Exhibit 10.06
EMPLOYMENT CONTRACT
This EMPLOYMENT CONTRACT ("Agreement") is made and entered into as of the
1st day of January, 1999, by and between NATURAL GAS SERVICES GROUP, INC., a
Colorado corporation, whose address is 0000 Xxxxx Xxxxxx Xxxx 0000, Xxxxxxx,
Xxxxx 00000, hereinafter referred to in this Agreement as the "Employer," and
XXXXX XXXXXX, whose address is 4404 Lennox, Xxxxxxx, Xxxxx 00000, hereinafter
referred to in this Agreement as "the Employee."
ARTICLE 1
TERM OF EMPLOYMENT
1.01. The Employer employs the Employee, and the Employee accepts
employment with the Employer, for the three-year period from January 1, 1999,
through December 31, 2001, and thereafter until terminated by either party upon
ninety (90) days advance written notice to the other party (herein referred to
as the "term of employment"). However, the term of employment may be terminated
earlier as provided in Article 5.
ARTICLE 2
DUTIES OF EMPLOYEE
2.01. BASIC DUTIES. The Employee is hired as President of Hi-Tech
Compressor Company, L.C., a subsidiary of the Employer. The Employee shall
perform all services, acts, or things necessary and advisable to manage and
conduct the business of the Employer, subject to the policies set by the board
of directors from time to time.
The Employee agrees to devote substantially all of his entire productive
time, ability and attention to the business of the Employer during the term of
employment. The services of the Employee shall be performed at such locations
and at such times as shall be directed by the board of directors from time to
time. The Employee shall to the best of his ability make every effort to promote
the business of the Employer.
2.02. EMPLOYER TO PROVIDE TRANSPORTATION AND ORDINARY EXPENSES. The
Employer agrees to provide the Employee use of a properly-registered vehicle
selected by the Employer for all of the Employee's transportation needs required
for the performance of the Employee's duties under this Agreement. The Employee
may provide a vehicle of his choice, in which case the Employer will pay an
allowance of $400.00 per month. The Employer shall also pay for or reimburse the
Employee for all reasonable and necessary gasoline oil, and automobile
maintenance expenses incurred by the Employee in the performance of his duties
under this Agreement.
ARTICLE 3
COMPENSATION OF EMPLOYEE
3.01. BASIC SALARY. The Employee shall receive a salary as established
from time to time by the Directors, but in no event shall the annual salary be
less than Sixty Thousand Dollars ($60,000.00), paid biweekly. If the Employee
voluntarily terminates employment prior to
December 31, 2001 or is terminated pursuant to Article 5 prior to December 31,
2001, or if the Employee's employment is terminated by either party at any time
after December 31, 2001, the Employee's salary and his incentive bonus (as
provided under section 3.02 hereof) shall be prorated and paid only to the date
of termination of employment.
3.02. INCENTIVE BONUS. The Employee shall receive an annual incentive
bonus during the term of employment equal to a percentage of the net pre-tax
profits of Hi-Tech Compressor Company, L.C. as shown by financial income
statements prepared in accordance with generally accepted accounting procedures.
Provided, however, that such incentive bonus shall not be greater than 150% of
the gross salary during the contract year. Such incentive bonus shall be
determined for each annual period commencing as of January 1 and ending as of
December 31 (the "Contract Year"), with payment to the Employee to be made
within ninety (90) days following the end of such annual period. The incentive
bonus shall be Five and Seven-Tenths Percent (5.7%) of the net pre-tax profits.
Equipment manufactured for transfer to a related leasing entity shall be
reflected as a sale at a fair-market value as determined by the Directors and
the Employee.
3.03. VACATION AND SICK PAY. After the completion of six (6) months of
service in the employ of the Employer, the Employee shall be entitled to an
annual paid vacation of fifteen (15) business days with full pay. Such vacation
shall be taken at any time selected by the Employee and approved by the
Employer. In addition, the Employee shall be entitled to six (6) days per year
as sick leave with pay. Neither vacation time nor sick leave may be accumulated,
and if not used during the year in which it is granted, it shall be deemed to
have been waived by the Employee.
3.04. HOLIDAYS. The Employee shall be entitled to a holiday with full pay
on New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day, and/or any other day designated as a holiday by the Employer.
