EMPLOYMENT AGREEMENT
Exhibit 10.3
This
Employment Agreement, is made as of April 24, 2006 and effective as of
May
1, 2006
(the
“Effective Date”), by and between Xxxxxx
Xxxxxx
(“Employee”) and Quest
Oil Corporation,
a
Nevada corporation (the “Company”). In consideration of the premises and for
other good and valuable consideration, and with the intent to be legally bound,
the parties hereto agree as follows:
RECITALS
WHEREAS,
the Company desires to employ Employee on the terms and conditions herein stated
and Employee accepts such terms of employment.
1. Position.
During
the term of this Agreement, the Company will employ the Employee, and the
Employee will serve the Company in the capacity of Chief
Financial Officer.
2. Duties.
The
Employee will perform duties described in Exhibit
“A,” attached
to this Agreement and incorporated by this reference, together with such
additional reasonably related duties assigned by the Chief Executive Officer
or
the Board of Directors.
3. Service.
Except
with respect to the matters specified below, Employee will devote substantial
working time and efforts to the business and affairs of the Company. The
foregoing shall not, however, preclude the Employee: (a) from engaging in
appropriate civic, charitable or religious activities; (b) from serving on
the boards of directors of other entities, with the consent of the Company,
which consent shall not be unreasonably withheld; (c) from providing
incidental assistance to family members on matters of family business, so long
as the foregoing activities and service do not conflict with the Employee's
responsibilities to the Company; and (d) from completing, managing and
supervising Employee’s personal business affairs.
4. Term
of Agreement.
The
Company agrees to continue the Employee's employment, and the Employee agrees
to
remain in the employ of the Company, pursuant to the terms of this Agreement
for
a period of 12 months, but this Agreement shall be subject to extension for
and
up to an additional twelve (12) months after the Effective Date, unless the
Employee’s employment is earlier terminated or modified pursuant to the
provisions of this Agreement.
5. Compensation
and Benefits.
5.1 Compensation.
5.1.1. Base
Salary.
Employee shall receive a salary of $5,000 per month (the “Base Salary”), in
accordance with the general payroll practices of the Company.
5.1.2 Expenses.
The
Company will reimburse (monthly) the Employee for all reasonable and necessary
expenses incurred by the Employee in connection with the Company's business
including: entertainment, airfare, automobile, hotel and miscellaneous expenses
incurred by Employee. Expenses exceeding $1,000 shall require approval by the
CEO prior to the time such expenses are incurred.
5.1.3 Common
Stock Purchase Warrants.
Common
stock purchase warrants (in the form attached as Exhibit A) to purchase
1,000,000 shares of the Company’s common stock at an exercise price equal to
110% of the closing market price of the Company’s common stock as of April 24,
2006. The warrants shall have a term of 5 years and shall vest to the holder
at
a rate of 250,000 warrants every 90 days.
5.1.4 Profit
from Operations.
Employee shall receive a Profit from Operations Bonus (“POB”), payable
quarterly, equal to a 2.5% carried working interest (“CWI”) from all oil and gas
well owned and/or operated by the Company. The POB shall be derived from (i)
new
CWI revenues from new production, and (ii) increased CWI revenues from existing
production, based on the trailing three months CWI revenues from the date of
the
execution of this Agreement. The CWI revenue calculation shall be based on
the
difference derived when subtracting (i) taxes, and (ii) royalties from a gross
revenue amount. So long as this Agreement provides for a POB, the POB shall
be
paid for the life of a particular well.
Example:
|
Assume
that an Agreement was Executed on April 1, 2006
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||
|
Well
No. 1
|
Well
No.2
|
|
|
January
1 to March 31
|
0
|
$100,000
in Gross Sales
|
|
April
1 through June 30
|
$100,000
in Gross Sales
|
$200,000
in Gross Sales
|
|
Assume:
(i) the two xxxxx above were both located in Alberta, Canada and
that
there was a provincial tax equal to 20%; and (ii) there was a royalty
arrangement with a landowner, paying this person 10%.
Note
that a “Royalty” shall not mean a production cost or a fee to an operator
or other contractor providing services.
Analysis:
In the above example, the Employee with a 2.5% POB would receive,
from the
April 1 to June 30 period, $1,750 from Well 1 and $1,750 from Well
2. Well
1 would be considered new production and the Well 2 POB would be
based on
the increase in CWI from the preceding three month period.
|
||
6. Termination.
6.1 Events
of Termination.
