NEWGOLD INC.

EXECUTIVE  EMPLOYMENT  AGREEMENT  dated as of February 1, 2006 between  Newgold,
Inc., a Delaware  corporation (the "Company" or "Newgold"),  and James W. Kluber
(the "Executive").

The  Company  desires  to  employ  the  Executive  as Chief  Financial  Officer,
Secretary  and member of the Board of  Directors  and the  Executive  desires to
accept  such  employment  by  the  Company,  on the  terms  and  subject  to the
conditions hereinafter set forth.

NOW,  THEREFORE,  in  consideration  of the  mutual  covenants  and  obligations
hereinafter set forth, the parties hereto hereby agree as follows:

SECTION 1.        EMPLOYMENT. Effective as of the date hereto the Company hereby
employs the  Executive,  and the  Executive  hereby  accepts  employment  by the
Company, upon the terms and subject to the conditions hereinafter set forth.

SECTION 2.        TERM.

         (a) The employment of the Executive  hereunder  shall be for the period
commencing  as of the date hereof and ending on January  31, 2009 (the  "Initial
Term").  The Term shall  automatically  be extended prior to the end of the then
current Term for  successive  one year  periods  until either the Company or the
Executive  notifies  the other party in writing at least six months prior to the
end of the Term  (defined  below) that it or he does not wish to further  extend
the Term. As used herein,  "Term" shall mean the Initial Term and all subsequent
one-year extension periods, unless the Term is earlier terminated under Sections
6, 7, 8 or 9.

         (b) During the Initial Term the Company shall not require the potential
relocation of the Executive without the Executive's approval.

SECTION 3.        DUTIES. The Executive shall be employed as the Chief Financial
Officer  of the  Company  or in  such  other  position  as the  Company  and the
Executive  shall agree in writing,  The Executive  shall perform such duties and
services as are appropriate and commensurate  with the Executive'  position with
the Company and as are  consistent  in stature and prestige  with such  position
subject only to the supervision of the Chief  Executive  Officer of the Company.
The Executive shall report directly and solely to the Chief Executive Officer of
the Company.  Notwithstanding  the above, the Executive shall not be required to
perform any duties or  responsibilities  which would, or would not be likely to,
result in a non-compliance with or violation of any applicable law,  regulation,
regulatory bulletin, and/or any other regulatory requirement.

SECTION 4.        TIME TO BE DEVOTED TO EMPLOYMENT

         (a) Except for four weeks  vacation (or the amount of vacation to which
the Executive is otherwise  entitled under company policy) per year (in addition
to public holidays) and absences due to temporary illness,  during the Term, the
Executive  shall devote  substantially  all of his business time,  attention and
energies  to the  business  and affairs of the  Company  (or,  at the  Company's
option, any direct or indirect subsidiary of the Company).  A number of flexible
days will be assigned for religious holidays as per Corporate Policy.

         (b) During the Term,  the  Executive  shall not be engaged in any other
business  activity which  conflicts with the duties of the Executive  hereunder,
whether or not such  activity  is pursued  for gain,  profit or other  pecuniary
advantage; provided, however, that the Executive shall be allowed, to the extent
such  activities do not  substantially  interfere  with the  performance  by the
Executive  of his  duties  and  responsibilities  hereunder,  (a) to manage  his
personal  affairs,  and (b) to serve on boards or  committees  of  corporations,
civic or  charitable  organizations  and/or trade  associations  so long as such
corporations,  civic

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<PAGE>
or charitable organizations are not in conflict with the duties of the Executive
or the business of the Company.

SECTION 5.        COMPENSATION; REIMBURSEMENT.

