Document:

exv10w9

 

Exhibit 10.9

QUOVADX, INC.

Non-Executive Management

Retention and Change in Control Plan 

			
	1.	 	PURPOSE.

The Company has adopted the Quovadx, Inc. Retention and Change in Control Plan (this
“Plan”) for the benefit of selected key employees of the Company, on the terms and
conditions described in this Plan. The purpose of this Plan is to provide a special incentive to
key employees of the Company, to help retain qualified employees, to maintain a stable work
environment and to provide economic security to eligible employees while the Company explores
various strategic alternatives. There are certain terms that are important to understand this
Plan. These terms are described in Section 12 of this Plan.

Each Participant will receive an agreement (each, an “Award Agreement”) from the Company
that states the specific amount and terms of the Retention Bonus and of the Change in Control
Payment. The Participant must execute and deliver his or her Award Agreement to the Company (by
the date set forth in the Award Agreement) to participate in this Plan. Each Award Agreement will
be in a form and will contain terms and conditions as the Plan Administrator deems appropriate
subject to this Plan.

			
	2.	 	AWARDS.

Subject to the terms and conditions of this Plan and the Participant’s Award Agreement, each
Participant will receive a Retention Bonus, and upon the occurrence
of a triggering event the
Change in Control Payment, in consideration for services rendered to the Company.

			
	3.	 	RETENTION BONUS AND CHANGE IN CONTROL PAYMENT.

Fifty percent (50%) of the Retention Bonus will vest on the First Vesting Date and the remaining
fifty percent (50%) of the Retention Bonus will vest on the Second Vesting Date; provided the
Participant is employed by the Company on the applicable vesting date except as set forth below.

In the event of a Change in Control Transaction, if a Participant’s employment is terminated by the
Company, other than for Cause, during the period commencing one (1) month prior to the execution of
an agreement the consummation of which would result in a Change in Control Transaction up to and
through the Closing Date, then (i) no later than thirty (30) days after the Closing Date that
Participant will receive their Change in Control Payment, regardless of whether or not any acquiror
in the Change in Control Transaction employs or offers to employ the Participant after the Closing
Date, (ii) any unvested portion of the Participant’s Retention Bonus will vest as of the Closing
Date and (iii) any of the Participant’s other equity awards from the Company which have not
previously vested shall become immediately vested and exercisable as of the Closing Date.

 

 

			
	4.	 	PAYMENT OF RETENTION BONUS.

To the extent vested in accordance with Section 3, the Company will pay the vested portion
of the Retention Bonus to each Participant no later than thirty (30) days after the applicable
vesting date. If there is a Change in Control Transaction, the Company will pay the remaining
portion of the Retention Bonus which has vested in accordance with Section 3 no later than
thirty (30) days after the Closing Date.

In the event a Participant is terminated after a vesting event but prior to payment of any vested
portion of the Retention Bonus, the Company will pay the vested portion of the Retention Bonus on
the Participant’s termination date.

			
	5.	 	CONFIDENTIALITY AND NON-SOLICITATION.

No Participant will receive or be eligible to receive any portion of his or her Retention Bonus or
the Change in Control Payment, not previously paid, if the Participant violates the confidentiality
or the non-solicitation restrictions set forth in this Section 5 or in the Participant’s
Award Agreement. For purposes of this Section 5, references to the “Company and its
affiliates” will also include any successors to the Company’s business.

During each Participant’s employment with the Company and thereafter, he or she will not disclose
to any Person (except as required by applicable law or for the proper performance of his duties and
responsibilities to the Company and its affiliates), or use for his or her own benefit or gain, any
Confidential Information obtained by the Participant incident to his or her employment or other
association with the Company or any of its affiliates. The term “Confidential Information” will
not include information that: (i) becomes subsequently available to the Participant on a
non-confidential basis from a source not known or reasonably suspected by Participant to be bound
by a confidentiality agreement or secrecy obligation owed to the Company; (ii) is or becomes
generally available to the public other than as a result of a breach of a confidentiality agreement
or (iii) is independently developed by the Participant without use, directly or indirectly, of
Confidential Information. If only a portion of the Confidential Information falls under one of the
previous exceptions, then only that portion will not be deemed Confidential Information. In the
event that the Participant is requested or required, under any applicable court order,
administrative order, statute, regulation or other official order by any government or any agency
or department thereof, to disclose any Confidential Information, the Participant will (a) provide
the Company with prompt written notice of any such request or requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with the provisions of
this Agreement and (b) reasonably cooperate with the Company to obtain such protective order or
other remedy. In the event such protective order or other remedy is not obtained and the Company
fails to waive compliance with the relevant provisions of this Agreement, the Participant agrees to
(1) furnish only that portion of the Confidential Information that he or she is advised by his or
her legal counsel in writing that he or she is legally required to disclose, (2) upon the Company’s
request and expense, use his or her reasonable efforts to obtain assurances that confidential
treatment will be accorded to such information and (3) give the Company