3.05. OTHER BENEFITS. All base compensation provided for in this Agreement
shall be exclusive of any benefits which the board of directors of the Employer
may elect, in its sole and complete discretion, after the date hereof to make
available to the Employee under any bonus plan, profit sharing trust, pension
plan, deferred compensation plan, hospitalization plan, medical or dental
service plans, health insurance plan, or any other employee benefit plan that
may be in effect at any time or from time to time during the term of employment
hereof. The Employer agrees that during the term of employment the Employee
shall be afforded the opportunity to participate in any such plan which is
generally available to other employees of the Employer other than any bonus plan
or other plan measured by the income or performance of the Employer.
Participating in any such plans shall be consistent with the Employee's rate of
basic compensation to the extent that compensation is a determinant with respect
to coverage or participation under any such plan; provided, however, that the
Employee's participation shall not be limited by reason of income or basic
compensation if such limitations are not necessary to obtain tax deductions or
are not required by law.
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ARTICLE 4
PROPERTY RIGHTS OF THE PARTIES
4.01. INVENTIONS AND PATENTS. The Employee agrees that he will promptly
and completely inform and disclose to the Employer all inventions, designs,
improvements and discoveries that the Employee may have during the term of
employment that pertain or relate to the business of the Employer or to any
experimental work carried on by the Employer, whether conceived by the Employee
alone or with others and whether or not conceived during regular working hours.
All such inventions, designs, improvements and discoveries shall be the
exclusive property of the Employer. The Employee shall assist the Employer in
obtaining patents on all such inventions, designs, improvements and discoveries
deemed patentable by the Employer.
4.02. TRADE SECRETS OF EMPLOYER. During the term of employment under this
Agreement, the Employee will have access to and become familiar with various
trade secrets. The term "trade secrets" means devices, secret inventions,
processes and compilations of information, records and specifications, that are
owned by the Employer and that are regularly used in the operation of the
business of the Employer. The Employee shall not disclose any trade secrets of
the Employer during or at any time after the term of this Agreement, except as
required in the course of his employment under this Agreement. All files,
records, documents, drawings, specifications, equipment and similar items
relating to the business of the Employer, whether or not prepared by the
Employee, shall remain the exclusive property of the Employer and shall not be
removed under any circumstances from the premises where the work of the Employer
is being carried on, unless prior written consent of the Employer has been
obtained.
4.03. CONFIDENTIAL DATA OF CUSTOMERS OF EMPLOYER. In the course of
performing duties under this Agreement, the Employee will be handling financial,
accounting, statistical and personnel information concerning employees and
customers of the Employer. All such information is confidential and shall not be
disclosed, directly or indirectly, to any person other than agents of the
Employer, either during the term of this Agreement or any time after such term.
ARTICLE 5
TERMINATION OF EMPLOYMENT
5.01. TERMINATION BY EMPLOYER FOR CAUSE. The Employer may at its option
terminate this Agreement at any time by giving written notice of termination to
the Employee without prejudice to any other remedy to which the Employer may be
entitled either at law, in equity, or under this Agreement, if the Employee:
(a) Willfully breaches or habitually neglects the duties that the
Employee is required to perform under the terms of this Agreement;
(b) Willfully violates reasonable and substantial rules governing
employee performance;
(c) Refuses to obey reasonable orders in a manner that amounts to
insubordination;
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(d) Commits clearly dishonest acts toward the Employer; or
(e) Engages in acts of disruption or violence such as unprovoked
fighting.
5.02. TERMINATION ON GROUNDS OTHER THAN FOR CAUSE. This Agreement shall
terminate immediately on the occurrence of any one of the following events:
(a) The occurrence of circumstances that make it impossible or
impracticable for the business of the Employer to be continued;
(b) The death of the Employee;
(c) The loss by the Employee of legal capacity; or
(d) The continued incapacity on the part of the Employee to perform
his duties for a continuous period of ninety (90) days, unless waived by
the Employer.
ARTICLE 6
REIMBURSEMENT OF EXPENSES INCURRED BY EMPLOYEE
6.01. BUSINESS EXPENSES. The Employee is authorized to incur reasonable
business expenses in the performance of the Employee's duties under this
Agreement and in promoting the business of the Employer, including expenditures
for entertainment and travel. The Employer will reimburse the Employee on a
monthly basis for all such business expenses, provided that the Employee
presents to the Employer:
(a) An account book or statement of expense or diary in which the
Employee recorded at or near the time each expenditure was made:
(i) The amount of the expenditure;
(ii) The time, place and type of entertainment and travel or
other expense;
(iii) The business reason for the expenditure and the nature
of the business benefit derived or expected to be derived as a
result of the expenditure; and
(iv) The name and any other pertinent information concerning
each person who was entertained, sufficient to comply with Internal
Revenue Service Guidelines as revised from time to time.
