EXHIBIT 10.1

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of July 21, 2008, between
TERRA ENERGY & RESOURCE TECHNOLOGIES, INC., a Delaware corporation (“Employer”),
and Alexandre Agaian, an individual (“Employee”).

 

WITNESSETH:

 

WHEREAS, Employer desires to retain the services of Employee and Employee
desires to be employed by Employer upon the terms and conditions hereinafter set
forth;

 

NOW THEREFORE, in consideration of the agreements herein contained, the parties
hereto agree as follows:

 

1.      EMPLOYMENT. Employer hereby employs Employee, and Employee hereby agrees
to serve, as President of Employer and as a director and/or executive of any of
the Employer’s subsidiaries, for the Term of Employment (as defined in Section
2). Employee agrees to perform such services as are customary for such offices.
Employee further agrees to use Employee’s best efforts to promote the interest
of Employer and to devote such of Employee’s full business time and energies as
are reasonably required during normal business hours to the business and affairs
of Employer during the Term of Employment.

 

2.      TERM OF EMPLOYMENT. The employment hereunder shall commence as of July
21, 2008 and shall continue for a period of three years from the date of this
Agreement (the “Term of Employment”), unless earlier terminated: (a) upon death
of Employee; (b) at the option of Employer upon 30 days’ prior written notice to
Employee, in the event Employee, by reason of physical injury or illness, is
unable to materially perform his duties hereunder for a continuous period of 120
days and has no expectation of returning to work within a reasonable time
thereafter; (c) on three months’ prior written notice at the option of either
Employee or the Employer without cause; or (d) upon the discharge of Employee by
the Board of Directors of Employer for “cause” (as defined in Section 8 of this
Agreement).

 

3.      COMPENSATION.

 

(a)  Base Salary. As compensation for the services to be provided hereunder and
in consideration of Employee’s agreement not to compete as set forth in Section
4, during the first year of employment, Employer shall pay Employee an annual
salary, payable bi-weekly, at the rate of Two Hundred Thousand Dollars
($200,000), less all applicable withholdings and payroll taxes, and thereafter
for the reminder of the Term of Employment, Employer shall pay Employee an
annual salary, payable bi-weekly, at the rate of Two Hundred Forty Thousand
Dollars ($240,000), less all applicable withholdings and payroll taxes..

 

 

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(b)  Performance Based Bonus. Employee shall be eligible for a cash bonus in an
amount of up to 200% of the Base Salary, payable upon achievement of performance
targets and thresholds to be established by the Board of Directors, such as
achievement of certain market price, business performance, or other criteria,
determined by the Board of Directors in its reasonable discretion. Upon
achievement of 100%-120% of the performance target, the Employer shall pay
Employee a bonus equal to 100% of the Base Salary. Upon achievement of more than
120% of the performance target, the Employer shall pay Employee a bonus up to,
in the discretion of the Board of the Directors, 200% of the Base Salary. No
performance bonus will be payable in connection with achievement of less than
100% of the performance target.

 

(c)  Employee Benefits. Notwithstanding anything to the contrary in this
Agreement, Employee shall be entitled to an annual performance bonus or other
bonus and an annual increase in salary as determined by the Board of Directors
from time to time. Employee shall be entitled to the following fringe benefits:
(i) family medical and dental insurance (assuming eligibility) under such group
medical and dental insurance policies with insurance premiums not exceeding
$14,000 per year; (ii) twelve (12) sick days per year; (iii) three (3) weeks
vacation in each year fully worked; (iv) 10 holidays; and (v) participation in
Employer’s 401(k) plan or such other plan as Employer may adopt.

 

(d)  Payment Upon Early Termination.

 

(i) In the event of early termination of employment for reason specified in
Section 2 clause (d) of Section 2, Employer shall no longer be obligated to make
any payments of compensation to Employee or Employee’s estate under this
Agreement; provided, however, any compensation, salary and/or bonus earned
and/or vested for prior periods, but not yet paid, shall be paid by Employer to
Employee or Employee’s estate within 5 business days of such termination; and
further provided that no bonus pursuant to Section 3(b) of this Agreement shall
be payable if Employee was terminated for “cause” in accordance with Section 8
of this Agreement.

 

(ii) If Employer terminates Employee’s employment during the Term of Employment
for any reason other than those specified in clause (d) of Section 2 or Section
8 i) Employer shall pay Employee the amounts due to the Employee hereunder as of
the termination becomes effective within ten business days of termination. In
addition, subject to the above, all fringe benefits provided for herein, shall
continue for three (e) months from the effective date of termination of the
employment of Employee; ii) the options to be vested on the next anniversary
date following the date of termination shall be vested.

 

(iii) Following service of a notice during the Term of Employment by either
party for the reason specified in clause (c) of Section 2, Employer shall have
the right to require the Employee not to perform any services for the Employer
until the termination becomes effective, subject to payment to the Employee of
the salary for 3 months.

