Exhibit
10.5
EMPLOYMENT
AGREEMENT
THIS AGREEMENT made and entered into on June 1,
2009, by and between Bonanza Oil & Gas, Inc. a Nevada
corporation (the "Company") and Robert L. Teague (the
"Executive").
WHEREAS, the
Company desires that the Executive become employed by the Company
and provide services to the Company in the best interest of the
Company and its affiliates and constituencies;
WHEREAS, the
Executive desires to be employed by the Company as provided herein;
and
WHEREAS, the
Executive and the Company desire to enter into this Agreement to
set forth the terms and conditions of the Executive's services with
the Company;
NOW, THEREFORE,
in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt
of which is mutually acknowledged, the Company and the Executive
(individually a "Party" and together the "Parties") agree as
follows:
1.
Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby agree to be employed with the
Company on the terms and subject to the conditions set
herein.
2.
Terms of Employment . The term of the Executive's employment
under this Agreement (the "Employment Period") shall commence as of
the date of this Agreement, and shall end 1 year from the date of
this Agreement, unless extended or terminated earlier in accordance
with Section 5g.
3.
Position, Duties and Responsibilities. The Executive shall
be employed by the Company and shall serve as Executive Vice
President and Chief Operating Officer (“COO”). The
Executive shall have all authority commensurate with the position
of Chief Operating Officer and shall report to the Board of
Directors of the Company. The Executive shall not, without the
prior written approval of the Board, engage in any other business
activity which is in violation of policies established from time to
time by the Company or its affiliates.
a. Anything herein to the contrary
notwithstanding, nothing shall preclude the Executive from serving
on the boards of directors of a reasonable number of other
corporations or the boards of a reasonable number of trade
associations, provided that such activities do not materially
interfere with the proper performance of his duties and
responsibilities as an executive officer of the Company.
b. The Executive shall perform his
services hereunder primarily at the Company's Houston, TX
office.
a.
Base Salary. During the Employment Period, the
Executive shall receive a minimum annual salary ("Annual Base
Salary") equal to $180,000.00, payable in accordance with the
customary payroll as in effect from time to time for senior
executives of the Company. The Board, from time to time, shall
review the Executive's Annual Base Salary for possible increases of
such Base Salary in relationship to the goals and performance of
the Company, prevailing competitive conditions annually, and
significant milestones achieved by the Company. The Annual Base
Salary, including any increases, shall not be decreased during the
Employment Period.
b.
Medical and Group Life Insurance. Company agrees to include
Executive in the group medical and hospital plan of Company and
provide group life insurance for Executive at no charge to
Executive during this Agreement. Executive shall be
responsible for payment of any federal or state income tax imposed
upon these benefits.
c.
Bonus and Incentive Salary. An incentive salary equal to
2.5% of the adjusted net profits (hereinafter defined) of the
Company beginning with the Company's year end 2008 and each fiscal
year thereafter during the term of this
Agreement. "Adjusted net profit" shall be the net profit
of the Company before federal and state income taxes, determined in
accordance with generally accepted accounting practices by the
Company's independent accounting firm and adjusted to
exclude: (i) any incentive salary payments paid pursuant
to this Agreement; (ii) any contributions to pension and/or profit
sharing plans; (iii) any extraordinary gains or losses (including,
but not limited to, gains or losses on disposition of assets); (iv)
any refund or deficiency of federal and state income taxes paid in
a prior year; and (v) any provision for federal or state income
taxes made in prior years which is subsequently determined to be
unnecessary. The determination of the adjusted net
profits made by the independent accounting firm employed by the
Company shall be final and binding upon Executive and
Company. The incentive salary payment shall be made
within thirty (30) days after the Company's independent accounting
firm has concluded its audit. If the final audit is not
prepared within ninety (90) days after the end of the fiscal year,
then Company shall make a preliminary payment equal to fifty
percent (50%) of the amount due based upon the adjusted net profits
preliminarily determined by the independent accounting firm,
subject to payment of the balance, if any, promptly following
completion of the audit by the Company's independent accounting
firm. The maximum incentive salary payable for any one
year shall not exceed $250,000.00 of the then applicable base
salary of Executive.
d.
Restricted Stock Grants. In so far as approved by the Board
of Directors, to the extent Executive receives restricted stock in
the Company, based on certain milestones and other transactions
contained herein:
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The completion
of any merger, purchase, sale with assets in excess of $1 million
gross dollars, Executive shall receive 1 million shares of
restricted stock or an equivalent number of shares so that
Executive maintains a 12.5% equity in the Company.
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Transactions
whereas the Executive transfers existing shares to others for
benefit of the Company, then the Company will issue like shares,
commensurate of shares transferred by Executive at a reasonable
date thereafter the transaction.
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The stock will
accelerate vesting in order to become fully vested upon
Executive’s termination of his employment for a Change of
Control, upon termination of his employment for Good Reason or upon
termination of his employment by the Company without Cause (as
defined below).
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e.
Vacation. During Employment Period, the Executive shall be
entitled to 4 weeks of paid vacation per year.
f.
Expenses. During the Employment Period, the Executive shall
be entitled to receive prompt reimbursement for all reasonable
business-related expenses incurred by the Executive in accordance
with the policies and procedures of the company as applicable to
its senior executives.
g.
Other Executive Benefits. During the Employment Period, the
Executive shall be entitled to participate in or be covered under
all compensation, bonus, pension, retirement, and welfare and
fringe benefit plans, programs, and policies of the Company
applicable to senior executives of the Company.
a.
Death or Disability. The Executive’s employment
pursuant to this Agreement shall terminate automatically upon the
Executive's death. The Company may terminate the Executive's
employment for Disability by giving the Executive notice of its
intention in accordance with Section 5(e) unless E
