EXHIBIT 10.5
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into effective
as of April 6, 2011, by and between Government-Buys, Inc., a Maryland
corporation (“Employer”) and a wholly-owned subsidiary of Ariel Way, Inc., a
Florida corporation (“Ariel Way”), and Gary Block (“Employee”).  Defined terms
not otherwise defined herein shall have the meaning ascribed thereto in the
Stock Purchase Agreement, dated April 5, 2011, by and among Ariel Way, Employer
and Employee (the “Purchase Agreement”).
 
WITNESSETH:
 
WHEREAS, Employer and Employee (through his association with Employer), among
others, are parties to the Purchase Agreement pursuant to which Employer,
located at 7900 Wisconsin Avenue, Suite 303, Bethesda, MD, 20814 (the
“Premises”), was acquired by Ariel Way upon the terms and conditions set forth
in the Purchase Agreement (the “Acquisition”); and
 
WHEREAS, pursuant to Section 5.1(i) of the Purchase Agreement and as a condition
to the Acquisition, Employer has agreed to employ Employee and Employee is
willing to accept such employment, in each case, for the purposes and subject to
the terms and conditions hereinafter described.
 
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
conditions set forth below, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree as follows:
 
1.           Employment.  Employer hereby employs Employee to provide services
at the Premises and to provide services as required by Employer and described in
Section 2 hereof and Employee hereby accepts such employment upon the terms and
conditions set forth in this Agreement. Employee shall perform his duties and
responsibilities to the best of his abilities in a diligent, trustworthy,
businesslike and efficient manner.
 
2.           Services.
 
2.1           Duties.
 
2.1.1        During the Term (as defined in Section 3.1), Employee shall hold
the title “Executive Vice President, Sales” of Employer and shall provide the
professional services necessary to continue the management and daily operations
of Employer.  With respect to all matters, Employee shall operate under the
direction and supervision of the Chief Executive Officer or the designee of the
Chief Executive Officer or the Board of Directors of Employer.  Employee shall
perform or cause to be performed such services as are generally performed and
substantially consistent with the manner in which he performed such services for
Employer prior to the Acquisition
 
2.1.2        Employee shall, with the assistance of personnel hired by Employer,
cause to be kept and maintained complete and accurate records of all business
and other transactions conducted at the Premises, and shall continue to operate
Employer in a substantially similar manner as previously conducted by the
Employer prior to the Acquisition.
 
2.2           Hours.  During the Term, Employee shall work five (5) days per
week at an average of forty (40) hours per week during normal business hours on
a schedule mutually agreed upon by the parties, at the Premises.
 
 
 

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2.3           Outside Activities.  During the Term, Employee shall not be
employed by or involved in any other business activity, whether or not such
activity is pursued for gain, profit or other pecuniary advantage, except for
(i) volunteer services for or on behalf of such religious, educational,
non-profit and/or other eleemosynary organization as Employee may wish to serve
as approved by Employer, (ii) service as a director of for-profit business
activities as approved by Employer, and (iii) such other activities as may be
specifically approved by Employer.  This restriction shall not, however,
preclude Employee, unless otherwise in violation of any applicable law or
regulation, from (x) owning less than 2% of the total outstanding shares of a
publicly traded company, except for Ariel Way, (y) investing in real estate as a
limited or otherwise passive partner or (z) employment in any capacity with an
affiliate of Employer.
 
3.           Term.
 
3.1           Term; Renewal Period.  Unless earlier terminated as provided
herein, the term of this Agreement shall commence on the date of the execution
hereof and shall continue in full force and effect for a period of twenty (24)
months from the date hereof (“Initial Term”).  Following the expiration of the
Initial Term, the term of this Agreement shall be extended automatically for
successive additional twelve (12) month periods (each a “Renewal Period”) unless
terminated prior thereto by Employer or Employee as provided herein.  If either
Employer or Employee does not wish to renew this Agreement when it expires at
the end of the Initial Term or any Renewal Period as provided herein or if
either Employer or Employee wishes to renew this Agreement on different terms
than those contained herein, Employer or Employee shall give written notice in
accordance herewith of such intent to the other party at least 30 days prior to
the expiration of the Initial Term or any Renewal Period, as the case may be
(“Prior Written Notice”). Notwithstanding the foregoing, upon the expiration of
the Initial Term and during any Renewal Period, the employment of Employee will
be on an “at-will” basis and such employment may be terminated at any time by
either party, either with or without cause, and without prior notice. The
“at-will” nature of the employment relationship that will be in effect upon
expiration of the Initial Term and during any Renewal Period, as applicable,
cannot be changed except in writing signed by the Chief Executive Officer of
Employer.  The parties expressly agree that designation of a Term and a Renewal
Term in this Agreement does not in any way limit the right of the parties to
terminate this Agreement at any time as provided herein.  Reference in this
Agreement to the “Term” of this Agreement shall refer to both the Initial Term
and any Renewal Period, as the context requires.
 
