SYNTHESIS ENERGY SYSTEMS INC (Form: 8-K, Received: 04/02/2009 16:23:36)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

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

Date of Report (Date of earliest event reported): April 2, 2009 (March 31, 2009)

Synthesis Energy Systems, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation)		001-33522 (Commission File Number)		20-2110031 (I.R.S. Employer Identification No.)


Three Riverway, Suite 300, Houston, Texas ( Address of principal executive offices)		77056 ( Zip Code)

(713) 579-0600
(Registrant’s telephone number, including area code)

N/A
(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 of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CRF 240.133-4(c))

TABLE OF CONTENTS


	Item 1.01 Entry into a Material Definitive Agreement
	Item 1.02 Termination of a Material Definitive Agreement.
	Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
	Item 7.01 Regulation FD Disclosure.
	Item 8.01 Other Events
	Item 9.01 Financial Statements and Exhibits
SIGNATURE
EXHIBIT INDEX
EX-10.2
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-99.1

Item 1.01 Entry into a Material Definitive Agreement

On March 31, 2009, Synthesis Energy Systems, Inc. (the “Company”) announced that as a result of a tighter focus on operations and project implementation, plus the need to significantly reduce corporate overhead and overall costs, Timothy E. Vail, the Company’s President and Chief Executive Officer, and David Eichinger, the Company’s Chief Financial Officer, left the Company, effective March 31, 2009, based on a mutual decision with the Company’s board of directors (the “Board”). Mr. Vail will remain on the Board. In connection with these management changes, Robert Rigdon, the Company’s Chief Operating Officer and Senior Vice President of Global Development, was named President and Chief Executive Officer, and Kevin Kelly, the Company’s Controller and Chief Accounting Officer, assumed the duties of Principal Financial Officer, was named Secretary and will remain as Controller and Chief Accounting Officer.

On the same date, and as part of these management changes, the Company entered into letter agreements with Messrs. Rigdon and Kelly amending certain of the terms of their respective employment agreements. Pursuant to the amendment for Mr. Rigdon, (i) his base salary was increased to $300,000 per year retroactive to January 1, 2009; (ii) he is entitled to a cash performance bonus to be determined by, and to be payable at the sole discretion of, the compensation committee of the Board, for the periods ending on January 1 and July 1 of a given year (beginning on July 1, 2009); (iii) his performance based options were terminated and replaced with options with time based vesting, which were vested as to 25% of the shares as of the effective date of the new grant, and shall vest as to an additional 25% on each of the first three anniversary dates after such date, at an exercise price of $0.66 per share; (iv) he was granted a new option to acquire 200,000 shares of the Company’s common stock, which options shall vest as to 25% of the shares on each of the first four anniversary dates after the date of the new grant, beginning on the first anniversary of the effective date at an exercise price $0.66 per share; (v) in connection with a termination by the Company without cause or by Mr. Rigdon in connection with a change of control, he is entitled to reimbursement of his payment of his COBRA premiums through (a) the one year anniversary of the termination or (b) until he is eligible to participate in the health insurance plan of another employer, whichever is sooner; and (vi) in connection with a termination by Mr. Rigdon in connection with a change of control, he is also entitled to a lump sum payment of his annual base salary then in effect. In addition, Mr. Rigdon received a cash payment of $80,000 in satisfaction of his bonus earned during the year ended December 31, 2008. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the letter agreement for Mr. Rigdon, which is attached as Exhibit 10.2 hereto and incorporated by reference herein in its entirety.

Pursuant to the amendment for Mr. Kelly, (i) his base salary was increased to $230,000 per year retroactive to January 1, 2009; (ii) he was granted a new option to acquire 100,000 shares of the Company’s common stock, which options shall vest as to 25% of the shares on each of the first four anniversary dates after the date of the new grant, beginning on the first anniversary of the effective date at an exercise price $0.66 per share; and (iii) in connection with a termination by the Company without cause or by Mr. Kelly in connection with a change of control, he is entitled to reimbursement of his payment of his COBRA premiums through (a) the one year anniversary of the termination or (b) until he is eligible to participate in the health insurance plan of another employer, whichever is sooner. In addition, in satisfaction of his bonus earned during the year ended December 31, 2008, he was provided with a fully vested option grant to acquire 20,000 shares of common stock at an exercise price of $0.66 per share. The

foregoing summary does not purport to be complete and is qualified in its entirety by reference to the letter agreement for Mr. Kelly, which is attached as Exhibit 10.5 hereto and incorporated by reference herein in its entirety.

The form of option grant for the awards to Messrs. Rigdon and Kelly, as well as all other awards under the Company’s Amended and Restated 2005 Incentive Plan, as amended, is attached as Exhibit 10.8 hereto and incorporated by reference herein in its entirety.

In connection with the departure of Messrs. Vail and Eichinger, each of them entered into a Separation Agreement and Release with the Company (each, a “Release”), whereby (i) their respective employment agreements with the Company were terminated, subject to the continued enforcement of the provisions relating to non-competition and confidentiality, (ii) they entered into mutual releases, (iii) their Indemnification Agreements with the Company, each dated August 13, 2008, survived the termination of the employment agreement; (iv) they were granted reimbursement of their payment of their COBRA premiums through (a) the one year anniversary of the termination or (b) until they are eligible to participate in the health insurance plan of another employer, whichever is sooner; and (v) they were granted a new option grant in satisfaction of their 2008 bonuses and a right to participate in the Company’s option exchange program. In the case of Mr. Vail, he was provided with a fully vested option grant to acquire 68,182 shares of common stock at an exercise price of $0.66 per share, in satisfaction of his bonus earned during the year ended December 31, 2008. In addition, as part of the previously discussed option exchange program, Mr. Vail exchanged all of his option grants outstanding on March 31, 2009 for a new fully vested option grant to acquire 960,000 shares of common stock at an exercise price of $0.66 per share. In the case of Mr. Eichinger, he was provided with a fully vested option grant to acquire 68,182 shares of common stock at an exercise price of $0.66 per share, in satisfaction of his bonus earned during the year ended December 31, 2008. In addition, as part of the option exchange, Mr. Eichinger exchanged all of his option grants outstanding on March 31, 2009 for a new fully vested option grant to acquire 700,000 shares of common stock at an exercise price of $0.66 per share. The form of option grant for the awards to Messrs. Vail and Eichinger, as well as all other awards under the Company’s Amended and Restated 2005 Incentive Plan, as amended, is attached as Exhibit 10.8 hereto and incorporated by reference herein in its entirety.

The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Separation Agreement and Release of each of Mr. Vail and Mr. Eichinger, which are attached as Exhibits 10.6 and 10.7 hereto, respectively, and incorporated by reference herein in their entirety.

Item 1.02 Termination of a Material Definitive Agreement.

The text set forth in Item 1.01 regarding the termination of the employment agreements of Timothy E. Vail and David Eichinger, and the terms and conditions of each Severance Agreement and Release with the Company, is incorporated into this Item 1.02 by reference.

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

The text set forth in Item 1.01 regarding the Company’s management changes, the Severance Agreement and Release of each of Mr. Vail and Mr. Eichinger, and the amendments

to the employment agreements of Mr. Rigdon and Mr. Kelly is incorporated into this Item 5.02 by reference.

Additionally, effective March 31, 2009, Lorenzo Lamadrid, Michael Storey, Denis Slavich and Harry Rubin, all of whom are directors of the Company, participated in the Company’s option exchange program.

Prior to the exchange, Mr. Lamadrid had a grant of options to acquire 50,000 shares which vested in four equal installments, with the first installment vesting on the date of grant and the remainder vesting annually over the next three years at an exercise price of $2.50 per share. As a result of the exchange, Mr. Lamadrid received a grant options to acquire 25,000 shares on the same time based vesting schedule as the prior grant at an exercise price of $0.66 per share.

