Document:

EMPLOYMENT AGREEMENT

 

This Agreement (the "Agreement") is made and entered into on this 10th day of April, 2007 (the "Effective Date"), between QUEST RESOURCE CORPORATION (the "Company), and DAVID LAWLER ("Employee").

 

	
             
 	
            1.
 	
            Agreement to Employ; Duties.
 

 

a.             Agreement to Employ.  The Company hereby employs Employee and Employee hereby accepts employment upon the terms and conditions hereinafter set forth.  Employee will serve as Chief Operating Officer of the Company.  

 

b.             Duties.  Employee agrees that so long as he is employed pursuant to this Agreement, he will: (i) to the satisfaction of the Company, devote his best efforts and his entire business time to further properly the interests of the Company; (ii) at all times be subject to the direction and control of the Board of Directors of the Company with respect to his activities on behalf of the Company; (iii) comply with all rules, orders and regulations of the Company and all statutes, regulations, interpretive rulings and other enactments to which the Company is subject; (iv) truthfully and accurately maintain and preserve such records and make all reports as the Company may require; and (v) fully account for all monies which he may from time to time have
custody over and deliver the same to the Company whenever and however directed to do so.

 

	
             
 	
            2.
 	
            Compensation.
 

 

a.             Base Salary.  For all services to be rendered by Employee, the Company shall pay Employee a salary at the rate of Two Hundred Ninety Thousand ($290,000.00) and No/100 Dollars per year, in installments of equal frequency to the Company's standard payroll practices.  Salary payments shall be subject to withholding and other applicable taxes (e.g., federal and state withholding, FICA, earnings tax, etc).

 

b.             Incentive Bonus Compensation/Stock Options.  Employee shall be entitled to participate in an incentive bonus plan or program with a maximum potential amount of up to 100% of Base Salary, as such plan or program is established annually by the Board of Directors (or the Company's Compensation Committee).  Employee’s actual bonus level will be contingent upon the Company achieving predetermined financial results and the Board’s (and/or Compensation Committee's) approval, including approval of any components based on Company or individual performance.  Employee acknowledges that actual payouts under the plan may be more or less than Employee’s target level based on the performance of the Company against plan criteria and
Employee’s performance against any individual objectives.

 

c.             Moving Expenses.  Employee shall be entitled to reimbursement of up to $75,000 in moving and/or relocation expenses to be paid upon the Company's approval (which shall 

 

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not be unreasonably withheld) upon Employee's furnishing receipts or other supporting documentation of such expenses incurred by Employee.

 

d.             Bonus Shares and Restricted Stock Grants.  Employee shall be granted 15,000 fully vested bonus shares and 90,000 restricted shares of the Company pursuant to the terms of the 2005 Omnibus Stock Award Plan (including the terms of any Award Agreement executed in connection with such Plan).  The bonus shares will be issued as soon as practicable following May 1, 2007.  The restricted shares will vest in accordance with the following schedule, if employee is employed on such date:

 

	
             
 	
            May 1, 2008
 	
            30,000 Restricted Shares
 

	
             
 	
            May 1, 2009
 	
            30,000 Restricted Shares
 

	
             
 	
            May 1, 2010
 	
            30,000 Restricted Shares
 

 

3.              Term.  Unless earlier terminated by either party as provided in Section 5 or 6 hereof, this Agreement shall commence on May 1, 2007, and shall continue for a period of three (3) years thereafter until April 30, 2010 (the “Initial Term”).  Upon the expiration of the Initial Term, this Agreement shall automatically continue in effect for successive one (1) year terms (a “Renewal Term”) unless terminated by either party by providing written Notice of Termination (as provided in Section 7) not less than one hundred twenty (120) days prior to the end of the Initial Term or any Renewal Term.  

 

4.              Employee Benefits.  Employee shall be entitled, during his employment hereunder, to receive and participate in employee benefits available to senior executives of the Company as the Board of Directors (or the Compensation Committee) of the Company determines, in its sole discretion, from time to time.

 

Employee acknowledges that the benefits described above are subject to change in the discretion of the Board of Directors (or the Compensation Committee) of the Company, and that Employee is only entitled to participate in these benefits to the extent they are made available by the Company to senior executives from time to time.

 

	
             
 	
            5.
 	
            Termination of Employment by the Employee.  
 

 

a.            Voluntary Resignation.  Employee shall have the right to terminate his employment at any time by providing no less than thirty (30) days prior written Notice of Termination to the Company as specified in section 7 herein. Employee hereby agrees to assist in the training of his replacement, if requested.

 

b.            With Good Reason.  The Employee may terminate this Agreement with “Good Reason” as provided in this Section 5(b).  Good Reason means (i) the Company’s failure to pay the Employee’s salary or annual bonus in accordance with the terms of this Agreement (unless the payment is not material and is being contested by the Company in good faith); (ii) the requirement of the Company that the Employee be based anywhere other than Oklahoma City, Oklahoma (with the understanding that substantial travel may be required for Employee's position); (iii) a substantial reduction in the Employee’s duties or responsibilities; or (iv) Employee no longer 

 

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being the Chief Operating Officer of the Company; provided, however, that the Employee will give the Company thirty days prior written Notice of Termination, as specified in section 7 herein, of the basis for claiming Good Reason exists, and the Company shall have failed to cure such breach or nonperformance during the thirty day notice period.  In such event, the Company shall pay Employee severance pay (“Severance Pay”) equal to Employee’s remaining Base Salary for the Initial Term or for any Renewal Term, as applicable.  The Severance Pay shall be paid to Employee in equal installments on the Company’s regular payroll dates, with such installments to commence six (6) months after Employee's termination of employment (at which time Employee will receive a lump sum amount equal to the monthly payments that would have been paid during such six month period); provided, however, that if
the payment of the Severance Pay meets an exemption under Internal Revenue Code § 409A ("§ 409A") concerning the timing of payment of severance compensation, then the payment of the Severance Pay will commence upon Employee's termination of employment.  In addition, Company shall pay Employee (i) his pro rata portion of any annual bonus or other compensation to which he would have been entitled for the year during which the termination occurred, such payment to be made at such time that bonuses are paid to all employees, or if later, six (6) months after Employee's termination of employment (unless an exception to § 409A applies); and (ii) Employee’s COBRA health insurance premium payments (for the same coverage that Employee had in place prior to his termination) for the duration of the COBRA continuation period, or if earlier, until the Employee becomes eligible for health insurance because of employment with a different employer.  Employee shall only be paid
Severance Pay, pro rata bonuses and COBRA health insurance premiums under this Section if he signs an agreement containing a release of claims against the Company, in a form substantially similar to that included in Exhibit A, attached hereto and incorporated herein.  Employee will cease to be an employee of the Company as of the date specified in the Notice of Termination, and he will not receive or accrue any benefits of employment after such date, except as provided herein.  Severance Pay, pro rata bonuses and COBRA health insurance premium payments shall not be paid to the Employee if Employee owns, manages, operates, joins, contracts with, or is employed by or connected in any manner with (whether as principal, partner, shareholder, member, director, officer, employee, agent or otherwise), any business which is competitive to the business engaged in by the Company.  For purposes of this Agreement, a business shall be deemed to be competitive to the business engaged in by the
Company if such business is engaged in the same or similar business  activities conducted by the Company in the same geographical area in which the Company conducts its business operations (or is actively pursuing business operations) at the time of Employee’s termination of employment.

