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Exhibit 10.2    
    

Natural Gas Systems, Inc.

Employment Agreement  

        THIS AGREEMENT ("Agreement")is entered into as of
November 10, 2003, by and between Sterling McDonald (the "Employee") and  Natural Gas Systems, Inc.,
 a Delaware corporation (the "Company"). 

        1.     Duties and Scope of Employment. 

        (a)   Position. For the term of his employment under this Agreement (the
"Employment"), the Company agrees to employ the Employee in the position of Chief Financial Officer. The Employee shall report to the Company's CEO and
Board of Directors, or to such other person as the Company subsequently may determine. 

        (b)   Obligations to the Company. During the term of employment under this Agreement, Employee shall devote his/her full
business efforts and time to the Company. The foregoing shall not preclude the Employee from engaging in appropriate civic, charitable or religious activities or from devoting a reasonable amount of
time to private investments or from serving on the boards of directors of other entities, as long as such activities and/or services do not interfere or conflict with his/her responsibilities to the
Company. Employee may provide material work for companies or third parties, if and only if such work is disclosed in writing and Employee receives consent from the Board at a duly-held
meeting of the Board of Directors of the Company. The Employee shall comply with the Company's policies and rules, as they may be in effect from time to time during his
Employment.

        (c)   No Conflicting Obligations. The Employee represents and warrants to the Company that he is under no obligations or
commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement. The Employee represents and warrants that he will not use or disclose, in connection
with his Employment, any trade secrets or other proprietary information or
intellectual property in which the Employee or any other person has any right, title or interest and that his Employment will not infringe or violate the rights of any other person. The Employee
represents and warrants to the Company that he has returned all property and confidential information belonging to any prior employer. 

        (d)   Commencement Date. The Employee shall commence full-time Employment as soon as reasonably practicable and in
no event later than November 11, 2003. 

        2.     Cash and Incentive Compensation.

        (a)   Salary. The Company shall pay the Employee as compensation for his services an initial base salary at a gross annual rate
of $120,000.00. Such salary shall be payable in accordance with the Company's standard payroll procedures. The annual compensation specified in this Subsection (a), together with any increases in such
compensation that the Company may grant from time to time, is referred to in this Agreement as "Base Salary.") 

        (b)   Incentive Bonuses. The Employee shall be eligible to be considered for an annual incentive bonus based on objective or
subjective criteria established by the Company's Board of Directors (the "Board") or the Compensation Committee of the Board. The determinations of the
Board or its Compensation Committee with respect to such bonus shall be final and binding. The Employee shall not be entitled to an incentive bonus if he is not employed by the Company on the date
when such bonus is payable. 

        (c)   Stock Options. Subject to the approval of the Board or the Compensation Committee of the Board, the Company shall grant
the Employee a stock option covering 250,000 shares of the 

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Company's
Common Stock. Such option shall be granted as soon as reasonably practicable after the date of this Agreement. The exercise price of such option shall be equal to the fair market value of
such stock on the later of (i) the date of grant or (ii) the first day of the Employee's Employment. The term of such option shall be 10 years, subject to earlier expiration in
the event of the termination of the Employee's Employment. The Employee shall vest in 1/8th of the option shares after the first six months of continuous service, and thereafter the remaining option
shares shall vest in equal quarterly installments of 1/16th per quarter over the next forty-two months of continuous service. The grant of such option shall be subject to the
other terms and conditions set forth in the Company's 2003 Stock Plan and in the Stock Option Agreement, attached hereto as Exhibits B and C, respectively. 

        3.     Vacation and Employee Benefits. During his Employment, the Employee shall be eligible for paid vacations in accordance
with the Company's vacation policy, as it may be amended from time to time. During his Employment, the Employee shall be eligible to participate in the employee benefit plans maintained by the
Company, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan. 

        4.     Business Expenses. During his Employment, the Employee shall be authorized to incur necessary and reasonable travel,
entertainment and other business expenses in connection with his duties hereunder. The Company shall reimburse the Employee for such expenses upon presentation of an itemized account and appropriate
supporting documentation, all in accordance with the Company's generally applicable policies. 