         (a) During the Term,  the Company  (or, at the  Company's  option,  any
subsidiary  of the Company)  shall pay to the  Executive  an annual  salary (the
"Base  Salary")  of not less  than  $160,000,  payable  in  accordance  with the
Company'  normal  payroll   practices.   Such  Base  Salary  shall  be  reviewed
periodically  by the  Board  of  Directors  at  their  convenience,  but no less
frequently  than annually,  for increase by the Board of Directors in their sole
discretion  and in accordance  with the  Company's  established  policies.  At a
minimum,  the Base shall be adjusted by the annual  change in the United  States
Consumer Price Index. Such Base as so adjusted shall than constitute Executive's
"Base" for purposes of this Agreement.

         (b) During the Term and to the extent  available  to  employees  of the
Company (including any of its subsidiaries)  shall be entitled to participate in
all  benefit  plans,  pension,  welfare and  retirement  plans,  directors'  and
officers liability insurance,  life insurance,  hospitalization and surgical and
major medical coverages,  sick leave,  vacation and holiday policies,  long-term
disability  coverage  and such other  standard  fringe  benefits  maintained  or
sponsored by the Company or its subsidiaries.

         (c) The Company shall promptly  reimburse the Executive,  in accordance
with the published  guidelines of the Company,  for all reasonable and necessary
traveling expenses,  disbursements and other reasonable and necessary incidental
expenses  incurred by him for or on behalf of the Company in the  performance of
his duties  hereunder  upon  presentation  by the  Executive  to the  Company of
appropriate  receipts and documentation.  Additionally,  during the Initial Term
the Company shall  reimburse  the  Executive for office  expenses at the rate of
$500 per month.

         (d) Following the expiration or termination of the Term for any reason,
the Executive shall have the right to maintain any (i) health and life insurance
benefits  provided by the Company to the extent provided under applicable law an
(ii) any life insurance  benefits provided byte Company so long as the Executive
makes the premium payments  relating to such life insurance and is allowed to do
so per the respective life insurance company.

         (e) The  Executive  shall be entitled to  participate  in an  equitable
manner with other executive officers of the Company and its subsidiaries in such
discretionary bonus payments or awards as may be authorized,  declared, and paid
by the Board of Directors to the Company's  executives.  More specifically,  the
Company  will make the  Executive a  participant  in its Annual  Incentive  Plan
("AIP") for senior  management  at a target  incentive  rate subject to specific
parameters of  performance as established by the Board of Directors for the AIP.
Until such time as an AIP is approved by the Board of  Directors,  the Executive
shall be entitled to earn as an annual incentive up to 50% of his annual salary.

         (f) Until and unless a stock option plan  specifically  for the Company
is  instituted,  the  Executive  will  participate,  according  to the terms and
conditions  thereof,  in the  company's  stock option plan to the same degree as
other  executive  employees of like grade and status.  Upon  establishment  of a
Company stock option plan,  the  Executive  will  participate,  according to the
terms and conditions  thereof,  to the same degree as other Company employees of
like grade and status.


SECTION 6.        INVOLUNTARY TERMINATION.

         (a) If the Executive is incapacitated or disabled by accident, sickness
or  other  cause  so as to  render  him  mentally  or  physically  incapable  of
performing the services required to be performed by him under this Agreement for
a period of 90 days or longer during any six-month  period (such condition being
herein  referred to as a  "Disability"),  prior to the  Executive  resuming  the
performance of his duties as contemplated  herein, the Company may terminate the
employment of the Executive under this Agreement (an "Involuntary  Termination")
and upon such termination the Term shall terminate. Until the Company shall have
terminated the Executive's employment hereunder, the Executive shall be entitled
to receive his


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<PAGE>
compensation  and other benefits as set forth in this Agreement  notwithstanding
any such physical or mental, disability.

         (b) If the Executive  dies during the Term,  his  employment  hereunder
shall be deemed to cease as of the date of his death, and the termination of his
employment occasioned thereby shall be deemed an Involuntary Termination.

