Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the day of January 6, 2005,
by and between Michael Davies ("Employee") and RECLAMATION CONSULTING AND
APPLICATIONS, INC., a Colorado Corporation with its principal place of business
at 23832 Rockfield Boulevard, Suite 275, Lake Forest, California 92630
("Company").
1. RECITALS:
1.1 The company is in the business of manufacturing and marketing asphalt,
cement and related products release agents in liquid form that are non-toxic,
non-explosive and environmentally compatible, the formulation and ingredients of
which are confidential.
1.2 Employee has experience in the businesses conducted and to be conducted
by the Employer, or in related businesses, and desires to be employed by the
Company, and the Company desires to employee the Employee, on the terms and
conditions specified below
2. COVENANTS:
In consideration of the recitals and mutual covenants contained herein, the
parties agree that:
2.1 Employment. The Company will employ Employee to serve as Executive Vice
President & Chief Financial Officer with the duties listed and defined by the
Company or the Board, in connection with the Company's operations and Employee
does hereby accept such employment, all subject to the terms and provisions of
this Agreement. Employee represents that he is legally free to enter into this
agreement and that it does not conflict with any of his duties or obligations to
any other person and that he is not in any way restricted by any duties or
obligations to any other person from contributing his knowledge and talents to
the Company in performing his duties hereunder.
2.2 Term. This Agreement shall have an initial five-year term, which shall
be automatically renewed each year thereafter unless the Company, upon thirty
(30) days prior notice notifies Employee of its intent not to renew the
Agreement. Notwithstanding the foregoing, the Company or the Employee may at any
time terminate this Agreement and the employment relationship on thirty (30)
days prior notice to the other, with the consequences hereinafter set forth.
2.3 Compensation. During the first twelve months of employment, the Company
agrees to compensate Employee (from the commencement of this agreement) at the
rate of not less than $135,200 per year base compensation for the first year of
employment. Thereafter, Employee's annual compensation shall be increased by 20%
on each anniversary date of this agreement, provided that the Company reaches a
minimum net profit of $250,000. In no event shall Employee's minimum base
compensation be reduced below $135,200 per year. Such compensation shall be
payable monthly or on such more frequent basis as the Company may establish.
2.4 Bonuses. An annual bonus will be paid to Employee, the amount of which
is based upon the Company's net profits and shall be structured as follows:
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RCAI % of Salary Salary Bonus
Net Profit Paid as Bonus Amount Amount
$250,000 10% $135,200 $ 13,500
$500,000 20% $135,200 $ 27,000
$750,000 30% $135,200 $ 40,500
$1,000,000 40% $135,200 $ 54,000
$1,250,000 50% $135,200 $ 67,500
$1,500,000 60% $135,200 $ 81,000
$1,750,000 70% $135,200 $ 94,500
$2,000,000 80% $135,200 $108,000
$2,250,000 90% $135,200 $121,000
$2,500,000 100% $135,200 $135,000
RCAI % of Salary Salary Bonus
Net Profit Paid as Bonus Amount Amount
$250,000 10% $162,240 $ 16,224
$500,000 20% $162,240 $ 32,448
$750,000 30% $162,240 $ 48,672
$1,000,000 40% $162,240 $ 64,898
$1,250,000 50% $162,240 $ 81,120
$1,500,000 60% $162,240 $ 97,344
$1,750,000 70% $162,240 $113,568
$2,000,000 80% $162,240 $129,792
$2,250,000 90% $162,240 $146,016
$2,500,000 100% $162,240 $162,240
RCAI % of Salary Salary Bonus
Net Profit Paid as Bonus Amount Amount
$250,000 10% $194,688 $19,468.80
$500,000 20% $194,688 $38,937.60