(b) Documentary evidence, such as receipts or paid bills, that
states sufficient information to establish the amount, date, place and
essential character of the expenditure, for each expenditure.
No expenditures will be reimbursed pursuant to this Section unless the expense
is verified and approved by the board of directors of Employer.
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ARTICLE 7
EMPLOYEE'S OBLIGATIONS OTHER THAN
TO PERFORM SERVICES
7.01. NON-PIRACY AND NON-COMPETITION BY EMPLOYEE. The Employee covenants
and agrees that during the term of employment and for a period of one (1) year
(provided, however, that such one (1) year period of time may be extended to
include any period of violation hereof and/or any period of time may be extended
to enforce this covenant) following any termination of his employment with the
Employer, the Employee shall not, directly or indirectly, within the Employer's
sales area, either as principal, agent, manager, employee, owner, partner
(general or limited), stockholder, director of officer of a corporation, member
of an association or otherwise, solicit the rendering of any services of the
nature performed by the Employer as of the date of termination of Employee's
employment with the Employer or sell or offer to sell any product or other
equipment of the nature leased or sold by the Employer as of the date of
termination of the Employee's employment with the Employer.
For purposes of this Article 7, the term "Conflicting Organization" shall
mean any person or organization which is engaged in or about to become engaged
in, research on or development, marketing, rendering or selling of a
"Conflicting Service" within a one hundred fifty (150) mile radius of each
location in which the Employer has an office or place of business as of the date
of termination of this Agreement. The term "Conflicting Service" shall mean any
service or process of any person or organization other than the Employer, in
existence or under development, which is substantially similar to, resembles or
competes directly with any service, or process rendered by the Employer at the
time of the termination of the Employee's employment hereunder. The Employee
covenants and agrees that during the Employee's employment with the Employer and
for a period of one (1) year (provided, however, that such one (1) year period
may be extended to include any period of violation hereof and/or any period of
time required to enforce this covenant) following any termination of his
employment with the Employer, the Employee shall not engage in the following
activities:
(a) render services, directly or indirectly, to any Conflicting
Organization in connection with the marketing, rendering or selling of a
Conflicting Service; or
(b) render services to or own or participate in the ownership of,
finance or participate in the financing of, manage, operate, join or
control, directly or indirectly, any Conflicting Organization.
The Employee acknowledges that this Section 7.01 constitutes an
independent covenant and shall be operative regardless of the reasons for
termination of his employment and shall not be affected by performance or
non-performance of any provision of this Agreement by the Employer.
7.02. REMEDIES. It is agreed between the parties hereto that the Employer
would be irreparably damaged by reason of any violation of the provisions of
Section 7.01 hereof, and that any remedy at law for a breach of such provisions
would be inadequate. Therefore, in addition to other remedies or relief that may
be available at law to the Employer, the Employer shall be entitled to seek and
obtain injunctive or other equitable relief (including, but not limited to, a
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temporary restraining order, a temporary injunction or a permanent injunction)
against Employee, his agents, assigns, or successors for a breach or threatened
breach of such provisions and without the necessity of providing actual monetary
loss. It is expressly understood between the parties that this injunctive or
other equitable relief shall not be the Employer's exclusive remedy for any
breach of this Agreement and the Employer shall be entitled to seek any other
relief or remedy which it may have by contract, statute, law or otherwise for
any breach hereof.
7.03. REASONABLENESS OF NON-PIRACY COVENANT AND COVENANT NOT TO COMPETE.
The Employee warrants and represents that:
(a) he is familiar with non-piracy covenants and convents not to
compete;
(b) he has discussed the provisions of the non-piracy covenant and
the covenant not to compete contained herein with his attorney (or has had
the opportunity to discuss such covenants with his attorney and has
elected not to do so) and has concluded that such provisions (including,
without limitation, the right to equitable relief and the length of time
provided for herein) are fair, reasonable and just under the
circumstances;
(c) he is fully aware of the obligations, limitations and
liabilities included in the non-piracy covenant and the covenant not to
compete contained in this Agreement;
(d) the duration of this non-piracy covenant and covenant not to
compete has been agreed upon as a reasonable restriction, giving
consideration to the following factors: (1) The Employee and the Employer
reasonably anticipate that this Agreement, although terminable in
accordance with Article 5 hereof or otherwise, may continue in effect for
sufficient duration to allow the Employee to attain superior bargaining
strength and an ability for unfair competition with respect to the
customers covered hereby; and (2) the duration of the non-piracy covenant
and covenant not to compete is a reasonably necessary period to allow the
Employer to restore its position of equivalent bargaining strength and
fair competition with respect to those customers covered hereby; and
(e) the failure of the non-piracy covenant to delineate a
geographical territory covered hereby does not constitute an unlimited
geographical limitation, that the non-piracy covenant imposes no
geographical restriction at all, and that the non-piracy restrictions in
the Agreement apply only to customers, and not to territory.