Prior to the exchange, Mr. Slavich had (i) a grant of options to acquire 50,000 shares which vested in four equal installments, with the first installment vesting on the date of grant and the remainder vesting annually over the next three years at an exercise price of $2.50 per share and (ii) a grant of options to acquire 200,000 shares which vested in five equal installments, with the first installment vesting on the date of grant and the remainder vesting annually over the next four years at an exercise price of $3.00 per share. As a result of the exchange, Mr. Slavich received grants of options to acquire 25,000 shares and 100,000 shares, respectively, on the same time based vesting schedule as the prior grants at an exercise price of $0.66 per share.

Prior to the exchange, Mr. Storey had (i) a grant of options to acquire 50,000 shares which vested in four equal installments, with the first installment vesting on the date of grant and the remainder vesting annually over the next three years at an exercise price of $2.50 per share and (ii) a grant of options to acquire 200,000 shares which vested in five equal installments, with the first installment vesting on the date of grant and the remainder vesting annually over the next four years at an exercise price of $3.00 per share. As a result of the exchange, Mr. Storey received grants of options to acquire 25,000 shares and 100,000 shares, respectively, on the same time based vesting schedule as the prior grants at an exercise price of $0.66 per share.

Prior to the exchange, Mr. Rubin had grants of options to acquire 160,000 shares and 40,000 shares, each of which vested in five equal installments, with the first installment vesting on the date of grant and the remainder vesting annually over the next four years at exercise prices of $6.25 and $6.00, respectively, per share. As a result of the exchange, Mr. Rubin received grants of options to acquire 80,000 shares and 20,000 shares, respectively, on the same time based vesting schedule as the prior grants at an exercise price of $0.66 per share for each grant.

In addition, effective March 31, 2009, the Board, and the compensation committee thereof approved a new compensation plan for the members of the Board. Previously, independent, non-executive directors, other than Lorenzo Lamadrid, received a quarterly cash payment of $1,500 for their service on the Board. Under the new plan approved by the Board, and in lieu of the prior cash fees, (i) non-executive directors who serve as chair of a Board committee will receive an annual grant of stock options with an aggregate value of $100,000 and (ii) all other non-executive directors will receive an annual grant of stock options with an aggregate value of $90,000, in each case based on a fair market valuation and the exercise price in the grant, while non-independent, executive directors will continue to receive no compensation for their service on the Board. The options shall vest as to 25% of the shares on each of the first four anniversary dates after the date of the grant, beginning on the first anniversary of the grant and the exercise price shall be determined based on the closing price on

the date of the grant. The initial grants were made effective March 31, 2009 at an exercise price of $0.66 per share. There were no other changes to the Board compensation structure.

The form of option grant for the awards to the directors, as well as all other awards under the Company’s Amended and Restated 2005 Incentive Plan, as amended, is attached as Exhibit 10.8 hereto and incorporated by reference herein in its entirety.

Item 7.01 Regulation FD Disclosure.

In accordance with General Instruction B.2. of Form 8-K, the information presented under this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such a filing.

On March 31, 2009, the Company issued a press release announcing, among other things, the management changes described in Items 1.01 and 5.02 of this Current Report on Form 8-K. A copy of the press release is furnished herewith as Exhibit 99.1.

Item 8.01 Other Events

On March 31, 2009, the Company issued a press release announcing, among other things, the management changes described in Items 1.01 and 5.02 of this Current Report on Form 8-K.

Item 9.01 Financial Statements and Exhibits

	(a)		Financial Statements of business acquired

			None.

	(b)		Pro Forma Financial Information

			None.

	(c)		Shell Company Transactions

			None.

	(d)		Exhibits

	10.1		Employment Agreement between the Company and Robert Rigdon dated March 14, 2008 (incorporated by reference herein to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 12, 2008).

	*10.2		Letter Agreement between the Company and Robert Rigdon dated March 31, 2009.

	10.3		Employment Agreement between the Company and Kevin Kelly dated October 16, 2008 (incorporated by reference herein to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated November 12, 2008).

	10.4		Letter Agreement between the Company and Kevin Kelly dated January 9, 2009 (incorporated by reference herein to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 14, 2009).

	*10.5		Letter Agreement between the Company and Kevin Kelly dated March 31, 2009.

	*10.6		Separation Agreement and Release between the Company and Timothy E. Vail dated effective March 31, 2009.

	*10.7		Separation Agreement and Release between the Company and David Eichinger dated effective March 31, 2009.

	*10.8		Form of Nonstatutory Stock Option Agreement.

	**99.1		Press Release dated March 31, 2009.


*		= Filed herewith

**		= Furnished herewith

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 thereunto duly authorized.


	Synthesis Energy Systems, Inc.
Dated: April 2, 2009	/s/ Robert Rigdon
	Robert Rigdon
	President and Chief Executive Officer

EXHIBIT INDEX


10.1		Employment Agreement between the Company and Robert Rigdon dated March 14, 2008 (incorporated by reference herein to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated November 12, 2008).

*10.2		Letter Agreement between the Company and Robert Rigdon dated March 31, 2009.

10.3		Employment Agreement between the Company and Kevin Kelly dated October 16, 2008 (incorporated by reference herein to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated November 12, 2008).

10.4		Letter Agreement between the Company and Kevin Kelly dated January 9, 2009 (incorporated by reference herein to Exhibit 10.2 to the Company’s Current Report on Form 8-K dated January 14, 2009).

*10.5		Letter Agreement between the Company and Kevin Kelly dated March 31, 2009.

*10.6		Separation Agreement and Release between the Company and Timothy E. Vail dated effective March 31, 2009.

*10.7		Separation Agreement and Release between the Company and David Eichinger dated effective March 31, 2009.

*10.8		Form of Nonstatutory Stock Option Agreement.

**99.1		Press Release dated March 31, 2009.


*		= Filed herewith

**		= Furnished herewith

Exhibit 10.2

March 31, 2009

Mr. Robert Rigdon

Re: Amendment of Employment Agreement

Dear Robert:

This letter will constitute an amendment to your employment agreement with us dated March 14, 2008, effective as of the date that you sign below. These amendments are:

	•		Your new position with us will be President and Chief Executive Officer.

	•		Your base salary shall be $300,000 per year effective as of January 1, 2009, payable in accordance with our current payroll practices. You shall receive a lumpsum of $15,000 (subject to normal tax withholding) as part of your salary for the next pay period after the effective date of this letter representing the balance of your base salary owed to you retroactive to January 1 from the date hereof.

	•		For the periods ending on January 1 and July 1 of a given year (beginning on July 1, 2009), you may be awarded a cash performance bonus to be determined by, and to be payable at the sole discretion of, our Compensation Committee. As a result of this amendment, the provisions of Section 3(c) of your employment agreement will be of no further force or effect.

	•		Effective February 9, 2009, as a result of your participation in our option exchange program, you received options to acquire 87,500 shares of common stock which vested based on the achievement of the same performance criteria as your prior performance based grant which was cancelled in the option exchange. This grant is currently vested as to 25% of such shares. We will terminate this performance option and replace it with an option to purchase 87,500 shares of our common stock, which shall be vested as to 25% of the shares as of the effective date of this letter, and shall vest as to an additional 25% on each of the first three anniversary dates after such date, beginning on the first anniversary of such date. The exercise price for the new options will be $0.66. The term of the new options is ten years from the date of grant and the new options will be issued in accordance with the terms and conditions of our Amended and Restated 2005 Incentive Plan, as amended.

	•		We will grant you a new option to acquire 200,000 shares of our common stock, which options shall vest as to 25% of the shares on each of the first four anniversary dates after the date of the new grant, beginning on the first anniversary thereof. The exercise price for the new option grants will be $0.66 per share. The term of the new options is ten years from the date of grant and

the new options will be issued in accordance with the terms and conditions of our Amended and Restated 2005 Incentive Plan, as amended.

	•		Pursuant to Section 3(i) of your employment agreement, we shall reimburse you for the cost of airline travel for your spouse to accompany you to China on your trips for your work for us; provided that you shall only be entitled to such reimbursement twice in any twelve-month period and such reimbursement shall be subject to our applicable policies on airline expense reimbursement.