        5.     Term of Employment.

        (a)   Termination of Employment. The Company may terminate the Employee's Employment at any time and for any reason (or no
reason), and with or without Cause, by giving the Employee ten day's notice in writing. The Employee may terminate his Employment by giving the Company ten days' advance notice in writing. The
Employee's Employment shall terminate automatically in the event of his death. The termination of the Employee's Employment shall not limit or otherwise affect his obligations under Section 7. 

        (b)   Employment at Will. The Employee's Employment with the Company shall be "at will," meaning that either the Employee or
the Company shall be entitled to terminate the Employee's Employment at any time and for any reason, with or without Cause. Any contrary representations that may have been made to the Employee shall
be superseded by this Agreement. This Agreement shall constitute the full and complete agreement between the Employee and the Company on the "at will" nature of the Employee's Employment, which may
only be changed in an express written agreement signed by the Employee and a duly authorized officer of the Company. 

        (c)   Rights Upon Termination. Except as expressly provided in Section 6, upon the termination of the Employee's
Employment, the Employee shall only be entitled to the compensation, benefits and expense reimbursements that the Employee has earned under this Agreement before the effective date of the termination.
The payments under this Agreement shall fully discharge all responsibilities of the Company to the Employee. 

        6.     Termination Benefits. 

        (a)   General Release. Any other provision of this Agreement notwithstanding, Subsections (b) and (c) below shall
not apply unless the Employee (i) has executed a general release of all claims (in a form prescribed by the Company) and (ii) has returned all property of the Company in the Employee's
possession. 

        (b)   Severance Pay. If, after ninety days of Employee's continuous employment with the Company, the Company terminates the
Employee's Employment for any reason other than Cause 

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or
Permanent Disability, then the Company shall pay the Employee his Base Salary for a period of one month following the termination of his Employment (the "Continuation
Period"). The Continuation Period shall increase by one month for every six months of continuous service of Employee, for a maximum of six months (after thirty of continuous
service). Such Base Salary shall be paid at the rate in effect at the time of the termination of Employment and in accordance with the Company's standard payroll procedures. 

        (c)   Definition of "Cause." For all purposes under this Agreement,
"Cause" shall mean: 

          (i)  An
unauthorized use or disclosure by the Employee of the Company's confidential information or trade secrets, which use or disclosure causes material harm to the
Company; 

         (ii)  A
material breach by the Employee of any agreement between the Employee and the Company; 

        (iii)  A
material failure by the Employee to comply with the Company's written policies or rules; 

        (iv)  The
Employee's conviction of, or plea of "guilty" or "no contest" to, a felony under the laws of the United States or any state thereof; 

         (v)  The
Employee's gross negligence or willful misconduct; or 

        (vi)  A
continued failure by the Employee to perform assigned duties after receiving written notification of such failure from the Board of Directors. 

        (d)   Definition of "Permanent Disability." For all purposes under this
Agreement, "Permanent Disability" shall mean the Employee's inability to perform the essential functions of the Employee's position, with or without
reasonable accommodation, for a period of at least 90 consecutive days because of a physical or mental impairment. 

        7.     Non-Solicitation and Non-Disclosure. 

        (a)   Non-Solicitation. During the period commencing on the date of this Agreement and continuing until the first
anniversary of the date when the Employee's Employment terminated for any reason, the Employee shall not directly or indirectly, personally or through others, solicit or attempt to solicit (on the
Employee's own behalf or on behalf of any other person or entity) either (i) the employment of any employee or consultant of the Company or any of the Company's affiliates or (ii) the
business of any customer or working interest partner, or other oil and gas service provider with whom the Company is engaged in one or more projects or relationships. 

        (b)   Non-Disclosure. The Employee has entered into a Proprietary Information and Inventions Agreement with the
Company, attached hereto as Exhibit A, which is incorporated herein by this reference. 

        8.     Successors.

        (a)   Company's Successors. This Agreement shall be binding upon any successor (whether direct or indirect and whether by
purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company's business and/or assets. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets which becomes bound by this Agreement. 

