EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement (this “Agreement”), dated as of February 4, 2009, to be
effective as of the 1st day of
July 2008, between CPC of America, Inc., a Nevada corporation (together with its
successors or assigns as permitted under this Agreement, the “Company”), and
Xxxxxx X. Xxxx, an individual (the “Executive”).
RECITALS
The
Company desires to employ the Executive and enter into this Agreement embodying
the terms of such employment and the Executive desires to enter into this
Agreement and to accept such employment.
In
consideration of the mutual covenants and for other good and valuable
consideration, the Company and the Executive (individually a “Party” and
together the “Parties”) agree as follows:
1.
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DEFINITIONS
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(a) “Base Salary” shall mean the
salary provided for in Section 4 below subject to such increases as may be
made from time to time.
(b) “Cause” shall
mean:
(i) the
conviction of (including any act as a result of pleading nolo contendere) or
entry of judgment against the Executive by a civil or criminal court of
competent jurisdiction of a felony, or any other offense or wrongdoing involving
embezzlement, fraud, misappropriation of funds, any act of moral turpitude or
dishonesty;
(ii) the
indictment of the Executive by a state or federal grand jury or the filing of a
criminal complaint or information for a felony, or any other offense involving
embezzlement, fraud, misappropriation of funds, any act of moral turpitude or
dishonesty, unless such indictment or filing is dismissed within one hundred
eighty (180) days from the date of such indictment or filing. The Board of
Directors of the Company (“Board of Directors”) may elect to suspend and extend
the Term of Employment by such one hundred eighty (180) day period or the number
of days actually taken by the Executive to dismiss such indictment or filing,
whichever is less; provided that the Executive notifies the Company in writing
that the Executive intends to contest in good faith such indictment or filing
and pursues the dismissal of such indictment or filing with reasonable
diligence. During such period of suspension, Executive may be relieved of
duties, but shall be entitled to receive Base Salary;
(iii) the
written confession by the Executive of embezzlement, fraud, misappropriation of
funds, any act of moral turpitude or dishonesty or acts constituting a
felony;
(iv) the
finding by a court of competent jurisdiction in a criminal or civil action or by
the U.S. Securities and Exchange Commission or state blue sky agency in an
administrative proceeding that the Executive has willfully violated any federal
or state securities law;
(v) the
engagement by the Executive in willful and continued misconduct, or the
Executive’s willful and continued failure to substantially perform the
Executive’s obligations, for a period of twenty (20) days following written
notice by the Company describing in reasonable detail the specific items of
misconduct or failures;
(vi) the use
by the Executive of alcohol or any controlled substance to an extent that it
interferes, in the sole discretion of the Board of Directors, on a continuing
and material basis with the performance of the Executive’s duties under the
Agreement;
(vii) the
willful, unauthorized disclosure by the Executive of Confidential Information,
as defined in Section 10, concerning the Company or any subsidiary, unless
such disclosure was (A) believed in good faith by the Executive to be
appropriate in the course of properly carrying out duties under the Agreement,
or (B) required by an order of a court having jurisdiction over the subject
matter or a summons, subpoena or order in the nature thereof of any legislative
body (including any committee thereof) or any governmental or administrative
agency;
(viii) performance
of services by the Executive, other than in the course of properly carrying out
her duties under the Agreement and as otherwise provided herein, in breach of
Executive’s covenants set forth in Section 10(b) of this Agreement while the
Executive is employed by the Company
(ix) commission
by Executive of an act involving moral turpitude, dishonesty, theft or unethical
business conduct, or conduct which impairs or injures the reputation of, or
xxxxx, the Company, or any violation of law or regulations on Company premises
or to which the Company is subject; or
(x) any
material breach of this Agreement or Company rules that, if capable of being
corrected, remain uncorrected 15 days following the Company’s delivery of
written notice of such breach.
(c) “Change in Control” means,
and shall be deemed to occur upon the happening of the acquisition, directly or
indirectly, in a single transaction or a series of related transactions by any
person resulting in the beneficial ownership of 50% or more of the combined
voting power of the then outstanding voting securities of the
Company entitled to vote;
(d) "Sale of the Company" means
either of the following transaction that takes place during the Term or to which
the Company agrees to during the Term (i) a merger or consolidation of involving
the Company (except where the shareholders of the Company immediately prior to
the merger or consolidation own 50% or more of the voting shares of the
surviving corporation immediately after the merger or consolidation), (ii) the
sale of all or substantially all of the assets of the Company, or (iii) the sale
or licensing of all or substantially all of the Company’s rights to its MedClose
device.
