EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement entered into this 29th day of December, 1995, is
between GAIA TECHNOLOGIES, INC., a Texas corporation ("Company"), and XXXXXXX X.
XXXXXXX, a resident of Xxxxxx County, Texas ("Employee").
WHEREAS, the Company wishes to assure itself of the services of Employee
for the period provided in this Agreement, and Employee is willing to serve in
the employ of the Company on a full-time basis for said period, and upon the
other terms and conditions hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto hereby agree as follows:
1. Employment. The Company hereby employs Employee and the Employee
hereby accepts employment by the Company upon the terms and conditions of this
Agreement.
2. Position and Responsibilities. During the period of his employment
hereunder, Employee agrees to serve the Company and the Company shall employ
Employee as the Company's Executive Vice President. During the term of this
Agreement, Employee agrees to devote his full time and attention during normal
business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Employee hereunder,
to use the Employee's best efforts to perform faithfully and efficiently such
responsibilities. The foregoing shall not be construed as preventing the
Employee from making passive investments in other businesses or enterprises;
provided, however, that (a) such investments would not require services on the
part of the Employee which would in any way impair the performance of his duties
under this Agreement and (b) are not in violation of any provision of Section 6
or 7 of this Agreement.
3. Term. The period of Employee's employment under this Agreement shall
commence on the date hereof and shall continue for a period of sixty (60) full
calendar months thereafter; provided, however, that on the first day of each
April and October during the term of this Agreement beginning on April 1, 1997,
either the Company or the Employee may, at such party's sole option, terminate
this Agreement, with or without cause, by providing not less than six (6)
months' prior notice to the other party (or the Company may also elect to
provide three (3) months's prior notice so long as it also provides three (3)
additional months of severance pay). Upon any termination of this Agreement, at
the written request of the sole shareholder of the Company, Employee shall
promptly resign in writing from any other positions as a director, officer,
employee or other position that he may then hold with respect to the Company or
any corporation, partnership or other entity controlling, controlled by or under
common control with the Company.
4. Compensation.
a. Base Salary. For all services rendered by Employee in any
capacity during his employment under this Agreement, including, without
limitation, services as an executive, officer, director, or member of any
committee of the Company or of any subsidiary, affiliate, or division
thereof, the Company shall pay Employee as compensation a monthly salary at
the rate of not less than $7,500.00. Such salary shall be payable in
accordance with the customary payroll practices of the Company, but in no
event less than semi-monthly. During the period of this Agreement,
Employee's salary shall be reviewed at least annually, but there shall be
no obligation to increase such salary.
b. Bonus. From time to time, the Board of Directors of the Company,
or a committee designated by the Board of Directors, may (but is not
obligated to) elect to pay a bonus to Employee.
c. Stock Option Agreement. Contemporaneously with the execution and
delivery of this Agreement, the parties hereto shall cause to be executed
and delivered to each other that certain Stock Option Agreement,
substantially in the form of Exhibit A, attached hereto and made a part
hereof.
d. Benefits. Until the termination of the Employee's employment
pursuant to this Agreement, the Employee and the Employee's family, as the
case may be, shall be eligible for participation in and to receive all
benefits under welfare benefit plans, practices, policies and programs of
the Company or any other subsidiaries of North American Technologies Group,
Inc., a Delaware corporation ("NATK"), that are offered to officers
similarly situated (including, without limitation, medical, disability,
employee life, group life, accidental death and travel accident insurance
plans and programs), so long as, with respect to any such insurance plan or
program, Employee qualifies in, and his enrollment is accepted by the
insurer providing, such insurance plan or program, without any material
additional cost or expense by the Company; provided, however, that the
Company shall not be obligated to provide Employee with any benefit offered
by any other subsidiary of NATK that varies from a benefit offered by the
Company if such benefit is based primarily on a nature of the business
activities conducted by such other subsidiary.
e. Reimbursement of Expenses. The Company shall reimburse the
Employee for all reasonable and proper travel and out-of-pocket expenses
incurred by Employee in connection with the performance of his duties, all
in accordance with the Company's policies as to the allowable amount of
such expenses and the provision of itemized reports.