        (e)   Employee's Successors. This Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. 

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        9.     Arbitration. 

        (a)   Scope of Arbitration Requirement. The parties hereby waive their rights to a trial before a judge or jury and agree to
arbitrate before a neutral arbitrator any and all claims or disputes arising out of this Agreement and any and all claims arising from or relating to the Employee's Employment, including (but not
limited to) claims against any current or former employee, director or agent of the Company, claims of wrongful termination, retaliation, discrimination, harassment, breach of contract, breach of the
covenant of good faith and fair dealing, defamation, invasion of privacy, fraud, misrepresentation, constructive discharge or failure to provide a leave of absence, or claims regarding commissions,
stock options or bonuses, infliction of emotional distress or unfair business practices. 

        (b)   Procedure. The arbitrator's decision shall be written and shall include the findings of fact and law that support the
decision. The arbitrator's decision shall be final and binding on both parties, except to the extent applicable law allows for judicial review of arbitration awards. The arbitrator may award any
remedies that would otherwise be available to the parties if they were to bring the dispute in court. The arbitration shall be conducted in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. The arbitration shall take place in Houston, Texas. 

        (c)   Costs. The parties shall share the costs of arbitration equally. Both the Company and the Employee shall be responsible
for their own attorneys' fees, and the arbitrator may not award attorneys' fees unless a statute or contract at issue specifically authorizes such an award. 

        (d)   Applicability. This Section 9 shall not apply to (i) workers' compensation or unemployment insurance claims
or (ii) claims concerning the validity, infringement or enforceability of any trade secret, patent right, copyright or any other trade secret or intellectual property held or sought by either
the Employee or the Company (whether or not arising under the Proprietary Information and Inventions Agreement between the Employee and the Company). 

        10.   Miscellaneous Provisions. 

        (a)   Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be
addressed to him at the home address that he most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all
notices shall be directed to the attention of its Secretary. 

        (b)   Modifications and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the
modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another
time. 

        (c)   Whole Agreement. This Agreement supersedes any previous offer letter. No other agreements, representations or
understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the subject
matter hereof. This Agreement and the Proprietary Information and Inventions Agreement contain the entire understanding of the parties with respect to the subject matter hereof. 

        (d)   Withholding Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes or other charges
required to be withheld by law. 

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        (e)   Choice of Law and Severability. This Agreement shall be interpreted in accordance with the laws of the State of Texas
(except their provisions governing the choice of law). If any provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any applicable jurisdiction by reason of the scope,
extent or duration of its coverage, then such provision shall be deemed amended to the minimum extent necessary to conform to applicable law so as to be valid and enforceable or, if such provision
cannot be so amended without materially altering the intention of the parties, then such provision shall be stricken and the remainder of this Agreement shall continue in full force and effect. If any
provision of this Agreement is rendered illegal by any present or future statute, law, ordinance or regulation (collectively the "Law"), then such
provision shall be curtailed or limited only to the minimum extent necessary to bring such provision into compliance with the Law. All the other terms and provisions of this Agreement shall continue
in full force and effect without impairment or limitation. 

        (f)    No Assignment. This Agreement and all rights and obligations of the Employee hereunder are personal to the Employee and
may not be transferred or assigned by the Employee at any time. The Company may assign its rights under this Agreement to any entity that assumes the Company's obligations hereunder in connection with
any sale or transfer of all or a substantial portion of the Company's assets to such entity. 

        (g)   Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. 

        (h)   Indemnification. As an officer of the Company, Employee will be protected by the indemnification provisions of
Article IV of the Company's Certificate of Incorporation. 

        IN WITNESS WHEREOF, each of the parties has executed this employment Agreement, in the case of the Company by its duly authorized officer,
as of the day and year first above written. 

	

 	

 Employee
	

 	
Natural Gas Systems, Inc.
	