					
	 	 	 	 	 
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prior written notice of the Confidential Information to be disclosed as far in advance of his or her
disclosure as is reasonably practicable.

To the extent set forth in a Participant’s Award Agreement, each Participant will not, without the
Company’s prior written agreement, during his or her employment with the Company or one of its
affiliates and for a period set forth in his or her Award Agreement following termination of his or
her employment, directly or indirectly, whether as an employee, owner, sole proprietor, partner,
director, member, consultant, agent, founder, co-venturer or otherwise: (1) cause or attempt to
cause the termination of, or hire or attempt to hire, or interfere or
attempt to interfere with, the relationship between the
Company and any employee, agent, or contractor of the Company or (2)
solicit business from any customer or client served by the Company during the Participant’s
employment relationship with the Company or interfere or attempt to interfere with any transaction,
agreement, or business relationship in which the Company or any affiliate was involved at any point
during the Participant’s employment relationship.

			
	6.	 	ENFORCEMENT OF CONFIDENTIALITY AND NON-SOLICITATION PROVISIONS.

The Company, in addition to any other remedies available to it, will be entitled to preliminary and
permanent injunctive relief against any breach or threatened breach by any Participant of any of
the covenants contained in Section 5 and in the Participant’s Award Agreement without
having to post bond and shall be entitled to an award of its attorneys’ fees and costs if the
Participant is adjudged by a court of competent jurisdiction to have breached any of the
restrictive covenants in Section 5 or in the Participant’s Award Agreement.

In the event that any provision of Section 5 or in the Participant’s Award Agreement shall
be determined by any court of competent jurisdiction to be invalid or unenforceable, such provision
shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law and
the remainder of this Section 5 or the Participant’s Award Agreement will remain fully
enforceable.

With regard to a Participant: if, during the period commencing at termination of employment with
the Company and its affiliates and ending on termination of the non-solicitation restrictions set
forth in the Award Agreement, the Company determines in good faith that the Participant has
violated any of the confidentiality or non-solicitation provisions in Section 5 or in the
Participant’s Award Agreement, all rights to future payments and benefits under Sections 2,
3 and 4 and in the Participant’s Award Agreement shall be immediately forfeited.

			
	7.	 	PLAN ADMINISTRATION.

The Plan Administrator will administer, interpret and make all other determinations necessary or
advisable for the administration of this Plan, subject to all of the provisions of this Plan and
subject to the limitations set by the CCB. The Plan Administrator will identify Participants and
award Retention Bonuses and Change in Control Payments

					
	 	 	 	 	 
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subject to any limitations set by the CCB. All determinations made by the Plan Administrator in
accordance with this Section 7 will be binding on the Company and all Participants.

			
	8.	 	PLAN MODIFICATION OR TERMINATION.

The Plan Administrator may terminate this Plan at any time; provided, however, that (i) during the
one (1) month period prior to the execution of an agreement the consummation of which would result
in a Change in Control Transaction, (ii) during the Pendency of a Transaction and (iii) following a
Change in Control, the Plan Administrator may not terminate or amend this Plan in any manner that
may be adverse to the interests of any Participant. For the avoidance of doubt, any amendment to
this Plan or any action by the Plan Administrator will be considered adverse to the interests of a
Participant if it (a) causes a Participant to no longer be a participant in this Plan or to
decrease the benefits for which a Participant is eligible or (b) is in violation of the first
sentence of this Section 8. Any action of the Company in amending or terminating the Plan
will be taken in a non-fiduciary capacity.