 

c.            Employee’s Disability.  The Employee may terminate his employment hereunder if his health should become impaired to an extent that makes the continued performance of his duties hereunder hazardous to his physical or mental health or his life; provided, that the Employee shall have furnished the Company with a written statement from a qualified doctor to such effect.  In the event this Agreement is terminated as a result of the Employee's disability, (i) the Employee shall receive from the Company, in a lump-sum payment due within thirty (30) days of the effective date of termination, the sum equal to Two Hundred Ninety Thousand Dollars 00/100 ($290,00.00), and (ii) all compensation and benefits that accrued and vested
as of the date of Termination.  In order to, and to the extent necessary to, comply with Section 409A, all cash amounts due under this Section 5(c) shall be payable to 

 

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Employee in a lump-sum cash payment on the six-month anniversary of the date of Employee’s termination of employment.

	
             
 	
            6.
 	
            Termination of Employment by the Company.
 

 

a.            Without Cause.  The Company may terminate Employee's employment under this Agreement at any time without cause by giving Employee a Notice of Termination as provided under Section 7 hereof.  In such event, the Company shall pay Employee severance pay (“Severance Pay”) equal to Employee’s remaining Base Salary for the Initial Term or for any Renewal Term, as applicable, in accordance with the following payment schedule:  (i)  if Employee’s employment is terminated within two (2) years following a “change in control” (as defined below), the Severance Pay will be paid in one lump sum six (6) months following Employee’s termination of employment; (ii) in all other cases, Severance Pay shall be paid to Employee in equal
installments on the Company’s regular payroll dates, with such installments to commence six (6) months after Employee's termination of employment (at which time Employee will receive a lump sum amount equal to the monthly payments that would have been paid during such six month period); provided, however, that if the payment of the Severance Pay meets an exemption under Internal Revenue Code Section 409A concerning the timing of payment of severance compensation, then the payment of the Severance Pay will commence (or be paid, in the case of a change in control) upon Employee's termination of employment.  In addition, Company shall pay Employee (i) his pro rata portion of any annual bonus or other compensation to which he would have been entitled for the year during which the termination occurred, such payment to be made at such time that bonuses are paid to all employees, or if later, six (6) months after Employee's termination of employment (unless an exception to § 409A
applies); and (ii) Employee’s COBRA health insurance premium payments (for the same coverage that Employee had in place prior to his termination) for the duration of the COBRA continuation period, or if earlier, until the Employee becomes eligible for health insurance because of employment with a different employer.  Employee shall only be paid Severance Pay, pro rata bonuses and COBRA health insurance premium payments under this Section if he signs an agreement containing a release of claims against the Company, in a form substantially similar to that included in Exhibit A, attached hereto and incorporated herein.  Employee will cease to be an employee of the Company as of the date specified in the Notice of Termination, and he will not receive or accrue any benefits of employment after such date, except as provided herein.  Severance Pay, pro rata bonuses and COBRA health insurance premium payments shall not be paid to the Employee if Employee owns, manages, operates, joins,
contracts with, or is employed by or connected in any manner with (whether as principal, partner, shareholder, member, director, officer, employee, agent or otherwise), any business which is competitive to the business engaged in by the Company.  For purposes of this Agreement, a business shall be deemed to be competitive to the business engaged in by the Company if such business is engaged in the same or similar business  activities conducted by the Company in the same geographical area in which the Company conducts its business operations (or is actively pursuing business operations) at the time of Employee’s termination of employment.

 

For purposes of this section, a "Change in Control" shall be consistent with regulations issued under Internal Revenue Code section 409A (the "409A regulations") and shall mean the occurrence of a "Change in the Ownership of the Company," a "Change in Effective Control of the Company", or a "Change in the Ownership of a Substantial Portion of the Company's 

 

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Assets." A "Change in the Ownership of the Company” means the acquisition by any one person, or more than one person acting as a group, of the outstanding and issued common stock (“Shares”) of the Company that, together with Shares held by such person or group, constitutes more than 50 percent of the total voting power of the Shares of the Company (however, if any one person, or more than one person acting as a group, is considered to own more than 50 percent of the total voting power of the Shares of the Company, the acquisition of additional Shares by the same person or group shall not constitute a Change in the Ownership of the Company).  A “Change in Effective Control of the Company” shall occur if either (i) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such
person or persons) ownership of Shares of the Company possessing 35 percent or more of the total voting power of the Shares of the Company (however, if a person, or more than one person acting as a group owns 35% of the total fair market value or total voting power of the Shares of the Company, the acquisition of additional Shares by such person or group shall not constitute a Change in Effective Control of the Company; or (ii) a majority of members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company's board of directors prior to the date of the appointment or election.  A “Change in the Ownership of a Substantial Portion of the Company's Assets” occurs when any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons)
assets from the Company that have a total gross fair market value (“gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets) equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.  For purposes of this section, the term "acting as a group" shall have the same meaning as defined in the 409A regulations.