	•		Under Section 5(a) of your employment agreement, in the event of a termination of your employment by us without Cause (as defined in your employment agreement), we shall, provided that you elect COBRA within the time period required by law, reimburse your payment of your COBRA premiums through (i) the one year anniversary of your termination or (ii) until you are eligible to participate in the health insurance plan of another employer, whichever is sooner.

	•		Under Section 6 of your employment agreement, in the event of a termination of your employment within 60 days of a Change of Control (as defined in your employment agreement), you will be entitled to a lump sum payment of your annual base salary then in effect. In addition, provided that you elect COBRA within the time period required by law, we shall reimburse your payment of your COBRA premiums through (i) the one year anniversary of your termination or (ii) until you are eligible to participate in the health insurance plan of another employer, whichever is sooner.

This letter does not affect any other terms of your employment agreement. Each party acknowledges and agrees that they will work toward an amendment and restatement of your employment agreement to more completely reflect these amendments and any other changes which the parties deem necessary. If you have any questions regarding this matter, please let us know.


	SYNTHESIS ENERGY SYSTEMS, INC.
	/s/ Kevin Kelly
	Kevin Kelly
	Chief Accounting Officer


ACKNOWLEDGED AND AGREED as of March 31, 2009
/s/ Robert Rigdon
Robert Rigdon

Exhibit 10.5

March 31, 2009

Mr. Kevin Kelly

Re: Amendment of Employment Agreement

Dear Kevin:

This letter will constitute an amendment to your employment agreement with us dated October 16, 2008, effective as of the date that you sign below. These amendments are:

	•		Your base salary shall be $230,000 per year effective as of January 1, 2009, payable in accordance with our current payroll practices. You shall receive a lumpsum of $9,500 (subject to normal tax withholding) as part of your salary for the next pay period after the effective date of this letter representing the balance of your base salary owed to you retroactive to January 1 from the date hereof.

	•		We will grant you a new option to acquire 100,000 shares of our common stock, which options shall vest as to 25% of the shares on each of the first four anniversary dates after the date of the new grant, beginning on the first anniversary thereof. The exercise price for the new option grants will be $0.66 per share. The term of the new options is ten years from the date of grant and the new options will be issued in accordance with the terms and conditions of our Amended and Restated 2005 Incentive Plan, as amended.

	•		Under Section 5(a) of your employment agreement, in the event of a termination of your employment by us without Cause (as defined in your employment agreement), we shall, provided that you elect COBRA within the time period required by law, reimburse your payment of your COBRA premiums through (i) the one year anniversary of your termination or (ii) until you are eligible to participate in the health insurance plan of another employer, whichever is sooner.

	•		Under Section 5(b) of your employment agreement, it will not be deemed a relocation of your office if you are required to make periodic trips to China as part of your duties and responsibilities.

	•		Under Section 6 of your employment agreement, in the event of a termination by you of your employment within 60 days of a Change of Control (as defined in your employment agreement), provided that you elect COBRA within the time period required by law, we shall reimburse your payment of your COBRA premiums through (i) the one year anniversary of your termination or (ii) until you are eligible to participate in the health insurance plan of another employer, whichever is sooner.


	SYNTHESIS ENERGY SYSTEMS, INC.
	/s/ Robert Rigdon
	Robert Rigdon
	President and Chief Executive Officer


ACKNOWLEDGED AND AGREED as of March 31, 2009
/s/ Kevin Kelly
Kevin Kelly

Exhibit 10.6

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (the “Agreement”) is dated March 31, 2009, and is effective on the date described in Section 15. This Agreement is made as a mutually agreed compromise between the Parties (as defined below) for the complete and final settlement of all claims, differences, and alleged causes of action existing between them as of the Effective Date.

PARTIES

The Parties to this Agreement are Synthesis Energy Systems, Inc. (the “Company”) and Timothy E. Vail (the “Executive”). The Company and the Executive are referred to collectively as the “Parties.”

PREAMBLE

WHEREAS, the Executive was previously employed as the President and Chief Executive Officer of the Company, pursuant to that certain Employment Agreement dated May 30, 2006, as amended on November 15, 2006 (as amended, the “Employment Agreement”);

WHEREAS, the Executive and the Company also entered into that certain Indemnification Agreement dated August 13, 2008 (the “Indemnification Agreement”);

WHEREAS, the Parties intend to terminate the Employment Agreement as of the Effective Date (except with respect to the Executive’s and the Company’s continuing obligations under Sections 4 — Restrictive Covenants, 9 — Waiver of Breach, 12 — Applicable Law, Jurisdiction, and 13 — Attorney and Trial Costs of the Employment Agreement, as revised hereby) and enter into this Agreement;

WHEREAS, the Parties intend that this Agreement shall operate as a complete and final settlement of all claims, differences and alleged causes of action existing between them as of the Effective Date;

WHEREAS, the Executive has had at least 21 days to consider this Agreement;

WHEREAS, the Company has advised the Executive in writing to consult with independent legal counsel and tax advisors respecting this Agreement;

WHEREAS, the Executive has had an opportunity to consult with independent legal counsel and tax advisors with respect to the terms, meaning and effect of this Agreement; and

WHEREAS, the Executive understands that the Company regards the above representations as material and that the Company is relying on these representations in entering into this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and obligations contained and exchanged in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

1. Definitions .

1.1 “Code” shall mean the Internal Revenue Code of 1986, as amended, and the notices, rules and regulations thereunder.

1.2 “Company and/or its Affiliates” means and includes the Company, its Affiliates, and all of their predecessors, successors and assigns and parents, subsidiaries, divisions or other affiliated companies, partners, partnerships, present and former officers, directors, employees, stockholders, agents, employee benefit plans or programs and their fiduciaries, whether in their individual or official capacities and all of the successors and assigns of the foregoing. “Affiliates” also includes a person or entity who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the Company.

1.3 “Date of Termination” means March 31, 2009.

2. Termination of the Employment Agreement . The Parties agree that the Employment Agreement is hereby terminated and of no further force and effect as of the Effective Date, except with respect to the Executive’s and the Company’s obligations under Sections 4 — Restrictive Covenants, 9 — Waiver of Breach, 12 — Applicable Law, Jurisdiction, and 13 — Attorney and Trial Costs, all of which survive the termination of the Employment Agreement; provided, that the following amendments are hereby made to the surviving provisions of the Employment Agreement: (i) for purposes of Section 4(a) of the Employment Agreement, the non-public information of the Company acquired by, or disclosed to, the Executive shall include, but not be limited to, all information related to the Company’s intellectual property, including without limitation, its U-GAS fluidized bed gasification technology, and (ii) the third sentence of Section 4(b) of the Employment Agreement is replaced in its entirety with the following: “As of the date hereof, the Business of the Corporation is to develop projects or provide the technology for projects that convert coal and coal/biomass fuels through coal gasification technology to products for the chemicals, transportation fuels, natural gas, and power markets.” This Agreement shall have no effect on the Indemnification Agreement, which is hereby ratified and affirmed and shall remain in full force and effect.

3. Exchange of Equity Incentive Awards . The Executive has surrendered for cancellation all of his currently held options, as set on Schedule I hereto, and, in exchange, effective as of the date hereof, the Company has issued a new stock option grant to purchase 960,000 shares of the Company’s common stock, at an exercise price of $0.66 per share. Such stock option grant shall be fully vested as of the date hereof and shall be exercisable until March 31, 2019, the tenth anniversary of the date hereof. Such grant shall be granted under, and be subject to, the terms of the Company’s Amended and Restated 2005 Incentive Plan, as amended.

4. Payments to the Executive .

4.1 In satisfaction of the bonus earned by the Executive for his service to the Company during the year ended December 31, 2008, effective as of the date hereof, the Company has issued to the Executive a stock option grant to acquire 68,182 shares of the Company’s common stock at an exercise price of $0.66 per share. Such stock option grant shall be fully vested as of the date hereof and shall be exercisable until March 31, 2019, the tenth

anniversary of the date hereof. Such grant shall be granted under, and be subject to, the terms of the Company’s Amended and Restated 2005 Incentive Plan, as amended.