			
	9.	 	NO GUARANTEE OF EMPLOYMENT.

This Plan does not, and will not be construed to provide, any assurance of any Participant’s
continuing employment with the Company, its affiliates or successors. Unless otherwise provided in
an employment agreement between the Company and a Participant, each Participant acknowledges that
the Participant is an employee at will and either the Company or the employee can terminate the
employment relationship with or without notice, for any reason or for no reason at all. Each
Participant acknowledges that he or she remains subject to the Company’s Code of Business Conduct
and Ethics.

			
	10.	 	TAX.

The Company shall be entitled to withhold from amounts to be paid to a Participant any federal,
state or local withholding or other taxes which it is from time to time required to withhold.

			
	11.	 	ASSIGNMENT; SUCCESSORS AND ASSIGNS.

The Company, its successors and assigns may in their sole discretion assign this Plan and/or any
Award Agreement to any Person, with or without any Participant’s consent. This Plan thereafter
shall bind and obligate such successor and assigns to the liabilities and obligations hereunder,
and inure to the benefit of, the Company’s successor or assign(s).

No Participant may assign any right or interest under this Plan or his or her Award Agreement or
any right or obligation arising under the Award Agreement.

			
	12.	 	IMPORTANT TERMS.

To help the Participants understand this Plan, it is important to know the following terms:

					
	 	 	 	 	 
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Cause — means a termination by the Company because of any one of the following events: (i) the
Participant’s misconduct, fraud, dishonesty or malfeasance that results in material injury to the
Company; (ii) the Participant’s willful or intentional failure to (a) perform his or her duties,
(b) follow the reasonable and legal direction of the Company or (c) follow the policies, procedures
and rules of the Company, including but not limited to the Company’s Code of Business Conduct and
Ethics. For any such failure listed in this sub-section (ii), the Company shall first give the
Participant written notice setting forth with specificity the reasons that the Company believes the
Participant is failing and fifteen (15) days to cure such failure or (iii) the Participant’s
conviction of, or plea of nolo contendre to, a felony.

Compensation Committee of the Board (CCB) — is the committee appointed by the Board of Directors
of the Company to administer compensation plans of the Company.

Change in Control — has the meaning ascribed to such term in the Stock Plan.

Change in Control Payment — shall consist of a cash payment, the total amount as set forth in each
Participant’s Award Agreement, which is subject to the terms and conditions set forth in this Plan
and in the Participant’s Award Agreement.

Change in Control Transaction — means the consummation of any of the following events prior to
March 2, 2008: (i) the occurrence of a Change in Control, (ii) for Participants assigned to a
specific division of the Company, the closing of a sale of such division or (iii) for Participants
assigned to corporate headquarters, the closing of a sale of a specific division in the event such
Participant’s employment is terminated in connection therewith.

Closing Date — the date on which a Change in Control Transaction occurs.

Code —  means the Internal Revenue Code of 1986, as amended.

Company — Quovadx, Inc., a Delaware corporation.

Confidential Information — any and all information of the Company and its affiliates that is not
generally known by others with whom they compete or do business, or with whom they plan to compete
or do business and any and all information, not publicly known, which, if disclosed by the Company
or its affiliates would assist in competition against them. Confidential Information includes
without limitation such information relating to (i) the trade secret, development, research,
testing, manufacturing, marketing and financial activities of the Company and its affiliates, (ii)
all products planned, researched, developed, tested, manufactured, sold, licensed, leased or
otherwise distributed or put into use by the Company or any of its affiliates, together with all
services provided or planned by the Company or any of its affiliates, during the Participant’s
employment, (iii) the costs, sources of supply, financial performance and strategic plans of the
Company and its affiliates, (iv) the identity and special needs of the customers of the Company and
its affiliates and (v) the people and organizations with whom the Company and its affiliates have
business relationships and those relationships. Confidential Information also includes comparable
information that the Company or any of its affiliates have received belonging to others or which
was received by the Company or any of its affiliates with any understanding that it would not be
disclosed.

					
	 	 	 	 	 
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First Vesting Date — May 31, 2007.

Participant —  means any full-time employee of the Company or any subsidiary thereof who is
designated by the Plan Administrator.

Pendency of a Transaction —  the period commencing upon the execution of an agreement the
consummation of which would result in a Change in Control Transaction and ending on the earlier to
occur of (1) the Closing Date or (2) the termination of such an agreement.