The
Employee's employment with the Company shall terminate upon any one of the
following:
6.1.1 Thirty
(30) days after the date of a written notice sent to the Employee stating the
Company's determination, made in good faith, that it is terminating the Employee
for “Cause” as defined under Section 6.2 below (“Termination for Cause”);
or
6.1.2 Thirty
(30) days after the date of a written notice sent to the Employee stating the
Company's determination, made in good faith that, due to a mental or physical
incapacity, the Employee has been unable to perform his duties under this
Agreement for a period of not less than six (6) consecutive months (“Termination
for Disability”); or
6.1.3 Upon
the
Employee's death (“Termination Upon Death”); or
6.1.4 Thirty
(30) days after the date of a notice sent to the Employee stating that the
Company is terminating his employment, without Cause, which notice can only
be
given by the Company at any time after the Effective Date at the Company's
sole
discretion, for any reason or for no reason (“Termination Without Cause”);
or
6.1.5 The
date
of a notice sent to the Company from the Employee stating that the Employee
is
electing to terminate his employment with the Company (“Voluntary
Termination”).
6.2 “Cause”
Defined.
For
purposes of this Agreement, “Cause” for the Employee's termination will exist at
any time after the occurrence of one or more of the following
events:
6.2.1 Any
willful act or acts of dishonesty undertaken by the Employee intended to result
in substantial gain or personal enrichment of the Employee at the expense of
the
Company;
6.2.2 Any
willful act of gross misconduct which could reasonably be expected to materially
and demonstrably result in damage to the Company. No act, or failure to act,
by
the Employee shall be considered “willful” if done, or omitted to be done, by
him in good faith and in the reasonable belief that his act or omission was
in
the best interest of the Company and/or required by applicable law,
or
6.2.3 Employee
is charged with the commission of a felony involving moral
turpitude.
6.2.4 Any
violation of the Company’s Code of Ethics (Attached as Exhibit B)
6.2.5. Any
violation of Sections 8 or 10 of this Agreement during the term of employment
with the Company.
6.3 “Termination
Without Cause”
shall
mean:
6.3.1 Termination
of the Employee’s employment with the Company for any reason other than
Cause.
6.4 Effect
of Termination.
6.4.1 Termination
for Cause or Voluntary Termination.
In the
event of any termination of the Employee's employment pursuant to
Section 6.1.1 or Section 6.1.5, the Company shall immediately pay to
the Employee the compensation and benefits accrued and otherwise payable to
the
Employee under Section 5 through the date of termination. The Employee's
rights under the Company's benefit plans, is one should exist, shall be
determined under the provisions of those plans.
6.4.2 Termination
for Disability.
In the
event of termination of employment pursuant to Section 6.1.2:
6.4.2.1 The
Company shall immediately pay to the Employee the compensation and benefits
accrued and otherwise payable to the Employee under Section 5 through the date
of termination; and
6.4.2.2 The
Employee shall receive any other benefit payments as provided in the Company's
standard benefit plans applicable to disability, should such a plan
exist.
6.4.3 Termination
Upon Death.
In the
event of termination of employment pursuant to Section 6.1.3, all
obligations of the Company and the Employee shall cease, except the Company
shall immediately pay to the Employee (or to the Employee's estate) the
compensation and benefits accrued and otherwise payable to the Employee under
Section 5 through the date of termination.
7.5 Termination
Without Cause.
In the
event of any termination of this Agreement pursuant to
Section 6.1.4:
7.5.1 The
Company shall immediately pay to the Employee the compensation and benefits
accrued and otherwise payable to the Employee under the entire term of this
Agreement.
7.5.2 Provided
that Employee is not in violation of Section 8 or 10 of this Agreement during
the time of Employment and for the period of time during which the POB is
payable to Employee, the Company shall pay to the Employee the POB under Section
5.1.4 as follows:
7.5.2.1 Fifty
percent (50%) of the POB for a period of 12 months following the expiration
of
the term of this Agreement.
7.5.2.1 Twenty
five percent (25%) of the POB for the period beginning on a date which begins
on
the date which is 12 months from the date of expiration of this Agreement and
ending on a date which is 24 months from the expiration of this
Agreement.
