EXHIBIT 10.4
As part of the incentive for signing this Agreement, the Company hereby grantsthe Executive Team the following warrants (the “Warrants”), with the following primaryterms and conditions, plus such other terms and conditions as may be included in theWarrant, which shall be mutually acceptable.
a)Each Warrant shall entitle the owner to purchase one share of common stock of theCompany. The warrants will contain price protection should shares be used for anacquisition at a price lower than the conversion price in force. The anti dilution provisionwill not apply to financings done below the strike price.
b)Executive Team is hereby granted three Warrant Certificates as follows:
Certificate #1 for 10,000,000 Warrants with a strike price of $.025 per share must beexercised within one year of the date Executive Team begins collecting salaries from theCompany,
Certificate # 2 for 10,000,000 Warrants with a strike price of $.04 per share and a Term of5 years from the vesting date,
Certificate #3 for 10,000,000 Warrants with a strike price of $.055 per share and a Term of5 years from the vesting date.
Certificate #1 shall vest immediately upon signing this Agreement. Certificate #2 shall vest.
upon execution of Certificate #1.
Certificate #3 shall vest upon execution of Certificate #1.
All Warrants may vest earlier per the “Early Vesting Criteria” contained herein. Executive Team shall be entitled to divide each certificate into smaller unit sizes to reflect ownershipinterest consistent with the Executive team allocation or individual estate planningactivities. Individual executives shall be permitted to change the names on such Warrants ifhe deems it desirable to do so.
c)All Warrants shall vest earlier than the time criteria listed in b)above based upon the following “Early Vesting Criteria”,
i) All unvested Warrants shall automatically vest when the Company hasrevenue of $12,500,000 total for any two consecutive quarters and the Company records a pre-tax net profit for the two quarters.
ii) All unvested Warrants shall vest when the Executive “exercises” the Warrant by converting the Warrant from a warrant to a share of common stock as specified in the warrant document The Company shall cooperatewith Executive in exercising any Warrants when, Executive gives noticeof intent to exercise.
iii) A Change of Control
iv) Termination of employment for any reason other than “for cause” or resignation.
d)The Warrants and the underlying shares shall be registered in the first registration statement which the Company files, provided legalcounsel for the Company determines that said Warrants and shares can belegally included.
e)Executive compensation -Executive Team hereby agrees to waive any salary from theCompany for a period of 6 months from the date of this Agreement.
f)Board of Directors - Immediately upon execution of this Agreement Messrs Silvey andYoung shall resign from the Company’s Board of Directors. They shall be replaced by dintColdren (new Chairman and CEO) and Alan Massara (new Director and President).
| Agreed: | ||
| /s/ Mike Pruitt | Date | |
| Mike Pruitt | 12-14-10 | |
| North American Energy Resources, Inc | ||
| /s/ Clint Coldren | Date | |
| Clint Coldren | 12/14/10 | |
| /s/ Alan Massara | Date | |
| Alan Massara | 12/14/10 | |
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