SECTION 7.        TERMINATION  BY  THE  COMPANY  FOR  CAUSE.   The  Company  may
terminate the Executive'  employment  hereunder for "Cause" (a "Termination  for
Cause") and upon such termination the Term shall terminate. For purposes of this
Agreement, "Cause" shall be limited to:

         (a) the continued  failure by the Executive to follow the lawful duties
delegated  to him by the Board of  Directors  (other than any failure  resulting
from an illness or other similar incapacity or disability),  at any time that is
ten (10)  days  after a written  notice  of such  failure  is  delivered  to the
Executive on behalf of the Board of Directors that  specifically  identifies the
manner in which it is alleged that the Executive has not substantially performed
such duties;

         (b) the commission by the Executive of: (i) willful or gross misconduct
in  performing  his duties on behalf of the  Company,  resulting  or  reasonably
likely  to  result  in  material   financial  injury  to  the  Company  or  (ii)
misappropriation of funds,  properties or assets of the Company in excess of ten
thousand  dollars  ($10,000),  (iii)  chronic  use of illegal  drugs or (iv) the
Executive's  expression  of any  statement or commission of any action that is a
libelous per se or slanderous per se statement concerning the Company (including
its subsidiaries and affiliates);

         (c) the Executive'  conviction of, or guilty or nolo contendre plea to,
a crime constituting a felony.

         (d) In any case  described  in this Section 7, the  Executive  shall be
given written notice authorized by a vote of at least majority of the members of
the Board of Directors of the Company (the "Board") that the Company  intends to
terminate the Executive'  employment for Cause.  Such written  notice,  given in
accordance with Section 17 of this  Agreement,  shall specify the particular act
or acts,  or failure to act,  which is or are the basis for the  decision  to so
terminate the Executive'  employment for Cause. The Executive shall be given the
opportunity  (along with counsel) within 30 calendar days of the receipt of such
notice to meet with the Board to defend such act or acts, or failure to act, and
the Executive shall be given 20 business days after such meeting to correct such
act or failure  act.  Upon failure of the  Executive,  within such latter 20 day
period, to correct such act or failure to act, the Executive'  employment by the
Company may be terminated for Cause.

SECTION 8.        TERMINATION BY THE COMPANY  WITHOUT CAUSE;  TERMINATION BY THE
EXECUTIVE FOR GOOD REASON.

         (c) The Company may terminate the employment of the Executive hereunder
at any time during the Term without "Cause' (a "Termination  Without Cause') and
upon such  termination the Term shall  terminate.  It is expressly  acknowledged
that  non-extension of the Term and the Company' notifying the Executive that it
does not wish to extend the Term shall  constitute a Type I Termination  Without
Cause.  Terminations  Without  Cause  Related  to  a  Change  in  Control  shall
constitute  Type II Terminations  Without Cause.  For purposes of this Agreement
"Change in Control" is defined as:

         v.   Any "person"  (as such term is used in Section  13(d) and 14(d) of
              the  Securities  Exchange  Act of 1934,  as  amended)  becomes the
              "beneficial  owner"(as  defined  in Rule  13d-3  under  said Act),
              directly or indirectly,  of securities of the Company representing
              forty-five  percent  (45%)  or  more  of the  total  voting  power
              represented by the Company's then outstanding  voting  securities;
              or

         vi.  A  change  in the  composition  of the  Board  occurring  within a
              two-year period,  as a result of which less than a majority of the
              directors are Incumbent  Directors.  "Incumbent  Directors"  shall
              mean  directors  who either (A) are directors of the Company as of
              the date hereof, or (B) are elected, or nominated for election, to
              the Board with the affirmative votes of at least a majority of the


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<PAGE>
              Incumbent  Directors  at the time of such  election or  nomination
              (but shall not include an individual  whose election or nomination
              is in  connection  with an  actual  or  threatened  proxy  contest
              relating to the election of directors to the Company); or

         vii. The  consummation of a merger or consolidation of the Company with
              any other corporation,  other than a merger or consolidation which
              would result in the voting  securities of the Company  outstanding
              immediately  prior  thereto  continuing  to  represent  (either by
              remaining outstanding or by being converted into voting securities
              of the surviving entity) at least fifty-five  percent (55%) of the
              total voting power  represented  by the voting  securities  of the
              Company or such surviving  entity  outstanding  immediately  after
              such merger or consolidation; or

         viii. (d) The consummation of the sale or disposition by the Company of
              all or substantially all of the Company's assets.