(e) “Term of Employment” shall
mean the initial three-year period specified in Section 2 below and if, but
only if, automatically renewed as provided in Section 2, shall include the
period of such renewal.
(f) “Voting Securities” means
securities of the Company, the holders of which are entitled to vote for the
election of directors.
Page 2 of 9
2.
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TERM
OF EMPLOYMENT
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(a) The
Company hereby employs the Executive, and the Executive hereby accepts
employment with the Company, in the position and with the duties and
responsibilities as set forth in Section 3 below for the Term of
Employment, subject to the terms and conditions of the Agreement.
(b) The
initial Term of Employment shall commence as of the date of this Agreement
retroactive to July 1, 2008 and shall terminate on June 30, 2011, unless
terminated earlier as provided in Section 8; provided that the Term of
Employment shall automatically renew for successive one-year periods unless
(i) it has sooner terminated as provided in Section 8 or
(ii) either party has notified the other in writing at least thirty (30)
days prior to the otherwise scheduled expiration of the Term of Employment that
such Term of Employment shall not so renew.
(c) The
Executive shall devote such portion of her business time as is necessary to
carry out the duties and responsibilities of her employment hereunder in a
timely and competent manner. Otherwise, the Executive shall be
allowed to devote her remaining business time to other non-Company related
business matters, including her private accounting practice, provided that such
other business activities do not conflict with the covenants in Section
10.
3.
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POSITION,
DUTIES AND AUTHORITIES
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During
the Term of Employment, the Executive shall be employed as the Chief Financial
Officer of the Company. Subject to supervision and in accordance with
the policies and directives established by the Chief Executive Officer, the
Executive’s duties and responsibilities shall include responsibility for all
accounting and SEC reporting functions and such other duties, responsibilities
and authorities customarily associated with such positions.
4.
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BASE
SALARY; EXPENSES
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(a) During
the Term of Employment, the Executive shall be paid by the Company a Base Salary
payable no less frequently than in equal monthly installments at an annualized
rate of $60,000; subject to increase as may be determined by the Company within
its sole discretion.
(b) Executive
shall be personally responsible for the payment of, and shall not be entitled to
seek reimbursement from the Company for, any travel, entertainment or other
business expenses incurred by Executive in connection with the performance of
her duties on behalf of the Company.
5.
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RESTRICTED
STOCK GRANT
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In
addition to the Base Salary, the Company shall issue to Executive upon the
execution of this Agreement by the parties hereto 30,000 shares (“Restricted
Shares”) of the Company’s Series E Preferred Stock. The Restricted
Shares shall be subject to vesting and risk of forfeiture as
follows: 5,000 Restricted Shares shall vest and become fully paid for
on January 1, 2009; 833.3 Restricted Shares shall vest and become fully paid for
on the first day of each of the next 29 months during the term of this
agreement; and 834.3 Restricted Shares shall vest and become fully paid for on
June 29, 2011. In the event of the early termination of this
Agreement pursuant to Section 8(a) or Section 8(c), all Restricted Shares that
are unvested shall be automatically forfeited and
cancelled. Executive shall return to the Company all Restricted
Shares forfeited pursuant to this Section 5 and hereby grants the Company a
limited power of attorney for purposes of executing any stock powers or
assignments necessary or desirable to effect the cancellation of any forfeited
Restricted Shares. In the event of (i) Change in Control, (ii) change
in the chief executive officer of the Company (other than Executive’s
appointment to such position); or (iii) termination of this Agreement pursuant
to Section 8(b), all unvested Restricted Shares shall immediately vest and be
deemed fully paid for.
Page 3 of 9
6.
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BONUS
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The
Executive will be entitled to receive a performance-based bonus of up to 100% of
the Executive’s annual Base Salary for the calendar year commencing January 1,
2009 and for each calendar year during the remainder of the Term of
Employment. The performance bonus shall be subject to the Executive’s
satisfaction of certain performance goals determined by the Board of
Directors. Prior to January 1, 2009, or as near such date as
possible, and the commencement of each calendar year thereafter during the
remainder of the Term of Employment, the Board of Directors shall determine, in
its sole and absolute discretion, the performance goals for the Executive and
deliver a written description of those goals to Executive. The
written description shall be incorporated into and become a part of this
Agreement. All payments of bonuses earned during any calendar year
shall be due and payable no later than March 31st of the
following year. The determination of whether the Executive has
satisfied the performance goals shall be made by the Board of Directors in its
reasonable discretion. The Board of Directors may delegate its
obligations under this Section 6 to any Compensation Committee of the Board of
Directors.