$750,000 30% $194,688 $58,406.40
$1,000,000 40% $194,688 $77,857.20
$1,250,000 50% $194,688 $ 97,344
$1,500,000 60% $194,688 $116,812.80
$1,750,000 70% $194,688 $136,281.60
$2,000,000 80% $194,688 $155,750.40
$2,250,000 90% $194,688 $175,219.20
$2,500,000 100% $194,688 $194,688
RCAI % of Salary Salary Bonus
Net Profit Paid as Bonus Amount Amount
$250,000 10% $233,625.60 $ 23,362.56
$500,000 20% $233,625.60 $ 46,727.12
$750,000 30% $233,625.60 $ 70,087.68
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$1,000,000 40% $233,625.60 $ 93,450.24
$1,250,000 50% $233,625.60 $116,812.80
$1,500,000 60% $233,625.60 $140,175.36
$1,750,000 70% $233,625.60 $163,537.92
$2,000,000 80% $233,625.60 $186,900.48
$2,250,000 90% $233,625.60 $210,263.04
$2,500,000 100% $233,625.60 $233,625.60
RCAI % of Salary Salary Bonus
Net Profit Paid as Bonus Amount Amount
$250,000 10% $280,350.72 $ 28,035.07
$500,000 20% $280,350.72 $ 56,070.14
$750,000 30% $280,350.72 $ 84,105.21
$1,000,000 40% $280,350.72 $112,140.28
$1,250,000 50% $280,350.72 $140,175.36
$1,500,000 60% $280,350.72 $168,210.43
$1,750,000 70% $280,350.72 $196,245.49
$2,000,000 80% $280,350.72 $224,280.57
$2,250,000 90% $280,350.72 $252,315.64
$2,500,000 100% $280,350.72 $280,350.72
2.5 Stock Options. The option to purchase 2,500,000 shares of common
restricted stock in the Company has been granted in Employee's name. All options
shall expire 5-years from the vesting date. 1,500,000 of these options have been
carried over from Employee's previous Employment Agreement with the Company.
Options will be vested annually, subject to continued employment, and released
to Employee as per the schedule below. The corresponding number of share options
shall be vested to Employee at the purchase values and on the dates indicated.
No. Options Date Available Exercise Price
500,000 January 15, 2002 $0.40 per share
500,000 January 15, 2003 $0.40 per share
500,000 January 15, 2004 $0.40 per share
1,000,000 January 15, 2005 $0.25 per share
Additional stock options may be granted to Employee each year following the
above schedule on the anniversary date of this Agreement, the amount and price
of which to be determined solely by the Company.
2.6 Duties. Employee agrees to devote his energies to the business of the
Company and agrees to perform such reasonable responsibilities and duties as may
be assigned to him from time to time by the Company or by the Company's board of
directors, which shall be consistent with his position as Executive Vice
President. In no event shall the Employee be precluded from activities in
professional societies, or from lecturing or writing in areas of his
professional expertise for reasonable periods, and Employee shall be entitled to
retain fees, honoraria, publication royalties and similar compensation paid as a
result of such activities.
2.7 Additional Benefits. The Company agrees to reimburse Employee promptly
for or to pay on behalf of Employee, any reasonable expenses heretofore or
hereafter incurred by Employee (to the extent not paid by others) in the
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furtherance of the goals of the Company upon submission of a satisfactory
accounting by Employee, and to provide Employee with the following additional
benefits:
2.7.1 A minimum of three weeks annual paid vacation. Vacation shall accrue
on a monthly basis or part thereof; however, once unused vacation has accrued to
a maximum of three weeks, accrual of additional vacation shall cease until the
balance of accrued vacation has been reduced below six weeks. The Company will
not cause the vacation accrual to cease by withholding its approval of any of
the Employee's vacation requests.
2.7.2 Any other standard benefits that may be established by the Company or
its affiliates for its employees.
