Exhibit 10.5
INDEPENDENT CONTRACTOR AGREEMENT
INDEPENDENT CONTRACTOR AGREEMENT between AbTech Industries, Inc., a Delaware
Corporation (hereinafter “COMPANY”), and Gordon Brown (hereinafter
“CONTRACTOR”). Each of CONTRACTOR and COMPANY may from time to time be referred
to individually as a “Party” and collectively as the “Parties.”
COMPANY desires to obtain the benefit of the services of CONTRACTOR, and
CONTRACTOR desires to provide such services on the terms and conditions set
forth in this Independent Contractor Agreement (the “AGREEMENT”). The parties
acknowledge that it is their intent that the relationship between them will be
an independent contractor relationship and not an employment relationship.
In consideration of the promises and mutual obligations hereafter set forth, the
parties hereto agree as follows:
AGREEMENT
1. Effective Date and General Scope of Engagement

  A.   AGREEMENT is entered into as of May 1, 2010 by and between COMPANY and
CONTRACTOR.     B.   During the Term (as defined below) of this AGREEMENT,
CONTRACTOR will perform those services (hereinafter referred to as the
“Services”) described in the statement of work contained in Appendix A (the
“Scope of Work”).     C.   AGREEMENT consists of this AGREEMENT and
Appendix A-C. The Parties acknowledge that a separate agreement shall be entered
into entitling CONTRACTOR to stock options or other equity instruments, pursuant
to the terms described in Section 3(D) and 3(E), below, of this AGREEMENT.

2. Term
The term of this AGREEMENT (the “Term”) shall commence on May 1, 2010 and
continue until termination as provided herein. This AGREEMENT may be terminated
(a) at any time by either party for any reason upon thirty (30) days prior
written notice to the other party of its intention to terminate the AGREEMENT,
(b) upon written notice in the event of a termination for cause, or (c) on
December 31, 2010.
3. Fees, Expenses, Incentive Compensation, and Equity

  A.   COMPANY shall pay to CONTRACTOR a monthly retainer for his services under
this AGREEMENT. During the first eight (8) months of the term of this AGREEMENT
the

 

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      monthly retainer will be fifteen thousand dollars ($15,000.00) per month
(the “Professional Fee”). The Professional Fee is non-refundable and shall be
paid on or before the 1st day of each calendar month for professional services
to be provided that month. In the event a full month is not earned due to
mid-month start or termination, the Professional Fee shall be prorated. During
the first eight (8) months of the Term of this AGREEMENT, five thousand dollars
($5,000.00) of each monthly retainer shall be guaranteed. The payment of this
guaranteed portion of the monthly retainer will be secured by the COMPANY
issuing to CONTRACTOR a non-interest bearing Convertible Promissory Note, in the
same form as such notes currently being offered by COMPANY TO INVESTORS, IN THE
PRINCIPAL amount of forty thousand dollars ($40,000.00) (the “Note”). Until the
Note is paid in full, five thousand dollars ($5,000.00) of each monthly retainer
paid by COMPANY will be applied as a payment on the Note so that at the end of
eight (8) monthly retainer payments of at least five thousand dollars
($5,000.00) each, the Note will be paid in full and CONTRACTOR will return the
Note to COMPANY for cancellation.

  B.   COMPANY shall pay to CONTRACTOR up to thirty thousand dollars
($30,000.00) in travel and living expense reimbursement during calendar year
2010 for travel to and from Phoenix and Sacramento. CONTRACTOR may incur
additional travel and other related business expenses on behalf of the COMPANY,
additional expenses incurred by the CONTRACTOR must conform to the travel and
expense policy of the COMPANY attached as Appendix B. International travel and
expenses in aggregate exceeding one thousand five hundred dollars ($1,500.00) in
any given month require prior approval from COMPANY before those expenses are
incurred.