3.2           Termination.  This Agreement shall terminate upon the earlier to
occur of (i) the expiration of the Initial Term or any Renewal Period upon
delivery of Prior Written Notice in accordance with Section 3.1 above, or (ii)
upon the termination at any time, with or without cause, of Employee’s at-will
employment following the expiration of the Initial Term and during any Renewal
Period, or (iii) upon the death or Disability of Employee, or (iv) during the
Initial Term, upon thirty (30) days prior written notice from Employer to
Employee of the termination of Employee’s employment for “cause” (as defined
below).
 
For purposes hereof, the term “cause” shall include (i) any conviction of
Employee for the violation of any criminal statute constituting a felony;
(ii) gross misconduct in the performance of Employee’s duties hereunder; (iii)
the failure by Employee to follow or comply with the policies and procedures of
Employer or its parent, Ariel Way, or the written directives of the Board of
Directors of Employer; provided that such policies, procedures or directives are
consistent with Employee’s duties hereunder and provided that such failure
continues after Employee receives written notice from Employer concerning such
failure and such failure is not cured within ten (10) business days; or (iv) the
violation by Employee of any material provision of this Agreement.
 
For purposes hereof, the term “Disability” shall mean that by reason of physical
or mental disability, Employee will be unable to perform the regular duties of
employment under this Agreement for a continuous period of ninety (90) days.
 
4.           Compensation, Vacation and Benefits. During the Term, for all
services Employee performs hereunder, the Employer shall compensate and pay or
provide Employee, and Employee will receive, the following compensation and
benefits:
 
 
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4.1           Salary.  A base salary in the amount of Twelve Thousand Nine
Hundred Dollars ($12,900) per month (the “Salary”) to be paid on a monthly basis
in accordance with the Employer’s customary payroll practices.
 
4.2           Bonus.    Employee shall participate in an annual performance
bonus plan, for an additional up to 50% of the Salary per year, subject to
achieving certain gross margin performance metrics per targets and objectives
set forth in Exhibit A hereto and incorporated herein by reference thereto.  In
addition, Employee shall participate in a commission plan for an additional 20%
of the gross margin of revenue generated from sales or services originated by
Employee which bonus shall be paid on a quarterly basis in arrears and in all
cases subject to the Employer’s collection of the proceeds from such sale or
provision of services.
 
4.3           Vacation.  Employee will be entitled to three (3) weeks paid
vacation after six (6) months service hereunder and an additional one (1) week
paid vacation after twelve (12) months of services hereunder, for a total of
four (4) weeks paid vacation annually.
 
4.4           Benefit Plans.  Employee shall be entitled to participate in all
operative individual employee benefit and welfare plans of Employer as then in
effect.  Employee shall be entitled to participate in Ariel Way’s ordinary
Executive Stock Option plan as filed with the Securities and Exchange
Commission.  Notwithstanding the foregoing, nothing contained herein shall, in
any manner whatsoever, require or obligate Employer to adopt or implement, or to
prevent, preclude or otherwise prohibit Employer from amending, modifying,
curtailing, discontinuing or otherwise terminating any Benefit Plan at any
time.    Employee acknowledges that, in order to maintain eligibility for
healthcare benefits, Employee must work on a full-time basis, which means that
Employee must work an average of 32 hours per week during any rolling four week
period (it being understood that Employee is not penalized in such regard for
vacation and other time off provided for herein).  Employer shall fund on
Employee’s behalf up to $6,000 in contributions to Employee’s health savings
account (HSA) for fiscal 2012.
 
4.5           Expenses.      Employee shall be entitled to reimbursement for
cell phone expenses, gas expenses, and reimbursement for travel expenses related
to the business operations of Employer, subject to such reasonable documentation
and other limitations as may be established by the policies of Employer from
time to time.
 
