

 

15. No Right to Employment. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in accordance with the Employment Agreement or, in the absence of an employment or similar agreement, in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or Affiliates to terminate the Participant’s employment or service at any time, for any reason and with or without Cause.

 

16. Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the PSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Participant.

 

17. Compliance with Laws. The grant of PSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to the settlement of the PSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.

 

18. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the PSUs are intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.

 

19. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company, which consent shall not be unreasonably withheld.

 

20. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

 

21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

 

22. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.

 

23. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

 

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24. Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time, to the extent provided in Article XIII of the Plan; (b) the award of PSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the PSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

FALCON MINERALS CORPORATION

   
  By: /s/ Jonathan Z. Cohen
  Name: Jonathan Z. Cohen
  Title: Chairman of the Board
   
 

PARTICIPANT

   
   
  By: /s/ Daniel C. Herz
  Name: Daniel C. Herz

 

 

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Exhibit 10.4

 

PERFORMANCE STOCK UNIT AGREEMENT

 

PURSUANT TO THE

 

FALCON MINERALS CORPORATION

 

2018 LONG-TERM INCENTIVE PLAN

 

* * * * *

 

Participant: Daniel C. Herz

 

Grant Date: April 19, 2019

 

Number of Performance Stock Units Granted: 500,000

 

* * * * *

 

THIS PERFORMANCE STOCK UNIT AGREEMENT (this “Agreement”), dated as of the Grant Date specified above, is entered into by and between Falcon Minerals Corporation, a Delaware (the “Company”), and the Participant specified above, pursuant to the Falcon Minerals Corporation 2018 Long-Term Incentive Plan, as in effect and as amended from time to time (the “Plan”), which is administered by the Committee; and

 

WHEREAS, the Committee has determined in accordance with the Plan that it would be in the best interests of the Company to grant the Performance Stock Units (“PSUs”) provided herein to the Participant.

 

NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth and for other good and valuable consideration, and intending to be legally bound hereby, the parties hereto hereby mutually covenant and agree as follows:

 

1. Incorporation By Reference; Plan Document Receipt. This Agreement is subject in all respects to the terms and provisions of the Plan (including, without limitation, any amendments thereto adopted at any time and from time to time unless such amendments are expressly intended not to apply to the Award provided hereunder), all of which terms and provisions are made a part of and incorporated in this Agreement as if they were each expressly set forth herein. Any capitalized term not defined in this Agreement shall have the same meaning as is ascribed thereto in the Plan as of the date hereof. The Participant hereby acknowledges receipt of a true copy of the Plan and that the Participant has read the Plan carefully and fully understands its content. In the event of any conflict between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control; provided, however, that any provisions with respect to treatment of the PSUs upon the Participant’s Termination (as defined below) shall be as provided in this Agreement.

 

2. Grant of Performance Stock Unit Award. The Company hereby grants to the Participant, as of the Grant Date specified above, the number of PSUs specified under Number of Performance Stock Units Granted above (i.e., 500,000 PSUs). Except as otherwise provided by the Plan and this Agreement, the Participant agrees and understands that nothing contained in this Agreement provides, or is intended to provide, the Participant with any protection against potential future dilution of the Participant’s interest in the Company for any reason, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares, except as otherwise specifically provided for in the Plan or this Agreement, including Section 3(b) below. Subject to Section 5 hereof, the Participant shall not have the rights of a stockholder in respect of the shares underlying this Award until such shares are delivered to the Participant in accordance with Section 4 hereof.

 

3. Vesting. The PSUs shall be subject to both time vesting and performance vesting.

 

(a) Subject to the further provisions of this Section 3, the PSUs subject to this grant shall time vest on August 23, 2021, provided that the Participant has not incurred a Termination prior to such date.

 

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(b) The PSUs shall performance vest if the following performance targets are met on or prior to August 23, 2025:

 

(i) The 30-Day VWAP (as such term is defined in that certain Contribution Agreement, dated as of June 3, 2018, by and among Royal Resources L.P., a Delaware limited partnership (“Royal Resources”), Osprey Energy Acquisition Corp., a Delaware corporation, and such other parties thereto named therein, as such agreement is in effect as of the date hereof (the “Contribution Agreement”)) equals or exceeds least $20.00 per share (subject to adjustment in accordance with Section 12 hereof) (the “Price Target”) and the aggregate market value of the voting stock held by stockholders (other than affiliates of The Blackstone Group, L.P.) is greater than $2.0 billion (subject to adjustment in accordance with Section 12 hereof) (together with the Price Target, the “Targets”).