Person —an individual, a corporation, an association, a partnership, an estate, a trust and any
other entity or organization, other than the Company or any of its affiliates.

Plan Administrator —  means the Company’s Chief Executive Officer or his designee.

Retention Bonus — shall consist of a cash payment, the total potential amount as set forth in each
Participant’s Award Agreement, which is subject to vesting, payment and other terms and conditions
set forth in this Plan and in the Participant’s Award Agreement.

Retention Period — means the eighteen (18) month period commencing August 31, 2006.

Second Vesting Date — means March 2, 2008.

Stock Plan — the Quovadx, Inc. 2006 Equity Incentive Plan.

			
	13.	 	CLAIMS, INQUIRIES, APPEALS.

13.1 Applications for Benefits and Inquiries. Any application for benefits, inquiries
about this Plan or inquiries about present or future rights under this Plan must be submitted to
the Plan Administrator in writing, as follows:

Plan Administrator

c/o Quovadx, Inc.

7600 E. Orchard Road, Suite 300-S

Greenwood Village, CO 80111

13.2 Denial of Claims. In the event that any application for benefits is denied in whole
or in part, the Plan Administrator must notify the applicant, in writing, of the denial of the
application, and of the applicant’s right to review the denial. The written notice of denial will
be set forth in a manner designed to be understood by the applicant, and will include specific
reasons for the denial, specific references to the Plan provision upon which the denial is based, a
description of any information or material that the Plan Administrator needs to complete the review
and an explanation of the Plan’s review procedure.

     This written notice will be given to the employee within ninety (90) days after the Plan
Administrator receives the application, unless special circumstances require an extension of time,
in which case, the Plan Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required,

					
	 	 	 	 	 
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written notice of the extension will be furnished to the applicant before the end of the initial
ninety (90)-day period.

     This notice of extension will describe the special circumstances necessitating the additional
time and the date by which the Plan Administrator is to render its decision on the application. If
written notice of denial of the application for benefits is not furnished within the specified
time, the application shall be deemed to be denied. The applicant will then be permitted to appeal
the denial in accordance with the review procedure described below.

13.3 Request for a Review. Any person (or that person’s authorized representative) for
whom an application for benefits is denied (or deemed denied), in whole or in part, may appeal the
denial by submitting a request for a review to the Plan Administrator within sixty (60) days after
the application is denied (or deemed denied). The Plan Administrator will give the applicant (or
the applicant’s representative) an opportunity to review pertinent documents in preparing a request
for a review and submit written comments, documents, records and other information relating to the
claim. A request for a review shall be in writing and shall be addressed to:

Plan Administrator

c/o Quovadx, Inc.

7600 E. Orchard Road, Suite 300-S

Greenwood Village, CO 80111

     A request for review must set forth all of the grounds on which it is based, all facts in
support of the request and any other matters that the applicant feels are pertinent. The Plan
Administrator may require the applicant to submit additional facts, documents or other material as
the Plan Administrator may find necessary or appropriate in making its review.

13.4 Decision on Review. The Plan Administrator will act on each request for review within
sixty (60) days after receipt of the request, unless special circumstances require an extension of
time (not to exceed an additional sixty (60) days), for processing the request for a review. If an
extension for review is required, written notice of the extension will be furnished to the
applicant within the initial sixty (60)-day period. The Plan Administrator will give prompt,
written notice of the Plan Administrator’s decision to the applicant. In the event that the Plan
Administrator confirms the denial of the application for benefits in whole or in part, the notice
will outline, in a manner calculated to be understood by the applicant, the specific Plan
provisions upon which the decision is based. If written notice of the Plan Administrator’s
decision is not given to the applicant within the time prescribed in this Section 13.4 the
application will be deemed denied on review.

13.5 Rules and Procedures. The Plan Administrator may establish rules and procedures,
consistent with the Plan and with Employee Retirement Income Security Act of 1974, as amended, as
necessary and appropriate in carrying out his or her responsibilities in reviewing benefit claims.
The Plan Administrator may require an applicant who wishes to

					
	 	 	 	 	 
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submit additional information in connection with an appeal from the denial (or deemed denial) of
benefits to do so at the applicant’s own expense.