4.2 Provided that the Executive elects COBRA within the time period required by law, the Company shall reimburse his payment of his COBRA premiums through (i) December 31, 2009 or (ii) until the Executive is eligible to participate in the health insurance plan of another employer, whichever is sooner.

5. Pay Through Date of Termination . The Executive acknowledges that he has received all salary, wages, bonuses, accrued and unpaid vacation time, sick time or other paid time off earned, and other compensation earned on or before the Date of Termination.

6. Resignation and Acknowledgement by the Executive . Effective as of the Date of Termination, the Executive hereby resigns from all positions he holds as an officer with the Company and/or its Affiliates and as a director of the Company’s Affiliates, provided that the Executive does not resign as a director of the Company. In connection with his resignation, Executive acknowledges that he has disclosed all information to the Company and the Board of which he has knowledge which could be expected to result in a material adverse effect on the Company, its business or its results of operations after the Effective Date.

7. Future Services of Executive for the Company . If the Company so requests after the Date of Termination, the Executive agrees to (i) assist the Company its contemplated transition plans, including through service as a consultant to the Company, on such terms and conditions as the Executive and the Company shall mutually agree; provided that, if Executive’s services as a consultant shall be requested or required for any period longer than five days, Executive shall be entitled to receive compensation for such services equal to a pro-rata portion of his annual base salary as of the Effective Date, to be pro-rated based upon the portion of a calendar year that he serves as a consultant, and (ii) cooperate with the Company in the resolution of any pending or future litigation that relates to the time during which the Executive served as an employee of the Company.

8. Releases

8.1 Release by the Executive . The Executive unconditionally, fully and forever waives, releases, discharges, agrees to hold harmless, and promises not to sue the Company and/or its Affiliates, from and for any claim, action or right of any sort, known or unknown, arising on or before the Effective Date.

a. This release includes, but is not limited to, any claim arising out of or related to the following: any claim for any wages, salary, compensation, sick time, vacation time, paid leave or other remuneration of any kind; any claim for additional or different compensation or benefits of any sort, including any participation in any severance pay plan; any claim under any stock option grant issued by the Company to the Executive (other than the grants pursuant to Sections 3 and 4 hereof), the Company’s Amended and Restated 2005 Incentive Plan, as amended, or any other oral or written agreement or plan regarding an equity incentive award of Executive; any claim of discrimination or retaliation on the basis of age, race, sex, religion, marital status, sexual preference, national origin, handicap or disability, veteran

status, or special disabled veteran status; any claim arising under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Executive Retirement Income Security Act of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act of 1938, the Texas Commission on Human Rights Act, Chapter 451 of the Texas Labor Code, or the Texas Payday Law, as such statutes may be amended from time to time; any other claim based on any statutory prohibition; any claim arising out of or related to an express or implied employment contract, any other contract affecting terms and conditions of employment, or a covenant of good faith and fair dealing; any tort claim or other claim for personal injury, death or property damage or loss; any claim for fraud or misrepresentation; and any personal gain with respect to any claim arising under any whistleblower or qui tam provisions of any state or federal law.

b. The Executive represents that the Executive has read and understands this release provision and that rights and claims under the Age Discrimination in Employment Act of 1967 are among the rights and claims against the Company that the Executive is releasing. The Parties further acknowledge and agree that the Executive is not releasing any of the following: (i) any rights or claims arising after the Date of Termination, (ii) any rights or claims arising from or related to any obligations that are stated or affirmed in this Agreement, (iii) any rights or claims for indemnification pursuant to any applicable contract, policy, bylaw, or law (including but not limited to the Indemnification Agreement), (iv) any rights or claims under any agreement or plan governing the Executive’s stock option awards granted pursuant to Sections 3 and 4 hereof, and (v) any rights or claims that may not be released as a matter of law (for example, claims for unemployment insurance).

8.2 Release by the Company . The Company unconditionally, fully and forever waives, releases, discharges, agrees to hold harmless, and promises not to sue the Executive and/or any of the Executive’s heirs, administrators, successors and/or assigns, from and for any claim, action or right of any sort, known or unknown, arising on or before the Effective Date. The parties further acknowledge and agree that the Company is not releasing any of the following: (i) any rights or claims arising after the Date of Termination; (ii) any rights or claims arising from or related to any obligations, agreements, representations or covenants that are stated or affirmed in this Agreement; (iii) any rights or claims under any agreement or plan governing the Executive’s stock option awards granted pursuant to Sections 3 and 4 hereof; and/or (iv) any rights or claims that may not be released as a matter of law.

9. Consideration . As consideration for the Executive’s execution and performance of his obligations under this Agreement, the Company (i) has granted the release set forth in Section 8.2 of this Agreement and (ii) will perform its remaining obligations pursuant to this Agreement. The Executive agrees that the release set forth in Section 8.2 of this Agreement is in addition to anything of value which the Executive is already entitled from the Company.

10. No Other Claims . The Executive represents that the Executive has not filed or authorized the filing of any complaints, charges or lawsuits against the Company and/or its Affiliates with any federal, state or local court, governmental agency, or administrative agency, and that if, unbeknownst to the Executive, any such complaint has been filed on the Executive’s behalf, the Executive will use the Executive’s best efforts to cause it to be withdrawn immediately and dismissed with prejudice.

11. Confidentiality . Both Parties shall keep strictly confidential all the terms and conditions, including amounts payable, in the Agreement and shall not disclose them to any person other than legal and/or financial advisors, government officials who seek such information in the course of their official duties, individuals at the Company responsible for implementing the Agreement, and the Executive’s spouse, unless compelled to do so by law or regulation, or business necessity (including the requirement to file this Agreement with the Securities and Exchange Commission or tax reporting obligations). Nothing in this Section is intended to prevent the Executive from disclosing the fact that he was employed by the Company or from describing his employment duties.

12. Consultation With Counsel . The Company advises the Executive to consult with independent legal counsel and tax advisors prior to executing this Agreement, and the Executive acknowledges being given that advice. The Executive acknowledges that Porter & Hedges, LLP is acting solely as counsel to the Company with respect to this Agreement.

13. No Defamatory Statements . The Executive agrees that he will refrain from making any representation, statement, comment or any other form of communication (hereinafter collectively referred to as “representation”), whether written or oral, to any person or entity, including but not limited to the principals, officers, directors, employees, advisors, agents, customers, suppliers and competitors of the Company and/or its Affiliates, or any government officials, which representation has the effect or tendency to disparage, denigrate, or otherwise reflect negatively on the Company and/or its Affiliates and/or their business, officers, directors, shareholders, employees, agents, advisors or investors. The Company agrees it will take all reasonable steps to ensure that the Company and its officers, directors, and employees refrain from making any external representation that would have the effect or tendency to disparage, denigrate, or otherwise reflect negatively on the Executive.

14. Return of Company Materials . The Executive agrees to deliver to the Company promptly after the Date of Termination all originals and copies of Company materials and all other property of the Company and/or its Affiliates in the Executive’s possession, custody or control.

15. Revocation of Agreement; Effective Date . The Executive, at the Executive’s sole discretion, may revoke this Agreement on or before the expiration of seven calendar days after signing it. Revocation shall be in writing and effective upon dispatch to the following: Chief Accounting Officer, Synthesis Energy Systems, Inc., Three Riverway, Suite 300, Houston, Texas 77056. If the Executive elects to revoke the Agreement, all of the provisions of the Agreement shall be void and unenforceable. If the Executive does not so elect, the Agreement shall become effective at the expiration of the revocation period (i.e., on the eighth day after the Executive signs the Agreement) (the “Effective Date”).

16. Miscellaneous .

16.1 The Parties acknowledge that this Agreement is the result of a compromise and shall never be construed as, or said by either of them to be, an admission by the other of any liability, wrongdoing, or responsibility. The Parties expressly disclaim any such liability, wrongdoing, fault, or responsibility.