 

(e)  Stock Options. Upon execution of this Agreement, Employer shall issue to
Employee stock options to purchase an aggregate of five million (5,000,000)
shares of Employer’s common stock (the “Options”), subject to vesting and
exercisability as follows:

 

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(1) 2,000,000 options shall vest upon receipt by the Employer of third party
financing (in debt or equity) in the amount of at least $10 million during the
first year of the Term of the Employment Agreement, and such options shall be
exercisable at $0.20 per share and shall expire on the fourth year anniversary
date of this Agreement;

 

(2) 1,000,000 options shall vest on the first year anniversary date of this
Agreement, and shall be exercisable at $0.40 per share and shall expire on the
fourth year anniversary date of this Agreement;

 

(3) 1,000,000 options shall vest on the second year anniversary date of this
Agreement, and shall be exercisable at $0.60 per share and shall expire on the
fifth year anniversary date of this Agreement; and

 

(4) 1,000,000 options shall vest on the third year anniversary date of this
Agreement, and shall be exercisable at $0.90 per share and shall expire on the
sixth year anniversary date of this Agreement.

 

The vesting schedule is subject to the Employee’s continued employment at the
time of each vesting period subject to clause 3(d)(ii). The Company intends to
file a registration statement covering the shares underlying all employee
options, and will include the Employee’s Options in such filing.

 

(f) If Employee dies during the Term of Employment, Employer shall pay to
Employee’s estate the compensation that would otherwise be payable to Employee
pursuant to this Agreement.

 

(g)  Employee shall receive a one-time sign-on bonus of $20,000 payable within
five business days of Employee’s first day of service under this Agreement.

 

4.      COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY; CONFIDENTIALITY.

 

(a)  Covenant Not to Compete and Solicit. During the Term of Employment,
Employee will not, within any jurisdiction in which Employer or any affiliate
conducts its business operations, or in any way materially competing with
Employer, directly or indirectly, own, manage, operate, control, be employed by
or participate in the ownership, management, operation or control of, or be
connected in any manner with, any business of the type or character engaged in
or competitive with that conducted by Employer. The decision of Employer’s Board
of Directors as to what constitutes a competing business shall be final and
binding upon Employee, and such decision shall be made in good faith, or as
adjudicated in a court of law. Employee confirms that the Employer presently
conducts business operations based on interpreting of various modalities used in
analyzing, reporting on and recommending sites for exploration and recovery of
natural resources. For these purposes, ownership by Employee or any affiliate of
Employee of securities of a public company not in excess of five percent (5%) of
any class of such securities shall not be considered to be competition with
Employer. Nothing

 

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herein shall prohibit Employee from holding stock in Helios Petroleum Holding,
AG (Switzerland) and to serve on the board of directors of Helios Petroleum and
any of its affiliates.

 

During his employment and during one year after termination of Employee’s
employment with Employer, Employee will not, in a capacity that Employee
performs for Employer pursuant to this Agreement, compete, directly or
indirectly, with Employer’s STeP® and Employer’s other proprietary technology
analysis business. The term “not compete” as used herein shall mean that the
Employee shall not own, manage, operate, or be employed in a business
competitive with utilizing STeP® and Employer’s other proprietary technology.

 

For a period of one (1) year after termination of Employee’s employment with
Employer, except with Employer’s specific written permission, which shall not be
unreasonably withheld, Employee further agrees to refrain from interfering with
the employment relationship between Employer and its other employees, by
soliciting any of such individuals to participate in independent business
ventures and agrees to refrain from soliciting business from any client of
Employer’s (that became clients of Employer during the Term of Employment) for
Employee’s benefit or for any other entity, if such solicitation shall be in
direct competition with the Employer or materially harmful to the business of
Employer.

 

It is the desire and intent of the parties that if any provisions of this
Section 4(a) shall be adjudicated to be invalid or unenforceable, this Section
4(a) shall be deemed amended to delete therefrom such provisions or portion
adjudicated to be invalid or unenforceable, such amendment to apply only with
respect to the operation of this paragraph in the particular jurisdiction in
which such adjudication is made.

 

(b)  Intellectual Property. During the Term of Employment, Employee will
disclose to Employer, all ideas, inventions and business plans developed by
Employee during such period which directly relate to the business of Employer,
including without limitation any such process, operation, product or improvement
which may be patentable or copyrightable. Employee agrees that such will be the
property of Employer, and that Employee will, at Employer’s request and cost, do
whatever is necessary to secure the rights thereto by patent, copyright or
otherwise to Employer.

 

(c)  Confidentiality. Employee agrees that during the term of his employment and
for 10 years thereafter, other than for the purpose of furtherance of the
business of the Company, not to divulge to anyone (other than Employer or any
other persons employed or designated by Employer, which designation has already
been made by Employer to include that disclosure to the Institute is
specifically, and at all times, permitted) any knowledge or information of any
type whatsoever of a confidential nature relating to the business of Employer or
any of its subsidiaries or affiliates, including without limitation all types of
trade secrets (unless readily ascertainable from public or published information
or trade sources, required by law, or requested by governmental body or an NGO,
including NASD). Employee further agrees not to disclose, publish or make use of
any such knowledge or information of a confidential nature without prior written
consent of Employer.