 

a.             With Cause  The Company may terminate Employee's employment under this Agreement at any time for cause effective immediately upon Notice of Termination.  In the event the Company terminates this Agreement for cause on the part of Employee, Employee shall receive Base Salary for the period to the date of his termination.  Employee shall not be entitled to receive Severance Pay from the Company if his employment is terminated for cause.  For purposes of this Agreement, "cause" shall be defined to include, but not be limited to, the following:  (i) any act or omission by Employee that constitutes gross negligence or willful misconduct; (ii) theft, dishonest acts or breach of fiduciary duty that materially enrich the Employee or materially damage the
Company or conviction of a felony, (iii) any conflict of interest, except those consented to in writing by the Company; (iv) any material failure by Employee to observe Company work rules, policies or procedures; (v) failure or refusal by Employee to perform his duties and responsibilities required hereunder, or to carry out reasonable instruction, to the satisfaction of the Company; (vi) any conduct that is materially detrimental to the operations, financial condition or reputation of the Company; or (vii) any material breach of this Agreement by Employee; provided, however, the occurrence of those events set forth in clauses (i), (iv), (v) or (vii), shall be deemed “Good Cause” to the extent and only to the extent that such breach or nonperformance remains uncorrected for thirty (30) days following Company’s reasonably detailed written notice to Employee of such breach or nonperformance; provided further, however, that a repeated breach after notice and cure of any
provision of clauses (i), (iv), (v) or (vii) involving the same or substantially similar actions or 

 

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conduct, shall be grounds for termination for “Good Cause” without any additional notice from the Company.

 

c.            Employee’s Disability.  If, as a result of incapacity due to physical or mental illness or injury, the Employee shall fail to render services of the character contemplated by this Agreement for three (3) consecutive months or for an aggregate period of one hundred and eighty (180) calendar days during any twelve (12) month period, then thirty (30) days after receiving written notice (which notice may occur before or after the end of such three (3) or twelve (12) month period, but which shall not be effective earlier than the last day of such three (3) or twelve (12) month period), the Company may terminate the Employee's employment hereunder provided the Employee is unable to resume his full-time duties as contemplated
by this Agreement at the conclusion of such notice period.  In the event this Agreement is terminated by the Company as a result of the Employee's disability, (i) the Employee shall receive from the Company, in a lump-sum payment due within thirty (30) days of the effective date of termination, the sum equal to Two Hundred Ninety Thousand Dollars 00/100 ($290,000.00), and (ii) all compensation and benefits that accrued and vested as of the date of termination.  In order to, and to the extent necessary to, comply with Section 409A, all cash amounts due under this Section 6(c) shall be payable to Employee in a lump-sum cash payment on the six-month anniversary of the date of Employee’s termination of employment.

7.               Notice of Termination.  Any termination of Employee's employment by the Company pursuant to Section 6 or by Employee pursuant to Section 5 shall be communicated by written Notice of Termination to the other party hereto.  Said Notice shall be deemed to have been duly given when delivered personally or by overnight delivery, sent via facsimile, or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	
             
 	
            If to the Company:
 

 

	
             
 	
            Quest Resource Corporation
 

	
             
 	
            9520 North May Avenue
 

	
             
 	
            Oklahoma City, Oklahoma  73120
 

	
             
 	
            Attention: Jerry Cash (or then current Chief Executive Officer)
 

	
             
 	
            Facsimile: (405) 488-1156
 

 

	
             
 	
            If to Employee:
 

 

	
             
 	
            David Lawler
 

	
             
 	
            9520 North May Avenue
 

	
             
 	
            Oklahoma City, Oklahoma  73120
 

	
             
 	
            Facsimile: (405) 840-9897
 

 

or at such other address as either party may designate in writing to the other.

 

8.               Company Property. Upon termination of this Agreement for any reason whatsoever, Employee shall immediately deliver to the Company any and all Company property, including, without limitation, all Confidential Information, as such Confidential Information is 

 

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defined in Section 15.  From and after termination of this Agreement, Employee shall not represent that he has any further authority to act as a representative of the Company, in any capacity.

 

9.               Intellectual Property.  Any interest in patents, patent applications, inventions, copyrights, developments and processes ("Inventions") which Employee now or hereafter during the period Employee is employed by the Company may own or develop relating to the fields in which the Company may then be engaged shall belong to the Company; and forthwith upon request of the Company, Employee shall execute all assignments and other documents and take all such other action as the Company may reasonably request in order to vest in the Company all his right, title and interest in and to the Inventions free and clear of all liens, charges and encumbrances.

 

10.            No Conflicts.  Employee represents and warrants to the Company that neither the execution nor delivery of this Agreement, nor the performance of Employee's obligations hereunder, will conflict with, or result in a breach of, any term, condition, or provision of, or constitute a default under, any obligation, contract, agreement, covenant or instrument to which Employee is a party or under which the Employee is bound, including, without limitation, the breach by Employee of a fiduciary duty to any former employers.

 

11.            Personnel Policies.  The general personnel policies of the Company (as said policies may exist from time to time) will apply to Employee with the same force and effect as to any other employee of the Company, except to the extent such general personnel policies are inconsistent with the terms and provisions of this Agreement, in which event the terms and provisions of this Agreement shall control.

 

12.            Compensation Review.  The Company will conduct periodic reviews of Employee and his performance no less frequently than annually.  While the Company currently anticipates that during such reviews, it may consider possible increases to Base Salary, both Employee and the Company hereby agree that the Company shall have no obligation to alter or adjust any compensation or benefits due to Employee pursuant to the terms of this Agreement.

 

13.            Expense Reimbursement.  Employee shall be reimbursed by the Company for the reasonable and necessary business expenses incurred by Employee in the discharge of his duties, subject to the Company's standard policies and procedures related to expense reimbursement and approval thereof.

 

14.            Conflict of Interest.  Employee shall devote his full time and attention to the business of the Company and the diligent discharge of the duties assigned to Employee throughout the term of this Agreement.  Unless consented to by the Company, Employee will not, directly or indirectly, have any business interests or investments (whether as principal, partner, shareholder, director, officer, employee, agent or otherwise) that:  (i) are other than passive investments which do not require Employee's direct personal time, attention, or services; or (ii) create any conflict of interest with the Company or with  Employee's employment by the Company.  For purposes of the foregoing, a conflict of interest shall include, but not be limited to, any direct or
indirect interest in any business or enterprise that is competitive with the Company or any corporation or business enterprise directly or indirectly controlling, controlled by or under common control with the Company.

 

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Notwithstanding the foregoing, during the period Employee is employed by the Company, Employee may own up to 1% of the outstanding equity securities of stock in any corporation which is listed upon a national stock exchange or traded in the over-the-counter market.

