EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into as of February 17,
2017 by and between Quest Solution, Inc., a Delaware corporation (the
“Company;”), and Shai Lustgarten, an individual (the “Executive”). This
Agreement shall become effective the sooner of two weeks of the date hereof or
upon the satisfaction of the conditions set forth in Section 9.13.

 

1. Duties and Responsibilities.

 

1.1 Positions. From the Effective Date until March 13, 2018, Executive shall
serve as the Company’s President and Chief Operating Officer (“COO”), with such
duties as are customarily associated with the position of a COO for a public
company. As part of these duties, Executive shall report to and perform the
specific duties and responsibilities assigned to him by the Company’s Chief
Executive Officer during this time and, where applicable, the Board of
Directors. Beginning on March 13, 2018, Executive shall become and serve as the
Company’s Chief Executive Officer (“CEO”), with such duties as are customarily
associated with the position of a CEO for a public company. As part of these
duties, Executive shall report to and perform the specific duties and
responsibilities assigned to him by the Company’s Board of Directors during his
tenure as CEO.

 

1.2 Efforts; Other Activities. Executive agrees to devote his best efforts,
attention and energies to advance the business and welfare of the Company, to
render his services under this Agreement, on a full-time basis, fully,
faithfully, diligently, competently and to the best of his ability. Executive
may conduct other non-competitive business or hold other positions or
directorships with other non-competitive for-profit entities, provided that
those activities do not create a conflict of interest with the Company, do not
interfere with the performance of Executive’s duties to the Company. Executive
may, without the prior approval of the Board, serve in any capacity with any
civic, education, or charitable non-profit organization, provided such service
does not interfere with Executive’s duties to the Company.

 

1.3 Location; Travel. Executive shall be based at the Company’s headquarters in
Eugene, Oregon, but Executive will be required to travel from time to time to
other geographic locations in connection with the performance of his duties.

 

2. Agreement Term. Except as otherwise provided for herein, the term of this
Agreement with Executive shall commence on the Effective Date and continue
thereafter for two (2) years until February 17, 2019 (the “Term”). At that time,
the parties will address and negotiate in good faith any mutually agreeable
extension or replacement of this Agreement. Even so, the parties agree that the
Executive’s employment with the Company during the Term, notwithstanding the
provisions of this Agreement or the potential for any extensions thereof or
subsequent agreements, may be terminated by either Executive or the Company at
any time, for any or no reason, with or without Cause (as defined below), and
pursuant to the terms provided below.

 

3. Compensation and Benefits.

 

3.1 Base Salary. Executive’s base salary under this Agreement shall be Two
Hundred Forty Thousand Dollars ($240,000.00) (U.S.) per year (less applicable
withholdings), which shall be payable as provided by law and in accordance with
the Company’s standard payroll schedule, together with such increases as may be
approved by the Company’s Compensation Committee and Board of Directors from
time to time in their sole discretion (the “Base Salary”).

 

 

 

 

3.2 Bonus.

 

(a) Sign-On Stock Grant. Executive shall be eligible to receive a one-time
signing bonus of Forty-Eight Thousand Dollars ($48,000.00) worth of shares in
the Company’s restricted common stock (the “Stock Grant”), which shall be
established by the Compensation Committee in conjunction with the Company’s 2017
Financial Plan and submitted for approval by the Board of Directors in the first
quarter of 2017. Upon that approval, the Stock Grant shall be issued to
Executive and shall vest in its entirety upon issuance.

 

(b) Executive Bonus Plan. Executive shall be eligible to participate in the
Company’s Executive Bonus Plan, as it may exist from time to time, which will
include both cash and stock components and be based on measurable objectives
established by the Company’s Board of Directors for achievement in free cash
flow, EBITDA, cost reduction, and/or any other factors the Board of Directors
selects in its sole discretion. Such objectives shall be generated and approved
by the Compensation Committee of the Board of Directors within sixty (60) days
of Executive’s first day of employment as CEO. The timing and frequency of the
payout of Executive’s bonuses as CEO will be determined and confirmed by the
Compensation Committee of the Board prior to payout.