13.6 Exhaustion of Remedies. No legal action for benefits under the Plan may be brought
until the claimant (1) has submitted a written application for benefits in accordance with the
procedures described by Section 13.1 above, (2) has been notified by the Plan Administrator
that the application is denied (or the application is deemed denied due to the Plan Administrator’s
failure to act on it within the established time period), (3) has filed a written request for a
review of the application in accordance with the appeal procedure described in Section 13.3
above and (4) has been notified in writing that the Plan Administrator has denied the appeal (or
the appeal is deemed to be denied due to the Plan Administrator’s failure to take any action on the
claim within the time prescribed by Section 13.4 above).

			
	14.	 	MISCELLANEOUS.

Subject to the specific provisions of Section 5 concerning the non-solicitations, if any
other provision of this Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provision had not been included.

The headings and captions in this Plan are provided for reference and convenience only, shall not
be considered part of this Plan, and shall not be employed in the construction of this Plan.

Any notice or other communication required or permitted pursuant to the terms hereof shall have
been duly given when delivered or mailed by United States Mail, first class, postage prepaid,
addressed to the intended recipient at his, her or its last known address.

This Plan shall be construed and enforced according to the laws of the State of Colorado to the
extent not preempted by federal law, which shall otherwise control.

Any questions about this Plan or questions about rights under this Plan must be submitted to the
Company’s Vice President of Human Resources in writing, as follows:

Karen Wilcox

c/o Quovadx, Inc.

7600 E. Orchard Road, Suite 300S

Greenwood Village, CO 80111

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EXHIBIT 10.1

EMPLOYMENT AGREEMENT

          This Employment Agreement (the “Agreement”) is entered into as of this 29th day of June, 2006,
by and between American Oil & Gas, Inc., a Nevada corporation (the “Company”), and Joseph
B. Feiten (“Employee”) to be effective as of June 29, 2006 (the “Effective Date”).
Employee and Company are sometimes referred to individually as a “Party” and collectively
as the “Parties.”

     In consideration of the mutual covenants, promises and agreements herein contained, the
Company and Employee hereby covenant, promise and agree to and with each other as follows:

     1. Employment. The Company shall employ Employee and Employee shall perform services
for and on behalf of the Company upon the terms and conditions set forth in this Agreement.

     2. Positions and Duties of Employment. Employee shall be required to devote his full
energy, skill and best efforts as required to the furtherance of his duties with the Company as the
Company’s Chief Financial Officer.

          Employee understands that his employment by the Company involves a high degree of trust and
confidence, that he is employed for the purpose of furthering the Company’s reputation and
improving the Company’s operations and profitability, and that in executing this Agreement he
undertakes the obligations set forth herein to accomplish such objectives. Employee agrees that he
shall serve the Company fully, diligently, competently and to the best of his ability. Employee
fully understands his right to discuss this Agreement with his attorney, that he has availed
himself of this right to the extent that he desires, that he has carefully read and fully
understands this entire Agreement, and that he is voluntarily entering into this Agreement.

     3. Duties.

          3.1 Employee shall serve as Chief Financial Officer of the Company and in that capacity shall
work with the Company to pursue the Company’s plans as directed by the Board. Employee shall have
the responsibilities, duties, obligations, rights, benefits and requisite authority as is customary
for the position of Chief Financial Officer and as may be determined by the Board.

          3.2 During the term of this Agreement, Employee shall devote substantially all of Employee’s
business time, attention, knowledge and skills solely to the business and interests of the Company
and to the performance of Employee’s duties under this Agreement. Without limiting the foregoing,
Employee shall perform services on behalf of the Company for 40 hours per week, and Employee shall
be available at the reasonable request of the Company at other times, including weekends and
holidays, to meet the financing and financial reporting requirements of the Company. The
foregoing notwithstanding, Employee will be vacationing with his wife on an unpaid leave of absence
from Saturday, August 20, 2006 through Sunday, September 24, 2006.

          3.3 During the term of this Agreement, Employee shall office in Denver, Colorado or upon
authorization from the Board, a suburb of Denver.

 

 

     4. Term. Unless terminated earlier as provided for in this Agreement, the term of
this Agreement shall commence on the Effective Date and end on the fifth anniversary of the
Effective Date (the “Term”). If the employment relationship is terminated by either Party,
Employee agrees to cooperate with the Company and with the Company’s new management with respect to
the transition of the new management in the operations previously performed by Employee. Upon
Employee’s termination, Employee agrees to return to the Company all non-public Company documents
(and all copies thereof), any other Company property in Employee’s possession or control, and any
materials of any kind that contain or embody any proprietary or confidential material of the
Company. The foregoing notwithstanding, the Employee may retain personal copies of his employment,
performance and benefit records, such as this Agreement.