 

15.            Confidentiality; Restrictive Covenants.  Employee acknowledges that his employment with the Company will afford Employee an opportunity to identify the Company's business strategies and know-how, enable him to establish favorable relations with the Company's customers, business prospects and suppliers and provide him with access to other confidential, trade secret or proprietary information of the Company (collectively, the "Confidential Information") including, without limitation, business and marketing plans, customer files and lists, business prospects, sales techniques, billing files, software, source code, financial information, reports, summaries, spreadsheets, evaluations, drawings, specifications, seismic data, reserve reports, prospect
analyses, geological and geophysical data, maps, models, interpretations, and other confidential or proprietary information of the Company whether in written, graphic, electronic or any other format.  Employee further acknowledges that the Company will expend considerable amounts of time, money and other assets in the development of this Confidential Information which is essential to its business, and Employee acknowledges that his employment by the Company is conditioned on his promise not to use any Confidential Information or to divulge any Confidential Information to any person or entity not employed by the Company without the Company's prior written approval.  Employee, therefore, agrees not to use, disclose or in any manner reveal to any person, firm, company, corporation or other entity any of the Confidential Information  conveyed to him or in connection with his employment by the Company prior or subsequent to this Agreement other than for Employee to carry out his duties
under this Agreement.  Anything herein to the contrary notwithstanding, this Agreement shall be inoperative as to such portions of the Confidential Information which (i) are or become generally available to the public other than as a result of a disclosure by Employee; (ii) become available to Employee on a nonconfidential basis from a source, other than the Company or its representatives, which has represented to Employee (and which Employee has no reason to disbelieve after due inquiry) that such source is entitled to disclose it, or (iii) were known to Employee on a nonconfidential basis prior to disclosure to Employee by the Company or its representatives.

 

Employee further agrees that while he remains in the employ of the Company and for a period of twelve (12) months following termination of such employment by Employee or by the Company for cause, Employee will not directly or indirectly (whether through any person, firm, company, corporation or other entity, other than the Company), do any of the following anywhere within the geographical area in which the Company does business:

 

a.      For his own account, for any person, firm, company, corporation or other entity, other than the Company, or for any other reason, solicit business or cause agents of any person, firm, company, corporation or other entity to solicit business of a type similar to that solicited by the Company from or for any person, firm, company, corporation or other entity who was, at the effective date of the termination of his employment with the Company, or within a one (1) year period prior to such termination, a customer of the Company, as disclosed by the Company's books and records, or solicit business from any prospective customer of the Company with whom the Company has had contact within the 

 

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one (1) year period prior to such termination as disclosed by the Company's books and records;

 

b.     In any way, directly or indirectly, whether personally or through agents, other persons or otherwise, divert or take away or attempt to divert or take away any of such customers or prospective customers or any of the Company's suppliers or business prospects, or otherwise interfere with or attempt to interfere with the Company's relations with any of such customers, prospective customers, business prospects or suppliers; or

 

c.      In any other way, whether personally or through agents, other persons or otherwise, induce or attempt to induce any director, employee or agent of the Company to terminate his employment with the Company.

 

16.            Severability of Restrictive Covenants.  It is understood and agreed that the restrictions imposed by the provisions of the foregoing Section 15 and each subsection thereof are separate and severable, and it is the intent of the parties hereto that in the event the restrictions imposed by said Section or any subsection should be determined by any court of competent jurisdiction to be void for any reason whatsoever, the remaining provisions of this Agreement and the restrictions imposed by the remainder of said Section or subsection shall remain valid and binding upon the parties.  It is also agreed and understood that in the event any restriction contained in Section 15 should be considered by any court of competent jurisdiction to be unenforceable
because unreasonable either in length of time or area to which said restriction applies, it is the intent of both  parties hereto that said court reduce and reform the provisions thereof so as to apply to limits considered enforceable by said court.

 

17.            Equitable Remedies.  Recognizing that irreparable damage will result to the Company in the event of breach of any of the foregoing covenants and assurances of Section 15 by Employee, the Company shall be entitled to an injunction to be issued by any court of competent jurisdiction enjoining and restraining Employee and each and every person, firm, company, corporation or other entity acting in concert or participating with Employee from the continuation of such breach, and in addition thereto, Employee shall pay to the Company all ascertainable damages, including costs and reasonable attorneys' fees and expenses, sustained by the Company by reason of the breach of said covenants and assurances.

 

18.            Survival of Representations.  The covenants, agreements, representations and warranties contained in or made by Employee pursuant to this Agreement shall survive Employee's termination of employment, irrespective of any investigation made by or on behalf of any party.

 

19.            Waiver.  Failure of either party to demand strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition, nor shall any waiver or relinquishment by either party of any right or power hereunder at any one time or more times be deemed a waiver or relinquishment of such right or power at any other time or times.

 

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20.            Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

21.            Governing Law; Binding Effect.  This Agreement shall be governed by and construed in accordance with the laws of the State of Oklahoma and shall be binding upon the parties hereto, their heirs, executors, administrators, successors and assigns.

 

22.            Entire and Final Agreement.  This Agreement shall supersede any and all agreements of employment, oral or written (including correspondence, memoranda, term sheets, etc.), heretofore existing and contains the entire agreement of the parties with respect to the subject matter hereof.  This Agreement may not be modified orally, but only by an agreement in writing, signed by the party against whom the enforcement of any waiver, change, modification, extension or discharge is sought.

 

23.            Assignment.  Neither this Agreement nor any of the rights, obligations or interests arising hereunder may be assigned by Employee without the prior written consent of the Company.  Neither this Agreement nor any of the rights, obligations or interests arising hereunder may be assigned by the Company, without the prior written consent of the Employee, to a person other than:  (1) an affiliate of the Company; or (2) any party with which the Company merges or consolidates, or to whomever the Company may sell all or substantially of its assets; provided, however, that any such affiliate or successor shall expressly assume all of the Company's obligations and liabilities to Employee under this Agreement.

 

24.            Section Headings.  The section headings contained in this Agreement are inserted for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.

 

	
             
 	
            25.
 	
            Signature Blocks.
 

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its behalf and Employee has hereunto set his hand the day and year first above written.