 

3.3 Additional Stock Grants or Options, (a) As CEO, Executive shall be eligible
to receive additional performance-based stock options or grants in the Company,
which will be determined during the duration of Executive’s employment with the
Company (the “Employment Period ) and offered both at times and in amounts
subject to the Board of Directors’ sole discretion. All such stock options or
grants shall be subject to a vesting schedule determined by the Compensation
Committee of the Board of Directors, which shall in no event be less than a
period of three (3) years.

 

(b)Within thirty days of this Agreement, the Company shall grant Executive
options to purchase 2,281,000 shares of the Common Stock (the “Signing Options”)
of the Company which collectively with the Stock Grant, represents 8.2% of the
total outstanding shares of Common Stock and the Class C Shares on the date of
this Agreement (the “Executive’s Ownership Percentage”). 33% of the Signing
Options shall be priced at the closing price on the date as of the signing of
this Agreement and shall vest immediately. 66% of the Signing Options shall be
priced at a 20% premium to the closing price on the date of the signing of this
Agreement. 33% of the total shares shall vest and become exercisable one year
from the date of Agreement. The balance of the total Signing Options shall vest
and become exercisable two years from the date of Agreement. Two years from this
date of Agreement, the Board of Directors shall consider at its sole discretion
issuing similar number of options under similar terms. Excluding Employee Stock
Options from the calculation at the end of one year, in the event that the
Signing Options and with the Stock Grant represent less than 8% of the total
outstanding shares of Common Stock and the Class C Shares (the “Minimum
Ownership Percentage”) as a result of the exercise or conversion of convertible
securities outstanding on the date hereof, the Company will issue additional
options (priced at the market price upon issuance), so that Executive’s
Ownership is not less than the Minimum Ownership Percentage.

 

3.4 Paid Time Off. Executive shall receive four (4) weeks of paid time off
(“.PTO”) per calendar year, which amount shall accrue in accordance with and
subject to any caps on accrual established by the Company’s vacation policy in
effect from time to time for employees of the Company. In addition, Executive
shall be entitled to paid time off for all holidays provided under the Company’s
regular holiday schedule.

 

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3.5 Group Benefit Plans; Individual Insurance. Executive shall, throughout the
Employment Period, be eligible to participate in all of the group term life
insurance plans, group health plans, dental plans, accidental death and
dismemberment plans, short-term disability programs, retirement plans, profit
sharing plans, 401 (k), employee stock purchase plans or other plans for which
Executive qualifies that are available to the executive officers of the Company
as provided under the terms of such plans. With respect to any of the foregoing
benefits, Executive may elect to receive the cash value of the premiums the
Company would otherwise pay as additional compensation.

 

3.6 Withholdings. The Company shall deduct and withhold from any compensation
payable to Executive hereunder (including but not limited to, any payments or
benefits under this Section 3 and any payments or benefits under Section 5), any
and all applicable federal and state income and employment withholding taxes and
any other amounts the Company determines are required to be deducted or withheld
by the Company under applicable statutes, regulations, ordinances or orders
governing or requiring the withholding or deduction of amounts otherwise payable
as compensation or wages to employees.

 

4. Expense Reimbursement. During the Employment Period, Executive shall be
entitled to, in accordance with the reimbursement policies in effect from time
to time, receive reimbursement from the Company for reasonable business expenses
incurred by Executive in the performance of Executive’s duties hereunder,
provided Executive furnishes the Company with vouchers, receipts and other
details of such expenses in the form required by the Company sufficient to
substantiate a deduction for the business expenses in question under all
applicable rules and regulations of federal and state taxing authorities.

 

5. Termination of Employment. During the Term of this Agreement, Executive’s
employment with the Company shall be at-will and may be terminated by either the
Company or Executive at any time, and for any reason not prohibited by law. If
such termination occurs before the conclusion of Executive’s employment as CEO,
President, COO. Executive (or, in the case of Executive’s death, Executive’s
estate and beneficiaries) shall have no further rights to any other compensation
or benefits from the Company under this Agreement other than the “Separation
Benefits” as set forth in Section 5.land the Stock Grant. In the event that the
Executive is terminated without cause or Executive resigns for Good Reason as
determined in Section 5.2, the Signing Options shall immediately vest if not
otherwise vested under their terms. If such termination occurs during
Executive’s employment as CEO, Executive (or, in the case of Executive’s death,
Executive’s estate and beneficiaries) shall have no further rights to any other
compensation or benefits from the Company on or after the termination of
employment other than the Stock Grant and the vested Signing Options and as set
forth in Section 5.1 and Section 5.2.