2.8 Non-Disclosure of Confidential Information. It is understood that
employee will acquire and be informed of confidential technical and/or business
information used by and belonging to the Company ("Confidential Information"),
including Confidential Information as defined in the Company's EMPLOYEE
NON-DISCLOSURE AND NON-COMPETITION AGREEMENT. Employee agrees that some or all
of such Confidential Information is in the nature of trade secrets and is the
sole property of the Company. Employee will keep confidential, and will not
disclose to any third person or entity, any Confidential Information without
Employer's consent and pursuant to the proceedings further defined in the
Company's EMPLOYEE NON-DISCLOSURE AND NON-COMPETITION AGREEMENT.
2.9 Confidentiality after Termination of Employment. Employee agrees that
upon termination of employment, he or she shall surrender promptly to the
Company any and all documents and property of the Company, including, but not
limited to: reports, drawings, manuals, correspondence, customer lists and other
Confidential Information which he or she may possess, and all other materials
and all copies thereof relating in any way to the Company's business, or in any
way obtained by the Employee during the course of his employment, and that he
shall not retain any copies, notes or abstracts of the foregoing. Employee
further agrees that such documents, lists and information shall be and remain
the sole property of the Company. All of the terms of paragraph 2.8 shall remain
in full force and effect both during the continuation of employment of Employee
by the Company and after the termination of employment for any reason.
2.10 Confidentiality. Employee agrees to execute standard Company documents
establishing the Employee's duties of confidentiality and the rights of the
Company to all inventions, trade secrets, etc., developed by the Employee in the
course of his employment, namely the EMPLOYEE NON-DISCLOSURE AND NON-COMPETITION
AGREEMENT.
2.11 Non-Competition. Employee agrees that during the term of his
employment by Company, Employee will not engage in any way whatsoever, directly
or indirectly, in any business that is competitive with the Company and its
subsidiaries and affiliate operations, nor solicit or in any other manner work
for or assist any business which is competitive to the Company and its
subsidiaries and affiliate operations.
2.12 Non-Participation in Competitive Activities. During the term of this
agreement, Employee will undertake no planning for or organization of any
business activity competitive with the work he performs as an Employee of the
Company and its subsidiaries and affiliate operations, and Employee will not
combine or participate with other employees of the Company and its subsidiaries
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and affiliate operations for the purpose of organization of any such competitive
business activity.
2.13 Assignment to Company of Proprietary Rights. Employee agrees to
execute any and all documents and take any and all other actions necessary or
desirable for the assignment to the Company and its subsidiaries and affiliate
operations of all of his interests in any Confidential Information, trade
secrets, copyrightable materials and patentable or patented ideas developed by
him, alone or in conjunction with others, in the course of his employment by the
Company.
2.14 Injunctive Relief. The parties hereto agree and acknowledge that many
of the rights conveyed by this Agreement are of a unique and special nature and
that the Company and its subsidiaries and affiliate operations will not have an
adequate remedy at law in the event of failure of Employee to abide by its terms
and conditions, nor will money damages adequately compensate for such injury. It
is, therefore, agreed between the parties that in the event of breach by
Employee of Employee's covenants contained in this Agreement, the Company and
its subsidiaries and affiliate operations shall have the rights, among other
rights, to damages sustained thereby and to a preliminary or permanent
injunction to restrain Employee from the prohibited acts. Employee agrees that
this Paragraph shall survive for one year after the termination of his
employment, and Employee shall be bound by its terms for a period of one year
subsequent to the termination of his employment, providing that the Company and
its subsidiaries and affiliate operations continue to conduct the same business
or businesses as they were conducting during the period of this Agreement.
Nothing herein contained shall in any way limit or exclude any and all other
rights granted by law or equity to the Company and its subsidiaries and
affiliate operations.
2.15 Termination of Employment. If Employee's employment terminates or is
terminated, the rights and obligations of the parties shall depend upon the
reason for termination. Termination may occur for any one of the following
reasons: termination by the Company for cause, termination by the Company
without cause, termination by Employee without cause, termination by Employee
with cause, or termination of Employee by reason of his death or long-term
disability.