 

(ii) The Price Target shall be decreased effective immediately after the declaration of any Extraordinary Dividend (as defined in the Contribution Agreement), with such decrease in the Price Target, if any, to be in the same proportion as the decrease of the Adjusted Tier 2 Target for Royal Resources under the Contribution Agreement; provided further, that in no instance shall the Price Target be decreased below $12.50 (subject to adjustment in accordance with Section 12 hereof).

 

(iii) In the event of a Liquidity Event (as defined below) that results in distributions to stockholders or that involves shares of the Company being acquired pursuant to a tender offer or an agreement with the Company, the Price Target (to the extent not previously achieved) shall be applied using the Liquidity Event Price, as defined below, rather than the 30-Day VWAP as of the date of the Liquidity Event. For the avoidance of doubt, to the extent that the foregoing does not cause the PSUs to vest, the Targets shall continue to apply as set forth in clauses (i), (ii) and (iii) above.

 

(v) The term “Liquidity Event” shall have the meaning set forth in the Contribution Agreement.

 

(vi) The term “Liquidity Event Price” shall mean the highest price per share of Common Stock paid in any Liquidity Event.

 

There shall be no proportionate or partial vesting in the periods prior to each vesting date and all vesting shall occur only on the appropriate vesting date, except for acceleration as provided herein or in the Plan. For avoidance of doubt, once the Targets are achieved, such PSU shall not become unvested if the trading price or aggregate market value of the Company subsequently declines. Any PSUs that have not vested in accordance with the terms of this Agreement as of August 23, 2025 shall be forfeited for no consideration on August 23, 2025.

 

(c) Committee Discretion to Accelerate Vesting. Notwithstanding the foregoing, the Committee may, in its sole discretion, provide for accelerated vesting of the PSUs at any time and for any reason.

 

(d) Qualifying Termination. Upon the Participant’s Termination by the Company without Cause (as defined in that certain Employment Agreement, dated as of April 19, 2019, between the Company and the Participant (as amended, amended and restated, or supplemented from time to time, the “Employment Agreement”)) or by the Participant for Good Reason (as defined in the Employment Agreement) or upon the Participant’s Termination due to the Participant’s death or Disability (any such termination, a “Qualifying Termination”), the PSUs shall be time vested as of the date of termination and shall be performance vested, to the extent not yet performance vested, if the Targets are achieved on or within 30 days following the Participant’s date of the Qualifying Termination. Any PSUs that have not vested in accordance with this Section 3(d) shall be forfeited for no consideration as of the date 30 days after the Qualifying Termination.

 

(e) Forfeiture. Subject to the Committee’s discretion to accelerate vesting hereunder, other than in the event of a Qualifying Termination, upon the Participant’s Termination for any reason before all of the PSUs subject to this grant have vested, any unvested PSUs shall automatically terminate and shall be forfeited as of the date of the Participant’s Termination.

 

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4. Delivery of Shares or Cash.

 

(a) Within thirty (30) days following the date on which both the time and the performance vesting criteria have been met with respect to PSUs, the Participant shall receive 500,000 shares of Common Stock (subject to adjustment under Section 12) or, in the sole discretion of the Committee, an amount in cash equal to the Fair Market Value of such shares of Common Stock on the date of vesting. Whether payment is made in the form of Common Stock or cash, or a combination thereof, shall be determined in the sole discretion of the Committee.

 

(b) Blackout Periods. If the Participant is subject to any Company “blackout” policy or other trading restriction imposed by the Company on the date such distribution would otherwise be made pursuant to Section 4(a) hereof, such distribution shall be instead made on the earlier of (i) the date that the Participant is not subject to any such policy or restriction and (ii) ninety (90) days following the date such distribution would otherwise have been made hereunder.

 

5. Dividends; Rights as Stockholder. Except as otherwise provided herein, the Participant shall have no rights as a stockholder with respect to any shares of Common Stock covered by any PSU, including any rights to cash dividends on shares of Common Stock issuable hereunder, unless and until the Participant has become the holder of record of such shares.