 

5.1 Separation Benefits. Regarding term of employment, for the until the last
day of Ql, 2017 there is no compensation tied to separation if it does not work
out. In the event the Company terminates after the last day of Ql, 2017
Executive’s employment with the Company prior to the expiration of the
Employment Period for any reason, or in the event the Executive resigns from the
Company voluntarily, then the Company shall pay to Executive the following:

 

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(a) Executive’s unpaid Base Salary that has been earned through the date that
Executive’s employment with the Company is terminated (the “Termination Date”);

 

(b) Executive’s accrued but unused vacation:

 

(c) Any accrued but unpaid expenses pursuant to Section 4 above;

 

(d) Such vested accrued benefits, and other benefits and/or payments, if any, as
to which the Executive (and his eligible dependents) may be entitled under, and
in accordance with the terms and conditions of, the employee benefit
arrangements, plans and programs of the Company as of the Termination Date
(including, for example, the presentment of the right to continue health benefit
coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), as
applicable), but not including any severance pay plan; and

 

(e) Any other payments as may be required under applicable law. The benefits
provided under subsections (a) through (d) of this Section 5.1 are collectively
referred to as the “Separation Benefits.”

 

5.2 Termination without Cause or Resignation for Good Reason.

 

(a) Termination Benefits. If during the Term of this Agreement, the Executive
voluntarily resigns for Good Reason (as defined below) or the Company terminates
Executive’s employment for any reason other than for Cause (as defined below),
then the Company shall pay to the Executive the following compensation and
benefits (the “Termination Benefits”) in addition to the Separation Benefits set
forth in Section 5.1, subject to the conditions set forth in Section 6 and
contingent upon the Executive’s execution and delivery of a General Release of
Claims in favor of the Company, its affiliates and representatives, the form of
which is acceptable to the Company:

 

(i) Severance Payment. A lump sum payment equal to the greater of (A) the unpaid
Base Salary through the end of the Term of this Agreement, at the rate in effect
on the Termination Date, that otherwise would have been paid to the Executive if
he remained employed through the end of this Agreement’s full Term, or (B) one
(1) year of Base Salary, at the rate in effect on the Termination Date. Subject
to Sections 7 and 8, the lump sum payment required by this Section shall be paid
no later than thirty (30) days following the Termination Date.

 

(ii) COBRA Reimbursement. In the event that the Executive properly and timely
elects to continue health benefit coverage under COBRA after the Termination
Date and the Company received from Executive of a copy of such election and
proof of Executive’s timely payment of each COBRA premium, the Company shall
promptly reimburse Executive on a taxable basis for the amount of each such
premium paid by Executive. Such COBRA premium reimbursements will be paid by the
Company for coverage until the earliest of (A) the end of the period of time
during which the Executive is entitled to continuation coverage under COBRA, or
(B) such time as Executive subsequently becomes covered by another group health
plan. Executive agrees to notify the Company immediately if he becomes covered
by another group health plan. If, on the Termination Date, the Company
determines in its sole discretion that it cannot reimburse the Executive for the
COBRA premiums as provided in this Section 5.2(a)(ii) above without potentially
violating, or being subject to an excise tax under, applicable law (including,
without limitation, Section 2716 of the Public Health Service Act), the Company
will in lieu thereof provide to the Executive monthly payments (the “Section
5.2(a)(ii) Taxable Payments”) during the maximum period for which COBRA premiums
otherwise were to be reimbursed. The amount of each monthly payment shall equal
the COBRA premium that the Executive would be required to pay to continue his
healthcare benefits under the Company’s group plans for the first month of COBRA
coverage. For the avoidance of doubt, the Section 5.2(a)(ii) Taxable Payments,
if any, will be made regardless of whether the Executive elects COBRA
continuation coverage and may be used for any purpose, including, but not
limited to continuation coverage under COBRA.