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5. Termination.
a. By Company for Cause. The Company may terminate the Employee's
employment of "Cause" at any time. Termination for "Cause" shall mean
termination of Employee's employment with the Company because of (i) any
act or omission that constitutes a material breach by Employee of his
obligations or agreements under this Agreement (other than any such act or
omission resulting from Employee's death or disability due to physical or
mental illness or accident), after written notice by the Board of such
breach which sets forth the nature of the material breach, and failure of
Employee to correct such breach within 30 business days of such notice;
(ii) Employee's being convicted of the commission of a felony; (iii)
Employee's engaging in willful misconduct, gross negligence or an act of
dishonesty that has or can reasonably be expected to have an adverse effect
on the Company; or (iv) a material failure by Employee to comply with the
procedures or policies of general application with respect to the operation
of the Company, as established by the Board, after written notice by the
Board of such failure which sets forth the nature of the material failure,
and failure of Employee to correct such failure within 30 business days of
such notice.
b. Death or Disability. The Employee's employment shall be
terminated on account of the Employee's death or disability. Employee
shall be deemed to be disabled if, as a result of incapacity due to
physical or mental illness or accident, the Employee shall have failed to
perform in any material respect Employee's duties with the Company for two
months within a twelve-month period and, within ten (10) days after written
notice of termination is given to the Employee, the Employee shall not have
returned to the full-time performance of the Employee's duties.
c. By Employee for Good Reason. The Employee's employment may be
terminated by the Employee at any time for "Good Reason." For purposes of
this Agreement, "Good Reason" shall mean, without the Employee's written
consent, the occurrence of any of the following circumstances unless such
circumstances are fully remedied by the Company within 30 days after the
Company's receipt of written notice thereof given by the Employee:
(i) Any act or omission that constitutes a material breach by the
Company of its obligations or agreements under this Agreement (and if
such omission is the failure to make any salary payment to Employee
when due, the Company shall only be entitled to receive ten (10) days'
(rather than 30 days') written notice and opportunity to remedy such
omission);
(ii) The assignment to the Employee of any duties materially
inconsistent with, or the withdrawal from the Employee of any duties
material to, the position in the Company that the Employee holds
pursuant to this Agreement; or
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(iii) The relocation of the Employee's office to a location
other than in Xxxxxx County, Texas or a county adjacent thereto,
except for required travel on the Company's business.
d. Notice of Termination. Any termination by the Company for Cause
or by the Employee for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
10(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon and (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Employee's employment under the provision so
indicated.
e. Obligations upon Termination.
(i) If Employee's employment is terminated by the Company or the
Employee in accordance with the provisions of this Section or in
accordance with the provisions of Section 3, then the Company's
obligations to the Employee and the Employee's obligations to the
Company shall terminate except that the Company shall be obligated to
pay to the Employee the base salary earned by him and not previously
paid to him through the date of termination, and the Employee's
obligations under Sections 6 and 7 shall continue as provided therein.
(ii) If Employee's employment is terminated by the Company
without Cause (other than as a result of death, disability or as
provided in Section 3), or by Employee with Good Reason, Company's
obligations to the Employee and the Employee's obligations to the
Company shall terminate except that (A) the Company shall be obligated
to pay to the Employee the base salary earned by him and not
previously paid to him through the date of termination, (B) Company
shall continue to pay Employee (on a semi-monthly basis) his then
current base salary for the remainder of the then-current six (6)
month period at the end of which the Employee's employment could have
been terminated by the Company pursuant to Section 3 hereof, and (C)
Employee's obligations under Sections 6 and 7 shall continue as
provided therein.
6. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge, data and customer lists relating to the Company or any of its
affiliates and which shall not be or become public knowledge (other than by acts
by the Employee or his representatives in violation of this Agreement). After
termination of the Employee's employment with the Company, the Employee shall
not, without the prior written consent of the Company communicate or divulge any
such information, knowledge, data or customer list to any party other than the
Company and those designated by it.