     5. Compensation. Employee shall receive the following as compensation:

          (a) A salary at the annual rate of $144,000, subject to possible increases from time to time
in the discretion of the Board, or a committee selected by the Board, payable in accordance with
the Company’s customary payroll practices.

          (b) At the discretion of the Board, or a committee selected by the Board, performance-based
bonus(es).

          (c) Employee shall be entitled to participate in the Company’s 2004 Stock Option Plan, and
hereby is awarded the right and option to purchase 250,000 shares of Common Stock thereunder (the
“Options”). Each of the Options shall be exercisable at the price equal to the price per share of
the last sale transaction recorded on the American Stock Exchange on the Effective Date of this
Agreement. 50,000 of the Options shall be immediately exercisable, and 40,000 of the Options shall
become exercisable on June 29, of each of 2007, 2008, 2009, 2010, and 2011. The terms and
conditions of the Options shall be documented by, and are subject to, a Stock Option Agreement
between the Company and the Employee to be executed at the time of execution of this Agreement.

          (d) Company shall include Employee, if otherwise eligible, in any profit sharing plan,
executive stock option plan, pension plan, retirement plan and (except for medical, dental and/or
hospitalization plans) any and all other benefit plans, which may be placed in effect by the
Company for the benefit of the Company’s employees during the Term. The Employee has represented
that he will not require medical, dental and/or hospitalization plan coverage for he and his family
until September 1, 2007. Effective September 1, 2007, the Company shall provide Employee with all
or at least a portion of Employee’s family medical, dental and hospitalization insurance, which
shall not be less than that afforded to the Company’s other employees, nothing in this Agreement
shall limit (i) Company’s ability to exercise the discretion provided to it under any such benefit
plan, or (ii) the Company’s discretion to adopt, not adopt, amend or terminate any such benefit
plan at any time.

          (e) The Company shall provide Employee with three weeks vacation leave per each year of
Employee’s employment and with sick leave consistent with Company plans and policies in effect for
Employees from time to time.

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          (f) Any payments which the Company shall make to Employee pursuant to this Agreement shall be
reduced by standard withholding and other applicable payroll deductions, including but not limited
to federal, state or local income or other taxes, Social Security and Medicare Taxes, State
Unemployment Insurance, State Disability Insurance, and the like.

     (g) During the term of his employment, Employee shall be reimbursed for reasonable expenses
that are authorized by the Company and that are incurred by Employee for the benefit of the Company
in accordance with the standard reimbursement practices of the Company. Reasonable expenses
authorized by the Company include, but are not limited to, the renewal of employee’s CPA license
and his dues as a member of the American Institute of Certified Public Accountants, the Colorado
Society of CPAs, and COPAS — Colorado. Any direct payment or reimbursement of expenses shall be
made only upon presentation of an itemized accounting conforming in form and content to standards
prescribed by the Internal Revenue Service relative to the substantiation of the deductibility of
business expenses.

          6. Confidentiality. Employee hereby warrants, covenants and agrees that, Employee may
disclose confidential information, including but not limited to (a) information, memoranda, plans
or other documents concerning Company’s business or development plans, customers or suppliers, (b)
Company’s development, or sales and marketing methods or techniques, or (c) Company’s trade secrets
and other “know-how” or information not of a public nature, regardless of how such information came
to the custody of Employee, only when Employee believes such disclosure to be in the best interest
of the Company and never contrary to the specific written instruction of the Board. For purposes
of this Agreement, such information shall include, but not be limited to, information, including a
formula, pattern, compilation, program, device, method, technique or process, that (i) derives
independent economic value, present or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic value from its
disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy. The warranty, covenant and agreement set forth in this paragraph shall
not expire, shall survive this Agreement, and shall be binding upon Employee without regard to the
passage of time or other events.