 

6. Non-Transferability. Subject to Section 19 hereof, no portion of the PSUs may be sold, assigned, transferred, encumbered, hypothecated or pledged by the Participant, other than to the Company as a result of forfeiture of the PSUs or in the event of the Participant’s death or disability, as provided herein unless and until payment is made in respect of vested PSUs in accordance with the provisions hereof and the Participant has become the holder of record of the vested shares of Common Stock issuable hereunder.

 

7. Governing Law. All questions concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to the choice of law principles thereof.

 

8. Withholding of Tax. The Company shall have the power and the right to deduct or withhold, or require the Participant to remit to the Company, an amount sufficient to satisfy any federal, state, local and foreign taxes of any kind (including, but not limited to, the Participant’s FICA and SDI obligations) which the Company, in its sole discretion, deems necessary to be withheld or remitted to comply with the Code and/or any other applicable law, rule or regulation with respect to the PSUs and, if the Participant fails to do so, the Company may otherwise refuse to issue or transfer any shares of Common Stock otherwise required to be issued pursuant to this Agreement. In the discretion of the Participant, any such withholding obligation with regard to the Participant may be satisfied by reducing the amount of cash or shares of Common Stock otherwise deliverable to the Participant hereunder.

 

9. Legend. The Company may at any time place legends referencing any applicable federal, state or foreign securities law restrictions on all certificates, if any, representing shares of Common Stock issued pursuant to this Agreement. The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares of Common Stock acquired pursuant to this Agreement in the possession of the Participant in order to carry out the provisions of this Section.

 

10. Securities Representations. The PSUs are being issued to the Participant and this Agreement is being made by the Company in reliance upon the following express representations and warranties of the Participant. The Participant acknowledges, represents and warrants that:

 

(a) The Participant has been advised that the Participant may be an “affiliate” within the meaning of Rule 144 under the Securities Act and in this connection the Company is relying in part on the Participant’s representations set forth in this Section 10.

 

(b) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, any shares of Common Stock issued to the Participant in respect of the PSUs must be held indefinitely unless an exemption from any applicable resale restrictions is available or the Company files an additional registration statement (or a “re-offer prospectus”) with regard to such shares and the Company is under no obligation to register such shares (or to file a “re-offer prospectus”).

 

(c) If the Participant is deemed an affiliate within the meaning of Rule 144 of the Securities Act, the Participant understands that (i) the exemption from registration under Rule 144 will not be available unless (A) a public trading market then exists for the Common Stock of the Company, (B) adequate information concerning the Company is then available to the public, and (C) other terms and conditions of Rule 144 or any exemption therefrom are complied with, and (ii) any sale of the shares of Common Stock issued to the Participant in respect of the PSUs hereunder may be made only in limited amounts in accordance with the terms and conditions of Rule 144 or any exemption therefrom.

 

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11. Restrictive Covenants.

 

(a) Confidentiality. During the course of the Participant’s employment with the Company, the Participant will have access to Confidential Information. For purposes of this Agreement, “Confidential Information” means all data, information, ideas, concepts, discoveries, trade secrets, inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, developments, techniques, methods, processes, treatments, drawings, sketches, specifications, designs, plans, patterns, models, plans and strategies, and all other confidential or proprietary information or trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or medium) whether now or hereafter existing, relating to or arising from the past, current or potential business, activities and/or operations of the Company or any of its affiliates, including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising, transition, promotions, pricing, personnel, customers, suppliers, vendors, raw partners and/or competitors. The Participant agrees that the Participant shall not, directly or indirectly, other than in the good faith performance of his duties hereunder, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Participant’s assigned duties and for the benefit of the Company, either during the period of the Participant’s employment or at any time thereafter, any Confidential Information or other confidential or proprietary information received from third parties subject to a duty on the Company’s and its subsidiaries’ and affiliates’ part to maintain the confidentiality of such information, and to use such information only for certain limited purposes, in each case, which shall have been obtained by the Participant during the Participant’s employment by the Company (or any predecessor). The foregoing shall not apply to information that (i) was known to the public prior to its disclosure to the Participant; (ii) becomes generally known to the public subsequent to disclosure to the Participant through no wrongful act of the Participant or any representative of the Participant; (iii) is independently developed by Participant, or comes into possession of the Participant, other than in connection with his employment by the Company; or (iv) the Participant is required to disclose by applicable law, regulation or legal process (provided that the Participant provides the Company with prior notice of the contemplated disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information).