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7. Obligations of Employee
a. Discoveries and Inventions. If Employee, while employed by the
Company or during a period of one year after termination of such
employment, makes, either solely or jointly with others, any discovery,
improvement, or invention which would pertain or relate in any way to the
Business (as defined in Section 7(e)(i)) as conducted by the Company, its
subsidiaries, or affiliates at the time of termination of his employment,
such discovery, improvement, or invention (whether or not of patentable
nature) shall be the exclusive property of the Company. Employee shall
execute and deliver to the Company, without further compensation, any and
all documents which the Company deems necessary or appropriate to prepare
or prosecute applications for patents upon such discovery, improvement, or
invention, to assign and transfer to the Company his entire right, title,
and interest in and to such discovery, improvement, or invention, and
patents therefor, and otherwise more fully and perfectly to evidence the
Company's ownership thereof.
b. Assistance in Litigation. Employee shall, upon reasonable notice
and at the Company's sole expense, furnish such information and assistance
to the Company as may reasonably be required by the Company in connection
with any litigation in which it or any of its subsidiaries or affiliates
is, or may become, a party that relates to any matter or event occurring
during Employee's tenure with the Company.
c. Return of Confidential Information. Upon termination of
Employee's employment by Company, Employee shall promptly return to Company
all property, papers, records and software of every kind relating to the
Company or its business, whether in hard copy form or electronically or
magnetically stored; provided, however, that in the event of a dispute
between the Company and Employee relating to the subject matter of this
Agreement, Employee may retain a copy of any of the foregoing that may
relate to such dispute until such dispute has been resolved, and Employee
shall continue to be subject to the provisions of Section 6 with respect to
such copy or copies.
d. Noncompetition. The parties recognize that the employment of
Employee with the Company will be special, unique and of an extraordinary
character and in connection with such employment Employee has special skill
and training and may acquire during the term hereof additional special
skill and training. Employee accordingly agrees that while Employee is
employed by Company and continuing from the date of the termination of
Employee's employment with the Company for any reason for three (3) years
thereafter, Employee shall not:
(i) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer, employee,
employer, advisor, stockholder, partner or in any other individual or
representative capacity whatsoever, either for his own benefit or for
the benefit of any other person or entity either (a) hire, attempt to
hire, contact or solicit with respect to hiring any employee of the
Company or any of its affiliates, or (b) induce or otherwise
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counsel, advise or encourage any employee of the Company or any of its
affiliates to leave the employment of the Company or such affiliate,
in each case under this clause (i), unless Employee has received the
express prior written consent of NATK thereto, which consent shall not
be unreasonably withheld;
(ii) act or serve as a director, officer, employee, consultant,
independent contractor or in any other position or capacity with or
for, or acquire a direct or indirect ownership interest in or
otherwise conduct (whether as stockholder, partner, investor, joint
venturer, or as owner of any other type of interest), any Competing
Business as such term is defined herein; provided, however, that this
clause (ii) shall not prohibit Employee from being the owner of up to
5% of any class of outstanding securities of any company or entity if
such class of securities is publicly traded; or
(iii) directly or indirectly, either as principal, agent,
independent contractor, consultant, director, officer, employee,
employer, advisor, stockholder, partner or in any other individual or
representative capacity whatsoever, either for his own benefit or for
the benefit of any other person or entity, (A) divert or take away any
customers or clients of the Business or (B) contact, call upon or
solicit any such customer or client if the intent, effect or a
reasonably expected consequence of the same is to divert or take away
such customer or client.
Notwithstanding the provisions of this paragraph (d), in the event NATK or
one of its subsidiaries or affiliates does not elect to exercise the
Crosstie Purchase Option, as defined in that certain Crosstie Purchase
Option and Loan Agreement (the "Crosstie Agreement"), dated as of December
29, 1995, by and among TIETEK, INC., a Texas corporation, NATK, Xxxxxxx X.