         (b) The  Executive  may  terminate  his  employment  with  the  Company
hereunder at any time during the Term for "Good Reason" (a "Termination for Good
Reason").  It is expressly  acknowledged that  non-extension of the Term and the
Company'  notifying the Executive that it does not wish to extend the Term shall
not constitute  grounds for a Termination for Good Reason.  For purposes of this
Agreement,  "Good Reason" shall mean: (1) a reduction in or continuing,  uncured
failure to pay compensation or benefits (ii) a material breach by the Company of
any material  provision of this  Agreement,  (iii) the Company'  (including  any
officer, director,  employee, agent or representative thereof) expression of any
statement or commission of any action that could reasonably be construed to be a
false or misleading  statement of fact or a libelous,  slanderous or disparaging
statement of or  concerning  the  Executive,  or (iv) the Company  requiring the
Executive  to perform any duties or  responsibilities  which  would  result in a
non-compliance with or violation of any applicable law,  regulation,  regulatory
bulletin, and/or any other regulatory requirement.

SECTION 9.        VOLUNTARY  TERMINATION.  Any  termination of the employment of
the  Executive   hereunder   otherwise  than  as  a  result  of  an  Involuntary
Termination,  a  Termination  For  Cause,  a  Termination  Without  Cause  or  a
Termination for Good Reason shall he deemed to be a "Voluntary  Termination" and
upon such termination the Term shall terminate.  A Voluntary  Termination  shall
not be, and shall not be deemed to be, a breach of this  Agreement.  A Voluntary
Termination shall be deemed to be effective no earlier than four weeks after the
Company'  receipt of written notice  delivered in accordance with the provisions
of Section 17 hereof of such termination to the Company.

SECTION 10.       EFFECT OF TERMINATION OF EMPLOYMENT.

         (a)  Upon  the  termination  of the  Executive's  employment  hereunder
pursuant to a  Voluntary  Termination  or a  Termination  For Cause  neither the
Executive nor his  beneficiary or estate shall have any further tights or claims
against the Company under this Agreement except to receive:

         (v)  any unpaid  portion  of the Base  Salary  provided  for in Section
              5(a), computed on a pro rata basis to the date of termination;

         (vi) cash  compensation  equal to the product of (a) the number of days
              of accrued vacation,  if any,  accumulated by the Executive to the
              effective date of termination  divided by the total number of work
              days per  annum for which the  Executive  receives  a Base  Salary
              multiplied by (b) the Base Salary;

         (vii) reimbursement  for any expenses for which the Executive shall not
              have theretofore been reimbursed as provided in Section 5(d); and

         (viii) any  other  compensation  and  benefits  as may be  provided  in
              accordance  with the terms and provisions of any applicable  plans
              or  programs,  if any  of the  Company  or any  subsidiary  of the
              Company.

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<PAGE>
         (b)  Upon  the  termination  of the  Executive's  employment  hereunder
pursuant  to  an  Involuntary   Termination,   neither  the  Executive  nor  his
beneficiary  or estate  shall  have any  further  rights or claims  against  the
Company  under this  Agreement  except  the right (i) to  receive a  termination
payment  equal to that provided for in Section 10(a) hereof plus (ii) to receive
a cash severance  payment in an aggregate  amount equal to 24 months of the Base
Salary payable in 48 consecutive equal  semi-monthly  installments plus (iii) if
the  Involuntary  Termination  occurs as defined in Section  6(a) above then the
Company  shall  continue to provide  health and welfare  benefits  per  existing
Company policy to the Executive for a period of 24 months.