 

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(b) Definition of Cause. For puiposes of this Agreement, “Cause” shall mean any
of the following:

 

(i) Executive’s misappropriation of the Company’s funds or property, or any
attempt by Executive to secure any personal profit related to the business or
business opportunities of the Company without the informed, written approval of
the Audit Committee of the Company’s Board of Directors;

 

(ii) Any unauthorized use or disclosure by Executive of confidential information
or trade secrets of the Company (or any parent or subsidiary of the Company);

 

(iii) Executive’s willful failure to perform, or continuing neglect in the
performance of, duties lawfully assigned to Executive by the Company’s Board of
Directors, provided that the Company shall have provided Executive with written
notice of such failure or neglect and the Executive has been afforded at least
ten (10) business days to cure such failure or neglect;

 

(iv) Executive’s conviction of, or plea of nolo contendre to, any felony or
misdemeanor involving moral turpitude or fraud, or of any other crime involving
material harm to the standing or reputation of the Company;

 

(v) Any other willful misconduct by Executive that the Board determines in good
faith has had a material adverse effect upon the business or reputation of the
Company;

 

(vi) Any other material breach or violation by the Executive of this Agreement,
the Company’s written code of conduct, or other written policy of the Company
that has been provided to the Executive; provided, however, that the Company
shall have provided the Executive with written notice that such actions are
occurring and the Executive has been afforded at least ten (10) business days to
cure.

 

Notwithstanding the foregoing, in subparagraphs (iii) and (vi), (A) the cure
period shall apply neither to violations of the Company’s code of conduct or
prohibition against unlawful harassment, and (B) such cure period shall only
apply to breaches, violations, failures or neglect that in the Board’s sole
judgment are capable of or amenable to such cure.

 

(c) Definition of Good Reason. For the purposes of this Agreement, “Good Reason”
shall mean Executive’s voluntary resignation upon any of the following events:

 

(i) A material reduction in Executive’s authority, duties or responsibilities
(and not simply a change in title or reporting relationships);

 

(ii) A material reduction by the Company in the Executive’s compensation (for
avoidance of doubt, a ten percent (10%) reduction in the Executive’s Base Salary
shall constitute a material reduction in Executive’s compensation);

 

(iii) Any breach by the Company of its obligations under this Agreement that
results in material adverse consequences to Executive including but not limited
to the failure to issue Executive the Stock Grant or the Signing Stock Options;
or

 

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(iv) The failure of any buyer or acquirer of the Company in a change in control
to assume the Company’s obligations to Executive under this Agreement.

 

Notwithstanding the foregoing, “Good Reason” shall only be found to exist if the
Executive provides written notice to the Company identifying and describing the
event resulting in Good Reason within ninety (90) days of the initial existence
of such event (“Good Reason Notice”), the Company does not cure such event
within thirty (30) days following receipt of the Good Reason Notice from the
Executive, and the Executive terminates his employment during the ninety (90)-
day period beginning thirty (30) days after the Executive’s delivery of the Good
Reason Notice.

 

6. Restrictive Covenants.

 

6.1 Noncompetition. Executive agrees that, for the duration of his employment
with the Company and for a period of one (1) year after the Termination Date
thereof, Executive shall not engage in, or have any direct or indirect interest
in any person, firm, corporation, organization, entity or business in North
America - whether as an employee, officer, owner, director, agent, security
holder, investor, creditor, consultant, partner, or otherwise - which engages in
business that is similar to, or competitive with, the Company’s business. While
Executive knows what the Company’s business is, for purposes of this Agreement,
the Company’s business is defined as a reseller, integrator, developer, and
software and services provider of mobile computing and data collection
technology. Notwithstanding Executive’s noncompetition obligations in this
Section 6.1, Executive may own (a) not more than 1% of the securities of any
company whose securities are publicly traded, and (b) the securities of any
company currently owned by Executive, which have been or are in the future
disclosed in writing to the Company and approved by the Board of Directors.

 

6.2 Confidentiality. The Company and Executive acknowledge that the services to
be performed by Executive under this Agreement are unique and extraordinary and,
as a result of such employment, Executive shall be in possession of Confidential
Information relating to the business practices of the Company and its
subsidiaries and affiliates (collectively, the “Company Group”). The term
“Confidential Information” shall mean any and all information (oral and written)
relating to the Company Group, or any of their respective activities, or of the
clients, customers, acquisition targets, investment models or business practices
of the Company Group, other than such information that (a) is generally
available to the public or within the relevant trade or industry, other than as
the result of breach of the provisions of this Section, or (b) is required of
Executive to disclose under any applicable laws, regulations or directives of
any government agency, tribunal or authority having jurisdiction in the matter
or under subpoena or other process of law. The Executive shall not, during his
Employment Period with the Company or at any time thereafter (except as may be
required in the course of the performance of his duties hereunder and except
with respect to any litigation or arbitration involving this Agreement,
including the enforcement hereof), directly or indirectly, use, communicate,
disclose or disseminate to any person, firm or corporation any Confidential
Information acquired by the Executive during, or as a result of, his employment
with the Company, without the prior written consent of the Company. The
confidentiality obligations contained in this Section 6.2 shall be in addition
to any other confidentiality agreement entered into between the Company and
Executive, including the proprietary information and invention assignment
agreement to be signed by Executive as per the Company’s policy with respect to
all employees.