     7. Non-Compete.

          (a) Employee acknowledges and recognizes the highly competitive nature of the Company’s
business and that Employee’s duties hereunder justify restricting Employee’s further employment.
The Employee agrees that so long as the Employee is employed by the Company, Employee, except when
acting at the request of the Company on behalf of or for the benefit of the Company, (i) will not
induce customers, agents or other sources of distribution of the Company’s business under contract,
doing business with the Company, or in negotiations to do business with the Company to terminate,
reduce, alter or divert business with or from the Company, (ii) will not, directly or indirectly,
solicit or induce, or enter into any discussions that would have the effect of soliciting or
inducing, any individual that was, within ninety days prior to the termination of this Agreement,
an employee of Company or any of Company’s affiliates to leave the Company or such affiliate of the
Company, (iii) will not, directly or indirectly, employ any individual that was, within ninety days
prior to the termination of this Agreement, an employee of either the Company or an affiliate of
the Company, and (iv) shall not, directly or

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indirectly, either as a principal, agent, employee, employer, consultant, partner, member or
manager of a limited liability company, shareholder of a company that does not have securities
registered under the Securities Exchange Act of 1934, as amended (the “1934 Act”), or
shareholder in excess of one percent of a company that has securities registered under the 1934
Act, corporate officer or director, or in any other individual or representative capacity, engage
or otherwise participate in any manner or fashion in any business that is in competition in any
manner whatsoever with the business activities of Company. Employee further covenants and agrees
that the restrictive covenant set forth in this paragraph is reasonable as to duration, terms, and
geographical area and that the same protects the legitimate interests of Company, imposes no undue
hardship on Employee, and is not injurious to the public. Ownership by Employee, for investment
purposes only, of less than one percent of any class of securities of a corporation if said
securities are listed on a national securities exchange or registered under the 1934 Act shall not
constitute a breach of the covenant set forth under (iv) above. Occasional consulting (with
regards to Tipperary Corporation) by Employee, as the former CFO of Tipperary Corporation, when
provided to Tipperary Corporation or its affiliates shall not constitute a breach of the covenant
set forth under (iv) above. It is the desire and intent of the Parties that the provisions of this
paragraph be enforced to the fullest extent permissible under the laws and public policies applied
in each jurisdiction in which enforcement is sought. Accordingly, if any particular portion of
this paragraph shall be adjudicated to be invalid or unenforceable, this paragraph shall be deemed
amended to apply in the broadest allowable manner and to delete therefrom the portion adjudicated
to be invalid or unenforceable, such amendment and deletion to apply only with respect to the
operation of paragraph in the particular jurisdiction in which that adjudication is made.

          (b) In the event that Employee’s employment with Company is terminated pursuant to Section
8(a) below, the provisions in Section 7(a) above shall continue to apply for a period of 12 months
following the date of termination, however, such provisions will be limited geographically to any
areas that Company is currently developing, or any areas that Company has, during the 12 month
period prior to the date of termination, analyzed to determine if development and exploration is
feasible in such area. Company shall, no later than thirty days after the termination of
Employee’s employment pursuant to Section 8(a) below, provide Employee with a list of areas to
which Section 7(a) is limited.

     8. Termination.

          (a) In the event that Employee’s employment with the Company is terminated for Cause, by
reason of Employee’s death or disability, or due to Employee’s resignation or voluntary
termination, then all compensation and benefits will cease as of the effective date of such
termination, and Employee shall receive no severance benefits, or any other compensation; provided
that Employee, or his estate, shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination.

               (i) For purposes of this Agreement, “Cause” shall mean that the Board, acting in good faith
based upon the information then known to the Company, determines that Employee has engaged in or
committed any of the following: willful misconduct, gross negligence, theft, fraud, or other
illegal conduct; refusal or unwillingness to perform Employee’s

4

 

duties; performance by Employee of Employee’s duties determined by the Board to be inadequate
in a material respect; breach of any applicable non-competition, confidentiality or other
proprietary information or inventions agreement between Employee and the Company; inappropriate
conflict of interest; insubordination; failure to follow the directions of the Board or any
committee thereof; or any other material breach of this Agreement. Indictment or conviction of any
felony, or any entry of a plea of nolo contendre in a felony proceeding, under the laws of the
United States or any State shall also be considered “Cause” hereunder.