Xxxxxxx, J. Xxxxx Xxxxxxx and Xxxxx X. Xxxxxxxx, in accordance with the
terms of such Crosstie Agreement, as the same may be amended from time to
time, then the provisions of clause (d)(ii) above shall not apply to
Employee's carrying on the activities described therein as they relate to
the Crosstie Business (as defined in the Crosstie Agreement), and shall
not be deemed to be violating the provisions of clause (d)(ii) with respect
thereto; provided, however, that Employee shall continue to be subject to
the other provisions of this paragraph (d).
e. In exchange for Employee's agreements contained in the provisions
of clause (d) of this Section 7, the Company agrees to pay to Employee on
or before March 28, 1996, the sum of $25,000.
f. For the purposes of this Section 7 the following terms shall have
the meaning set forth below:
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(iv) "Business" shall mean the design, development, engineering,
manufacture, marketing, service and supply of Products (as that term
is defined in that certain TieTek Royalty Agreement, a copy of which
is attached to the Crosstie Agreement, dated as of the date hereof)
that the Company is permitted to manufacture, other than Applicable
Hardgoods (as that term is defined in that certain Gaia-TieTek License
Agreement, dated as of the date hereof, by and between the Company and
TieTek, Inc., a Texas corporation); provided further that Products
shall also include such Applicable Hardgoods in the event NATK
exercises the Crosstie Purchase Option (as that term defined in the
Crosstie Agreement).
.
(v) "Competing Business" shall mean any individual, business,
firm, undertaking, company, partnership, corporation, joint venture,
limited liability company, organization or other entity that engages
in any aspect of the Business.
g. Should any portion of this Section 7 be deemed unenforceable
because of the scope, duration or territory encompassed by the undertakings
of the Employee hereunder, and only in such event, then the parties consent
and agree to such limitation on scope, duration or territory as may be
finally adjudicated as enforceable by a court of competent jurisdiction
after the exhaustion of all appeals.
8. Remedies. With respect to each and every breach or violation or
threatened breach or violation by Employee of Section 6 or 7, the Company, in
addition to all other remedies available at law or in equity including specific
performance of the provisions hereof, shall be entitled to enjoin the
commencement or continuance thereof and may, without notice to Employee, apply
to any court of competent jurisdiction for entry of an immediate restraining
order or injunction. The Company may pursue any of the remedies described in
this Section 8 concurrently or consecutively in any order as to any such breach
or violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any of the other
of such remedies.
9. Successors.
a. This Agreement is personal to the Employee and without the prior
written consent of the Company shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the
Employee's legal representatives.
b. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
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10. Miscellaneous.
a. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified otherwise than by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
b. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid
addressed as follows:
If to the Employee: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
If to the Company: 0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxx
or to such other address as any party shall have furnished to the others in
writing in accordance herewith. Notice and communications shall be
effective when actually received by the addressee.
c. Except as specifically set forth in Section 7 hereof, any term or
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions
of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable or invalid, such provision
shall be interpreted to be only so broad as is enforceable and valid.
d. This Agreement contains the entire understanding of the Company
and the Employee with respect to the subject matter hereof.
e. Any material decision or determination relating to the enforcement
of the Company's rights against Employee hereunder by the Company shall
only be made with the written concurrence or consent of the chief executive
officer or other executive officer of NATK.
11. Taxes. The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
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12. Employment. Notwithstanding anything to the contrary in this
Agreement, the Employee and the Company acknowledge that the employment of the
Employee by the Company after expiration of the term of this Agreement as set
out in Section 3 hereof is "at will," unless the parties agree otherwise in
writing, and may be terminated at any time thereafter by either the Employee or
the Company at any time.
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
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GAIA TECHNOLOGIES, INC.
By /s/ Xxx X. Xxxxxxxxxx
--------------------------------
Name: Xxx X. Xxxxxxxxxx
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Title: President
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