         (b)

         3.   Upon the  termination,  at the end of the  initial  Term  plus the
              first two  annual  renewals  of the Term,  if  applicable,  of the
              Executive's  employment hereunder pursuant to a Type I Termination
              Without Cause neither the Executive nor his  beneficiary or estate
              shall have any further  rights or claims against the Company under
              this  Agreement  except  (i) the right to  receive  a  termination
              payment  equal to the amount  provided for in Section 10(a) hereof
              plus (ii) the  right to  receive a cash  severance  payment  in an
              aggregate  amount equal to 36 months of the Base Salary payable in
              72  consecutive   equal   semi-monthly   installments.   Upon  the
              termination,  after  the end of the  initial  Term  plus the first
              three annual renewals of the Term, of the  Executive's  employment
              hereunder  pursuant to a Type I Termination  Without Cause neither
              the Executive nor his beneficiary or estate shall have any further
              rights or claims against the Company under this  Agreement  except
              (i) the right to receive a termination payment equal to the amount
              provided  for in  Section  10(a)  hereof  plus  (ii) the  right to
              receive a cash severance  payment in an aggregate  amount equal to
              12 months  of the Base  Salary  payable  in 24  consecutive  equal
              semi-monthly installments plus (iii) the immediate vesting of 100%
              of all unvested  options to ---- purchase  shares of the Company's
              common stock as of the  Termination  Date granted  pursuant to any
              stock option agreement between the Executive and the Company.

         4.   Upon the  termination at any time within 10 years from February 1,
              2005 of the Executive's employment hereunder pursuant to a Type II
              Termination  Without  Cause  or a  Termination  for  Good  Reason,
              neither the Executive nor his beneficiary or estate shall have any
              further  rights or claims against the Company under this Agreement
              except (i) the right to receive a termination payment equal to the
              amount provided for in Section 10(a) hereof plus (ii) the right to
              receive a cash severance  payment in an aggregate  amount equal to
              36 months  of the Base  Salary  payable  in 72  consecutive  equal
              semi-monthly installments plus (iii) the immediate vesting of 100%
              of all unvested options to purchase shares of the Company's common
              stock as of the  Termination  Date  granted  pursuant to any stock
              option agreement between the Executive and the Company.

         (d) In the event of any termination of employment under this Agreement,
the  Executive  shall be under no  obligation  to seek  other  employment  or to
mitigate  damages.  and there shall be no offset  against any amounts due to the
Executive  under this Agreement on account of any  remuneration  attributable to
any subsequent employment that would not constitute a breach of the covenant set
forth in Section 11(a) hereof that the Executive may obtain. Any amounts due are
in the nature of severance payments,  or liquidated damages or both, and are not
in the nature of a penalty.

         (e) The Company's  obligation to make the payments provided for in this
Agreement  and  otherwise  to perform  its  obligations  hereunder  shall not be
affected by any  circumstances,  including,  without  limitation,  any  set-off,
counterclaim,  recoupment,  defense or other  right which the Company has or may
have against the Executive or others.

SECTION 11.       NON-COMPETITION; NON-DISCLOSURE OF INFORMATION.

         (a) The  Executive  shall not during the Term,  and for a period of two
years  following the termination of the Term due to a Termination For Cause or a
Voluntary  Termination:  (i) directly or  indirectly  engage in any  Competitive
Business (as defined below),  whether such  engagement  shall be as an


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<PAGE>
employee,  employer,  owner,  consultant,  partner or other  participant  in any
Competitive Business, (ii) assist others in engaging in any Competitive Business
in the manner  described in the foregoing  clause (i), (iii) induce employees of
the  Company to  terminate  their  employment  with the Company or engage in any
Competitive  Business  or (iv)  solicit  customers  or vendors of the Company to
alter or terminate  their  business  relationship  with the  Company;  provided,
however, that the Executive may own directly or indirectly,  solely as a passive
investment,  securities  of any  Competitive  Business  traded  on any  national
securities  exchange  if the  Executive  is not a  controlling  person of, nor a
member  of a group  which  controls  such  person  and  does  not,  directly  or
indirectly,  own 5% or more of any class of securities  of such person.  As used
herein,  the term "Competitive  Business" shall mean any business which would be
determined  to be a direct  competitor  based on the  "Competition  section"  or
similar  disclosure within the most recent business plan but only if and only to
the extent such  businesses are a primary  business  conducted by the Company or
any of its subsidiaries at the time of any termination of the Term.