16.2 This Agreement constitutes the entire agreement between the Parties, except to the extent that it expressly incorporates provisions of the Employment Agreement. This Agreement shall have no effect on the Indemnification Agreement and any agreement or plan governing the Executive’s equity incentive awards granted pursuant to Sections 3 and 4 hereof. This Agreement may be executed in identical counterparts, each of which shall constitute an original and both of which shall constitute one and the same agreement. Except as expressly provided herein, this Agreement supersedes the Employment Agreement, each stock option grant issued by the Company to the Executive (other than the grants pursuant to Sections 3 and 4 hereof), and any severance benefit plan or program and any bonus program at the Company and/or its Affiliates.

16.3 The Parties understand and agree that any breach of the terms of this Agreement may give rise to liability for money damages and other legal or equitable relief.

16.4 The Parties warrant that no representations have been made other than those contained in the written provisions of this Agreement, and that they do not rely on any representations not stated in this Agreement.

16.5 The Parties further warrant that they or their undersigned representatives are legally competent and fully authorized to execute and deliver this Agreement.

16.6 The Parties confirm they have had the opportunity to have this Agreement explained to them by independent legal counsel and tax advisors of their choice, and that they execute this Agreement freely, knowingly and voluntarily. The Company is relying on its own judgment and on the advice of its independent legal counsel and tax advisors and not upon any recommendation of the Executive or his agents, independent counsel or other representatives. Likewise, the Executive is relying on his own judgment and on the advice of his independent legal counsel and tax advisors, and not upon any recommendation of the Company or its directors, officers, employees, agents, independent counsel or other representatives. By voluntarily executing this Agreement, both Parties confirm their competence to understand and do hereby accept the terms of this Agreement as resolving fully all differences, disputes and claims that may exist within the scope of this Agreement.

16.7 This Agreement may not be modified or amended except by a writing signed by both Parties. No waiver of this Agreement or of any of the promises, obligations, terms, or conditions contained in it shall be valid unless it is in writing signed by the Party against whom the waiver is to be enforced. The waiver by either Party hereto of a breach of any provision of this Agreement shall neither operate nor be construed as a waiver of any subsequent breach by any Party. Except as expressly provided for herein, the failure of either Party hereto to take any action by reason of any breach will not deprive such Party of the right to take action at any time while such breach occurs.

16.8 If any part or any provision of this Agreement shall be finally determined to be invalid or unenforceable under applicable law by a court of competent jurisdiction, that part shall be ineffective to the extent of such invalidity or unenforceability only, without in any way affecting the remaining parts of said provision or the remaining provisions of the Agreement.

16.9 The Parties have cooperated in the preparation of this Agreement. Hence, the Agreement shall not be interpreted or construed against or in favor of either Party by virtue of the identity, interest, or affiliation of its preparer.

16.10 This Agreement is made and shall be enforced pursuant to the laws of the State of Texas, without regard to its law governing conflicts of law.

16.11 The payments under this Agreement shall be paid from the general assets of the Company and there shall be no separate trust established to make any payments under this Agreement.

16.12 All payments under this Agreement shall be subject to all applicable federal, state and local taxes and tax requirements.

16.13 This Agreement shall be binding on and inure to the benefit of the successors and assigns of the Parties. No rights or obligations, benefits of or payments to the Executive under this Agreement may be subject to claims of the Executive’s creditors, or in any manner may be assigned or transferred by the Executive other than his rights to compensation and benefits that are transferred by will or to his estate by operation of law.

16.14 All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be deemed to have been given when (i) delivered by hand or sent by facsimile, or (ii) on the third business day following deposit in the United States mail by registered or certified mail, return receipt requested, to the addresses as follows (provided that notice of change of address shall be deemed given only when received):

If to the Company to:

Synthesis Energy Systems, Inc.
Three Riverway, Suite 300
Houston, Texas 77056
Attention: Chief Accounting Officer
Facsimile No.: (713) 579-0610

If to the Executive to:

Timothy E. Vail
5106 Doliver
Houston, Texas 77056

or to such other addresses as the Company or the Executive, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section 16.14.

16.15 Titles and headings to Sections are for the purpose of reference only and shall in no way limit, define or otherwise affect the provisions hereof. Any and all Exhibits referred to in this Agreement are, by such reference, incorporated herein and made a part hereof for all

purposes. The words “herein”, “hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement and not to any particular provision hereof.

16.16 Wherever appropriate to the intention of the Parties, the respective rights and obligations of said parties, including, but not limited to, the rights and obligations set forth in Sections 10 through 13 hereof and this Section 16, shall survive any termination or expiration of this Agreement.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date indicated below


TIMOTHY E. VAIL (“Executive”)	SYNTHESIS ENERGY SYSTEMS, INC. (“Company”)

/s/ Timothy E. Vail	By:	/s/ Robert W. Rigdon
		Name:	Robert W. Rigdon
Date: March 31, 2009		Title:	President and Chief Executive Officer
		Date:	March 31, 2009


THE STATE OF TEXAS COUNTY OF HARRIS		§ § §

BEFORE ME, the undersigned authority, on this day personally appeared Timothy E. Vail, who, being by me first duly sworn, upon his oath deposed and stated that he has read the foregoing Agreement; that he has been advised to discuss the provisions of this Agreement with an attorney of his choice before signing it; that he fully understands the terms and conditions of this Agreement; that he is legally competent to execute this Agreement; and that he has voluntarily executed this Agreement for the purposes and consideration therein expressed.

Given under my hand and seal of office on this 31st day of March, 2009.



	/s/ Jeanean Sirkel
	NOTARY PUBLIC IN AND FOR
	THE STATE OF TEXAS


THE STATE OF TEXAS COUNTY OF HARRIS		§ § §

BEFORE ME, the undersigned authority, on this day personally appeared Robert W. Rigdon, who being by me first duly sworn, upon his oath deposed and stated that he is the Chief Executive Officer of Synthesis Energy Systems, Inc. (the “Company”); that he has read the foregoing Agreement; that he has discussed the provisions of this Agreement with any attorney of his choice; that he fully understands the terms and conditions of this Agreement; that he is legally competent and fully authorized to execute this agreement on behalf of the Company; and that he has voluntarily executed this Agreement for the purposes and consideration therein expressed.

Given under my hand and seal of office on this 31st day of March, 2009.



	/s/ Jeanean Sirkel
	NOTARY PUBLIC IN AND FOR
	THE STATE OF TEXAS

SCHEDULE I

	•		Grant of 50,000 shares of common stock on November 7, 2005

	•		Grant of 2,350,000 shares of common stock on May 30, 2006

Exhibit 10.7

SEPARATION AGREEMENT AND RELEASE

PARTIES

The Parties to this Agreement are Synthesis Energy Systems, Inc. (the “Company”) and David Eichinger (the “Executive”). The Company and the Executive are referred to collectively as the “Parties.”

PREAMBLE

WHEREAS, the Executive was previously employed as the President and Chief Executive Officer of the Company, pursuant to that certain Employment Agreement dated May 30, 2006 (as amended, the “Employment Agreement”);

WHEREAS, the Executive and the Company also entered into that certain Indemnification Agreement dated August 13, 2008 (the “Indemnification Agreement”);

WHEREAS, the Executive has had at least 21 days to consider this Agreement;

WHEREAS, the Company has advised the Executive in writing to consult with independent legal counsel and tax advisors respecting this Agreement;

WHEREAS, the Executive has had an opportunity to consult with independent legal counsel and tax advisors with respect to the terms, meaning and effect of this Agreement; and

WHEREAS, the Executive understands that the Company regards the above representations as material and that the Company is relying on these representations in entering into this Agreement.

1. Definitions .

1.1 “Code” shall mean the Internal Revenue Code of 1986, as amended, and the notices, rules and regulations thereunder.

1.3 “Date of Termination” means March 31, 2009.

3. Exchange of Equity Incentive Awards . The Executive has surrendered for cancellation all of his currently held options, as set on Schedule I hereto, and, in exchange, effective as of the date hereof, the Company has issued a new stock option grant to purchase 700,000 shares of the Company’s common stock, at an exercise price of $0.66 per share. Such stock option grant shall be fully vested as of the date hereof and shall be exercisable until March 31, 2019, the tenth anniversary of the date hereof. Such grant shall be granted under, and be subject to, the terms of the Company’s Amended and Restated 2005 Incentive Plan, as amended.