 

	
            "Employee"
 	
             
 	
            "Company"
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
            QUEST RESOURCE CORPORATION
 
	
             
 	
             
 	
             
 
	
            /s/ David Lawler            4/10/07                                        
 	
             
 	
             
 
	
            David Lawler
 	
             
 	
            By:
 	
            /s/ Jerry D. Cash
 
	
             
 	
             
 	
             
 	
            Jerry D. Cash
 
	
             
 	
             
 	
            Title:
 	
            Chief Executive Officer
 

 

 

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EXHIBIT A

RELEASE AGREEMENT

 

THIS RELEASE AGREEMENT (“Release”) is entered into effective the date signed below, by and between DAVID LAWLER (“Employee”) and QUEST RESOURCE CORPORATION (“Company”).

 

WHEREAS, the Company has determined that Employee's employment with the Company should end effective ________________________  ("Termination Date"); and

 

WHEREAS, the Company and Employee desire to fully and finally resolve all issues which might relate to Employee's employment with the Company.

 

NOW THEREFORE, in consideration of the mutual promises set forth below, it is hereby agreed by and between Employee and Company as follows:

 

	
             
 	
            A.
 	
            Payment to Employee.  The Company agrees to pay Employee the sum of $________ (the "Payment") as severance pay, less all applicable withholdings for state, federal and FICA taxes.  The Payment shall be paid in one lump sum as soon as practicable [following the expiration of the seven-day revocation period set forth in paragraph G below] OR [six (6) months following the Termination Date].
 

 

	
             
 	
            B.
 	
            Employee’s Release of Liability. Employee agrees to the following general release:
 

 

(a)          Employee hereby releases, acquits and forever discharges the Company, its subsidiaries, divisions, affiliates, agents, independent contractors, shareholders, employees, directors, and officers, and all of its predecessors and successors (collectively referred to in this Release as "Released Parties") of and from any and all causes of action, suits, proceedings, claims, demands, rights, obligations, losses, injury, costs, expenses, compensation and all other damages and liabilities of any kind or nature whatsoever, whether known or unknown, suspected or unsuspected, asserted or assertable (collectively "Claims") which Employee now owns or holds, or at any time has owned or held, against the Released Parties arising out of or related to contract (express and/or implied), tort, payment of
wages, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Acts of 1866 and 1871, the Age Discrimination in Employment Act, as amended, the Family Medical Leave Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, the Americans With Disabilities Act of 1991, the Equal Pay Act of 1963, the Rehabilitation Act of 1973, and/or any other federal, state or local statute, law, ordinance, order or principle of common law, or any Claim in relation to Employee’s ownership or sale of Company stock or participation in any compensation or stock plan or any Claim relating to any other law, common or statutory, resulting from any act or omission committed or omitted prior to the date this Release is signed, and specifically including Claims arising out of or 

 

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in consequence of the employment relationship between Employee and Company, or the termination thereof.

 

(b)          Employee hereby represents, warrants and agrees that Employee has not initiated, nor will he initiate, any legal proceedings, charges, complaints or other actions in any court or administrative agency regarding the Claims released herein and that none of the Claims has been assigned, encumbered or otherwise transferred.  Employee further waives any right he may have to any benefit or other relief the Equal Employment Opportunity Commission, or similar state or local agency, might seek on his behalf, and he agrees to direct such agency to withdraw or dismiss any such action.

 

C.    Confidentiality of this Release.  Employee agrees to keep the terms, amount and fact of this Release confidential.  Employee will not disclose any information concerning this Release to anyone other than his immediate family, tax advisor and attorney, each of whom will be informed and bound by this confidentiality provision.  Employee acknowledges that revealing any information regarding the terms of his separation from employment or discussing the terms of this Release may cause the Company injury and damage and will constitute a breach of his obligations under the Release and will cause a forfeiture of his rights hereunder.

 

D.    Employee Agreement.  The parties acknowledge that Employee's obligations in Sections 15 through 17 of the Employment Agreement entered into between Company and Employee dated May 1, 2007 (the "Employment Agreement") remain in full force and effect.  This Release and Sections 15 through 17 of the Employment Agreement constitute the entire agreement between Employee and the Company.  This Release may not be modified orally, but only by an agreement in writing, signed by the party against whom the enforcement of any waiver, change, modification, extension or discharge is sought.

 

E.    Time to Review.  Employee acknowledges that he has been given the opportunity to consider and review this Release with counsel of his choice for a reasonable period of time, up to twenty-one (21) days, and that he understands his respective rights and obligations pursuant to this Release.  Employee further declares he enters into this Release freely, voluntarily and without any pressure or coercion from any person or entity, including, but not limited to, the Company or any of its representatives.

 

F.    Time to Revoke.  Employee understands that he has the right to revoke this Release within a period of seven (7) days following his signing this Release and that this Release shall not become effective or enforceable, nor shall he receive the Payment, until the seven-day revocation period has ended.

 

G.   Governing Law; Binding Effect.  This Release is made and entered into in the State of Oklahoma and shall be interpreted, enforced and governed by the laws of the State of Oklahoma, and shall be binding upon the parties hereto, their heirs, executors, administrators, successors and assigns.

 

A-2

 

H.    Non-Admission of Liability.  Employee understands and agrees that the Company denies that he has cognizable claims against it.  He further understands and agrees that neither this Release nor any action taken hereunder is to be construed as an admission by the Company of violation of any local, state, federal or common law.  In fact, the Employee understands that the Company expressly denies any such violation.

 

I.     Severability.  The invalidity or unenforceability of any provision or provisions of this Release shall not affect the validity or enforceability of any other provision of this Release, which shall remain in full force and effect.

 

IN WITNESS WHEREOF, the Company has caused this Release to be executed on its behalf to be effective the date signed below.

 

	
             
 	
             
 	
            QUEST RESOURCE CORPORATION
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
            By:
 	
             
 
	
             
 	
             
 	
            Name:
 	
             
 
	
             
 	
             
 	
            Title:
 	
             
 

 

 

I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE TERMS OF THIS RELEASE, INCLUDING THE RELEASE OF CLAIMS HEREIN, AND HAVE HAD SUFFICIENT OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL PRIOR TO EXECUTING THIS RELEASE TO THE EXTENT I DEEMED SUCH CONSULTATION NECESSARY AND I VOLUNTARILY ACCEPT AND AGREE TO THE TERMS OF THIS RELEASE, INCLUDING THE RELEASE OF CLAIMS HEREIN.

 

	
             
 	
             
 	
            EMPLOYEE
 
	
             
 	
             
 	
             
 
	
            Dated:
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            David Lawler
 
	
             
 	
             
 	
             
 	
             
 
					

            

 

 

	
             
 	
            Current Address: 
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
            Current Telephone No. 
 	