 

(b) Noncompetition. The Participant acknowledges that (i) the Participant performs services of a unique nature for the Company that are irreplaceable, and that the Participant’s performance of such services to a competing business will result in irreparable harm to the Company, (ii) the Participant has had and will continue to have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in competition against the Company or any of its affiliates, (iii) in the course of the Participant’s employment by a competitor, the Participant would inevitably use or disclose such Confidential Information, (iv) the Company and its affiliates have substantial relationships with their customers and the Participant has had and will continue to have access to these customers, (v) the Participant has received and will receive specialized training from the Company and its affiliates, and (vi) the Participant has generated and will continue to generate goodwill for the Company and its affiliates in the course of the Participant’s employment. Accordingly, during the Participant’s employment hereunder and the Restricted Period (as defined below), the Participant agrees that the Participant will not engage in any Competitive Activities (as defined below) in any basin or location in which the Company or any of its subsidiaries owns any Hydrocarbon Interests (as defined below) (or otherwise makes any direct or indirect investment in any Hydrocarbon Interests or has demonstrable plans to commence any activities or direct or indirect investment in Hydrocarbon Interests or any Competitive Activities in any other basin or location in North America. Notwithstanding the foregoing, nothing herein shall prohibit the Participant from being a passive owner of not more than one percent (1%) of the equity securities of a publicly traded corporation engaged in a business that is in competition with the Company or any of its subsidiaries or affiliates, so long as the Participant has no active participation in the business of such corporation, or owning a passive investment in any mutual, private equity or hedge fund or similar pooled investment vehicle. For the purposes of this Agreement, (A) “Competitive Activities” shall mean owning any interest in, participating in (whether as a director, officer, employee, member, or partner), consulting with, rendering services for (including as an employee), or in any manner engaging in any business or enterprise involving or related to (I) the acquisition, ownership, operation, finance, maintenance, exploration, production and development of Hydrocarbon Interests, (II) the production and sale of oil, gas and other hydrocarbons produced from such Hydrocarbon Interests, (III) the sale or other disposition of such Hydrocarbon Interests or (IV) any upstream business or activities or oil or gas marketing activities or other energy-related activities; (B) “Hydrocarbon Interests” shall mean (I) all oil, gas and/or mineral leases, oil, gas or mineral properties, mineral servitudes and/or mineral rights of any kind (including fee mineral interests, lease interests, farmout interests, overriding royalty and royalty interests, net profits interests, oil payment interests, production payment interests and other types of mineral interests), including any rights to acquire any of the foregoing and (II) all oil and gas gathering, treating, compression, storage, processing and handling assets of any kind, including all rigs, platforms, pipelines, wells, wellhead equipment, pumping units, flowlines, tanks, injection facilities, compression facilities, gathering systems, processing facilities and other related equipment or materials of any kind; and (C) “Restricted Period” means the period beginning on the Participant’s last day of employment with the Company and ending (I) on the second anniversary thereof, if such termination of employment occurs prior to the expiration of the Initial Term and (II) on the first anniversary thereof, if such termination occurs upon or after the expiration of the Initial Term.

 

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(c) Nonsolicitation; Noninterference.

 

(i) During the Participant’s employment with the Company and the Restricted Period, the Participant agrees that the Participant shall not, except in the furtherance of the Participant’s duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, solicit, aid or induce any customer of the Company or any of its subsidiaries or affiliates to purchase goods or services then sold by the Company or any of its subsidiaries or affiliates from another person, firm, corporation or other entity or assist or aid any other persons or entity in identifying or soliciting any such customer.

 

(ii) During the Participant’s employment with the Company and the Restricted Period, the Participant agrees that the Participant shall not, except in the furtherance of the Participant’s duties to the Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A) solicit, aid or induce any employee, representative or agent of the Company or any of its subsidiaries or affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm, corporation or other entity unaffiliated with the Company or hire or retain any such employee, representative or agent, or take any action to materially assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (B) interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company or any of its subsidiaries or affiliates and any of their respective vendors, joint venturers or licensors. An employee, representative or agent shall be deemed covered by this Section 11(c)(ii) while so employed or retained and for a period of six (6) months thereafter. Notwithstanding the foregoing, a general solicitation that is not targeted at employees, representatives, or agents of the Company shall not constitute a breach of this Section 11(c)(ii).