8. Non-Disclosure.
The
Employee acknowledges that during the course of his employment by the Company,
the Company will provide, and the Employee will acquire, knowledge of special
and unique value with respect to the Company's business operations, including,
by way of illustration, the Company's existing and contemplated product line,
trade secrets, compilations, business and financial methods or practices, plans,
hardware and software technology products, systems, programs, projects and
know-how, pricing, cost of providing service and equipment, operating and
maintenance costs, marketing and selling techniques and information, customer
data, customer names and addresses, customer service requirements, supplier
lists, and confidential information relating to the Company's policies,
employees, and/or business strategy (all of such information herein referenced
to as the “Confidential Information”). The Employee recognizes that the business
of the Company is dependent upon Confidential Information and that the
protection of the Confidential Information against unauthorized disclosure
or
use is of critical importance to the Company. The Employee agrees that, without
prior written authorization of the President of the Company, the Employee will
not, during his employment, divulge to any person, directly or indirectly,
except to the Company or its officers and agents or as reasonably required
in
connection with the Employee’s duties on behalf of the Company, or make any
independent use of, except on behalf of the Company, any of the Company's
Confidential Information, whether acquired by the Employee during his employment
or not. The Employee further agrees that the Employee will not, at any time
after his employment has ended, use or divulge to any person directly or
indirectly any Confidential Information, or use any Confidential Information
in
subsequent employment of any nature. If the Employee is subpoenaed, or is
otherwise required by law to testify concerning Confidential Information, the
Employee agrees to notify the Company upon receipt of a subpoena, or upon belief
that such testimony shall be required. This nondisclosure provision shall
survive the termination of this Agreement for any reason. The Employee
acknowledges that the Company would not employ the Employee but for his
covenants and promises contained in this Section 8.
9. Return
of Documents.
The
Employee agrees that if the Employee’s relationship with the Company is
terminated (for whatever reason), the Employee shall not remove or take with
the
Employee, but will leave with the Company or return to Company, all Confidential
Information, records, files, data, memoranda, reports, customer lists, customer
information, product information, price lists, documents and other information,
in whatever form (including on computer disk), and any and all copies thereof,
or if such items are not on the premises of the Company, the Employee agrees
to
return such items immediately upon the Employee's termination or the request
of
the Company. The Employee acknowledges that all such items are and remain the
property of the Company.
10. No
Interference or Solicitation.
The
Employee agrees that during his employment, and for a period of six (6) months
following the termination of his employment (for whatever reason), that neither
he nor any individual, partner(s), limited partnership, corporation or other
entity or business with which he is in any way affiliated, including, without
limitation, any partner, limited partner, director, officer, shareholder,
employee, or agent of any such entity or business, will: (i) request, induce
or
attempt to influence, directly or indirectly, any employee of the Company to
terminate their employment with the Company; or (ii) employ any person who
as of
the date of this Agreement was, or after such date is or was, an employee of
the
Company. The Employee further agrees that during the period beginning with
the
commencement of the Employee’s engagement with the Company and ending six (6)
months after the termination of the Employee’s employment with the Company (for
whatever reason), he shall not, directly or indirectly, as an employee, agent,
consultant, stockholder, director, partner or in any other individual or
representative capacity of the Company or of any other person, entity or
business, solicit or encourage any present or future customer, supplier,
contractor, partner or investor of the Company to terminate or otherwise alter
his, his or its relationship with the Company. This provision shall survive
the
termination of this Agreement for any reason.
11. Injunctive
Relief.
The
Employee acknowledges and agrees that the agreements and covenants contained
in
this Agreement are essential to protect the Confidential Information, business,
and goodwill of the Company. The Employee further acknowledges that the breach
of any of the agreements contained herein, including, without limitation, the
confidentiality covenants specified in Section 8 and the non-solicitation
covenants specified in Section 10 will give rise to irreparable injury to
the Company, inadequately compensable in damages. Accordingly, the Company
shall
be entitled to injunctive relief to prevent or cure breaches or threatened
breaches of the provisions of this Agreement and to enforce specific performance
of the terms and provisions hereof in any court of competent jurisdiction,
in
addition to any other legal or equitable remedies which may be available. The
Employee further acknowledges and agrees that in the event of the termination
of
the Employee's employment with the Company, whether voluntary or involuntary,
that the enforcement of a remedy hereunder by way of injunction shall not
prevent the Employee from earning a reasonable livelihood. The Employee further
acknowledges and agrees that the covenants contained herein are necessary for
the protection of the Company's legitimate business interests ad are reasonable
in scope and content.