             
 

 

 

A-3<PAGE>
                                                                    Exhibit 10.4

                      MARKETING AND DISTRIBUTION AGREEMENT

     This Marketing and Distribution Agreement (the "Agreement") is entered into
as of the 18th day of May, 2006, by and between MedTrak Technologies, Inc., an
Arizona corporation ("MedTrak"), and AcuNetx, Inc., a Nevada corporation
("AcuNetx").

                                    RECITALS:
                                    ---------

     A. MedTrak markets and sells video electronystagmography ("VNG") products
listed on the attached Exhibit A (the "MedTrak VNG Products").

     B. AcuNetx manufactures various medical devices, including the MedTrak VNG
Products.

     C. AcuNetx intends to create and manufacture an alternate line of VNG
products that will be marketed and branded by AcuNetx (the "AcuNetx VNG
Products"). MedTrak VNG Products and AcuNetx VNG Products will collectively be
referred to as the "Products."

     D. AcuNetx desires that MedTrak be the exclusive company to market and sell
the MedTrak VNG Products, and MedTrak desires that AcuNetx be the sole and
exclusive manufacturer of the MedTrak VNG Products.

                                   AGREEMENT:
                                   ----------

     1. Exclusive Dealings for MedTrak VNG Products.

          1.1 AcuNetx grants to MedTrak the exclusive right to market and sell
the MedTrak VNG Products. MedTrak grants to AcuNetx the exclusive right to
manufacture the MedTrak VNG Products.

          1.2 MedTrak may market and distribute the MedTrak VNG Products itself
or through distributors or sub-distributors (collectively referred to as
"Distributors"), provided that AcuNetx approves the Distributor's contract(s)
with MedTrak, such approval(s) not to be unreasonably withheld. AcuNetx hereby
consents to the current Distributor contracts listed on Exhibit B.

          1.3 MedTrak and its Distributors may market and sell the MedTrak VNG
Products under a "private label" as they are currently labeled in Exhibit A,
including the MedTrak brand and sub-brands MobiTrak, ScottTrak and OtoTrak. No
additional or new naming or branding of MedTrak VNG products manufactured by
AcuNetx may occur.

     2. MedTrak VNG Product Improvements.

          2.1 As AcuNetx creates and develops the AcuNetx VNG Products, it will
make any improvements that are part of the AcuNetx VNG Products available to
MedTrak and its Distributors to be incorporated in the MedTrak VNG Products
under the MedTrak "private label" provisions of Section 1.3. The price and
commission structure for the improved MedTrak VNG Products will be separately
negotiated as these product improvements become available. The parties agree
that the price and commission structure will be comparable with AcuNetx products
distributed by other AcuNetx distributors.

<PAGE>

          2.2 MedTrak agrees to adhere to the AcuNetx marketing and branding
standards in compliance with applicable FDA labeling regulation and
requirements.

     3. Exclusive Manufacturer. During the term of this Agreement, MedTrak
agrees not to distribute or sell any VNG products other than those manufactured
by AcuNetx.

     4. Purchase Orders. Each sale of any MedTrak VNG Product will be initiated
by MedTrak's delivery to AcuNetx of a written purchase order specifying in
reasonable detail the type, quantity, delivery date, and shipping destination
information for the MedTrak VNG Product ordered (the "Purchase Order"). No
Purchase Order will be binding on AcuNetx until accepted in writing by AcuNetx.
If any Purchase Order is not rejected in writing and delivered to MedTrak by
AcuNetx within three business days of AcuNetx's receipt of the Purchase Order,
then Purchase Order will be deemed accepted as submitted.

     5. Delivery.

          5.1 Type of Delivery. All Products delivered will be FOB AcuNetx's
plant or other place of shipment. AcuNetx will use its best efforts to deliver
Products by the applicable delivery date to the destination specified in each
Purchase Order. All customs duties, costs, taxes, insurance premiums, and other
expensive expenses relating to such transportation and delivery will be at the
recipient's expense.

          5.2 Packaging. AcuNetx will package the product in its standard
shipping packages.

          5.3 Set Up and Compliance. MedTrak will be responsible for assisting
end- users with setting out and ensuring Product compliance with Product
specifications at the time of setup.

     6. Price, Commission. and Payment.

          6.1 Commission-based Payment to MedTrak. If AcuNetx ships MedTrak VNG
Products directly to the end user, AcuNetx will book and collect the end-user
sales price. AcuNetx will then pay MedTrak a commission (the "Commission"),
which shall be the difference between the wholesale price to MedTrak for the
MedTrak VNG Products, as provided in writing to MedTrak (the "MedTrak Wholesale
Price"), and the end-user sales price. AcuNetx shall pay the Commission to
MedTrak within three business days after AcuNetx's has been paid for the Product
from the end-user.

          6.2 Wholesale Price Payment to AcuNetx. If for any reason AcuNetx
transfers title of the MedTrak VNG Products to MedTrak, together with the
responsibilities and liabilities of such title transfer, AcuNetx will ship
Product directly to MedTrak, and MedTrak shall pay AcuNetx the wholesale price
for the Product within 15 calendar days of invoice.

                                       2
<PAGE>

          6.3 Payment to MedTrak Distributors. MedTrak will be responsible for
payment of commissions to all of its Distributors and will indemnify AcuNetx
from any MedTrak Distributor claims of non-payment.

     7. Term and Termination.

          7.1 The Term of this Agreement will be for eight years and will
automatically be renewed for an additional three year term thereafter
(Additional Terms) unless notice of termination is given in writing by either
party at least 90 days prior to the end of the Initial Term or any Additional
Term.

          7.2 If either party materially breaches in provision of this Agreement
and the breach is not cured or steps initiated to remedy the breach to the other
parties reasonable satisfaction within 30 days after receipt of notice
specifying the breach, the party not in breach may terminate this Agreement.

     8. Prior Agreement. The parties had previously signed an Exclusive
Manufacturing, Sales, Licensing and Software Ownership Agreement dated March 22,
2004, as well as an Addendum signed on October 27, 2004 (collectively referred
to as the "Prior Agreement"). The parties hereby agree to cancel and terminate
the Prior Agreement, effective as of the date of this Agreement, except for any
amounts that are owed between the parties for transactions entered into prior to
the effective date of this Agreement. This Agreement supersedes and replaces the
Prior Agreement.