2.15.1 Termination by Company for Cause. In the event of termination by the
Company for cause, which shall consist only of specific actions knowingly and
intentionally taken by Employee to the specific material detriment of the
Company and not reasonably intended by him to benefit the company, the Employee
will receive all unpaid salary, bonuses, and other benefits accrued through the
last day of employment. Employee agrees, if he is so terminated for cause, that,
for a period of one year following the termination of employment of the
Employee, Employee will not engage in any way whatsoever, directly or
indirectly, in any business that is competitive with the Company and its
subsidiaries and affiliates utilizing any Confidential Information acquired
while organizing, founding, or acting as an officer, director or employee of the
Company, its subsidiaries or affiliates, nor solicit customers, investors,
service providers, or strategic partners of the Company, with the Company's, or
its subsidiary's or affiliates' business whether by interfering with or raiding
their employees, or disrupting or interfering with their relationships with
customers, investors, service providers, or strategic partners. Employee will
have thirty days after termination by the Company for cause to challenge the
termination. Employee may challenge the termination by the Company for cause by
sending written notice to that effect to the Company via registered or certified
mail, postmarked no later than 30-days from the date that employee received
notice from the Company that Employee was being terminated by the Company for
cause. The Company and Employee will each select an arbitrator who will each
review the facts surrounding the termination and the challenge. The arbitrators
will decide whether the Company was justified in terminating the Employee for
cause. If the arbitrators cannot agree whether the Company was justified in
terminating Employee for cause, the arbitrators will select a third arbitrator
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who will make the determination of whether the Company was justified in
terminating the Employee for cause. The arbitration proceeding shall be
conducted in accordance with the provisions of California's Arbitration act,
Code of Civil Procedure, Sections 1280, et seq. The Company and Employee agree
to abide by the decision of the arbitration.
If the arbitrators agree or if the third arbitrator determines, as applicable,
that the Company was not justified in terminating the Employee for cause, within
72 hours of receiving the arbitration decision that the termination by the
Company for cause was not justified, the Company will pay Employee back pay for
all salaries and benefits from the date of termination through the date of the
arbitration decision. The termination will then be treated as a termination by
the Company without cause, subject to the provisions of subparagraphs
2.15.2 Termination by Company without Cause. In the event of termination by
the Company without cause, i.e., an involuntary termination, or notification by
the Company of an intent not to renew the Agreement pursuant to paragraph 2.2 of
this Agreement, Employee shall be entitled to elect to receive severance pay
equal to 50% of the annual total compensation in effect in the last month of
employment, but in no cause less than $67,600 and will receive all unpaid
salary, bonuses, and other benefits accrued through the last day of employment.
2.15.3 Termination by Employee without Cause. In the event of termination
by Employee without cause, i.e., a voluntary termination, the Employee will
receive all unpaid salary, bonuses, and other benefits accrued through the last
day of employment. Employee agrees, if he so terminates without cause, that, for
a period of one year following the termination of employment of the Employee,
Employee will not engage in any way whatsoever, directly of indirectly, in any
business that is competitive with the Company and its subsidiaries and
affiliates utilizing any Confidential Information acquired while organizing,
founding, or acting as an officer, director or employee of the Company, its
subsidiaries, or affiliates, nor solicit customers, investors, service
providers, or strategic partners of the Company, or any of its subsidiaries or
operating affiliates; or disrupt, damage, impair or interfere with the
Company's, or its subsidiary's or affiliates' business whether by interfering
with or raiding their employees, or disrupting or interfering with their
relationships with customers, investors, service providers or strategic
partners. Thereafter, he will be free to so compete or participate with a
competitor.