         (b) The Executive understands that the foregoing restrictions may limit
his ability to earn a livelihood in a Competitive Business,  but he nevertheless
believes  that he has  received and will receive  sufficient  consideration  and
other benefits (including stock option grants) in connection with his employment
to clearly justify such restrictions which, in any event, the Executive does not
believe would prevent him from earning a living.  Nothing herein contained shall
prohibit the  Executive  from  engaging in a business  that is not a Competitive
Business.

         (c) The Executive  agrees that he will not, at any time during or after
the Term, disclose to any person, firm,  corporation or other entity,  except as
required by law, a court of competent  jurisdiction,  or any recognized subpoena
power, or to prosecute  claims under this Agreement,  any secret or confidential
information  not  already  in,  available  to or  known  by  the  public  domain
concerning the business,  clients or affairs of the Company or any subsidiary or
affiliate thereof for any reason or purpose whatsoever other than in furtherance
of the Executive'  work for the Company or any  subsidiary or affiliate  thereof
nor  shall  the  Executive  make  use of  any of  such  secret  or  confidential
information  for his  own  purpose  or for  the  benefit  of any  person,  firm,
corporation  or other  business  entity except the Company or any  subsidiary or
affiliate thereof.

SECTION 12.       THE  COMPANY'S  RIGHT  TO  INVENTIONS.   The  Executive  shall
promptly disclose,  grant and assign to the Company for its sole use and benefit
any  and  all  inventions,  improvements,  technical  information,  methods  and
suggestions  (the  "Inventions')  relating  in any  way to the  business  of the
Company  which he may develop or acquire  during the Term (whether or not during
usual working hours), together with all patent applications, patents, copyrights
and  reissues  thereof  that  may at any  time be  granted  for or upon any such
Inventions. In connection therewith:

         (a) The  Executive  shall  without  charge,  but at the  expense of the
Company promptly at all times hereafter  execute and deliver such  applications,
assignments,  descriptions and other instruments as may be reasonably  necessary
or proper in the  reasonable  opinion  of the  Company to vest title to any such
inventions,  improvements,  technical information, methods, patent applications,
patents,  copyright  applications,  copyrights or reissues of any thereof in the
Company  and to enable it to obtain  and  maintain  the  entire  right and title
thereto throughout the world; and

     (d) The Executive  shall render to the Company at its expense  (including a
         reasonable  payment for the time involved and related  expenses in case
         he is not then in its employ) all such  assistance as it may reasonably
         require in the prosecution of applications for said patents, copyrights
         or reissues  thereof;  in the  prosecution  or defense or  interference
         which may be  declared  involving  any said  applications,  patents  or
         copyrights  and in any  litigation in which the Company may be involved
         relating to any such  patents,  copyrights,  inventions,  improvements,
         technical information or methods.