4. Payments to the Executive .

anniversary of the date hereof. Such grant shall be granted under, and be subject to, the terms of the Company’s Amended and Restated 2005 Incentive Plan, as amended.

6. Resignation and Acknowledgement by the Executive . Effective as of the Date of Termination, the Executive hereby resigns from all positions he holds as a director and officer with the Company and/or its Affiliates. In connection with his resignation, Executive acknowledges that he has disclosed all information to the Company and the Board of which he has knowledge which could be expected to result in a material adverse effect on the Company, its business or its results of operations after the Effective Date.

8. Releases

Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Executive Retirement Income Security Act of 1974, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act of 1938, the Texas Commission on Human Rights Act, Chapter 451 of the Texas Labor Code, or the Texas Payday Law, as such statutes may be amended from time to time; any other claim based on any statutory prohibition; any claim arising out of or related to an express or implied employment contract, any other contract affecting terms and conditions of employment, or a covenant of good faith and fair dealing; any tort claim or other claim for personal injury, death or property damage or loss; any claim for fraud or misrepresentation; and any personal gain with respect to any claim arising under any whistleblower or qui tam provisions of any state or federal law.

16. Miscellaneous .

16.3 The Parties understand and agree that any breach of the terms of this Agreement may give rise to liability for money damages and other legal or equitable relief.

16.5 The Parties further warrant that they or their undersigned representatives are legally competent and fully authorized to execute and deliver this Agreement.

16.10 This Agreement is made and shall be enforced pursuant to the laws of the State of Texas, without regard to its law governing conflicts of law.

16.11 The payments under this Agreement shall be paid from the general assets of the Company and there shall be no separate trust established to make any payments under this Agreement.

16.12 All payments under this Agreement shall be subject to all applicable federal, state and local taxes and tax requirements.

If to the Company to:

Synthesis Energy Systems, Inc.
Three Riverway, Suite 300
Houston, Texas 77056
Attention: Chief Accounting Officer
Facsimile No.: (713) 579-0610

If to the Executive to:

David Eichinger
19 Bunnell
The Woodlands, Texas 77385

or to such other addresses as the Company or the Executive, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section 16.14.

purposes. The words “herein”, “hereof”, “hereunder” and other compounds of the word “here” shall refer to the entire Agreement and not to any particular provision hereof.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date indicated below


DAVID EICHINGER (“Executive”)	SYNTHESIS ENERGY SYSTEMS, INC. (“Company”)

/s/ David Eichinger	By:	/s/ Robert W. Rigdon
		Name:	Robert W. Rigdon
Date: March 31, 2009		Title:	President and Chief Executive Officer
		Date:	March 31, 2009


THE STATE OF TEXAS COUNTY OF HARRIS		§ § §

BEFORE ME, the undersigned authority, on this day personally appeared David Eichinger, who, being by me first duly sworn, upon his oath deposed and stated that he has read the foregoing Agreement; that he has been advised to discuss the provisions of this Agreement with an attorney of his choice before signing it; that he fully understands the terms and conditions of this Agreement; that he is legally competent to execute this Agreement; and that he has voluntarily executed this Agreement for the purposes and consideration therein expressed.

Given under my hand and seal of office on this 31st day of March, 2009.



	/s/ Jeanean Sirkel
	NOTARY PUBLIC IN AND FOR
	THE STATE OF TEXAS


THE STATE OF TEXAS COUNTY OF HARRIS		§ § §

Given under my hand and seal of office on this 31st day of March, 2009.



	/s/ Jeanean Sirkel
	NOTARY PUBLIC IN AND FOR
	THE STATE OF TEXAS

SCHEDULE I

•

Grant of 1,750,000 shares of common stock on May 30, 2006

Exhibit 10.8

NONSTATUTORY STOCK OPTION AGREEMENT
SYNTHESIS ENERGY SYSTEMS, INC.
AMENDED & RESTATED 2005 INCENTIVE PLAN

This Stock Option Agreement (the “Agreement”), is entered into as of (Date) between Synthesis Energy Systems, Inc., a Delaware corporation (the “Company”), and (Optionee Name) (the “Optionee”).

WITNESSETH:

WHEREAS, the Company has adopted the Amended & Restated Synthesis Energy Systems, Inc. 2005 Incentive Plan (as amended from time to time, the “Plan”) to encourage officers, employees, outside directors and consultants of the Company and its Subsidiaries to acquire or increase their ownership interest in the Company and to provide a means whereby they may develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to remain with and devote their best efforts to the business of the Company thereby advancing the interests of the Company and its stockholders;

WHEREAS, the Plan provides that such selected individuals may be granted a certain number of Options (as defined in the Plan) to purchase shares of the Common Stock, par value $.0l per share (“Common Stock”), of the Company to provide them with an ownership interest in the growth of the Company; and

WHEREAS, the Optionee has been selected to receive such award.

NOW, THEREFORE, in consideration of the premises, the terms and conditions set forth herein, the mutual benefits to be gained by the performance thereof and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Grant of Option . Pursuant to the Plan, the Company grants Optionee an option (the “Option” or “Stock Option”) to purchase (number of shares) shares (the “Optioned Shares”) of Common Stock at an Option Price equal to (Fair Market Value determined in accordance with the Plan) per share. The Date of Grant of this Stock Option is (Date). The “Option Period” shall commence on the Date of Grant and shall expire on the date immediately preceding the tenth (10 ^th ) anniversary of the Date of Grant. The Stock Option is a Nonstatutory Stock Option.

2. Subject to Plan . The Stock Option and its exercise are subject to the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not otherwise inconsistent with the provisions of this Agreement. The capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. The Stock Option is subject to any rules promulgated pursuant to the Plan by the Committee.

3. Vesting: Time of Exercise . Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Stock Option shall be vested and exercisable as follows (it being understood that the right to purchase Option Shares shall be cumulative so that the Optionee may purchase on or after any such anniversary and

1 Template (name or initials) Option Grant — (Date)

during the remainder of the Option Period those quantities of Option Shares which the Optionee was entitled to purchase but did not purchase during any preceding period or periods):

	a.		With respect to 25% (Shares) of the total Optioned Shares, the Stock Option shall vest and become exercisable on the first anniversary of the Date of Grant provided the Optionee is employed by (or, if the Optionee is a consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

	b.		With respect to 25% (Shares) of the total Optioned Shares, the Stock Option shall vest and become exercisable on the second anniversary of the Date of Grant provided the Optionee is employed by (or, if the Optionee is a consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

	c.		With respect to 25% (Shares) of the total Optioned Shares, the Stock Option shall vest and become exercisable on the third anniversary of the Date of Grant provided the Optionee is employed by (or, if the Optionee is a consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

	d.		With respect to 25% (Shares) of the total Optioned Shares, the Stock Option shall vest and become exercisable on the fourth anniversary of the Date of Grant provided the Optionee is employed by (or, if the Optionee is a consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

	e.		An Optionee shall become 100% vested in the total Optioned Shares hereunder on the day preceding an event which constitutes a Change in Control as defined in the Plan.

4. Term; Forfeiture . In the event of Optionee’s termination of employment (or consulting agreement in the event Optionee is a consultant) with the Company and its Subsidiaries (in each case, a “Termination”) for any reason other than Optionee’s voluntary termination, for Cause or Optionee’s death or disability, the Option outstanding on such date of Termination, to the extent vested on such date, may be exercised by Optionee (or, in the event of Optionee’s subsequent death, by Optionee’s Heir (as defined below)) within three (3) months following such Termination, but not thereafter. However, in no event shall the Option be exercisable after the tenth (10 ^th ) anniversary of the Date of Grant. To the extent the Option is not vested on Optionee’s date of Termination, the Option shall automatically lapse and be canceled unexercised as of such date.