 

(d) Nondisparagement. The Participant agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees, shareholders, agents or products other than in the good faith performance of the Participant’s duties to the Company while the Participant is employed by the Company. The Company agrees to instruct its officers and directors at the time of the Participant’s termination and, to the extent the Participant is terminated in connection with a Change in Control, its officers and directors in the ninety (90)-day period following such Change in Control, not to make negative comments about or otherwise disparage the Participant other than in the good faith performance of duties to the Company. This Section 11(d) shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).

 

(e) Inventions.

 

(i) The Participant acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work products, developments, software, know-how, processes, techniques, works of authorship and other work product, whether patentable or unpatentable, (A) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company resources and/or within the scope of the Participant’s work with the Company or that relate to the business, operations or actual or demonstrably anticipated research or development of the Company, and that are made or conceived by the Participant, solely or jointly with others, during the Employment Term (as defined in the Employment Agreement), or (B) suggested by any work that the Participant performs in connection with the Company, either while performing the Participant’s duties with the Company or on the Participant’s own time, shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual property protection are filed thereon (the “Inventions”). The Participant will keep full and complete written records (the “Records”), in the manner prescribed by the Company, of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole and exclusive property of the Company, and the Participant will surrender them upon the termination of the Employment Term, or upon the Company’s request. The Participant irrevocably conveys, transfers and assigns to the Company the Inventions and all patents or other intellectual property rights that may issue thereon in any and all countries, whether during or subsequent to the Employment Term, together with the right to file, in the Participant’s name or in the name of the Company (or its designee), applications for patents and equivalent rights (the “Applications”). The Participant will, at any time during and subsequent to the Employment Term, make such applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time to time by the Company to perfect, record, enforce, protect, patent or register the Company’s rights in the Inventions, all without additional compensation to the Participant from the Company but at the Company’s sole expense. The Participant will also execute assignments to the Company (or its designee) of the Applications, and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company’s benefit, all without additional compensation to the Participant from the Company.

 

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(ii) In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United States, on behalf of the Company and the Participant agrees that the Company will be the sole owner of the Inventions, and all underlying rights therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to the Participant. If the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the Company, the Participant hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised, throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of the Participant’s right, title and interest in the copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages therefrom. In addition, the Participant hereby waives any so-called “moral rights” with respect to the Inventions. To the extent that the Participant has any rights in the results and proceeds of the Participant’s service to the Company that cannot be assigned in the manner described herein, the Participant agrees to unconditionally waive the enforcement of such rights. The Participant hereby waives any and all currently existing and future monetary rights in and to the Inventions and all patents and other registrations for intellectual property that may issue thereon including, without limitation, any rights that would otherwise accrue to the Participant’s benefit by virtue of the Participant being an employee of or other service provider to the Company.

 

(iii) 18 U.S.C. § 1833(b) provides: “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that—(A) is made—(i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” Nothing in this Agreement is intended to conflict with 18 U.S.C. § 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 U.S.C. § 1833(b). Accordingly, the parties to this Agreement have the right to disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law. The parties also have the right to disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

 

(g) Reasonableness of Covenants. In signing this Agreement, the Participant gives the Company assurance that the Participant has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 11 hereof. The Participant agrees that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates and their Confidential Information and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area, and that these restraints, individually or in the aggregate, will not prevent the Participant from obtaining other suitable employment during the period in which the Participant is bound by the restraints. The Participant agrees that, before providing services, whether as an employee or consultant, to any entity during the period of time that the Participant is subject to the constraints in Section 11(a) hereof, the Participant will provide a copy of Section 11 of this Agreement to such entity. The Participant acknowledges that each of these covenants has a unique, very substantial and immeasurable value to the Company and its affiliates and that the Participant has sufficient assets and skills to provide a livelihood while such covenants remain in force. The Participant further covenants that the Participant will not challenge the reasonableness or enforceability of any of the covenants set forth in this Section 11, and that the Participant will reimburse the Company and its affiliates for all costs (including reasonable attorneys’ fees) incurred in connection with any action to enforce any of the provisions of this Section 11 if either the Company and/or its affiliates prevails on any material issue involved in such dispute or if the Participant challenges the reasonableness or enforceability of any of the provisions of this Section 11. It is also agreed that each of the Company’s affiliates will have the right to enforce all of the Participant’s obligations to that affiliate under this Agreement, including without limitation pursuant to this Section 11.