2.15.4 Termination by Employee with Cause. In the event of receipt of
notice of termination by Employee with cause, which shall consist only of a
material breach of the agreement by the Company including, without limitation,
nonpayment of salary or other compensation due, non-reimbursement of business
expenses, or failure to provide either health insurance allowance or coverage or
other benefits, the Company will have thirty days after receipt of notice of
termination by Employee to challenge the termination by Employee with cause. The
Company and Employee will each select an arbitrator who will each review the
facts surrounding the termination and the challenge. The arbitrators will decide
wither the Employee is justified in terminating with cause. If the arbitrators
cannot agree whether the Employee is justified in terminating with cause, the
arbitrators will select a third arbitrator who will make the determination of
whether the Employee is justified in terminating with cause. The arbitration
proceeding shall be conducted in accordance with the provisions of California's
Arbitration act, Code of Civil Procedure, Sections 1280, et seq. The Company and
Employee agree to abide by the decision of the arbitration.
If the arbitrators agree, or if the third arbitrator determines, as applicable,
that the Employee is justified in terminating with cause, or if the Company
fails to challenge the termination by the Employee with cause within the thirty
day period, the Employee shall be entitled to elect to receive severance pay
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equal to 100% of the annual total compensation in effect in the last month of
employment, but in no case less than
$135,200 and will receive all unpaid salary, bonuses, and other benefits accrued
through the last day of employment plus 30 days. If the arbitrators agree, or if
the third arbitrator determines, as applicable, that the Employee is not
justified in terminating with cause, the termination will be treated as a
termination by Employee without cause, subject to the provisions of
subparagraphs 2.15.3.
2.15.5 Termination by Death or Disability. In the event of termination by
reason of death of the Employee or the long-term disability of the Employee,
Employee shall be entitled to termination pay equal to three month's pay plus
three month's benefits, and will receive all unpaid salary, bonuses, and other
benefits accrued through the last day of employment. All payments due under this
paragraph will be made on the date of termination of employment. For purposes of
this section, the Company may terminate the Employee due to long-term disability
if the Employee is unable to perform any of his duties for a period of ninety
consecutive days or more, for reasons of sickness or injury. Additionally, in
the event of the long-term disability of Employee, if Employee is terminated by
the Company and then subsequently recovers from the disability, Employee will be
free to compete in any way whatsoever, directly or indirectly, in any business
that is competitive with the Company, and may solicit or in any other manner
work for or assist any business which is competitive to the Company.
2.15.6 Severance Pay. If Employee elects to receive the severance pay
provided for in subparagraph 2.15.2 or 2.15.4, whichever is applicable, and that
severance pay together with all other payments required by this Agreement are
paid to Employee in accordance with subparagraph 2.15.7, Employee agrees that
for a period of one year following the termination of employment of the
Employee, Employee will not engage in any way whatsoever, directly or
indirectly, in any business that is competitive with the Company and its
subsidiaries and affiliates utilizing any Confidential Information acquired
while organizing, founding, or acting as an officer, director or employee of the
Company, its subsidiaries or affiliates, nor solicit customers, investors,
service providers, or strategic partners of the Company, or any of its
subsidiaries or operating affiliates; or disrupt, damage, impair or interfere
with the Company's, or its subsidiary's or affiliates' business whether by
interfering with or raiding their employees, or disrupting or interfering with
their relationships with customers, investors, service providers or strategic
partners.
If Employee elects not to receive such severance pay, Employee will be free to
compete in any way whatsoever, directly or indirectly, in any business that is
competitive with the Company, and may solicit or in any other manner work for or
assist any business which is competitive to the Company.
2.15.7 Termination for any reason. In the event of termination for any
reason, all pay due under this Agreement except for severance pay is payable by
the Company on the last day of employment. Severance pay, when applicable, will
be paid as follows: one-half on the last day of employment and the remaining
payments in three equal monthly installments payable on the first of months four
through six.
2.16 Future Agreement. This Agreement and the documents referred to herein
contain the entire agreement of the parties relevant to the subject matter
hereof, and it may be amended only by a written document signed by both Employee
and Company.
2.17 Governing Law. The laws of California, without regard to conflicts of
laws principles thereof, shall govern this agreement.
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2.18 Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the heirs, successors and assigns of the parties hereto.
EMPLOYEE:
[Print Name]
RECLAMATION CONSULTING AND APPLICATIONS, INC.
By:
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Its.
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