7.
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EMPLOYEE
BENEFIT PROGRAMS
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During
the Term of Employment, the Executive and her dependents shall be entitled to
participate in, at the Company’s expense, whatever employee benefit plans the
Company may offer to its employees or officers, if any, such as medical,
surgical, hospitalization, dental and visual insurance coverage. The
Company will pay all expenses for these insurance program(s) or
plan(s).
8.
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TERMINATION
OF EMPLOYMENT
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(a) Termination by the Company for
Cause. At any time after learning of an event constituting
Cause, the Company may elect to give the Executive written notice of its
intention to terminate for Cause, specifying in such notice the event forming
the basis for Cause. Termination shall be effective immediately upon
delivery of notice hereunder or, in the event of Cause as defined under Section
1(b)(x), termination of the specified cure period. In the event the
Executive’s employment is terminated by the Company for Cause, the Executive
shall be entitled only to:
(i) Base
Salary, at the rate in effect at the time of termination, accrued and payable
through the date of termination of employment;
(ii) any other
compensation and benefits accrued and to which the Executive is entitled under
applicable plans, programs and agreements of the Company as of the date of
termination of employment; and
(iii) any
Restricted Shares that have vested as of the date of termination of
employment.
The
Executive’s entitlement to the foregoing shall be without prejudice to the right
of the Company to claim or xxx for any damages or other legal or equitable
remedy to which the Company may be entitled as a result of such Cause; provided,
however, that offset shall not be available to the Company in any
event.
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(b) Termination Without
Cause. In the event the Executive’s employment is terminated
by the Company without Cause (which shall include a termination by way of death
or disability), the Executive shall be entitled only to:
(i) Base
Salary, at the rate in effect at the time of termination, accrued and payable
through the date of termination of employment;
(ii) the
immediate vesting of all Restricted Shares then subject to vesting and risk of
forfeiture;
(iii) any
amounts due to the Executive under Section 9; and
(iv) any other
compensation and benefits accrued and to which the Executive is entitled under
applicable plans, programs and agreements of the Company as of the date of
termination without Cause.
(c) Voluntary
Termination. A “Voluntary Termination” shall mean a
termination of employment by the Executive on her own initiative other than a
termination under Section 8(a) or 8(b). In the event of a Voluntary
Termination, the Executive shall be entitled only to:
(i) Base
Salary, at the rate in effect at the time of termination, accrued and payable
through the date of termination of employment;
(ii) any other
compensation and benefits accrued and to which the Executive is entitled under
applicable plans, programs and agreements of the Company; and
(iii) any
Restricted Shares that have vested as of the date of termination of
employment.
A
Voluntary Termination shall not, solely due to a Voluntary Termination, be
deemed a breach of this Agreement and shall be effective upon the expiration of
30 days after written notice is delivered to the Company, unless another period
of time is agreed to in writing by the Parties.
(d) No Mitigation; No
Offset. In the event of any termination of the Executive’s
employment under the Agreement without Cause, the Executive shall be under no
obligation to seek other employment, and there shall be no offset against
amounts due the Executive under the Agreement on account of any remuneration
attributable to any subsequent employment that the Executive may
obtain.
(e) Nature of
Payments. Any amounts due the Executive under the Agreement in
the event of any termination of employment with the Company are in the nature of
severance payments, or liquidated damages which contemplate both direct damages
and consequential damages that the Executive may suffer as a result of the
termination of employment, or both, and are not in the nature of a
penalty.
9.
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PAYMENTS
IN CASE OF SALE OF COMPANY
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In the
event of a Sale of the Company, if the Company is obligated, pursuant to a
written agreement approved by the Board of Directors (or Compensation Committee
of the Board), to pay to its chief executive officer compensation or bonus based
on the Sale of the Company, then the Company shall then be obligated to pay to
the Executive, within five days of the closing of such transaction, twenty
percent (20%) of the consideration payable to the chief executive officer of the
Company based on the Sale of the Company.
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10.