It is the express intention of the Employee and the Employer to comply
with the provisions of Tex. Bus. & Comm. Code Xxx.Sections 15.50 and 15.51
(Xxxxxx 1990).
7.04. EXCLUSIONS FROM NON-COMPETITION PROVISION. The obligation of the
Employee not to compete with the Employer, set forth in Section 7.01 of this
Agreement, shall not prohibit the Employee from being a member of professional
or social organizations or from owning or purchasing any corporate securities of
a Conflicting Organization that are regularly traded on a recognized stock
exchange or over-the-counter market, provided that the Employee's ownership
interest therein does not exceed one percent (1%) of all issued and outstanding
shares of any class of corporate security thereof.
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7.05. INDEMNIFICATION. The Employee shall indemnify and hold harmless
Employer from all liability from loss, damage, or injury to persons or property
resulting from the willful misconduct of the Employee committed in the scope of
the Employee's employment.
ARTICLE 8
GENERAL PROVISIONS
8.01. NOTICES. Any notices required to be given under this Agreement by
either party to the other may be effected either by personal delivery in writing
or by mail, registered or certified, postage prepaid with return receipt
requested. Mailed notices shall be addressed to the parties at the addresses
appearing in the introductory paragraph of this Agreement. Each party may change
that party's address by written notice in accordance with this Paragraph.
Notices delivered personally shall be deemed effective as of actual receipt.
Mailed notices shall be deemed effective as of two (2) days after posting with
the United States Mail Service.
8.02. ENTIRETY OF AGREEMENT. This Agreement supersedes all previous
agreements between the Employee and the Employer, and contains the entire
understanding between the parties with respect to the subject matter specified
in this Agreement. Each party to this Agreement acknowledges that no other
agreement, statement, or promise not contained in this Agreement shall be valid
or binding. Any modification of this Agreement will be effective only if it is
in writing signed by the party to be charged.
8.03. PARTIAL INVALIDITY. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.
8.04. LAW GOVERNING AGREEMENT. It is the intent of the parties that this
Agreement be governed by and construed in accordance with the laws of the State
of Texas.
8.05. WAIVER. The failure of either the Employer or the Employee to insist
in one or more instances upon performance of any of the terms or conditions of
this Agreement shall not be construed as a waiver of future performance required
by such term or condition, and the obligations of either party with respect to
the term or condition shall continue in effect as if no forbearance had
occurred. No covenant or condition of this Agreement may be waived except by the
written consent of the waiving party.
8.06. CAPTIONS. The captions contained in this Agreement are for
convenient reference only and do not affect the meaning of any term or
provision.
8.07. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto and upon their successors, heirs, executors and assigns.
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EXECUTED in multiple originals as of the date first written above.
EMPLOYER:
NATURAL GAS SERVICES GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxx
------------------------------
Xxxxxxx Xxxxxxx
Chairman
EMPLOYEE:
/s/ Xxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx
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AMENDMENT
This instrument is an amendment to that certain Employment Agreement
entered into as of the 1st day of January, 1999, by and between NATURAL GAS
SERVICES GROUP, INC., a Colorado corporation, (Employer) and XXXXX XXXXXX
(Employee).
The subject Employment Agreement is amended as follows: Section 2.01 of
ARTICLE 2 is hereby deleted and is replaced with the following Section 2.01 of
ARTICLE 2 which is effective as of July 1, 2000.
2.01. BASIC DUTIES. The Employee hereafter shall serve as Vice
President and Chief Operations Officer of the Employer in addition to
serving as President of Rotary Gas System Inc a wholly owned subsidiary of
Employer. The Employee shall perform all services, acts, or things
necessary and advisable to manage the operations of Employer, subject to
the policies set by the board of directors from time to time.