  C.   COMPANY shall pay to CONTRACTOR incentive compensation on revenue derived
from his activities with the COMPANY. The incentive payments to CONTRACTOR shall
include: (i) payments of 2.5% of gross revenue collected by the COMPANY from all
customer accounts that CONTRACTOR is designated as the primary relationship
manager, and (ii) payments of 0.5% of gross revenue collected by the COMPANY
from all customer accounts during the term of this AGREEMENT. Incentive payments
due under section 3(C)(i) and 3(C)(ii) of this paragraph will be made by the
COMPANY to CONTRACTOR within 30 days of the end of each calendar quarter based
on the gross revenue payments received by COMPANY.

  D.   CONTRACTOR shall be entitled to earn COMPANY stock options or other
COMPANY equity instruments in a form and with terms to be determined by the
Parties. A separate agreement (the “Equity Agreement”) shall be executed by the
Parties entitling CONTRACTOR to such stock options or other equity instruments
and the Equity Agreement shall be independent from this AGREEMENT. Though the
form and terms shall be determined at a later date, COMPANY agrees that the
CONTRACTOR shall participate at a stock option or equity instrument level
commensurate with, and no less than that of, a vice president of the COMPANY.
Vesting of the stock option or equity instrument shall conform to the expiration
date of this AGREEMENT. The Parties shall execute the Equity Agreement entitling
CONTRACTOR to stock options or other equity instruments according to the terms
set forth in this paragraph no later than July 31, 2010

 

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      or before a significant event such as an IPO, whichever occurs first.

  E.   In addition to the stock options described in 3(D), CONTRACTOR shall be
entitled to a one-time grant of 9,000 stock options. The options shall be issued
under a separate stock option grant form and agreement. The options shall be
fully vested at the time of issuance.

  F.   Amounts owed to CONTRACTOR for more than thirty (30) days beyond
invoicing or date due as described above shall accrue interest each day that any
such amount is not paid and received by CONTRACTOR at a rate equal to one
percent (1.0%) per month.

4. Methodology, Status of Independent Contractor, and Computer Use

  A.   The parties intend this AGREEMENT to create an independent contractor
relationship. Neither this AGREEMENT nor CONTRACTOR’S performance hereunder
shall constitute or create an employee/employer relationship. CONTRACTOR shall
not be eligible for any benefits applicable to active employees of COMPANY.
CONTRACTOR shall act solely as an independent contractor, not as an employee or
agent of COMPANY. CONTRACTOR’s authority is limited to providing professional
consulting services, and CONTRACTOR shall have no authority, without the express
written consent of COMPANY, to incur any obligation or liability, or make any
commitments on behalf of the COMPANY.

  B.   CONTRACTOR may be assigned a user ID and password for access to a COMPANY
computer. All information sent, received or stored on COMPANY equipment is
COMPANY property. COMPANY reserves the right to access and disclose all
information within its computer network for any purpose and to monitor the use
of its computers and telecommunications equipment. Independent contractors do
not have any right to privacy with respect to their use of COMPANY computers,
networks, telephones, voice mail or other systems. User passwords to COMPANY
computer systems are confidential and sharing passwords is strictly forbidden.
Where it is necessary to share a password under emergency circumstances,
CONTRACTOR agrees to change its password within 24 hours of sharing it.
CONTRACTOR agrees to use COMPANY systems for the sole benefit of performing
Services and to use such systems in a professional manner.

5. Proprietary and Sensitive Information
Proprietary and sensitive information shall be governed by the Parties’
separately executed Confidentiality Agreement, which is incorporated into this
AGREEMENT by reference, as Appendix C.

 