     9. Confidential Information.

          9.1 AcuNetx Confidential Information. AcuNetx has developed, on its
own accord and is in possession of certain proprietary and confidential source
codes, schematics, lists of contractors, proprietary information and trade
secrets (collectively referred to as "AcuNetx Confidential Information) related
to the Products that are utilized in the manufacture of the Products. AcuNetx
has previously delivered the Confidential Information to Anker, Reed, Hymes &
Schreiber, a Law Corporation (hereafter Anker, Reed) for storage and
safekeeping.

               9.1.1 Access to AcuNetx's Confidential Information. MedTrak
          acknowledges that it and its employees will be exposed to and have
          access to the AcuNetx Confidential information during the term of this
          Agreement.

               9.1.2 MedTrak agrees to use the AcuNetx Confidential Information
          only to the extent necessary to perform its marketing and sales
          obligations under this Agreement and will not disclose, during the
          term of this Agreement, and at all times thereafter, any of the
          AcuNetx Confidential Information to any third party without the prior
          written consent of AcuNetx.

               9.1.3 MedTrak acknowledges that irreparable injury will result to
          AcuNetx in the event of a breach of this section, and in the event of
          such breach, AcuNetx will be entitled to an injunction to restrain the
          violation by MedTrak, its employees, and all persons acting for or
          with it. Injunctive relief will be in addition to any other remedies
          and damages available.

                                       3
<PAGE>

          9.2 MedTrak Confidential Information. MedTrak has developed, on its
own accord and is in possession of certain proprietary and confidential source
codes, schematics, lists of contractors, proprietary information and trade
secrets (collectively referred to as "MedTrak Confidential Information") related
to the Products that are utilized in the manufacture of the Products.

               9.2.1 Access to MedTrak's Confidential Information. AcuNetx
          acknowledges that it and its employees will be exposed to and have
          access to the MedTrak Confidential Information during the term of this
          Agreement.

               9.2.2 AcuNetx agrees to use the MedTrak Confidential Information
          only to the extent necessary to perform its development and
          manufacturing obligations under this Agreement and will not disclose
          during the term of this agreement and at all times thereafter, any of
          the MedTrak Confidential Information to any third party without the
          prior written consent of MedTrak.

               9.2.3 AcuNetx acknowledges that irreparable injury will result to
          MedTrak in the event of a breach of this section, and in the event of
          such breach MedTrak will be entitled to an injunction to restrain the
          violation by AcuNetx, its employees and all persons acting for or with
          it. Injunctive relief will be in addition to any other remedies in
          damages available.

     10. Ownership and Licenses of Software. MedTrak will be the exclusive owner
of the software, including upgrades, used in the MedTrak VNG Products (the
"Software"). All right, title, and interest, including copyright rights, of the
Software is hereby vested, and future upgrades will be vested, in MedTrak.
MedTrak hereby grants AcuNetx an exclusive license to use the Software during
the term of this Agreement.

     11. Inability of AcuNetx to Provide Products. If AcuNetx is not capable of
meeting MedTrak's sales requirements for the MedTrak VNG Products, AcuNetx will,
within 10 days, inform MedTrak of such inability to perform. Within 10 days
after so informing MedTrak, AcuNetx will direct Anker, Reed to make the AcuNetx
Confidential Information available to MedTrak so as to ensure MedTrak's ability
to continue to manufacture the MedTrak VNG Products. If the inability to provide
MedTrak VNG Products is temporary, AcuNetx may grant permission to. MedTrak to
have the Products manufactured by an alternative supplier, which supplier must
first be approved by AcuNetx. If MedTrak utilizes the AcuNetx Confidential
Information, MedTrak will compensate AcuNetx for each MedTrak VNG Product not
manufactured by AcuNetx in an amount equal to 10% of MedTrak's then current cost
to purchase the Product from AcuNetx

     12. Warranties, Support and Repairs. AcuNetx will provide each end-user of
the Products with AcuNetx's standard warranty coverage and also provide
technical support and repairs consistent with its warranty obligations. MedTrak
will not make any representation or give any warranties or guarantees to any
person with respect to any of the Products or related services, other than those
representations, warranties, or guarantees that AcuNetx has specifically
authorized.

                                       4
<PAGE>

     13. Indemnification. The parties agree that each party is solely
responsible for the performance of its duties, and each agrees to indemnify and
hold the other harmless from and against any and all claims asserted against the
other for loss or damage to property including claims for economic and business
injury, to persons or firms and all injury or death to third persons, including
all expenses incident to any of the foregoing claims, in any way arising out of
or relating to the conduct of such party's business and performance under this
Agreement. Each party further agrees to defend the other and the other's agents
and employees from and against any claim, demand, cause of action, damage, loss,
cost or expense arising from or in connection with its actions or failures to
act. Neither party may take any action that would have the effect of causing the
other to be in violation of any rules, decrees, laws or regulations.

     14. Expenses. Each party agrees to bear their own expenses in connection
with the negotiation of this Agreement, including but not limited to, attorneys'
fees, accounting fees, and other out-of-pocket expenses

     15. Press Release. Both parties agree to cooperate in preparing a press
release describing this Agreement. The press release will be submitted for
release unless legal counsel advises that for compliance purposes it must be
released sooner or later. Except as provided in this Section, neither party may
release any information to the public or the media without the consent of the
other party.

     16. Miscellaneous.

          16.1 Entire Agreement. This Agreement contains the entire agreement of
the parties regarding the subject matter and supersedes all prior agreements,
understandings and negotiations regarding the same, including the Prior
Agreement and that certain Letter of Intent dated April 20, 2006.

          16.2 Assignment. This Agreement may not be assigned by either party
without the prior written consent of the other party.

          16.3 Severability. If any provision of this Agreement is held to be
illegal or unenforceable, that provision will be limited or eliminated to the
minimum extent necessary so this Agreement will otherwise remain in full force
and effect.

          16.4 Further Assurances. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.

          16.5 Use of Party's Name. No right, express or implied, is granted by
this agreement to either party to use in any manner not expressly provided for
in this Agreement the name of the other party or any other trademark or trade
name of the other in connection with the performance of this agreement.