 

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6.3 Mutual Non-Disparagement. At no time during Executive’s Employment Period
with the Company or within three (3) years after the Termination Date thereof,
will the Executive, directly or indirectly, disparage the Company Group or any
of the Company Group’s past or present employees, officers, directors,
attorneys, products or services. Notwithstanding the foregoing, nothing in this
Section shall prevent Executive from making any truthful statement to the extent
(a) necessary to rebut any untrue public statements made about him; (b)
necessary with respect to any litigation, arbitration or mediation involving
this Agreement, including, but not limited to, the enforcement of this
Agreement; or (c) required or specifically protected by law, or any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof’) with appropriate jurisdiction.

 

(ii) At no time during Executive’s Employment Period with the Company or within
three (3) years after the Termination Date thereof, will the Company or any of
its then officers and/or directors, directly or indirectly, disparage the
Executive. Notwithstanding the forgoing, nothing in this Section shall prevent
the Company from making any truthful statement to the extent (a) Necessary to
rebut any untrue public statements made by the Executive about the Company; (b)
Necessary with respect to any litigation, arbitration or mediation involving
this Agreement, including, but not limited to, the enforcement of this
Agreement; or (c) required or specifically protected by law, or any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with appropriate jurisdiction.

 

6.4 Cooperation. Upon the receipt of reasonable notice from the Company
(including from the Company’s outside counsel), Executive agrees that during his
Employment Period with the Company and at any time thereafter, Executive will
respond and provide information to the best of his ability with regard to
matters about which Executive has knowledge as a result of his employment with
the Company, and will provide reasonable assistance to the Company Group and
their respective representatives in defense of any claims that may be made
against the Company Group (or any member thereof), and will also provide
reasonable assistance to the Company Group in the prosecution of any claims that
may be made by the Company Group (or any member thereof), to the extent that
such claims may relate to matters related to Executive’s Employment Period with
the Company (or any predecessors). If the Executive is required to provide any
services pursuant to this Section following his Termination Date, then the
Company:

 

(a) shall promptly compensate Executive for all time actually incurred in these
activities at an hourly rate of pay equal to Executive’s most recent annual Base
Salary divided by 2080 hours; and

 

(b) shall promptly reimburse the Executive for reasonable out-of-pocket travel,
lodging, communication and duplication expenses incurred in connection with the
performance of such services and in accordance with the Company’s business
expense reimbursement policies.

 

6.5 Injunctive Relief; Interpretation. Without limiting the remedies available
to the Company, Executive acknowledges and agrees that a breach of any of the
covenants contained in Section 6 will result in the material and irreparable
injury to the Company, the Company Group, or their respective affiliates or
subsidiaries, for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such breach or threat by Executive, the Company shall be entitled to a
temporary restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited by this Section 6,
without the necessity of posting a bond or other security. If for any reason it
is held that the restrictions under this Section 6 are not valid or enforceable
as written, such restrictions shall be interpreted or modified to render such
restrictions valid and enforceable, and such interpretation or modification
shall be to render such restrictions as broad as legally permissible.

 

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6.6 Return of Company Property. Upon the cessation of Executive’s employment for
any reason whatsoever, all Company Group property that is in the possession of
the Executive shall be promptly returned to the Company, including, without
limitation, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists, supplier
lists and any other materials that contain or are derived from Confidential
Information which are in the Executive’s possession, including all copies
thereof whether in electronic, digital or paper form. Anything to the contrary
notwithstanding, Executive shall be entitled to retain (a) papers and other
materials of a personal nature, including, but not limited to, photographs,
correspondence, personal diaries, calendars and rolodexes, personal files and
phone books, (b) information showing his compensation or relating to
reimbursement of expenses, (c) information that he reasonably believes may be
needed for tax purposes and (d) copies of plans, programs and agreements
relating to his employment, or termination thereof, with the Company.