SECTION 13.       GOLDEN  PARACHUTE EXCISE TAXES. In the event that the benefits
provided for in this Agreement or otherwise payable to the Executive  constitute
"parachute  payments" within the meaning of Section 280G of the Code and will be
subject  to the  excise  tax  imposed  by  Section  4999 of the  Code,  then the
Executive shall receive a payment from


                                                                   Exhibit 10.12
<PAGE>
the Company  sufficient  to pay the excise tax and federal and state  income and
employment  taxes  arising  from the  payments  made by the Company to Executive
pursuant to this sentence; provided, however, that in no event shall the Company
be  obligated  to pay  Executive  more  than one  million  dollars  ($1,000,000)
pursuant to this  Section 13.  Unless the  Company and the  Executive  otherwise
agree in writing,  the determination of Executive's excise tax liability and the
amount required to be paid under this Section 13 shall be made in writing by the
independent  auditors who are primarily used by the Company immediately prior to
the  Change  of  Control  (the  "Accountants").   For  purposes  of  making  the
calculations  required by this Section 13, the  Accountants  may make reasonable
assumptions  and  approximations  concerning  applicable  taxes  and may rely on
reasonable,  good faith  interpretations  concerning the  application of Section
280G and 4999 of the Code.  The Company and the  executive  shall furnish to the
Accountants  such  information  and documents as the  Accountants may reasonably
request in order to make a determination  under this Section.  The Company shall
bear all costs the  Accountants  may  reasonably  incur in  connection  with any
calculations contemplated by this Section 13.


SECTION 14.       MUTUAL  NONDISPARAGMENT.  In  consideration  of the  foregoing
provisions of this  Agreement  each party agrees that it shall not,  directly or
indirectly,  make or cause others to make any  statement or take any action that
could reasonably be construed to be a false or misleading statement of fact or a
libelous,  slanderous or  disparaging  statement of or concerning the Executive,
the  Company,  its  affiliates,  its  businesses  or  its  employees,  officers,
directors, agents, consultants or stockholders.

SECTION 15.       ENFORCEMENT. It is the desire and intent of the parties hereto
that the  provisions of this  Agreement  shall be enforced to the fullest extent
permissible  under the laws and public policies applied in each  jurisdiction in
which enforcement is sought.  Accordingly,  if any particular  provision of this
Agreement  shall be adjudicated to be invalid or  unenforceable,  such provision
shall be deemed amended to delete there from the portion thus  adjudicated to be
invalid or  unenforceable,  such  amendment  to apply  only with  respect to the
operation  of such  provision  in the  particular  jurisdiction  in  which  such
adjudication  is  made;  provided,  however,  that  if any  one or  more  of the
provisions  contained in this  Agreement  shall be  adjudicated to be invalid or
unenforceable  because  such  provision  is held to be  excessively  broad as to
duration,  geographical  scope,  activity or subject,  such  provision  shall be
deemed amended by limiting and reducing it so as to be valid and  enforceable to
the maximum extent  compatible  with the applicable  laws of such  jurisdiction,
such  amendment to apply only with respect to the operation of such provision in
the particular jurisdiction in which such adjudication is made.

SECTION 16.       REMEDIES; SURVIVAL.

         (a) The Executive  acknowledges  and understands that the provisions of
this Agreement are of a special and unique  nature,  the loss of which cannot be
accurately  compensated  for in damages by an action at law, and that the breach
of the provisions of this Agreement would cause the Company irreparable harm. In
the event of a breach by the  Executive  of the  provisions  of Section 11 or 12
hereof, the Company shall be entitled to an injunction restraining him from such
breach.  Nothing herein  contained shall be construed as prohibiting the Company
from pursuing any other remedies available for any breach of this Agreement.

         (b)  Notwithstanding  anything  contained  in  this  Agreement  to  the
contrary, the provisions of this Agreement shall survive the expiration or other
termination of the Term or this Agreement until, by their terms; such provisions
are no longer operative.

         (c) It is understood  and agreed that the provisions of Sections 11, 12
and 13 of this  Agreement  are separate and  distinct  from any other  agreement
between  the  parties  hereto.  Accordingly,  in the  event of a breach  of such
provisions,  the  breaching  party  shall only be held  responsible  for damages
arising under


                                                                   Exhibit 10.12
<PAGE>
such provisions and not for any damages,  which may be claimed to arise under or
with respect to any other agreement that is not separately breached.