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6. Services
CONTRACTOR agrees to perform for COMPANY the Services described in this
AGREEMENT with that degree of skill and judgment normally exercised by
recognized professional persons performing services of a similar nature.
CONTRACTOR’S recommendations and conclusions will be made to the best of his/its
knowledge and belief based on information furnished to it by COMPANY at the time
the Services are performed and CONTRACTOR shall be entitled to rely upon such
information.
7. Responsibility
CONTRACTOR shall perform the Services as an independent contractor in accordance
with its own methods, the terms of this AGREEMENT, and applicable laws and
regulations. CONTRACTOR’s liability arising out of or in connection with the
Services shall be limited to re-performing at its own expense any such Services
which are (a) deficient because of CONTRACTOR’s failure to perform such Services
in accordance with the standards imposed by law upon professionals performing
services of a similar nature, and (b) reported in writing to CONTRACTOR within a
reasonable time, not to exceed thirty (30) days after the discovery thereof, but
in no event later than ninety (90) days from the completion of the Services.
CONTRACTOR’s total liability to COMPANY arising out of or in connection with
this AGREEMENT shall not exceed the total Professional Fees paid to CONTRACTOR
under the AGREEMENT; COMPANY agrees to release CONTRACTOR from any liability in
excess thereof. COMPANY agrees to release CONTRACTOR from any liability for loss
of or damage to COMPANY’s property.
Under no circumstances shall CONTRACTOR be liable to COMPANY for any
consequential or incidental damages, including but not limited to loss of use or
loss of profit. NEITHER PARTY TO THIS AGREEMENT SHALL BE LIABLE FOR THE OTHER’S
LOST PROFITS OR SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, WHETHER IN AN
ACTION IN CONTRACT OR TORT, EVEN IF THE PARTY HAS BEEN HAS BEEN ADVISED BY THE
OTHER PARTY OF THE POSSIBILITY OF SUCH DAMAGES.
Releases from and limitations of liability expressed in this AGREEMENT shall
apply even in the event of the fault or negligence of the Party released or
whose liability is limited, and shall extend to the directors, officers,
employees, subcontractors and related entities of such Party.
COMPANY hereby agrees to defend, indemnify and hold harmless CONTRACTOR, its
respective officers, employees, agents, assigns and successors in interest from
and against any and all third Party liability, damages, losses, claims, demands,
actions, causes of action, costs including attorney’s fees and expenses for
death or injury to person or damage to property arising out of or in connection
with this AGREEMENT, to the extent caused by COMPANY’s acts or omissions of any
kind, including negligence.

 

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8. Reports and Other Written Materials
Reports and other written materials that are prepared specifically for the
COMPANY (and are indicated to be prepared for COMPANY) may not be reproduced,
distributed or used by third Parties without first obtaining prior written
consent by CONTRACTOR. COMPANY shall own such reports and written materials
provided to it and data in the form in which it is supplied. Provided however
that CONTRACTOR will own the materials and know-how it brings to, and the
general know-how it gains from this engagement. CONTRACTOR shall retain all
rights to its pre-existing methodologies and data used in, and non-confidential
methodologies and data developed during, this engagement. This requirement shall
be subject to confidentiality obligations, described in Section 5 above.
Reports and other written materials provided to COMPANY by CONTRACTOR may not be
relied upon by others. Neither CONTRACTOR, COMPANY nor any person acting on
behalf of either assumes any liabilities with respect to the use of or for
damages resulting from the use of any information contained in any written
materials provided by CONTRACTOR or disseminated, expressed, or conveyed by any
other means including but not limited to verbal communication. CONTRACTOR does
not represent or warrant that any assumed conditions will come to pass.
9. Changes
COMPANY may from time to time request or approve changes to the scope of work or
otherwise within the general scope of the services, or may request or approve
that CONTRACTOR perform additional services or extra work, or CONTRACTOR may
suggest or request such changes. In any such event, CONTRACTOR shall notify
COMPANY that such changes or additions are necessary or being requested. Any
such changes or additions shall be agreed to in writing by both Parties. In the
event that any such change or additional services or extra work results in
increased costs to CONTRACTOR or in an increase in the time for completion of
the Services, CONTRACTOR’S compensation and the schedule shall be equitably
adjusted.
10. Force Majeure
Neither Party shall be considered in default in the performance of its
obligations hereunder to the extent that the performance of any such obligation
is prevented or delayed by any cause, existing or future, which is beyond the
reasonable control of such Party. In such event, the schedule and compensation
for the performance of the services shall be equitably adjusted.
11. Subcontract Rights
CONTRACTOR shall not have the right to subcontract any portion of the services
to its related entities without the prior approval of COMPANY. CONTRACTOR
guarantees the compliance

 