5.           Termination of Employment by Employee.  If Employee terminates his
employment for any reason (either as a result of a breach or otherwise), then
Employer’s obligations under this Agreement shall cease immediately and
permanently.  Employer shall pay Employee such compensation owed as of the date
of termination on the next payday following the month of such termination.  This
termination shall be in addition to any and all remedies available to Employer
at law or in equity resulting from such breach.
 
6.           Miscellaneous.
 
6.1           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.  No party may assign any of its rights, or delegate any of its duties
or obligations, under this Agreement without the prior written consent of the
other party, and any such purported assignment or delegation shall be
void.  Notwithstanding the foregoing, Employer, its affiliates, and its
successors and assigns, may assign its rights and delegate its duties to any
successor entity resulting from any liquidation, merger, consolidation,
reorganization, or transfer of all or substantially all of the assets or stock
of Employer, but such assignment and delegation shall not release the original
party from such obligations and duties if the assignee/transferee fails to honor
such obligations and duties.
 
 
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6.2           Notices.  All notices, demands and other communications
(collectively, “Notices”) given or made pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given if sent by registered or
certified mail, return receipt requested, postage and fees prepaid, by overnight
service with a nationally recognized “next day” delivery company such as Federal
Express or United Parcel Service, or otherwise actually delivered to the
following addresses:
 
 
(a)
if to Employer, to:

 
Government Buys, Inc.

7900 Wisconsin Avenue
Suite 303
Bethesda, MD  20814
Attn: Chief Executive Officer
 
 
(b)
if to Employee, to:

Gary Block
7900 Wisconsin Avenue
Suite 303
Bethesda, MD  20814

Any Notice shall be deemed duly given when received by the addressee thereof,
provided that any Notice sent by registered or certified mail shall be deemed to
have been duly given two (2) business days from the date of deposit in the
United States mail, unless sooner received.  Any of the parties to this
Agreement may from time to time change its address for receiving Notices by
giving written notice thereof in the manner set forth above.
 
6.3           Amendment; Waiver.  No provision of this Agreement may be waived
unless in writing signed by all of the parties to this Agreement, and the waiver
of any one provision of this Agreement shall not be deemed to be a waiver of any
other provision.  This Agreement may be amended only by a written agreement
executed by all of the parties to this Agreement.
 
6.4           Governing Law.  This Agreement shall be governed by and construed
both as to validity and performance and enforced in accordance with the laws of
the State of Maryland without giving effect to the choice of law principles
thereof.
 
6.5           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.  A party may deliver this
Agreement by transmitting a facsimile of this Agreement signed by such party to
the other party, which facsimile signature shall be deemed an original for all
purposes.
 
6.6           Remedies Cumulative.  Each of the various rights, powers and
remedies shall be deemed to be cumulative with, and in addition to, all the
rights, powers and remedies which each party may have hereunder or under
applicable law relating hereto or to the subject matter hereof, and the exercise
or partial exercise of any such right, power or remedy shall constitute neither
an exclusive election thereof nor a waiver of any other such right, power or
remedy.
 
6.7           Headings.  The section and subsection headings contained in this
Agreement are included for convenience only and form no part of the agreement
between the parties.
 
 
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6.8           Severability.  Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
 
6.9           Expenses.  Each party shall pay its own costs and expenses,
including, without limitation, the fees and expenses of their respective counsel
and financial advisors.
 
6.10         Entire Agreement.  This Agreement, including the Purchase Agreement
and exhibits and schedules, and other agreements to be entered into in
connection with the transactions contemplated by the Purchase Agreement,
constitute and embody the entire understanding and agreement of the parties
hereto relating to the subject matter hereof and thereof and there is no other
agreement or understanding, written or oral, in effect between or among the
parties relating to such subject matter except as expressly referred to herein.
 
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IN WITNESS WHEREOF, the parties hereto have duly executed this Employment
Agreement as of the date first above written.
 
EMPLOYEE
 
Gary Block
Gary Block
 
GOVERNMENT-BUYS, INC.,
 
a Maryland corporation
 
Dean V. Schauer
By:
Dean V. Schauer
Its:
 

 
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EXHIBIT A

ANNUAL BONUS CRITERIA

[To be mutually agreed upon in writing post-Closing.]
 
 
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