 

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5.      REIMBURSEMENT OF BUSINESS EXPENSES. Employee shall be entitled to be
reimbursed for reasonable travel and other business related expenses incurred in
connection with Employee’s services to Employer pursuant to and during the Term
of Employment upon a basis consistent with the policies established or announced
by Employer. Notwithstanding the foregoing, during the first year of the Term of
Employment, for non-economy class air travel, will be limited to two
intercontinental flights (two round trips) at business class per year. Air
travel reimbursement policy will be revised each year depending on Employer’s
performance.

 

6.      OTHER PRIVILEGES.

 

(a)  Cellular Phone. During the Term of Employment, Employer agrees to provide
Employee with a cellular phone for business use at Employer’s cost and expense.

 

(b)  Automobile. During the term hereof, Employer agrees to reimburse Employee
for lease, insurance, parking, and gas expenses, on a 5/7 basis, in an amount
not to exceed in the aggregate $12,000 per year.

 

7.      BREACH BY EMPLOYEE. Both parties recognize that the services to be
rendered under this Agreement by Employee are special, unique and extraordinary
in character, and that in the event of a breach by Employee of the terms and
conditions of this Agreement , or other than as allowed herein, performs
services during the Term of Employment for any person, firm, corporation or
other entity engaged in a competing line of business with Employer, and fails to
correct or substantially cure such breach within a reasonable time after receipt
of written notice to cure, the Employer shall be entitled to terminate this
agreement. In the event of breach of confidentiality, the Employer may seek an
injunction.

 

8.      TERMINATION FOR CAUSE. Employer may terminate Employee for cause at any
time. For purposes of this Agreement, an event or occurrence constituting
“cause” shall mean:

 

(a)  Employee’s continued willful failure or refusal after notice thereof, to
perform specific directives of Employer’s Board of Directors, which shall not be
illegal in nature, when such directives are consistent with the scope and nature
of Employee’s duties and responsibilities as set forth in Section 1 and
elsewhere herein and such failure or refusal is: (i) not corrected within a
reasonable time after receipt of written notice is sent by Employer’s Board of
Directors after resolution authorizing such notice; (ii) the direct material
cause of material damages to the Employer;

 

(b)  Employee’s conviction of a felony or of any crime involving moral
turpitude, fraud or misrepresentation and final resolution of all appeals
therefrom;

 

(c)  Any court determination of gross or willful conduct of Employee resulting
in substantial loss to Employer, substantial damage to Employer’s reputation or
any material theft from Employer;

 

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(d)  Other than by reason of physical injury or illness, a determination of
Employee’s material willful failure to perform the duties and responsibilities
under this Agreement causing material damage to Employer;

 

(e) A determination of any material breach (not covered by any of the clauses
(a) through (d)) of any of the provisions of this Agreement, causing material
damage to Employer, and such breach was not cured within ten days, or such other
greater amount of time as is reasonable under the circumstances, after written
notice thereof is delivered to Employee by Employer.

 

9.      ASSIGNMENT. This Agreement is a personal contract and, except as
specifically set forth herein, the rights and interests of Employee herein may
not be sold, transferred, assigned, pledged or hypothecated by either party,
including indirectly. The rights and obligations of Employer hereunder shall be
binding upon and run in favor of the successors and assigns of Employer.
Employee specifically consents to assignment of this Agreement by Employer
pursuant to any reorganization or business combination that Employer may effect
hereafter, except as limited or otherwise provided elsewhere in this Agreement,
and subject to such other provisions.

 

10.    GOVERNING LAW; CAPTIONS. This Agreement contains the entire agreement
between the parties and shall be governed by the laws of the State of New York.
It may not be changed orally, but only by agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought, and consented to in writing by the Board of Directors of Employer.
Any dispute shall be resolved in the courts located in the County of New York in
the State of New York. Section headings are for convenience or reference only
and shall not be considered a part of this Agreement.

 

11.    NOTICES. Any notice or other communication required or permitted
hereunder shall be sufficiently given if delivered in person to Employer by
delivery to its Chairman of the Board of Directors or sent by telex, telecopy or
by registered or certified mail, postage prepaid, addressed as follows:

 

if to Employee, to:

Alexandre Agaian

at the address on file with the Employer

 

if to Employer, to:

Attn.: Board of Directors

TERRA ENERGY & RESOURCE TECHNOLOGIES, INC.

99 Park Avenue, 16th Floor

New York, New York 10016

Fax: 917-591-5988

 

 

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12.    PRIOR AGREEMENTS. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto.

 

13.     Employer shall indemnify and hold harmless, the Employee to the full
extent allowed by law, for any claims, damages, losses, including attorneys
fees, if such claims, damages or losses are related to the employment hereunder,
save for the gross negligence or willful misconduct on the part of the Employee.

 

IN WITNESS WHEREOF, Employer has by its appropriate officer signed this
Agreement and Employee has signed this Agreement, as of the date and year first
above written.

 

TERRA ENERGY & RESOURCE TECHNOLOGIES, INC.

 

By the Board of Directors

 

By: /s/ Dmitry Vilbaum

 

Name:

Dmitry Vilbaum

 

Title:

Chief Executive Officer

 

 

EMPLOYEE

 

/s/ Alexandre Agaian

Alexandre Agaian

 

 

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