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of such related entities with the terms of this AGREEMENT and that COMPANY will
not incur any duplication of costs by reason of such subcontracts.
12. Use of Name and Publicity
Each Party agrees that it will not, without the prior written consent of the
other Party in each instance use in advertising, publicity, or otherwise the
name of the other Party, or any affiliate, partner, employee or agent of the
other Party, or any trade name, trademark, trade device, service mark, symbol or
any abbreviation, contraction, or simulation thereof owned by the other Party or
its affiliates. Provided, however, that either Party may disclose the existence
of a contractual relationship between the Parties for promotional purposes.
13. Termination
AGREEMENT may be terminated according to the terms set forth in Section 2 above.
Payments obligated to CONTRACTOR under Section 3 above, which reasonably
reflects the portion of the Services performed to the date of termination, plus
all reasonable costs incurred as a result of such termination, shall be payable
by COMPANY to CONTRACTOR on the date of termination. Incentive Payments pursuant
to the terms described in Section 3 that are earned based on revenue received by
COMPANY during the quarter in which the date of termination occurs shall be paid
at the end of the quarter.
Upon such termination, CONTRACTOR’S liability to COMPANY arising out of or in
connection with the performance of the services shall cease.
14. Dispute Fees and Costs
In the event of a dispute under this AGREEMENT, the prevailing Party shall be
entitled to recover its reasonable and necessary attorney’s fees and costs
incurred in connection with such dispute.
If in the future CONTRACTOR is requested by COMPANY to provide assistance, give
testimony, review documents or the like in connection with claims, disputes,
investigations or litigation involving the project or facilities to which this
AGREEMENT pertains, then COMPANY shall compensate CONTRACTOR time and expenses
(including reasonable and necessary attorney’s fees) incurred by CONTRACTOR in
connection with such activities.
15. Complete Agreement
This signed AGREEMENT, Appendix A-C, shall constitute the entire Independent
Contractor Agreement between COMPANY and CONTRACTOR with respect to the subject
matter

 

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referenced herein and merge all of the previous and contemporaneous discussions,
representations, and understandings between the Parties with respect to the
subject matter of this AGREEMENT. This AGREEMENT shall not be altered except in
writing, signed by both Parties.
This AGREEMENT shall be binding upon and inure to the benefit of the executors,
administrators, successors, and assigns of the Parties hereto. Neither Party
shall assign, transfer or delegate any of the rights or obligations hereunder
without prior written consent of the other Party, except that either Party may
assign its rights and obligations in connection with a sale of substantially all
its assets or pursuant to a merger.
16. Third Party Liability
A person who is not a Party to this AGREEMENT shall have no right to enforce any
of its terms.
17. Applicable Law
This AGREEMENT and the relationship between the Parties shall be governed by and
interpreted in accordance with the laws of Arizona, without reference to its
conflicts of law principles. The Parties further agree that no claim may be
brought against any Party in contract, tort or otherwise save in so far as such
claim could be brought under the laws of the State of Arizona or any applicable
US federal law without reference to the law of any other country.

             
ABTECH INDUSTRIES, INC.
    CONTRACTOR (GORDON BROWN)    
 
           
By:
/s/ Glenn R. Rink     /s/ Gordon Brown      
 
Title: President
   
 
Date: 5/20/10      
Date: 5/20/2010
         

 

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APPENDIX A
SCOPE OF WORK
Services:

  •   Advisory role regarding general strategic planning for COMPANY (including
analysis support of new customer opportunities, new market segments and business
model analysis).     •   Develop a sales infrastructure within the COMPANY.
Activities may include training in sales techniques, establish goals to monitor
performance, establish a defined reporting system, and implement an electronic
sales tracking system.     •   Other tasks as agreed to by both Parties

Reporting:   CONTRACTOR agrees to participate in developing an annual plan of
activities that will be broken down into quarterly objectives. Progress and
objectives will be reviewed on a no less than quarterly basis.

 

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APPENDIX B
TRAVEL AND EXPENSE POLICY

 

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APPENDIX C
CONFIDENTIALITY AGREEMENT