 	

    
 By Robert S. Herlin

Title: CEO and President

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EXHIBIT A

INVENTIONS ASSIGNMENT AGREEMENT  

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EXHIBIT A

STOCK OPTION PLAN  

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EXHIBIT C

STOCK OPTION AGREEMENT  

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Exhibit 10.2QuickLinks
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[CAGAN-MCAFEE LETTERHEAD]  

 
 

Exhibit 10.3    
    

September 23,
2003 

Mr. Robert
S. Herlin

Chief Executive Officer
 NATURAL GAS SYSTEMS, INC.

3 Raydon Lane

Houston, TX 77024 

Dear
Bob, 

We
are pleased that Natural Gas Systems, Inc. (the "Company") desires to engage Cagan McAfee Capital Partners, LLC
("CMCP") as its financial advisor with respect to various matters involving the business of the Company (the "Advisory
Services"). We look forward to working with you and your management team, and have set forth below the agreed upon terms of our involvement. 

	1.
	Scope of Engagement

As
discussed, we will undertake certain services on behalf of the Company, including: 

	(a)
	Assisting
management in preparing a private placement memorandum, executive summary, PowerPoint presentation and other presentation materials that describe the Company and its related
businesses; and,

	(b)
	Introducing
and assisting in the negotiation of bank and finance company lines of credit and term loans;

	(c)
	Providing
financial advisory services and management consulting services to the Company;

	(d)
	Introducing
the Company to potential investors and public relations specialists; and

	(d)
	Providing
assistance to the Company in consummating merger or acquisition transactions with a public entity, including the assistance of negotiation of transactions and advisory work
related to the documentation of acquisitions by the Company.  

 

	2.
	Fees and Expenses.

For
our services hereunder, the Company will pay to CMCP the following: 

	(a)
	A
monthly advisory fee commencing November 1, 2003 (the "Effective Date") of $15,000 per month. Payments shall be made to the
account of CMCP via bank transfer from the Company on the first day of each month during the term of this agreement;

	(b)
	A
merger and acquisitions advisory fee equal to: Three Hundred Thousand Dollars ($300,000) and a warrant to purchase 240,000 shares of the Company's Common Stock
("Warrant"). This Warrant shall have a seven year maturity, a cashless net exercise provision and an exercise price equal to $1.00. This fee and
warrants shall be due and payable upon the successful execution of a merger agreement between the Company and a public entity introduced to the Company by CMCP; and

	(c)
	An
administrative expense reimbursement to CMCP for CFO support and other office and support staff in the amount of $2,500 per month, paid on the first day of each calendar month.
This fee shall terminate December 1, 2003. 

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	3.
	Use of Information; Financing Matters.

	(a)
	The
Company recognizes and confirms that CMCP in acting pursuant to this engagement will be using publicly available information and information in reports and other materials
provided by others, including, without limitation, information provided by or on behalf of the Company, and that CMCP does not assume responsibility for and may rely, without independent verification,
on the accuracy and completeness of any such information. The Company agrees to furnish or cause to be furnished to CMCP all necessary or appropriate information for use in its engagement and hereby
represents and warrants that any information relating to the Company or transaction that is furnished to CMCP by or on behalf of the Company will be true and correct in all material respects and not
misleading. The Company and CMCP agree that any information or advice rendered by CMCP or any of our representatives and any information provided by Company to CMCP in connection with this engagement
are for the confidential use of the receiving party and only as required to effect a transaction and the receiving party will not, and will not permit any third party to, use it for any other purpose
or disclose or otherwise refer to such advice or information, or to the disclosing party, in any manner without prior written consent.

	(b)
	Each
of the Company and CMCP agrees to conduct any offering and sale of securities in any transaction in accordance with applicable federal and state securities laws, and neither the
Company nor CMCP, nor any person acting on behalf of either of them, will offer or sell any securities in a transaction by any form of general solicitation, general advertising, or by any other means
that would be deemed a public offering under applicable law without the express written approval by the Board of Directors of the Company and pursuant to applicable state and federal securities laws.
CMCP has no obligation, express or implied, to purchase or underwrite any transaction or to itself provide any type of financing to the Company or be a party to any transaction, or to solicit
investors outside the United States.  