                                       5
<PAGE>

          16.6 Notices. All notices, demands, requests, elections or other
communications required or permitted to be given by any party to the other will
be in writing and will be (a) personally delivered; (b) sent via facsimile
transmission; or (c) deposited in the United States mail, first-class certified
postage prepaid, return receipt requested, and addressed to the parties as
follows:

                                   To AcuNetx:
                                   -----------

                      1000 S. McCaslin Boulevard, Suite 300
                            Superior, Colorado 80027
                         Attention: Terry R. Knapp, M.D.
                               (F) (303) 494-1714

                                 With a Copy to:

                             Michael J. Tauger, Esq.
                                5445 DTC Parkway
                                    Suite 520
                           Greenwood Village, CO 80111
                               (F) (303) 770-7257

                                   To MedTrak:
                                   -----------

                              10182 E. Cactus Road
                              Scottsdale, AZ 85260
                               (F) (413) 826-7905
                            Attention: Mel Shadowens

                                 With a Copy to:

                            Gallagher & Kennedy, P.A.
                            2575 East Camelback Road
                             Phoenix, Arizona 85016
                               (F) (602) 530-8500
                          Attention: Michael W. Murphy

Notices, demands, requests, elections, or other communications will, if
personally delivered, be effective upon receipt; if mailed, will be effective
upon the earlier of (a) actual receipt, (b) four days after first being
deposited in the United States mail as indicated by the postmark thereon; or (c)
if sent via facsimile, be effective upon delivery so long as the sender's
facsimile machine provides written proof of successful transmission. Notice of a
change of address must be in the manner provided for the giving of other
notices.

          16.7 Relationships of the Parties. Nothing contained in this agreement
is intended to be construed so as to constitute AcuNetx and MedTrak as partners
or joint venturers with each other. Neither party will have any express or
implied right or authority to assume or create any obligations on behalf of or
in the name of the other party or to bind the other party to any contract,
agreement or undertaking with any third party.

                                       6
<PAGE>

          16.8 Waiver and Modifications. The waiver by either party of a breach
of any provision will in no way be construed as a waiver of any subsequent
breach of such provision or the waiver of the provision itself. This Agreement
may not be changed, modified, amended or supplemented except by written
instrument signed by both parties.

          16.9 Applicable Law. This agreement will be governed by and construed
in accordance with the laws of the State of Colorado, without regard to conflict
of laws provisions. The proper venue for any proceeding at law or in equity will
be (i) Maricopa County, Arizona, if AcuNetx commences any proceeding against
MedTrak; and (ii) Boulder County, Colorado if MedTrak commensec any proceeding
against AcuNetx. The parties waive any right to object to the venue. The
prevailing party in any legal action to enforce or interpret this Agreement will
be entitled to reasonable costs and attorney's fees.

          16.10 Captions. Section captions are for convenience only and are not
to be construed to define, limit or affect the construction or interpretation of
this Agreement.

          16.11 Force Majeure. A party will not be liable for nonperformance or
delay in performance (other than of obligations regarding payment of money or
confidentiality) caused by any event reasonably beyond the control of such party
including, but not limited to wars, hostilities, revolutions, riots, civil
commotion, national emergency, strikes, lockouts, unavailability of supplies,
epidemics, fire, flood, earthquake, force of nature, explosion, embargo, or any
other act of God, or any law, proclamation, regulation, ordinance, or other act
or order of any court, government or governmental agency.

          16.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original as against any
party whose signature appears here on, and all of which will together constitute
one and the same instrument. This Agreement will become binding in one or more
counterparts hereof, individually or taken together, they are the signatures of
all the parties reflected here on as the signatories.

          16.13 No Presumption. This Agreement has been negotiated among the
parties and if there is any ambiguity, no presumption construing the Agreement
against a party may be imposed because this Agreement was prepared by counsel
for one party or the other.

     IN WITNESS WHEREOF, the parties have signed this agreement to be effective
as of the date first written above.

MEDTRAK TECHNOLOGIES, INC.,                      ACUNETX, INC.,
an Arizona corporation,                          a Nevada corporation

/s/ Mel Shadowens                                /s/ Terry R. Knapp 5/24/06
-----------------                                --------------------------
Mel Shadowens, Ph.D., Member                     Terry R. Knapp, M.D.
                                                 Chief Executive Officer

                                       7
<PAGE>

                                    EXHIBIT A

                              MEDTRAK VNG PRODUCTS

1.   MedTrak single camera 2 channel VNG system. This system includes the
     following:

Goggle Assembly single camera
9" video monitor
Inferface Cpntroller 2003 AHR
Active Head Rotation Infrared transmitter
Active Head Rotation Receiver
DC Power Supply
Computer (Tower or Laptop)
Keyboard
Mouse
Footswitch
17" Flat Screen CRT Monitor
Printer HP
Printer Cable
IF/Computer Cable
One each 48" video cable
ten each goggle pads
MedTrak VNG Operating Manual
MedTrak Software Disk
Windows XP
AC Power Center
One Atmos Air Caloric Irrigator (Bithermal)
One year warranty

2.   Mobi-Trak single camera 2 channel VNG system. This system includes the
     following:

Goggle Assembly single camera
Inferface Cpntroller 2003 AHR
Active Head Rotation Infrared transmitter
Active Head Rotation Receiver
DC Power Supply
Compute Laptop
One MobiTrak Carrying Case
Footswitch
Printer HP
Printer Cable
IF/Computer Cable
One each 48" video cable
ten each goggle pads
MobiTrak VNG Operating Manual
MobiTrak Software Disk

<PAGE>

Windows XP
AC Power Center
One Atmos Air Caloric Irrigator (Bithermal)
One year warranty

3.   ScottTrak VNG single camera 2 channel system. This system includes the
     following:

Goggle Assembly single camera
9" video monitor
Inferface Cpntroller 2003 AHR
Active Head Rotation Infrared transmitter
Active Head Rotation Receiver
DC Power Supply
Computer (Tower or Laptop)
Keyboard
Mouse
Footswitch
17" Flat Screen CRT Monitor
Printer HP
Printer Cable
IF/Computer Cable
One each 48" video cable
ten each goggle pads
ScottTrak VNG Operating Manual
ScottTrak Software Disk
Windows XP
AC Power Center
One Atmos Air Caloric Irrigator (Bithermal)
One year warranty

<PAGE>

                                    EXHIBIT B

                              DISTRIBUTOR CONTRACTS

Balance & Vestibular Systems, LLC aka InBalance, LLC
11315 Business Park Blvd
Jacksonville, Fl 32256

ScottPT
35 Dora Lane
Holmdel, NJ 07733

AmeriBalance
355 Brainards Rd
Harmony Township
Philipsburg, NJ 08865

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