In the event that the Optionee voluntarily terminates his or her employment (or consulting agreement in the event Optionee is a consultant) with the Company or a Subsidiary, or if Optionee’s employment or consulting agreement is terminated for Cause, any Option granted pursuant to this Agreement whether vested or unvested shall be forfeited upon the date that the Optionee’s Termination. Termination for “Cause” shall be termination resulting from (i) the

continuing and material failure by the Optionee to fulfill the Optionee’s duties as an employee or consultant of the Company or willful misconduct or gross neglect in the performance of such duties, (ii) committing fraud, misappropriation or embezzlement in the performance of the Optionee’s duties as an employee or consultant of the Company, or (iii) the Optionee’s commission of any felony for which the Optionee is convicted and which, as determined in good faith by the Company, constitutes a crime involving moral turpitude. For the purposes of the definition of Cause, the term “Company” includes Subsidiaries of the Company.

In the event of Optionee’s Termination by reason of death or disability, as defined by the Committee in its sole discretion pursuant to the terms of the Plan, the Option shall be fully vested on such date of termination and may be exercised by Optionee or, in the event of Optionee’s death, by the person to whom Optionee’s rights shall pass by will or the laws of descent and distribution (“Heir”), at any time within the twelve (12) month period beginning on Optionee’s Termination, but not thereafter. However, in no event shall the Option be exercisable after the tenth (10 ^th ) anniversary of the Date of Grant.

Notwithstanding the above, if the Optionee has an employment agreement with the Company, or any other agreement with the Company which governs the terms and conditions of their options, the terms of such agreement shall govern the terms and conditions of the term and forfeiture of their options.

5. Who May Exercise . Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Optionee, the Stock Option may be exercised only by the Optionee, or by the Optionee’s guardian or personal or legal representative (in the event of his or her disability or by a broker dealer subject to Section 2.3 of the Plan).

6. No Fractional Shares . The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall be issued.

7. Manner of Exercise . Subject to such administrative regulations as the Committee may from time to time adopt, the Option may be exercised by the delivery of written notice to the Committee or designated Company representative setting forth the number of shares of Common Stock with respect to which the Option is to be exercised, the date of exercise thereof (the “Exercise Date”) which shall be at least three (3) days after giving such notice unless an earlier time shall have been mutually agreed upon. On the Exercise Date, the Optionee shall deliver to the Company consideration with a value equal to the total Option Price of the shares to be purchased, payable to the Company in full in either: (i) in cash, or (ii) subject to prior approval by the Committee in its discretion, by withholding Shares which otherwise would be acquired on exercise having an aggregate Fair Market Value at the time of exercise equal to the total Option Price, or (iv) subject to prior approval by the Committee in its discretion, by a combination of (i), and (ii) above.

The Committee, in its discretion, also may allow the Option Price to be paid with such other consideration as shall constitute lawful consideration for the issuance of Shares (including, without limitation, effecting a “cashless exercise” with a broker of the Option), subject to applicable securities law restrictions and tax withholdings, or by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law. A “cashless exercise” of an Option is a procedure by which a broker provides the funds to the Optionee to

effect an Option exercise, to the extent consented to by the Committee in its discretion. At the direction of the Optionee, the broker will either (i) sell all of the Shares received when the Option is exercised and pay the Optionee the proceeds of the sale (minus the Option Price, withholding taxes and any fees due to the broker) or (ii) sell enough of the Shares received upon exercise of the Option to cover the Option Price, withholding taxes and any fees due the broker and deliver to the Optionee (either directly or through the Company) a stock certificate for the remaining Shares.

As soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver, or cause to be delivered, to or on behalf of the Optionee, in the name of the Optionee or other appropriate recipient, Share certificates for the number of Shares purchased under the Option. Such delivery shall be effected for all purposes when the Company or a stock transfer agent of the Company shall have deposited such certificates in the United States mail, addressed to Optionee or other appropriate recipient.

If the Optionee fails to pay for any of the Shares specified in such notice or fails to accept delivery thereof, then the Option, and right to purchase such Shares may be forfeited by the Company.

8. Nonassignability . The Stock Option is not assignable or transferable by the Optionee except by will or by the laws of descent and distribution or pursuant to a domestic relations order that would qualify as a qualified domestic relations order as defined in Section 414(p) of the Code, if such provision were applicable to the Stock Option and as otherwise permitted under Section 4.2 of the Plan.

9. Rights as Stockholder . The Optionee will have no rights as a stockholder with respect to any shares covered by the Stock Option until the issuance of a certificate or certificates to the Optionee for the Optioned Shares. The Optioned Shares shall be subject to the terms and conditions of this Agreement and Plan regarding such Shares. Except as otherwise provided in Section 10 hereof, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of such certificate or certificates.

10. Adjustment of Number of Optioned Shares and Related Matters . The number of shares of Common Stock covered by the Stock Option, and the Option Prices thereof, shall be subject to adjustment in accordance with Section 4.5 of the Plan.

11. Nonstatutory Stock Option . The Stock Option shall not be treated as an Incentive Stock Option.

12. Community Property . Each spouse individually is bound by, and such spouse’s interest, if any, in any Shares is subject to, the terms of this Agreement. Nothing in this Agreement shall create a community property interest where none otherwise exists.

13. Optionee’s Representations . Notwithstanding any of the provisions hereof, the Optionee hereby agrees that he will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Optionee hereunder, if the exercise thereof or the issuance of such shares shall constitute a violation by the Optionee or the Company of any provision of any law or regulation of any governmental authority or Company

policies, or the rules of the stock exchange on which the Common Stock is listed. Optionee acknowledges and agrees that if he or she is an officer, director or key employee of the Company, Optionee will be subject to the Company’s securities trading policy as it may be in effect from time to time and which may “black out” periods of time during which the Stock Option may not be exercised or which may also limit the amount of Shares that may be purchased or sold to a number that is less than requested by the Optionee. Any determination in this connection by the Company shall be final, binding, and conclusive. The obligations of the Company and the rights of the Optionee are subject to all applicable laws, rules, and regulations, rules of the stock exchange on which the Common Stock is listed and policies of the Company.

14. Investment Representation . The Optionee represents and warrants to the Company that all Common Stock which may be purchased hereunder will be acquired by the Optionee for investment purposes for his own account and not with any intent for resale or distribution in violation of federal or state securities laws.

15. Optionee’s Acknowledgments . The Optionee acknowledges receipt of a copy of the Plan, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all the terms and provisions thereof. The Optionee hereby agrees to accept as binding, conclusive, and final all decisions or interpretations of the Committee, the Company or the Board, as appropriate, upon any questions arising under the Plan or this Agreement.

16. Law Governing . This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Delaware (excluding any conflict of laws rule that might refer the governance, construction, or interpretation of this agreement to the laws of another state).

17. No Right to Continue Service or Employment . Nothing herein shall be construed to confer upon the Optionee the right to continue in the employ or to provide services to the Company, its Affiliates or any Parent or Subsidiary or their Affiliates, whether as an employee or as a consultant or as an Outside Director, or interfere with or restrict in any way the right of the Company or any of the other foregoing entities to discharge the Optionee as an employee, consultant or Outside Director at any time.

18. Legal Construction . In the event that any one or more of the terms, provisions, or agreements that are contained in this Agreement shall be held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid, illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision, or agreement that is contained in this Agreement and this Agreement shall be construed in all respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been contained herein.

19. Covenants and Agreements as Independent Agreements . Each of the covenants and agreements that is set forth in this Agreement shall be construed as a covenant and agreement independent of any other provision of this Agreement. The existence of any claim or cause of action of the Optionee against the Company, whether predicated on this Agreement or

otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements that are set forth in this Agreement.

20. Entire Agreement . This Agreement together with the Plan supersede any and all other prior understandings and agreements, either oral or in writing, between the parties with respect to the subject matter hereof and constitute the sole and only agreements between the parties with respect to the said subject matter. All prior negotiations and agreements between the parties with respect to the subject matter hereof are merged into this Agreement. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, have been made by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

21. Parties Bound . The terms, provisions, and agreements that are contained in this Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their respective heirs, executors, administrators, legal representatives, and permitted successors and assigns, subject to the limitation on assignment expressly set forth herein. No person or entity shall be permitted to acquire any Optioned Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein.