 

(h) Reformation. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 11 is excessive in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the laws of that state.

 

(i) Tolling. In the event of any violation of the provisions of this Section 11, the Participant acknowledges and agrees that the post-termination restrictions contained in this Section 11 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.

 

(j) Survival of Provisions. The obligations contained in Sections 11 hereof shall survive the termination or expiration of the Employment Term and the Participant’s employment with the Company and shall be fully enforceable thereafter.

 

12. Adjustments for Certain Events. In the event that a transaction or change in capitalization described in Section 4.2(b) of the Plan occurs, without limiting the application of Sections 4.2 and 12.1 of the Plan, the Company shall equitably adjust the Targets to reflect the applicable event. In the event of a Liquidity Event, the PSUs either (i) shall be assumed by the surviving entity, with equitable adjustments to the number of PSUs and the Targets or (ii) shall be fully vested with respect to time vesting and with respect to performance vesting, shall be vested to the extent Targets are achieved as of the date of the Liquidity Event, and the shares of Common Stock to be paid in respect of the PSUs shall be treated in the Liquidity Event as are other shares of Common Stock.

 

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13. Entire Agreement; Amendment. This Agreement, the Employment Agreement and the Plan, contain the entire agreement between the parties hereto with respect to the subject matter contained herein, and supersede all prior agreements or prior understandings, whether written or oral, between the parties relating to such subject matter. The rights of Participant under this Agreement may not be impaired or adversely affected in any manner by any amendment, suspension or termination of the Plan, except with the prior written consent of the Participant. This Agreement shall only be modified or amended by a writing signed by both the Company and the Participant.

 

14. Notices. Any notice hereunder by the Participant shall be given to the Company in writing and such notice shall be deemed duly given only upon receipt thereof by the General Counsel of the Company. Any notice hereunder by the Company shall be given to the Participant in writing and such notice shall be deemed duly given only upon receipt thereof at such address as the Participant may have on file with the Company.

 

15. No Right to Employment. Any questions as to whether and when there has been a Termination and the cause of such Termination shall be determined in accordance with the Employment Agreement or, in the absence of an employment or similar agreement, in the sole discretion of the Committee. Nothing in this Agreement shall interfere with or limit in any way the right of the Company, its Subsidiaries or Affiliates to terminate the Participant’s employment or service at any time, for any reason and with or without Cause.

 

16. Transfer of Personal Data. The Participant authorizes, agrees and unambiguously consents to the transmission by the Company (or any Subsidiary) of any personal data information related to the PSUs awarded under this Agreement for legitimate business purposes (including, without limitation, the administration of the Plan). This authorization and consent is freely given by the Participant.

 

17. Compliance with Laws. The grant of PSUs and the issuance of shares of Common Stock hereunder shall be subject to, and shall comply with, any applicable requirements of any foreign and U.S. federal and state securities laws, rules and regulations (including, without limitation, the provisions of the Securities Act, the Exchange Act and in each case any respective rules and regulations promulgated thereunder) and any other law, rule regulation or exchange requirement applicable thereto. The Company shall not be obligated to issue any shares of Common Stock pursuant to this Agreement if any such issuance would violate any such requirements. As a condition to the settlement of the PSUs, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate to evidence compliance with any applicable law or regulation.

 

18. Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the PSUs are intended to be exempt from the applicable requirements of Section 409A of the Code and shall be limited, construed and interpreted in accordance with such intent.

 

19. Binding Agreement; Assignment. This Agreement shall inure to the benefit of, be binding upon, and be enforceable by the Company and its successors and assigns. The Participant shall not assign (except in accordance with Section 6 hereof) any part of this Agreement without the prior express written consent of the Company, which consent shall not be unreasonably withheld.

 

20. Headings. The titles and headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

 

21. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.