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CONFIDENTIAL
INFORMATION AND NON-COMPETITION
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(a) The
Executive shall not, during the Term of Employment or anytime thereafter,
without prior written consent of the Company, divulge, publish or otherwise
disclose to any other person any Confidential Information regarding the Company
except in the course of carrying out the Executive’s responsibilities on behalf
of the Company (e.g., providing information to the Company’s attorneys,
accountants, bankers, etc.) or if required to do so pursuant to the order of a
court having jurisdiction over the subject matter or a summons, subpoena or
order in the nature thereof of any legislative body (including any committee
thereof and any litigation or dispute resolution method against the Company
related to or arising out of this Agreement) or any governmental or
administrative agency. For this purpose, Confidential Information
shall include, but is not limited to, the Company’s financial position and
results of operations, trades secrets and intellectual property, products and
product development plans, marketing and promotional plans and strategies,
customer lists and customer data bases. Confidential Information does
not include information that is generally available to the public other than
through a breach of the Agreement on the part of the Executive.
(b) The
Executive covenants and agrees that she will not, during the Term of Employment,
either individually or in partnership or in conjunction with any person and
whether as principal, agent, shareholder, member, officer, employee, investor or
in any manner whatsoever, directly or indirectly:
1)
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engage
in, continue in, or carry on, invest in, own, manage, operate, finance or
control, or participate in the ownership, management, operation, finance
or control, of any business (“Competing Business”) that manufactures,
markets or sells products that directly competes with a principal product
of the Company;
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2)
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be
retained by, employed by, consult with, advise or assist in any way,
whether or not for consideration, any Competing Business;
or
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3)
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engage
in any practice the purpose of which is to evade the provisions of this
covenant not to compete;
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provided,
however, that none of the foregoing shall prohibit the ownership of securities
of a person that is listed on a national securities exchange or traded in the
national over-the-counter market in an amount that does not exceed one percent
(1%) of the outstanding shares of any such person.
11.
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NON-SOLICITATION
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Except
with the prior written consent of the Company, Executive shall not solicit
customers, clients, or employees of the Company or any of its affiliates for a
period of twelve (12) months after the date of the expiration or termination of
this Agreement. Without limiting the generality of the foregoing,
Executive will not, for a period of twelve (12) months after the date of the
expiration or termination of this Agreement, willfully canvas or solicit any
such business in competition with the business of the Company from any customers
of the Company with whom Executive had contact during, or of which Executive had
knowledge solely as a result of, his performance of services for the Company
pursuant to this Agreement. Executive will not, for a period of
twelve (12) months after the date of the expiration or termination of this
Agreement, directly or indirectly request, induce or advise any customers of the
Company with whom Executive had contact during the term of this Agreement to
withdraw, curtail or cancel their business with the
Company. Executive will not, for a period of twelve (12) months after
the date of the expiration or termination of this Agreement, induce or attempt
to induce any employee of the Company to terminate his/her employment with the
Company.
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12.
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REMEDIES
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(a) Executive
acknowledges and agrees that immediate and irreparable harm, for which damages
would be an inadequate remedy, would occur in the event any of the provisions of
Sections 10 or 11 of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, Executive
agrees that Company shall be entitled to an injunction or injunctions to prevent
breaches of such provisions of this Agreement and to enforce specifically the
terms and provisions thereof without the necessity of proving actual damages or
securing or posting any bond or providing prior notice, in addition to any other
remedy to which it may be entitled at law or equity.
(b) Nothing
herein contained is intended to waive or diminish any rights Company may have at
law or in equity at any time to protect and defend its legitimate property
interests (including its business relationship with third parties), the
foregoing provisions being intended to be in addition to and not in derogation
or limitation of any other rights the Company may have at law or
equity.
(c) Executive
shall have no rights, remedies or claims for damages, at law, in equity or
otherwise with respect to any termination of Executive’s employment by the
Company other than as set forth in Section 8 of this
Agreement.
13.
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REPRESENTATION
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The
Company and the Executive respectively represent and warrant to each other that
each respectively is fully authorized and empowered to enter into the Agreement
and that their entering into the Agreement and the performance of their
respective obligations under the Agreement will not violate any agreement
between the Company or the Executive respectively and any other person, firm or
organization or any law or governmental regulation.
14.
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ENTIRE
AGREEMENT
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This
Agreement contains the entire agreement between the Parties and supersedes all
prior agreements, understandings, discussions, negotiations and undertakings,
whether written or oral, between the Parties.
15.