          (b) In the event that the Board determines, in its sole discretion, that it is in the best
interests of the Company to terminate the Employee’s employment with the Company, and the Board
does not desire to base such termination on the provisions of Section 8(a) regardless of whether it
is unable or does not desire to do so, then all compensation and benefits will cease as of three
months after the effective date of such termination, and Employee shall receive no severance
benefits, or any other compensation; provided that Employee shall be entitled to receive all
compensation earned and all benefits and reimbursements due through the date which is three months
after the effective date of termination.

          (c) Employee agrees that the payments contemplated by this Agreement shall constitute the
exclusive and sole remedy for any termination of employment, and Employee covenants not to assert
or pursue any other remedies, at law or in equity, with respect to any termination of employment.

          (d) Any party terminating this Agreement shall give prompt written notice (“Notice of
Termination”) to the other party hereto advising such other party of the termination of this
Agreement stating in reasonable detail the basis for such termination.

     9. Remedies. If there is a breach or threatened breach of any provision of Section 6
or Section 7 of this Agreement, the Company will suffer irreparable harm and shall be entitled to
an injunction restraining Employee from such breach. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies for such breach or threatened breach.

     10. Severability. It is the clear intention of the Parties to this Agreement that no
term, provision or clause of this Agreement shall be deemed to be invalid, illegal or unenforceable
in any respect, unless such term, provision or clause cannot be otherwise construed, interpreted,
or modified to give effect to the intent of the Parties and to be valid, legal or enforceable. The
Parties specifically charge the trier of fact to give effect to the intent of the Parties, even if
in doing so, information of a specific provision of this Agreement is required consistent with the
foregoing stated intent. In the event that such a term, provision, or clause cannot be so
construed, interpreted or modified, the validity, legality and enforceability of the remaining
provisions contained herein and other application(s) thereof shall not in any way be affected or
impaired thereby and shall remain in full force and effect.

     11. Waiver of Breach. The waiver by the Company or Employee of the breach of any
provision of this Agreement by the other Party shall not operate or be construed as a waiver of any
subsequent breach by that Party.

5

 

     12. Entire Agreement. This document contains the entire agreement between the Parties
and supersedes all prior oral or written agreements, if any, concerning the subject matter hereof
or otherwise concerning Employee’s employment by the Company. This Agreement may not be changed
orally, but only by agreement in writing signed by the Parties.

     13. Governing Law. This Agreement, its validity, interpretation and enforcement,
shall be governed by the laws of the State of Colorado, excluding conflict of laws principles.
Employee hereby expressly consents to personal jurisdiction in the state and federal courts located
in Denver County, Colorado for any lawsuit filed there against him by the Company arising from or
relating to this Agreement.

     14. Notices. Any notice pursuant to this Agreement shall be validly given or served
if that notice is made in writing and delivered personally or sent by certified mail or registered,
return receipt requested, postage prepaid, to the following addresses:

	 	 	 
	If to Company:

	 	American Oil & Gas, Inc.
	 

	 	1050 17th Street, Suite 2400
	 

	 	Denver, CO 80265
	 

	 	Attention: Andy Calerich
	 
	 	 
	If to Employee:

	 	To the address for Employee set forth below his signature.

          All notices so given shall be deemed effective upon personal delivery or, if sent by certified
or registered mail, five business days after date of mailing. Either party, by notice so given,
may change the address to which his or its future notices shall be sent.

     15. Assignment and Binding Effect. This Agreement shall be binding upon Employee and
the Company and shall benefit the Company and its successors and assigns. This Agreement shall not
be assignable by Employee.

     16. Headings. The headings in this Agreement are for convenience only; they form no
part of this Agreement and shall not affect its interpretation.

     17. Construction. Employee represents he has (a) read and completely understands this
Agreement and (b) had an opportunity to consult with any legal and other advisers as he has desired
in connection with this Agreement. This Agreement shall not be construed against any one of the
Parties.

* * * * * *

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     IN WITNESS WHEREOF, the parties have executed this Agreement to be effective on the day and
year first above written.

	 	 	 
	EMPLOYEE

	 	AMERICAN OIL & GAS, INC.
	 
	 	 
	/s/ Joseph B. Feiten

	 	/s/ Andrew P. Calerich
	 

	 	 
	Joseph B. Feiten, Individually

	 	Name: Andrew P. Calerich
	3553 W. 101 Place

	 	Title: President and Director
	Westminster, CO 80031
	 	 

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