 

7. Section 409A.

 

7.1 Interpretation. It is intended that the provisions of this Agreement comply
with the requirements of Section 409A of the Internal Revenue Code (“Section
409A “) or an exemption therefrom, and all provisions of this Agreement shall be
construed in a manner consistent with the requirements for avoiding taxes or
penalties under Section 409A. A termination of employment shall not be deemed to
have occurred for purposes of any payments or benefits subject to Section 409A
that are to be paid or provided upon or following a termination of employment
unless such termination qualifies as a “separation from service” within the
meaning of Section 409A and, for purposes of any such payments or benefits,
references in this agreement to “termination,” “termination of employment” or
like terms shall mean “separation from service.” For purposes of Section 409A,
each payment under this Agreement shall be treated as a separate payment. In
noevent may Executive, directly or indirectly, designate the calendar year of a
payment. If any provision of this Agreement (or of any award of compensation,
including equity compensation or benefits) would cause Executive to incur any
additional tax or interest under Section 409A. the Company shall, upon the
specific request of Executive, use its reasonable business efforts to in good
faith reform such provision to comply with Section 409A; provided that, to the
maximum extent practicable, the original intent and economic benefit to
Executive and the Company of the applicable provision shall be maintained, but
the Company shall have no obligation to make any changes that could create any
additional economic cost or loss of benefit to the Company. Notwithstanding the
foregoing, the Company shall not have any liability with regard to any failure
of this Agreement to comply with Section 409A so long as it has acted in good
faith with regard to compliance therewith.

 

7.2 Section 409A Delay. Notwithstanding any other provisions of this Agreement
to the contrary, and solely to the extent necessary for compliance with Section
409A and not otherwise eligible for exclusion from the requirements of Section
409A, if as of the date of Executive’s separation from employment from the
Company, (a) the Executive is deemed to be a “specified employee” (within the
meaning of Section 409A), and (b) the Company or any member of a controlled
group including the Company is publicly traded on an established securities
market or otherwise, no payment or other distribution required to be made to the
Executive hereunder (including any payment of cash, any transfer of property and
any provision of taxable benefits) as a result of Executive’s separation from
service shall be made until the date that is the earlier of (i) the first day of
the seventh month following the date on which Executive separates from service
with the Company, or (ii) the date of Executive’s death. Upon the expiration of
the foregoing delay period, all payments and benefits delayed pursuant to this
Section 7.2 (whether they would have otherwise been payable in a single sum or
in installments in the absence of such delay) shall be paid or reimbursed to
Executive in a lump sum, and all remaining payments and benefits due under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein.

 

7.3 Reimbursements and In-Kind Benefits. To the extent that reimbursements or
other in- kind benefits under this Agreement constitute “nonqualified deferred
compensation” for purposes of Section 409A, (a) the right to reimbursement or
in-kind benefits shall not be subject to liquidation or exchange for another
benefit, (b) the amount of expenses eligible for reimbursement, or in-kind
benefits, provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other
taxable year, and (c) such payments shall be made on or before the last day of
Executive’s taxable year following the taxable year in which the expense was
incurred.

 

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8. Section 280G.

 

8.1 Maximum Benefit. Notwithstanding any other provision of this Agreement or
any other plan, arrangement or agreement to the contrary, if any of the payments
or benefits provided or to be provided by the Company or its affiliates to
Executive or for Executive’s benefit pursuant to the terms of this Agreement or
otherwise (“Covered Payments”) constitute “parachute payments” within the
meaning of Section 280G of the Internal Revenue Code (“Section 2H0G’) and would,
but for this Section 8.1, be subject to the excise tax imposed under Code
Section 4999 (or any successor provision thereto) (the “Excise Tax”), then prior
to making the Covered Payments, a calculation will be made comparing (a) the Net
Benefit (as defined below) to Executive of the Covered Payments after payment of
the Excise Tax, to (b) the Net Benefit to Executive if the Covered Payments are
limited to the extent necessary to avoid being subject to the Excise Tax. If the
amount calculated under (a) above is less than the amount calculated under (b)
above, the Covered Payments will be reduced or eliminated to the minimum extent
necessary to ensure that no portion of the Covered Payments is subject to the
Excise Tax. “Net Benefit” means the present value of the Covered Payments net of
all federal, state, local and foreign income, employment and excise taxes.