12. Miscellaneous.
12.1 Indemnification.
The
Company agrees to indemnify and defend the Employee to the full extent provided
by law, and on terms no less favorable than any indemnification agreement the
Company has at any time during the term of this Agreement with an executive
or
officer of the Company. The Company agrees to reimburse Employee upon demand
for
any costs incurred in requesting or obtaining indemnification under this
paragraph.
12.2 Arbitration.
The
Employee and the Company shall submit to mandatory binding arbitration in San
Diego County, California before a sole arbitrator under the rules of the
American Arbitration Association, in any controversy or claim arising out of,
or
relating to, this Agreement or any breach hereof. The arbitrator is hereby
authorized to permit discovery, including deposition testimony and award to
the
prevailing party the costs (including reasonable attorneys' fees and expenses)
of any such arbitration.
12.3 Severability.
If any
provision of this Agreement shall be found by any arbitrator or court of
competent jurisdiction to be invalid or unenforceable, then the parties hereby
waive such provision to the extent that it is found to be invalid or
unenforceable and to the extent that to do so would not deprive one of the
parties of the substantial benefit of its bargain. Such provision shall, to
the
extent allowable by law and the preceding sentence, be modified by such
arbitrator or court so that it becomes enforceable and, as modified, shall
be
enforced as any other provision hereof, all the other provisions continuing
in
full force and effect.
12.4 No
Waiver.
The
failure by either party at any time to require performance or compliance by
the
other of any of its obligations or agreements shall in no way affect the right
to require such performance or compliance at any time thereafter. The waiver
by
either party of a breach of any provision hereof shall not be taken or held
to
be a waiver of any preceding or succeeding breach of such provision or as a
waiver of the provision itself. No waiver of any kind shall be effective or
binding, unless it is in writing and is signed by the party against whom such
waiver is sought to be enforced.
12.5 No
Assignment.
This
Agreement and all rights hereunder are personal to the Employee and may not
be
transferred or assigned by the Employee at any time. The Company may assign
its
rights, together with its obligations hereunder, to any parent, subsidiary,
affiliate or successor, or in connection with any sale, transfer or other
disposition of all or substantially all of its business and assets, provided,
however, that any such assignee assumes the Company's obligations
hereunder.
12.7 Entire
Agreement.
This
Agreement constitutes the entire and only agreement between the parties relating
to employment of the Employee with the Company, and this Agreement supersedes
and cancels any and all previous contracts, arrangements or understandings
with
respect thereto.
12.8 Amendment.
This
Agreement may be amended, modified, superseded, cancelled, renewed or extended
only by an agreement in writing executed by both parties hereto.
12.9 Notices.
All
notices and other communications required or permitted under this Agreement
shall be in writing and hand delivered, sent by telecopier, sent by registered
first class mail, postage pre-paid, or sent by nationally recognized express
courier service. Such notices and other communications shall be effective upon
receipt if hand delivered or sent by telecopier, five (5) days after mailing
if
sent by mail.
12.10 Binding
Nature.
This
Agreement shall be binding upon, and inure to the benefit of, the successors
and
personal representatives of the respective parties hereto.
12.11 Headings.
The
headings contained in this Agreement are for reference purposes only and shall
in no way affect the meaning or interpretation of this Agreement. In this
Agreement, the singular includes the plural, the plural included the singular,
the masculine gender includes both male and female referents, and the word
“or”
is used in the inclusive sense.
12.12 Counterparts
and Fax Signatures.
This
Agreement may be executed by Fax and in two or more counterparts, each of which
shall be deemed to be an original but all of which, taken together, constitute
one and the same agreement.
12.13 Governing
Law.
This
Agreement and the rights and obligations of the parties hereto shall be
construed in accordance with the laws of the State of Nevada.
12.14 Attorneys'
Fees.
In the
event of any claim, demand or suit arising out of or with respect to this
Agreement, the prevailing party shall be entitled to reasonable costs and
attorneys' fees, including any such costs and fees upon appeal.
IN
WITNESS WHEREOF, the Company and the Employee have executed this Agreement
as of
the date first above written.
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“COMPANY”
Quest
Oil Corporation
A
Nevada corporation
_________________________________
By:
Xxxxx X. Panther, II
Its:
President
|
“Employee”
_________________________________
Xxxxxx
Xxxxxx
|
EXHIBIT
“A”
TO
DUTIES
OF EMPLOYEE
| 1. |
Act
as the Chief Financial Officer as described in Article IV of the
Bylaws of
the Company or as directed by Company’s board of directors or Chief
Executive Officer.
|
EXHIBIT
“B”
TO
CODE
OF
ETHICS