SECTION 17.       KEY MAN  INSURANCE.  The Company may, for its own benefit,  in
its sole discretion,  maintain "key-man" life and disability  insurance policies
covering  the  Executive.  The  Executive  will  cooperate  with the Company and
provide such  information  as the Company may  reasonably  request in connection
with the Company's obtaining and maintaining such policies.

SECTION 18.       NOTICES.  and  other  communications  hereunder  shall  be  in
writing and shall be delivered  personally or sent by air courier or first class
certified or registered  mail,  return  receipt  requested and postage  prepaid,
addressed as follows:

If to the Executive:
James W. Kluber
327 Copperstone Trail
Coppell, TX 75019

If to the Company:
Newgold, Inc.
400 Capitol Mall, Suite 900
Sacramento, CA 95814
Attention: CEO

or to such  other  address  as the party to whom  notice is to be given may have
furnished to the other party in writing in accordance herewith.  All notices and
other communications hereunder shall be deemed to have been given on the date of
delivery.


SECTION 19.       BINDING  AGREEMENT.  This Agreement shall inure to the benefit
of and be  enforceable  by the  Executive's  personal or legal  representatives,
executors, administrators,  successors, heirs, distributees and devisees. If the
Executive  should die while any amount would still be payable to him  hereunder,
all such amounts,  unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the beneficiary  designated by the Executive
in a  writing  delivered  to the  Company,  or if  there  be no such  designated
beneficiary, to his estate.

SECTION 20.       GOVERNING  LAW.  This  Agreement  shall be  governed  by,  and
construed and enforced in accordance  with,  the laws of the State of California
applicable  to  contracts  made and to be performed  wholly  therein and without
regard to conflicts of laws and principles

SECTION 21.       WAIVER OF BREACH.  The  waiver by either  party of a breach of
any provision of thus  Agreement by the other party must be in writing and shall
not operate or be construed as a waiver of any  subsequent  breach by such other
party.

SECTION 22.       ENTIRE  AGREEMENT;   AMENDMENTS;   EXECUTION.  This  Agreement
contains  the entire  agreement  between the parties with respect to the subject
matter contained  herein and supersedes all, prior agreements or  understandings
among the parties with respect thereto. This Agreement may be amended only by an
agreement  in  writing  signed by the  parties  hereto.  This  Agreement  may be
executed  in any  number  of  counterparts,  each of which  shall be  deemed  an
original document but all of which shall constitute but one agreement.

SECTION 23.       HEADINGS. The section headings contained in this Agreement are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of this Agreement.

SECTION 24.       SEVERABILITY.   Any  provision  of  this   Agreement  that  is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof,  and any such  prohibition  or

                                                                   Exhibit 10.12
<PAGE>
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

SECTION 25.       ASSIGNMENT.  With respect to the Executive-, this Agreement is
personal  in its nature and the  Executive  shall not  assign or  transfer  this
Agreement or any rights and obligations hereunder. This Agreement and its rights
and obligations herein (including, without limitation,  Sections 11, 3.2, 13 and
14) shall inure to the benefit of, and be binding  upon,  each  successor of the
Company, whether by merger, consolidation,  recapitalization, transfer of all or
substantially  all assets,  or otherwise;  provided,  however,  that the Company
shall not assign this Agreement  without the Executive's  written consent,  such
consent not to be unreasonably withheld.

SECTION 26.       LEGAL  FEES  AND   EXPENSES.   If  a  court  of  a   competent
jurisdiction,   arbitral  tribunal  or  similar  adjudicative  tribunal  finally
determines  that the Company has breached any provision of this  Agreement,  the
Company shall reimburse the Executive for all of his or her out of pocket costs,
fees (including  attorneys fees) and expenses  incurred by him to enforce his or
her rights under this Agreement.



EXECUTIVE

By: ______________________________________________
Title:  Chief Financial Officer



NEWGOLD, INC.

By: ___________________________________________
Title:    Chief Executive Officer


























                                                                   Exhibit 10.12