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AMENDMENT
OR WAIVER
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This
Agreement cannot be changed, modified or amended without the consent in writing
of both the Executive and the Company. No waiver by either Party at
any time of any breach by the other Party of any condition or provision of the
Agreement shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or at any prior or subsequent time. Any waiver
must be in writing and signed by the Executive or an authorized officer of the
Company, as the case may be.
16.
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SEVERABILITY
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The
provisions of this Agreement shall be severable and the invalidity, illegality
or unenforceability of any provision of this Agreement shall not affect, impair
or render unenforceable this Agreement or any other provision hereof, all of
which shall remain in full force and effect. If any provision of this
Agreement is adjudicated by a court of competent jurisdiction as invalid,
illegal or otherwise unenforceable, but such provision may be made enforceable
by a limitation or reduction of its scope, the Parties agree to abide by such
limitation or reduction as may be necessary so that said provision shall be
enforceable to the fullest extent permitted by law. The Parties
further intend to and hereby confer jurisdiction to enforce the covenants
contained in Sections 10 and 11 (the “Restrictive Covenants”) upon the courts of
any jurisdiction within the geographical scope of such Restrictive
Covenants.
Page 7 of 9
17.
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SURVIVAL
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The
respective rights and obligations of the Parties shall survive any termination
of this Agreement to the extent necessary to the intended preservation of such
rights and obligations.
18.
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GOVERNING
LAW
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This
Agreement shall be governed by and construed under the law of the State of
Nevada, disregarding any principles of conflicts of law that would otherwise
provide for the application of the substantive law of another
jurisdiction. The Parties each hereby consents to the jurisdiction
and venue of the state courts of Xxxxx County, Nevada and the United States
district courts with jurisdiction in Nevada with respect to any matter arising
out of or relating to this Agreement other than matters that are subject to the
arbitration provisions of Section 19 of this Agreement.
19.
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SETTLEMENT
OF DISPUTES
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Except
for equitable actions seeking to enforce the provisions of Sections 10 and 11 of
this Agreement which may be brought by a court in any competent jurisdiction, in
the event a dispute, claim or controversy arises between the parties relating to
the validity, interpretation, performance, termination or breach of this
Agreement, (collectively, a "Dispute"), the Parties agree to hold a meeting
regarding the Dispute, attended by individuals with decision-making authority,
to attempt in good faith to negotiate a resolution of the Dispute prior to
pursuing other available remedies. If, within thirty (30) days after
such meeting or after good faith attempts to schedule such a meeting have
failed, the Parties have not succeeded in negotiating a resolution of the
Dispute, the Dispute shall be resolved through final and binding arbitration to
be held in Nevada in accordance with the rules and procedures of the American
Arbitration Association. The prevailing party in such proceeding
shall be entitled to recover the costs of the arbitration from the other party,
including, without limitation, reasonable attorneys’ fees.
20.
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HEADINGS
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The
headings of the paragraphs contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.
21.
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COUNTERPARTS
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This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
22.
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TAXES
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The
Executive’s compensation payable hereunder is stated in gross amounts and shall
be subject to such withholding taxes and other taxes as may be required by
law.
Page 8 of 9
23.
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ACKNOWLEDGMENT
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The
Executive acknowledges that he/she has been given a reasonable period of time to
study this Agreement before signing it and has had an opportunity to secure
counsel of his/her own. The Executive certifies that he/she has fully
read and completely understands the terms, nature, and effect of this
Agreement. The Executive further acknowledges that he/she is
executing this Agreement freely, knowingly, and voluntarily and that the
Executive’s execution of this Agreement is not the result of any fraud, duress,
mistake, or undue influence whatsoever. In executing this Agreement,
the Executive does not rely on any inducements, promises, or representations by
the Company other than that which is stated in this Agreement.
24.
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WAIVER
OF JURY TRIAL
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Each
Party waives, to the fullest extent permitted by applicable law, any right it
may have to a trial by jury in respect of any litigation arising out of or
relating to this Agreement and Executive’s employment by the
Company. Each Party (a) certifies that no representative, agent or
attorney of the other Party has represented, expressly or otherwise, that such
other Party would not, in the event of litigation, seek to enforce the foregoing
waiver and (b) acknowledges that it has been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications set
forth in this section.
In
Witness Whereof, the undersigned have executed the Agreement as of the date
first written above.
CPC
OF AMERICA, INC.,
a Nevada
corporation
By: /s/ Xxx
X. Xxxxxxx
Xxx
X. Xxxxxxx, President
Executive
/s/ Xxxxxx X.
Xxxx
XXXXXX
X. XXXX
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