 

8.2 Order of Reduction. Any reduction or elimination of Covered Payments
necessary pursuant to Section 8.1 will be made in accordance with Section 409A
and the following:

 

(a) the Covered Payments that do not constitute nonqualified deferred
compensation subject to Section 409A will be reduced or eliminated first in such
order as may be specified by Executive (or, if Executive does not provide
written notice to the Company specifying such order within 10 days of
Executive’s receipt of a written notice from the Company requesting such
information, the order specified by the Company); and

 

(b) all other Covered Payments will then be reduced or eliminated in the
following order: (i) cash payments, (ii) non-cash-forms of benefits (other than
equity-based payments and acceleration of vesting) and (iii ) equity-based
payments and acceleration of vesting.

 

To the extent payments are to be reduced or eliminated pursuant to clause (b)
above, payments or benefits to be made or provided on a later date will be
reduced or eliminated before payments or benefits to be made or provided on an
earlier date. Notwithstanding the foregoing, if the order of reduction or
elimination specified in clause (b) would violate Section 409A, then the
reduction or elimination shall be made in such other manner as may be necessary
to comply with Section 409A.

 

8.3 Recalculation. If, notwithstanding the initial application of this Section
8, the Internal Revenue Service determines that all or any portion of any
Covered Payment constitutes an excess parachute payment (as defined in Section
280G(b) of the Code), this Section 8 will be reapplied based on the Internal
Revenue Service’s determination, and Executive will be required to promptly
repay the portion of the Covered Payments required to avoid imposition of an
excise tax under Section 4999 of the Code together with interest at the
applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from
the date of Executive’s receipt of the excess payments until the date of
repayment).

 

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8.4 Determinations. Any determination required under this Section 8, including
whether any payments or benefits are parachute payments, shall be made by the
Company in its sole discretion. Executive will provide the Company with such
information and documents as the Company may reasonably request in order to make
a determination under this Section 8. For purposes of making the calculations
and determinations required by this Section 8, the Company may rely on
reasonable, good faith assumptions and approximations concerning the application
of Section 280G and Section 4999. The Company shall bear all costs incurred in
connection with any calculations contemplated by this Section 8. The Company’s
determination will be final and binding on Executive.

 

9. Miscellaneous.

 

9.1 Notices. Any notice to be given under the terms of this Agreement shall be
in writing and addressed to the Company at its headquarters in [Eugene, Oregon]
to the attention of the Secretary, and to the Executive at the address last
reflected on the Company’s payroll records, or such other address as either
party may hereafter designate in writing to the other. Any such notice shall be
delivered in person or shall be enclosed in a properly sealed envelope addressed
as provided herein, registered or certified, and deposited (postage and registry
or certification fee prepaid) in a post office or branch post office regularly
maintained by the United States Postal Service. Any such notice shall be deemed
given only when received, but if Executive is no longer employed by the Company
or a subsidiary, such notice shall be deemed to have been duly given five (5)
business days after the date it is mailed in accordance with the foregoing
provisions of this Section.

 

9.2 Severability. Each provision of this Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be unenforceable only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any other
provision of this Agreement. Furthermore, there shall be automatically
substituted for any prohibited or invalid provision a provision as similar
thereto as possible that is valid, legal and enforceable.

 

9.3 Binding Effect; Benefits. This is a contract pertaining to personal
services. Accordingly, Executive may not delegate his duties or assign his
rights under this Agreement. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective heirs, legal
representatives, successors and the Company’s assigns.

 

9.4 Entire Agreement. This Agreement represents the entire agreement of the
parties with respect to the subject matter hereof and shall supersede any and
all previous agreements, arrangements or understandings between the Company and
Executive, except the Company’s policies and procedures as in effect from time
to time and those plans and other arrangements which are specifically mentioned
herein and incorporated by reference as a result. This Agreement may be amended
at any time by mutual written agreement of the parties. In the case of any
conflict between any express term of this Agreement and any statement contained
in any plan, program, arrangement, employment manual, memo or rule of general
applicability of the Company, this Agreement shall control.