 

	4.
	Certain Acknowledgements.

The
Company acknowledges that CMCP has been retained by the Company, and that the Company's engagement of CMCP is as an independent contractor. Neither this engagement, nor the delivery of any advice
in connection with this engagement, is intended to confer rights upon any persons not a party hereto (including security holders, employees or creditors of the Company) as against CMCP or our
affiliates or their respective directors, officers, agents and employees. Upon prior written consent of the Company (which consent will not be unreasonably withheld), CMCP may, at our own expense,
place announcements or advertisements approved by the Company in financial newspapers and journals describing our services hereunder. The Company also acknowledges that CMCP may acquire
free-trading or restricted shares or debt of the Company either prior to or after a merger with a public company. The Company also acknowledges that CMCP may also be a significant
shareholder or retained advisor to entities that merge with the Company, and CMCP may make investments in or act as advisor to Companies that later become strategic partners or customers of the
Company. Such relationships shall be disclosed to the Company in writing prior to initiation of such transaction(s). 

	5.
	Indemnity.

CMCP
and the Company have entered into a separate letter agreement, dated the date hereof, providing for the indemnification of CMCP by the Company in connection with CMCP's engagement hereunder, the
terms of which are incorporated into this agreement in their entirety. 

	6.
	Term of Engagement.

CMCP's
engagement shall commence on the date hereof and shall continue until December 31, 2005 (the "Minimum Term"), and monthly thereafter
unless terminated as provided below. CMCP 

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may
terminate this agreement at any time, with or without cause, and the Company may terminate this agreement after the Minimum Term, with or without cause, by giving not less than 30 days
written notice to the other party; provided, however, that no such termination will affect the matters set out in this section or sections 3, 4, 5, or 7, or in the separate letter agreement relating
to indemnification. It is expressly agreed that following the expiration or termination of this agreement, CMCP shall be entitled to receive any fees as described above that have accrued prior to such
expiration or termination but are unpaid, as well as reimbursement for expenses as set forth herein. 

It
is also expressly agreed that if during a period of 24 months following termination of this agreement the Company executes a merger agreement with a public entity based introduced to the
Company by CMCP, the Company will pay CMCP a fee and expense reimbursement equal to the fees and administrative expenses which would have been payable to CMCP pursuant to Section 2 as if the
transaction had occurred during the term of this agreement. For clarification, CMCP shall only be paid the merger advisory fee described in Section 2(a) once. 

	7.
	Miscellaneous.

This
agreement is governed by the laws of the State of Texas, without regard to conflicts of law principles, and will be binding upon and inure to the benefit of the Company and CMCP and their
respective successors and assigns. Neither this agreement nor any duties or obligations under this agreement may be assigned by CMCP without the prior written consent of the Company. The Company and
CMCP agree to waive trial by jury in any action, proceeding or counterclaim brought by or on behalf of either party with respect to any matter whatsoever relating to or arising out of any actual or
proposed transaction or the engagement of or performance by CMCP hereunder. The Company also hereby submits to the jurisdiction of the courts of the State of Texas in any proceeding arising out of or
relating to this agreement, including federal district courts located in such state, agrees not to commence any suit, action or proceeding relating to thereto except in such courts, and waives, to the
fullest extent permitted by law, the right to move to dismiss or transfer any action brought in such court on the basis of any objection to personal jurisdiction, venue or inconvenient forum. This
agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. 

We
are pleased to accept this engagement and look forward to working with you on this matter. Please confirm that the foregoing is in accordance with your understanding of our agreement by signing and
returning to us a copy of this letter. 

	 	 	Very truly yours,
	

 	
 	
CAGAN MCAFEE CAPITAL PARTNERS, LLC
	

 	
 	

By:	

    
 Laird Q. Cagan

Managing Director

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Accepted
and agreed to as of the date set forth above: 

NATURAL GAS SYSTEMS, INC.

	

By	
 	

 Robert S. Herlin

Chief Executive Officer	
 	

 

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Exhibit 10.3

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