 

22. Further Assurances. Each party hereto shall do and perform (or shall cause to be done and performed) all such further acts and shall execute and deliver all such other agreements, certificates, instruments and documents as either party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the Plan and the consummation of the transactions contemplated thereunder.

 

23. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law.

 

24. Acquired Rights. The Participant acknowledges and agrees that: (a) the Company may terminate or amend the Plan at any time, to the extent provided in Article XIII of the Plan; (b) the award of PSUs made under this Agreement is completely independent of any other award or grant and is made at the sole discretion of the Company; (c) no past grants or awards (including, without limitation, the PSUs awarded hereunder) give the Participant any right to any grants or awards in the future whatsoever; and (d) any benefits granted under this Agreement are not part of the Participant’s ordinary salary, and shall not be considered as part of such salary in the event of severance, redundancy or resignation.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

  FALCON MINERALS CORPORATION
   
  By: /s/ Jonathan Z. Cohen
  Name: Jonathan Z. Cohen
  Title: Chairman of the Board
   
  PARTICIPANT
   
  By: /s/ Daniel C. Herz
  Name: Daniel C. Herz

 

 

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Exhibit 99.1

 

 

 

NEWS RELEASE

 

Contacts:Falcon Minerals:
 

Brian Begley

bbegley@falconminerals.com

         

FALCON MINERALS ANNOUNCES NEW MEMBERS APPOINTED TO THE BOARD OF DIRECTORS

 

NEW YORK, NY – April 25, 2019 – Falcon Minerals Corporation (“Falcon” or the “Company”) (NASDAQ: FLMN, FLMNW) announces today that the Company has added two new members to its Board of Directors. Mr. Alan J. Hirshberg and Mr. Eric Liaw have joined the Falcon Board of Directors (the “Board”) effective today, April 25, 2019.

 

Mr. Hirshberg has worked with Blackstone as a Senior Advisor since January 2019. He joined ConocoPhillips in 2010 as its Senior Vice President, Planning and Strategy, and retired in January 2019 as its Executive Vice President, Production, Drilling and Projects, a position he held since April 2016. In this role, he had responsibility for ConocoPhillips' worldwide operations, as well as supply chain, aviation, marine, major projects and engineering functions. Prior to joining ConocoPhillips, Mr. Hirshberg worked at Exxon and ExxonMobil for 27 years, serving in various senior leadership positions in upstream research, production operations, major projects and strategic planning. Mr. Hirshberg earned Bachelor and Master of Science degrees from Rice University.

 

Mr. Liaw is a Senior Managing Director in the Private Equity Group at Blackstone. Since joining Blackstone in November 2014, Mr. Liaw has been involved with Blackstone's investments in EagleClaw Midstream, Guidon Energy, Huntley & Huntley Energy Exploration, Jetta Energy Permian, Primexx Energy Partners, Rock Ridge Royalty, Royal Resources and Ulterra Drilling Technologies, among others. From August 2008 until August 2014, Mr. Liaw was a Principal at TPG Capital, where he evaluated and executed investment opportunities in the energy sector. From July 2004 to July 2006, Mr. Liaw was an associate at Bain Capital, where he focused on private equity investments in a wide range of industries. Mr. Liaw earned his Bachelor of Arts and Bachelor of Business Administration degrees from the University of Texas at Austin and his Master of Business Administration degree from Harvard Business School.

 

Mr. Hirshberg fills the vacancy created when Mr. David Foley resigned from the Board in December 2018, and Mr. Liaw will replace Mr. Angelo G. Acconcia, who resigned from the Board today. Mr. Hirshberg has been appointed to the Board’s Nominating and Corporate Governance Committee, and Mr. Liaw has been appointed as the Chairman of the Board’s Compensation Committee.

 

About Falcon Minerals

 

Falcon Minerals Corporation (NASDAQ: FLMN, FLMNW) is a C-Corporation formed to own and acquire high growth oil-weighted minerals rights. Falcon Minerals owns mineral, royalty, and over-riding royalty interests covering approximately 256,000 gross unit acres in the Eagle Ford Shale and Austin Chalk in Karnes, DeWitt and Gonzales Counties in Texas. The Company also owns additional assets of approximately 68,000 gross unit acres in Pennsylvania, Ohio and West Virginia prospective for the Marcellus Shale. For more information, visit our website at www.falconminerals.com.