 

9.5 Governing Law, Binding Arbitration, and Choice of Venue. This Agreement and
the performance of the parties hereunder shall be governed by the substantive
laws of the State of Oregon (without applying its conflicts of laws provisions)
and any applicable laws of United States of America, and shall be interpreted in
conformity with the same. The parties agree that any dispute or difference
between them with respect to or arising from this Agreement - whether about its
content, execution, enforceability, or performance - and any dispute or
different between them concerning or relating to Executive’s employment with the
Company or the termination thereof shall be, and is, subject to mandatory, final
and binding arbitration, which shall be conducted and governed pursuant to the
rules and procedures of the American Arbitration Association. BOTH THE COMPANY
AND EXECUTIVE, THEREFORE, WAIVE ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY FOR
ANY SUCH DISPUTE. The parties further agree that any such arbitration shall be
conducted in Lane County, Oregon, and they expressly agree to submit themselves
to the jurisdiction of the federal and state courts located in Lane County,
Oregon.

 

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9.6 Remedies. All rights and remedies provided pursuant to this Agreement or by
law shall be cumulative, and no such right or remedy shall be exclusive of any
other. A party may pursue any one or more rights or remedies hereunder or may
seek damages, injunctive relief or specific performance in the event of another
party’s breach or may pursue any other remedy at law or equity, whether or not
stated in this Agreement.

 

9.7 Breach of this Agreement. Executive understands and agrees that if he
breaches any provision of this Agreement, specifically including without
limitation the restrictive covenants contained in Section 6, all payments and
benefits provided hereunder shall cease, and any continuing obligation the
Company may have to Executive under this Agreement shall be deemed subject to a
full accord and satisfaction and thus no longer chargeable against the Company.
If the Company’s participation in any legal action is necessary to enforce the
terms of this Agreement because of Executive’s breach - whether such action is
brought by Executive, the Company, or a third party - the Company shall be
entitled to reimbursement of the reasonable costs and attorneys’ fees it incurs
in defending, pursuing or otherwise participating in such legal action in the
event that such court determines that such breach is the fault of Executive.

 

9.8 Survivorship. Except as otherwise expressly set forth in this Agreement, the
respective rights and obligations of the parties shall survive Executive’s
cessation of employment to the extent necessary to carry out the intentions of
the parties as embodied and expressed in this Agreement. This Agreement shall
continue in effect until there are no further rights or obligations of the
parties outstanding hereunder and shall not be terminated by either party
without the express prior written consent of both parties.

 

9.9 Neutral Interpretation. The parties agree that this Agreement shall not be
construed either for or against either of them in any dispute or interpretation
hereof.

 

9.10 No Waiver. The waiver by either party of a breach of any provision of this
Agreement shall not operate as, or be construed as, a waiver of any later breach
of that provision.

 

9.11 Taxes. Except as otherwise specifically provided herein, each party agrees
to be responsible for its own taxes and penalties.

 

9.12 Counterparts. This Agreement may be executed and delivered in counterparts
(including by facsimile or pdf’) which, when taken together, shall constitute
one and the same agreement of the parties.

 

9.13 Representation of Executive. Executive represents and warrants to the
Company that Executive has read and understands this Agreement, has had the
opportunity to consult with independent legal counsel of his choosing prior to
agreeing to the terms of this Agreement and is entering into this Agreement in a
knowing, willful and voluntary manner. Executive further affirms and warrants
that he has disclosed to the Company in writing all threatened, pending, or
actual claims brought against him by any previous employer since November 1,
2013, if such claims arc outstanding and unresolved as of the Effective Date of
this Agreement. - Executive has disclosed to Company that he has a prior
agreement with a former employer. Executive confirms that the Agreement
effective start date shall be the sooner of no later than two weeks from the
date of signing Agreement or upon satisfaction of any outstanding obligations to
his former employer. In the case that Executive had not provided a closure of
all outstanding obligations from his former employer, in that case, agreement
will not take effect.

 

[End of Text - Signature page follows]

 

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

 

COMPANY:

 

QUEST SOLUTION INC.

 

  By: /s/ Tom Miller    Name: Tom Miller   Title: President and Interim CEO

 

  By: /s/ SHAI LUSTGARTEN     SHAI LUSTGARTEN

 

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