The Employee agrees to devote substantially all of his entire
productive time, ability and attention to the business of the Employer
during the term of employment. The services of the Employee shall be
performed at such locations and at such times as shall be directed by the
board of directors from time to time. The Employee shall to the best of
his ability make every effort to promote the business of the Employer.
ARTICLE 3 of the subject Employment Agreement is hereby deleted in its
entirety and the following ARTICLE 3 is effective as of July 1, 2000.
ARTICLE 3
COMPENSATION OF EMPLOYEE
3.01. BASIC SALARY. The Employee shall receive a salary as
established from time to time by the Directors, but in no event shall the
annual salary be less than Ninety Thousand Dollars ($90,000), paid
biweekly, effective as of July 1, 2000. If the Employee voluntarily
terminates employment prior to December 31, 2001 or is terminated pursuant
to Article 5 prior to December 31, 2001, or if the Employees employment is
terminated by either party at any time after December 31, 2001, the
Employee's salary shall be prorated and paid only to the date of
termination of employment.
3.02 INCENTIVE BONUS. Within ninety (90) days of the close of
business for each fiscal year, the directors shall review the financial
results of the Company and determine an amount, if any, to be allocated
for bonus payment to designated employees. The allocation shall be in the
sole discretion of the directors. If an allocation is made, the directors
shall establish two bonus pools to be designated "Bonus Pool A" and "Bonus
Pool B." The directors shall determine the amount of funds that will be
allocated to each pool. The allocated funds shall be distributed to
participating employees that are designated by the directors or have
contractual rights to participate. The distribution shall be as follows:
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Pool A: Funds from this pool shall be distributed to each
participant based on the percentage that the
participating employee's base salary received during the
preceding fiscal year represents to the total base
salaries of all participating employees.
Example: Participant's base salary = $10,000 Total of all
participants' base salaries = $100,000 Participant shall
receive: ($10,000) $100,000 = 10% X "Bonus Pool A"
Pool B: Funds from this pool shall be distributed based on an
evaluation process for each participating employee. The
directors shall establish the review and evaluation
process. The funds in "Bonus Pool B" shall be
distributed based on the evaluation score of each
participant. Non-participating directors and/or
non-participating officers shall develop and implement
the plan and approve the distribution.
The Employee that is a party to this agreement shall
participate in both pools.
3.03. VACATION AND SICK PAY. After the completion of six (6) months
of service in the employ of the Employer, the Employee shall be entitled
to an annual paid vacation of fifteen (15) business days with full pay.
Such vacation shall be taken at any time selected by the Employee and
approved by the Employer. In addition, The Employee shall be entitled to
six (6) days per year as sick leave with pay.
Neither vacation time nor sick leave may be accumulated, and if not
used during the year in which it is granted, it shall be deemed to have
been waived by the Employee, unless agreed to and approved by the
Employer. Such approval shall be in writing and signed by an officer
designated by the directors.
3.04. HOLIDAYS. The Employee shall be entitled to a holiday with
full pay on New Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Christmas Day, and/or any other day designated as a
holiday by the Employer.
3.05. OTHER BENEFITS. All base compensation provided for in this
Agreement shall be exclusive of any benefits which the board of directors
of the Employer may elect, in its sole and complete discretion, after the
date hereof to make available to the Employee under any profit sharing
trust, pension plan, deferred compensation plan, hospitalization plan,
medical or dental service plans, health insurance plan, or any other
employee benefit plan that may be in effect at any time or from time to
time during the term of employment hereof. The Employer agrees that during
the term of employment, the Employee shall be afforded the opportunity to
participate in any such plan, which is generally available to other
employees of the Employer other than any bonus plan, or other plan
measured by the income or performance of the Employer. Participating in
any such plans shall be consistent with the Employee's rate of basic
compensation to the
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extent that compensation is a determinant with respect to coverage or
participation under any such plan; provided, however, that the Employee's
participation shall not be limited by reason of income or basic
compensation if such limitations are not necessary to obtain tax
deductions or are not required by law. The Employer agrees that during the
term of employment, the dependents of the Employee shall be afforded the
opportunity to participate in any hospitalization, medical or dental
service plans in which the Employee is enrolled. The Employer shall bear
the cost of such dependent participation.
EXECUTED in multiple originals this 1st day of January 2001, and
effective as of July 1, 2000.
EMPLOYER:
NATURAL GAS SERVICES GROUP, INC.
By: /s/ Xxxxxxx Xxxxxxx
----------------------------
EMPLOYEE:
/s/ Xxxxx Xxxxxx
--------------------------------
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