22. Modification . No change or modification of this Agreement shall be valid or binding upon the parties unless the change or modification is in writing and signed by the parties. Notwithstanding the preceding sentence, the Company may amend the Plan or revoke this Stock Option to the extent permitted by the Plan.

23. Headings . The headings that are used in this Agreement are used for reference and convenience purposes only and do not constitute substantive matters to be considered in construing the terms and provisions of this Agreement.

24. Gender, Number and Term Optionee . Words of any gender used in this Agreement shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise. Whenever the term “Optionee” is used herein under circumstances applicable to any other person or persons to whom this award may be assigned in accordance with the provisions of Paragraph 8, the term “Optionee” shall be deemed to include such person or persons.

25. Independent Legal and Tax Advice . Optionee acknowledges that the Company has advised Optionee to obtain independent legal and tax advice regarding the grant and exercise of the Option and the disposition of any Shares acquired thereby.

26. Notice . Any notice required or permitted to be delivered hereunder shall be deemed to be delivered only when actually received by the Company or by the Optionee, as the case may be, at the addresses set forth below, or at such other addresses as they have theretofore specified by written notice delivered in accordance herewith:

Notice to the Company shall be addressed and delivered as follows:

Synthesis Energy Systems, Inc.
Three Riverway, Suite 300
Houston, Texas 77056
Attn: Corporate Secretary
Fax: (832) 494-1006

Notice to the Optionee shall be addressed and delivered to Optionee’s address as set forth in the Company’s records.

27. Tax Requirements .

	a.		Tax Withholding . This Option is subject to and the Company shall have the power and the right to deduct or withhold, or require the Optionee to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of the Plan and this Option.

	b.		Share Withholding . With respect to tax withholding required upon the exercise of Stock Options or upon any other taxable event arising as a result of the Stock Option, Optionee may elect, subject to the approval of the Committee in its discretion, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a Fair Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All such elections shall be made in writing, signed by the Optionee, and shall be subject to any restrictions or limitations that the Committee, in its discretion, deems appropriate. Any fraction of a Share required to satisfy such obligation shall be disregarded and the amount due shall instead be paid in cash by the Optionee.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Optionee, to evidence his consent and approval of all the terms hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.


	COMPANY: SYNTHESIS ENERGY SYSTEMS, INC.
	By:
		Name:
		Title:

	OPTIONEE:

	(Optionee Name)

Exhibit 99.1


		PRESS RELEASE

Synthesis Energy Systems Announces Leadership Changes

New team to lead significant cost reductions focusing on China business

HOUSTON, Texas March 31, 2009 — Synthesis Energy Systems, Inc. (“SES”)(NASDAQ: SYMX) announced today that as a result of a tighter focus on operations and project implementation in China’s rapidly growing coal-to-chemicals and coal-to-natural gas markets, plus the need to significantly reduce corporate overhead and overall costs, Chief Executive Officer Tim Vail and Chief Financial Officer David Eichinger will be leaving the Company, effective March 31, 2009 based on a mutual decision with the Company’s Board of Directors. Mr. Vail will remain on the Company’s Board of Directors.

In connection with these management changes, the Company promoted Robert Rigdon, currently Chief Operations Officer, as the Company’s President and Chief Executive Officer, effective March 31, 2009. Mr. Rigdon will work closely with Kevin Kelly, who will remain the Company’s Controller and Chief Accounting Officer assuming the financial and accounting leadership responsibilities going forward.

Lorenzo Lamadrid, Chairman of the Board of SES, stated, “Robert brings outstanding technical and leadership skills as well as deep operating experience in the gasification industry and in China. These skills are critically important to SES as we shift our focus to project implementation and to the Company’s extensive opportunities in China, including the Hai Hua plant and the YIMA project under development. We thank Tim and David for their valuable contributions to SES and wish them every success in their future endeavors.”

Rigdon commented, “I am excited about the opportunity to lead SES during this pivotal time in the Company’s history. In today’s economic environment, U.S. project development is difficult with little hope of securing financing after investing significant development dollars. The China region is where we can be successful today and continue to grow. Together with our strong team, we will build upon the success of our U-GAS ^® technology and implement our China-focused strategy. As a result we are streamlining our organization and costs and are currently on track to reduce general and administrative costs by approximately 25%-30% with further reductions expected.”

Mr. Rigdon, age 50, has held the Company’s Chief Operations Officer position since November 2008. Mr. Rigdon joined SES in May 2008 as Senior Vice President of Operations and was responsible for overseeing the implementation

Three Riverway, Suite 300 Houston, Texas 77056
Tel: (713) 579-0600 / Fax: (713) 579-0610

and operation of the Company’s coal gasification projects worldwide. Prior to joining SES, Mr. Rigdon worked for GE Energy in a variety of capacities, including Director—IGCC Commercialization, and Director—Gasification Industrials and Chemicals Business. For the 20 years previous to this, Mr. Rigdon worked for Texaco, and later ChevronTexaco, in the Worldwide Power & Gasification group, where he ultimately became Vice President—Gasification Technology for the group. Mr. Rigdon is a mechanical engineer with a B.S. from Lamar University.

Mr. Kelly, age 46, is a Certified Public Accountant and has been employed by the Company as its Controller since October 2008. In November 2008, Mr. Kelly was named our Chief Accounting Officer, replacing David Eichinger who had temporarily assumed the role of principal accounting officer. Previously, Mr. Kelly was the Corporate Controller for W-H Energy Services since 2005 and held controllership and treasury management positions with a variety of publicly-traded companies.

Conference Call Information

Senior management will hold a conference call today at 4:30 p.m. Eastern Time to discuss the management change.

To access the live webcast, please log on to the Company’s website at www.synthesisenergy.com. Alternatively, callers may participate in the conference call by dialing (612) 288-0329. An archived version of the webcast will be available on the website through April 17, 2009. A telephone replay of the conference call will be available approximately two hours after the completion of the call through April, 7, 2009. Callers can access the replay by dialing (320) 365-3844; the PIN access number is 994684.

About Synthesis Energy Systems, Inc.

The Company is an energy and technology company that builds, owns and operates coal gasification plants that utilize its proprietary U-GAS ^® fluidized bed gasification technology to convert low rank coal and coal wastes into higher value energy products, such as transportation fuel and chemicals. The U-GAS ^® technology, which the Company licenses from the GTI, gasifies coal without many of the harmful emissions normally associated with coal combustion plants. The primary advantages of U-GAS ^® relative to other gasification technologies are (a) greater fuel flexibility provided by our ability to use a wide range of coal (including low rank, high ash and high moisture coals, which are significantly cheaper than higher grade coals), many coal waste products and biomass feed stocks; and (b) our ability to operate efficiently on a smaller scale, which enables us to construct plants more quickly, at a lower capital cost, and, in many cases, in closer proximity to coal sources. The Company currently has offices in Houston, Texas and Shanghai, China. For more information on SES, visit www.synthesisenergy.com or call (713) 579-0600.

Three Riverway, Suite 300 Houston, Texas 77056
Tel: (713) 579-0600 / Fax: (713) 579-0610

Contact:

Synthesis Energy Systems, Inc.

Ann Tanabe

Vice President of Investor Relations

(713) 579-0600

Ann.tanabe@synthesisenergy.com

Forward Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are our early stage of development, our estimate of the sufficiency of existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, our ability to reduce operating costs, the limited history and viability of our technology, the effect of the current international financial crisis on our business, commodity prices and the availability and terms of financing opportunities, our results of operations in foreign countries and our ability to diversify, our ability to maintain production from our first plant in the Hai Hua project, our ability to obtain the necessary approvals and permits and to negotiate definitive agreements and financing arrangements for our YIMA project and other future projects, and the sufficiency of internal controls and procedures. Although we believe that in making such forward-looking statements our expectations are based upon reasonable assumptions, such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. We cannot assure you that the assumptions upon which these statements are based will prove to have been correct.

###

Three Riverway, Suite 300 Houston, Texas 77056
Tel: (713) 579-0600 / Fax: (713) 579-0610

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents