EXHIBIT 10.4
CONSULTING SERVICES CONTRACT
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THIS CONTRACT OF CONSULTING SERVICES (hereinafter "Contract") is made as of
April 23, 1998, by and between CPC of America, Inc. a Nevada corporation, and
all wholly owned subsidiaries of the above named corporation (hereinafter the
"Company"), and CTM Group, Inc., a Nevada Corporation, (hereinafter
"Consultant").
R E C I T A L S
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A. Consultant has participated in the organization of the Company and its
business.
B. Consultant is expected to continue to make a major contribution to the
profitability, growth and financial strength of the Company.
C. The Company considers the continued services of the Consultant to be in
the best interest of the Company and its shareholders and desires to assure the
continued services of the Consultant on behalf of the Company on an objective
and impartial basis and without distraction or conflict of interest in the event
of an attempt to obtain control of the Company.
D. Consultant is willing to remain in the services of the Company under the
terms and conditions hereof, and upon the understanding that the Company will
provide him with the income security herein, if his services are terminated by
the Company or if he voluntarily terminates his services for good reason.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties to this Contract hereby agree as follows:
1. Services. The Company hereby agrees to contract with Consultant.
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Consultant accepts such assignments and agrees to be subject to the general
supervision, orders, advice and direction of the President, Chief Executive
Officer and the Board of Directors of the Company, in a manner consistent with
the Articles of Incorporation and Bylaws of the Company.
2. Terms of Services and Compensation. Consultant's term of services (the
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"Services Term") hereunder shall start on the date first written above, and
continue until such services terminates pursuant to Section 6 hereof.
3. Services Fees and Other Compensation.
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a. Consultant's fees for each year hereunder shall be $120,000.00 per
year. Thereafter during the Services Term, Consultant's fees shall be increased
each year by an amount equal to Consultant's fees for the previous year
multiplied by the percent change of the Consumer Price Index for all Urban
Consumers (the "CPI") (published by the Bureau of Labor Statistics, United
States Department of Labor) during the immediately preceding calendar year. For
example, if the percent change in the CPI from 1% to 11% were 10%, Consultant's
fees for the
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second year hereunder would be $132,000.00. Fee increases shall not exceed 10%
per year. Consultant's fees shall be payable within (10) ten days following
receipt of invoice. In addition, Consultant shall receive a bonus. The bonus
paid to Consultant shall be determined by the compensation committee as an
annual plan to be determined each year as a percentage of the monthly net
operating income of the Company pursuant to internally created financials of the
Company, payable beginning no later than sixty (60) days after the end of each
year, quarter and/or month subject to the compensation committee plan during the
term hereunder; provided however that no such monthly bonus shall be paid or
payable except and unless the monthly net operating income of the Company equals
at least $75,000.00. The Consultant shall be entitled to participate in any key
management bonus or incentive compensation program including, but not limited to
stock options and warrants, instituted by the Board of Directors of the Company,
in the sole discretion of the Board of Directors. The fees and bonus payments
hereunder shall be subject to withholding and any other applicable tax law.
b. Upon the execution of this Agreement by Consultant, the Company shall
grant to Consultant a stock option for a period of ten years to purchase up to
one million (1,000,000) shares of the Company's common stock, $.001 par value
per share (collectively, the "Shares"), at an exercise price of five dollars
($5.00) per Share. Such options shall vest and become exercisable in ten equal
installments of one hundred thousand (100,000) shares each over ten (10) years
with the first vesting to occur immediately (the "Vesting Date"), and subsequent
vestings to occur upon the next nine anniversaries of the Vesting Date. The
options shall have such additional terms and conditions as set forth in an
option agreement to be executed between the Company and Consultant in the form
attached hereto as Exhibit A.
4. Fees Guarantee. All fees payable to the Consultant under the Agreement
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will be guaranteed (the "Guaranteed Payments") as of the effective date of the
Agreement for the full Services Term of the Agreement except for terminations
found in Section 6(b), (d) or (e) hereof.
a. None of the Guaranteed Payments described in this Section shall
prevent the Consultant from receiving the Termination Benefits described in
Section 12 of the Agreement.
b. All Guaranteed Payments described in this Section and payable to the
Consultant shall be payable to the Estate of Consultant and or beneficiary
designee in the event of the death of the Consultant.
c. In the event of any mental disability which renders the Consultant
unable to fulfill his duties pursuant to Section 1 of this Agreement, all
Guaranteed Payments shall be made to Consultant's company, his attorney in fact,
his personal representative, his guardian, or any other such person legally
specifically listed, to whomever is legally authorized to receive monetary
payments due and owing to.
d. In the event of any physical disability which renders the Consultant
unable or unwilling to fulfill his duties pursuant to Section 1 of this
Agreement, all Guaranteed Payments shall be made directly to the Consultant.
e. Upon the termination of Consultant's services for any reason other
than pursuant to Section 6(b), (d), or (e) hereof, the Company shall continue to
pay to Consultant the
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fees received by him on the date of such termination for a minimum period of
five (5) years following such date of termination, payable on the Company's
regular fees payment date.
5. Reimbursement for Expenses. The Company shall, during the Services Term,
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reimburse Consultant for all reasonable travel, business entertainment and other
business expenses incurred by Consultant that are approved in rendering services
under this Contract. Such reimbursement shall be subject to compliance with the
applicable policies and procedures established by the Company.
6. Termination. The Services Term shall terminate on the first to occur of
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the following events:
a. the eleventh year anniversary of the date on which the Services Term
becomes effective;
b. termination by the Company for cause, upon written notice (specifying
the particulars) to Consultant from the Company's President, which cause shall
be limited to:
i. refusal by Consultant for any reason to comply with the material
orders, advice, directions, policies, standard and regulations of the Company
and its President or Board of Directors, as promulgated from time to time, or
with the provisions of this Contract, which failure or refusal is detrimental to
the Company;
ii. an act or acts of fraud or dishonesty by Consultant resulting in or
tending to result in gain to or personal enrichment of Consultant at the
Company's expense;
iii. any felony conviction of Consultant or material tort which is
detrimental to the Company;
iv. the persistent absence by Consultant from his services without
cause or explanation;
c. the death or dissolution of Consultant;
d. the 90th day after notice from the Company to Consultant that
Consultant is considered to be permanently disabled due to his inability to
perform his duties or fulfill his responsibilities hereunder, which inability
existed for a period of 90 days or more before such notice; or
e. termination by Consultant, at his option only, after 90 days prior
written notice to the Company.
Upon termination of Consultant's services pursuant to Section 6(b), (c), (d), or
(e), Consultant (or his estate) shall receive (i) any unpaid fees payments with
respect to periods prior to the date of termination, and (ii) any termination,
disability or death benefits to which he is entitled under any employee benefit
plan of the Company which is in effect at the time of the termination of
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his services. In all other events of termination, Consultant shall continue to
receive the Guaranteed Payments.
7. Agreement Not To Compete. Consultant agrees that if his services are
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terminated by the Company pursuant to Sections 6(b), or (e) hereof he shall not,
for a period of one year from the date his services hereunder terminate, (a)
directly or indirectly sell or attempt to sell within Florida on behalf of
himself or any other person, corporation or entity, any type of product or
services marketed by the Company at the time his services are terminated, (b)
directly or indirectly sell or attempt to sell any type of product or services
marketed by the Company at the time his services are terminated to any person,
corporation or other entity that is a customer of the Company at the time his
services are terminated, and (c) within the U.S.A., Canada, South America,
Europe or the Far East directly or indirectly, own manage, operate, control, be
employed by, participate in, or be connected in any manner with the ownership,
management, operation, or control of any business similar to the type of
business conducted by the Company at the time of termination of Consultant's
services hereunder; provided, however, that Consultant may be a shareholder of
less than 5% of the outstanding shares of voting stock of any company listed on
a recognized stock exchange or traded in the NASD over-the-counter market.
8. Technical Information. Consultant covenants and agrees that during the
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Services Term and for a period of six months after termination of the Services
Term (regardless of whether Consultant is terminated or defaults under any other
provision of this Contract) he will assign to the Company or its nominees all of
his right, title and interest in and to all "Technical Information" (as
hereinafter defined) which he makes, develops or conceives, either alone or in
conjunction with others; he will disclose promptly to the Company all such
Technical Information; and he will cooperate with the Company in its efforts to
protect its rights of ownership in such Technical Information. For purposes of
this Contract, "Technical Information" shall mean and include, but not be
limited to, all software, processes, devices, trademarks, trade names,
copyrights, patents, marketing plans, improvements, and ideas relating to the
business of the Company, and all goodwill associated with any such item.
9. Covenant Against Disclosure of Technical and Confidential Information.
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Consultant agrees that while he is performing services for the Company and
thereafter he shall not, directly or indirectly, disclose or use to the
detriment of the Company or for the benefit of any other person, corporation or
other entity, any confidential information or trade secret (including, but not
limited to, the identity and needs of any customer of the Company, the method
and techniques of any of the business of the Company, the marketing, sales,
costs and pricing plans and objectives of the Company, the problems,
developments, research records, and Technical Information) of the Company or of
any of the affiliates of the Company. Furthermore, Consultant shall deliver
promptly to the Company upon termination of his services, or at any time the
Company may so request, all memoranda, notes, records, reports, manuals,
software, models, designs, and other documents and computer records (and all
copies thereof) relating to the business of the Company, and all property
associated therewith, which he may then possess or have under his control. This
Contract supplements and does not supersede Consultant's obligations under
statute or the common law to protect the Company's trade secrets and
confidential information.
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10. Remedy. Consultant acknowledges that the restrictions contained in
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Sections 7 through 9 of this Contract are reasonable and that the legal remedies
for breach of the covenants which are contained in Sections 7 through 9 of this
Contract may be inadequate and, therefore, agrees that, in the event of any
actual or threatened breach of any such covenant, in addition to any other right
or remedy which the Company may have, the Company may: (a) seek specific
enforcement of any such covenant through injunction or other equitable relief,
and (b) recover from Consultant an amount equal to (i) all sums paid by the
Company to him after commencement of the breach, plus (ii) all costs and
expenses (including attorneys' fees) incurred by the Company in enforcement of
the covenant, plus (iii) all other damages to which the Company may be legally
entitled.
11. Undertaking To Pay Termination Benefits. In addition to the payments
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Consultant shall receive under Section 3 hereof, in the event of the termination
of his services, the Company agrees to pay to the Consultant the Termination
Benefits specified in Section 12 hereof if (a) control of the Company is
acquired (as defined in paragraph 13(a) hereof) and (b) within three years after
the acquisition of control occurs (i) the Company terminates the services of
Consultant for any reason other than pursuant to Section 6(b), 6(c) or 6(d)
hereof, or (ii) Consultant voluntarily terminates his services for good reason
(as defined in Section 13(b) hereof).
12. Termination Benefits. If Consultant is entitled to termination benefits
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pursuant to paragraph 11 hereof, the Company agrees to pay to Consultant as
termination compensation in a lump-sum payment within five calendar days of the
termination of Consultant's services an amount to be computed by multiplying (a)
Consultant's average annual fees payable by the Company which was includable in
the total gross fees, which includes additional fees and/or stock options income
of Consultant for the most recent five calendar years ending coincident with or
immediately before the date on which control of the Company is acquired (or such
portion of such period during which Consultant was performing services for the
Company), by (b) 100%. For purposes of this Contract, fees and compensation
paid by any direct or indirect subsidiary of the Company, if any will be deemed
to be fees and compensation paid by the Company. The Termination Benefits
described in this section are payable to the Consultant regardless of any
determination by the Company's independent public accountants that payments made
pursuant to this section are or would be non-deductible by the Company for
federal income tax purposes because of Section 280G of the Internal Revenue Code
of 1986 or any subsequent revisions in the Internal Revenue Code.
13. Definitions.
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a. As used in this Contract, the "acquisition of control": means (i)
attaining ownership of thirty percent (30%) or more of the shares of voting
stock of the Company by any person or group (other than a person or group
including Consultant or with whom or which Consultant is affiliated), or (ii)
the occurrence of a "change of control" required to be described under the proxy
disclosure rules of the Securities and Exchange Commission.
b. As used in this Contract, the term "good reason" means, without
Consultant's written consent, (i) a change in Consultant's status, position or
responsibilities which, in his reasonable judgment, does not represent a
promotion from his status, position or
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responsibilities as in effect immediately prior to the change in control; the
assignment to Consultant of any duties or responsibilities which, in his
reasonable judgment, are inconsistent with such status, position or
responsibilities; or any removal of Consultant from or failure to reappoint or
reelect him to any of such positions, except in connection with the termination
of his services for total permanent disability, death or pursuant to Section
6(b)(ii) or 6(b)(iii) herein or by him other than for good reason; (ii) a breach
by the Company of its covenants under this Contract after a change in control;
(iii) the relocation of the Company's principal executive offices to a location
outside the west central Florida area or the Company's requiring him to be based
at any place other than the location at which he performed his duties prior to a
change in control except for required travel on the Company's business to an
extent substantially consistent with his business travel obligations at the time
of a change in control; (iv) the failure of the Company to obtain a satisfactory
agreement from any successor or assign of the Company to assume and agree to
perform this Contract; (v) any purported termination of Consultant's services
which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 14(c) hereof (and, if applicable, Section 6(b) hereof);
and for purposes of this Contract, no such purported termination shall be
effective; or (vi) any request by the Company that Consultant participate in an
unlawful act or take any action constituting a breach of Consultant's
professional standard of conduct.
Notwithstanding anything in this paragraph 13(b) to the contrary, Consultant's
right to termination benefits pursuant to paragraph 11 herein shall not be
affected by his incapacity due to physical or mental illness.
14. Additional Provisions Relating to Termination.
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a. The Company is aware that the Board of Directors or shareholders of
the Company may then cause or attempt to cause the Company to refuse to comply
with its obligations under this Contract, or may cause or attempt to cause the
Company to institute, or may institute litigation seeking to have this Contract
declared unenforceable, or may take or attempt to take action to deny Consultant
the benefits intended under this Contract. In these circumstances, the purpose
of this Contract could be frustrated. It is the intent of the Company that
Consultant not be required to incur the expenses associated with the enforcement
of his rights under this Contract by litigation or other legal action, nor be
bound to negotiate any settlement of his rights hereunder. Accordingly, if
following a change in control, if it should appear to Consultant that the
Company has failed to comply with any of its obligations under this Contract or
in the event that the Company or any other person takes any action to declare
this Contract void or unenforceable, or institutes any litigation or other legal
action designed to deny, diminish or to recover from Consultant the benefits
entitled to be provided to Consultant, hereunder, and that Consultant has
complied with all of his obligations under this Contract, the Company
irrevocably authorizes Consultant from time to time to retain counsel of his
choice, at the expense of the Company as provided in this Section 14(a), to
represent Consultant in connection with the initiation or defense of any
litigation or other legal action, whether such action is by or against the
Company or any director, officer, shareholder, or other person affiliated with
the Company, in any jurisdiction. Notwithstanding any existing or prior
attorney-client relationship between the Company and such counsel, the Company
irrevocably consents to Consultant entering into an attorney-client relationship
with such counsel, and in that connection the Company and Consultant agree that
a confidential relationship shall exist between Consultant and such counsel. The
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reasonable fees and expenses of counsel selected from time to time by Consultant
as herein above provided shall be paid or reimbursed to Consultant by the
Company on a regular, periodic basis upon presentation by Consultant of a
statement or statements prepared by such counsel, in accordance with its
customary practices, up to a maximum aggregate amount of $50,000 and any out of
pocket expenses. The $50,000.00 shall be paid to Consultant's choice on Notice
of Legal Action against the Company. Any legal expenses incurred by the Company
by reason of any dispute between the parties as to enforceability of or the
terms contained in this Contract, notwithstanding the outcome of any such
dispute, shall be the sole responsibility of the Company, and the Company shall
not take any action to seek reimbursement from Consultant for such expenses.
b. The amounts payable to Consultant under this Contract shall not be
treated as damages but as severance compensation to which Consultant is entitled
by reason of termination of his services in the circumstances contemplated by
this Contract. The Company shall not be entitled to set off against the amounts
payable to Consultant of any amounts earned by Consultant in other services
after termination of his services with the Company, or any amounts which might
have been earned by Consultant in other services had he sought such other
services.
c. Any purported termination by the Company or by Consultant shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 21 hereof. For purposes of this Contract, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Contract relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of his
services under the provision so indicated. For purposes of this Contract, no
such purported termination shall be effective without such Notice of
Termination.
15. Entire Agreement. This Contract contains the entire agreement of the
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parties relating to the services of Consultant by the Company, superseding any
and all prior such agreements, and cannot be amended, modified, or supplemented
in any respect by subsequent written agreement entered into by the parties.
16. Benefit. Consultant acknowledges that the services to be rendered by him
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are unique and personal; accordingly, Consultant may not assign any of his
rights or delegate any of his duties or obligations under this Contract. The
rights and obligations of the Company under this Contract shall inure to the
benefit of, and be binding upon, the legal representatives, successors and
assigns of the Company.
17. No Waiver. No failure on the part of either party at any time to require
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the performance by the other party of any term of this Contract shall be taken
or held to be a waiver of such term or in any way affect such party's right to
enforce such term, and no waiver on the part of either party of any term in this
Contract shall be taken or held to be a waiver of any other term hereof or the
breach thereof.
18. Severability. The provisions of Sections 7 through 10 hereof are
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severable, and the invalidity or unenforceability of any particular provision of
Sections 7 through 10 shall not affect or limit the enforceability of the other
provisions. If any provision in Sections 7 through 10
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hereof is held unenforceable for any reason, including the time period,
geographic area, or scope of activity covered, then such provision shall be
enforced to whatever extent is reasonable and enforceable.
19. Governing Law. This Contract shall be governed and construed in
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accordance with the law of the State of Florida (other than the provisions
relating to choice of law). The parties hereto agree that any legal action
arising from this Contract may be brought in any state or federal court of
record in Florida and the parties hereto waive any right to question the
jurisdiction of such court over their person or the propriety of such venue.
20. Captions. The captions in this Contract are for convenience and
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identification purposes only, and not an integral part of this Contract, and are
not to be considered in the interpretation of any part hereof.
21. Notices. All notices and other communications hereunder shall be in
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writing and shall be deemed to have been duly given if in writing and personally
delivered to the party to whom notice should be given or if sent by registered
or certified mail, postage prepaid, addressed to the addresses set forth below,
or to such other addresses as shall be furnished in writing by either party to
the other:
If to the Company: CPC of America, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
If to Consultant: CTM Group, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000
22. Best Efforts and Reasonable Care. Consultant will exert his best efforts
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to assist in the management of the Company in accordance with the terms and
provisions of this agreement, and will use reasonable care in providing such
services.
23. Confidentiality. Consultant will not disclose or otherwise use an
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unauthorized manner confidential business, patient records and documents of the
Company without the express written consent of the Company while this agreement
is in effect or after this agreement is terminated.
24. Indemnification. Consultant will have no liability whatever for damage
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suffered by any person or entity on account of the dishonesty, willful
misconduct or negligence of any employee of the Company. The Company agrees to
indemnify the consultant and its employee's, directors, officers and associates
and hold it harmless from any and all liability, including reasonable attorneys'
fees caused by or resulting from intentional acts or omissions of the Company,
or any officer, director or employee thereof or of any employee or agent of the
Company.
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IN WITNESS WHEREOF, the Company has caused this contract to be executed on its
behalf by its duly authorized officer and Consultant has hereunto set his hand
as of the date and year first above written.
CPC of America, Inc.,
a Nevada Corp.
By: /s/ XXX X. XXXXXXX
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Xxx X. Xxxxxxx
President and Chief Executive Officer
CONSULTANT:
CTM Group, Inc.,
a Nevada corporation
By: /s/ XXXXXXX SHABTY
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Xxxxxxx Shabty, President
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NON-QUALIFIED STOCK OPTION AGREEMENT
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THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into as of
April 23, 1998 by and between CPC OF AMERICA, INC., a Nevada corporation
("Corporation"), and the CTM GROUP, INC., a Nevada Corporation ("Optionee").
R E C I T A L
- - - - - - -
The Corporation and Optionee have entered into that certain Employment
Contract of even date herewith pursuant to which the Corporation has agreed to
grant Optionee options to purchase 1,000,000 shares ("Shares") of the
Corporation's $.001 par value common stock ("Common Stock") at its fair market
value.
A G R E E M E N T
- - - - - - - - -
It is hereby agreed as follows:
1. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
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("Options") to purchase all or any part of 1,000,000 Shares, upon and subject to
the terms and conditions set forth herein.
2. OPTION PERIOD; ACCELERATION
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2.1 Option Period. The Options shall be exercisable at any time during the
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period commencing on the following dates (subject to the provisions of Section
16) and expiring on April 22, 2008, unless earlier terminated pursuant to
Section 6:
Number of Options Exercisable On or After
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100,000 April 23, 1998
100,000 April 23, 1999
100,000 April 23, 2000
100,000 April 23, 2001
100,000 April 23, 2002
100,000 April 23, 2003
100,000 April 23, 2004
100,000 April 23, 2005
100,000 April 23, 2006
100,000 April 23, 2007
2.2 Acceleration of the Exercise Date of Stock Options. Notwithstanding
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any other provision contained in this Agreement, in the event of a merger in
which the Corporation is not the surviving corporation or in the event of a
consolidation or sale or other disposition of substantially all of the assets of
the Corporation, all outstanding Options shall become immediately and fully
exercisable whether or not otherwise exercisable by their terms.
3. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
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giving written notice to the Corporation of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied by
such other executed instruments or documents as may be required by the
Corporation pursuant to this Agreement, and unless otherwise directed by the
Corporation, Optionee shall at the time of such exercise tender the purchase
price of the Shares he has elected to purchase. Optionee may purchase less than
the total number of Shares for which the Option is exercisable, provided that a
partial exercise of an Option may not be for less than One Hundred (100) Shares.
If Optionee shall not purchase all of the Shares which he is entitled to
purchase under the Options, his right to purchase the remaining unpurchased
Shares shall continue until expiration of the Options. The Options shall be
exercisable with respect of whole Shares only, and fractional Share interests
shall be disregarded.
4. AMOUNT OF PURCHASE PRICE. The purchase price ("Purchase Price") per Share
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for each Share which Optionee is entitled to purchase under the Options shall be
$5.00 per Share.
5. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of exercise
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of the Options, Optionee shall tender in cash or by certified or bank cashier's
check payable to the Corporation, the purchase price for all Shares then being
purchased. Provided, however, in lieu of any cash payment, Optionee shall have
the right to exercise the Options in full or in part by surrendering Options in
exchange for the number of Shares equal to the quotient of X divided by Y where
X is the number of Shares to which the Options are being exercised multiplied by
the Purchase Price and Y is the Market Price of the Shares less the Purchase
Price. For purposes of this Section 5, the term Market Price at any date shall
be deemed to be (i) if the Shares are traded on an exchange, the closing price
of the Shares on the date of the notice of exercise; or (ii) if the Shares are
not publicly traded, the value determined by the Board of Directors in good
faith based upon the fair market value as determined by independent and well
qualified experts.
6. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. If an
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Optionee's employment or other relationship with the Corporation (or a
subsidiary) terminates, the effect of the termination on the Optionee's rights
to acquire Shares shall be as follows:
6.1 Termination Other than for Death, Disability or Cause. If an
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Optionee ceases to be employed by, or ceases to have a relationship with, the
Corporation or a Subsidiary for any reason other than for death, disability or
cause, such Optionee's Options shall expire not later than three (3) months
thereafter. During such three (3) month period and prior to the expiration of
the Option by its terms, the Optionee may exercise any Option granted to him,
but only to the extent such Options were exercisable on the date of termination
of his employment or relationship and except as so exercised, such Options shall
expire at the end of such three (3) month period unless such Options by their
terms expire before such date. The decision as to whether a termination for a
reason other than death, disability or cause has occurred shall be made by the
Corporation, whose decision shall be final and conclusive, except that
employment shall not be considered terminated in the case of sick leave or other
bona fide leave of absence approved by the Corporation.
6.2 Death or Disability. If an Optionee ceases to be employed by, or
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ceases to have a relationship with, the Corporation or a subsidiary by reason of
death or disability (within the meaning of Code Section 22(e)(3)), such
Optionee's Options shall expire not later than one (1) year thereafter. During
such one (1) year period and prior to the expiration of the Option by its terms,
the Optionee may exercise any Option granted to him, but only to the extent such
Options were exercisable on the date the Optionee ceased to be employed by, or
ceased to have a relationship with, the Corporation or subsidiary by reason of
death or disability. The decision as to whether a termination by reason of
disability has occurred shall be made by the Corporation, whose decision shall
be final and conclusive.
6.3 Termination for Cause. If an Optionee's employment by, or relationship
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with, the Corporation or a subsidiary is terminated for cause, such Optionee's
Option shall expire immediately; provided, however, the Corporation may, in its
sole discretion, within thirty (30) days of such termination, waive the
expiration of the Option by giving written notice of such waiver to the Optionee
at such Optionee's last known address. In the event of such waiver, the Optionee
may exercise the Option only to such extent, for such time, and upon such terms
and conditions as if such Optionee had ceased to be employed by, or ceased to
have a relationship with, the Corporation or a subsidiary upon the date of such
termination for a reason other than disability, cause or death. Termination for
cause shall include termination pursuant to Sections 6(b) and 6(e) of that
certain Employment Contract dated April 23, 1998 between the Corporation and
Optionee. The determination of the Corporation with respect to whether a
termination for cause has occurred shall be final and conclusive.
7. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable,
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either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by Optionee.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
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"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an
Adjustment Event, (i) appropriate and proportionate adjustments shall be made to
the number and kind and exercise price for the shares subject to the Options,
and (ii) appropriate amendments to this Agreement shall be executed by the
Corporation and Optionee if the Corporation determines that such an amendment is
necessary or desirable to reflect such adjustments. If determined by the
Corporation to be appropriate, in the event of an Adjustment Event which
involves the substitution of securities of a corporation other than the
Corporation, the Corporation shall make arrangements for the assumptions by such
other corporation of the Options. Notwithstanding the foregoing, any such
adjustment to the Options shall be made without change in the total exercise
price applicable to the unexercised portion of the Options, but with an
appropriate adjustment to the number of shares, kind of shares and exercise
price for each share subject to the Options. The determination by the
Corporation as to what adjustments, amendments or arrangements shall be made
pursuant to this
Section 8, and the extent thereof, shall be final and conclusive. No fractional
Shares shall be issued on account of any such adjustment or arrangement.
9. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing contained in
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this Agreement shall obligate the Corporation to employ or have another
relationship with Optionee for any period or interfere in any way with the right
of the Corporation to reduce Optionee's compensation or to terminate the
employment of or relationship with Optionee at any time.
10. TIME OF GRANTING OPTIONS. The time the Options shall be deemed granted,
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sometimes referred to herein as the "date of grant," shall be April 23, 1998.
11. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
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privileges of stock ownership as to any Shares not actually issued and delivered
to Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
12. SECURITIES LAWS COMPLIANCE. The Corporation will diligently endeavor to
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comply with all applicable securities laws before any stock is issued pursuant
to the Options. Without limiting the generality of the foregoing, the
Corporation may require from the Optionee such investment representation or such
agreement, if any, as counsel for the Corporation may consider necessary in
order to comply with the Securities Act of 1933 as then in effect, and may
require that the Optionee agree that any sale of the Shares will be made only in
such manner as is permitted by the Corporation. The Corporation may in its
discretion cause the Shares underlying the Options to be registered under the
Securities Act of 1933 as amended by filing a Form S-8 Registration Statement
covering the Options and the Shares underlying the Options. Optionee shall take
any action reasonably requested by the Corporation in connection with
registration or qualification of the Shares under federal or state securities
laws.
13. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options granted
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herein are intended to be non-qualified stock options described in U.S. Treasury
Regulation ("Treas. Reg.") (S)1.83-7 to which Sections 421 and 422 of the
Internal Revenue Code of 1986, as amended from time to time ("Code") do not
apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be described in Treas. Reg. (S)1.83-7 or be subject to
Sections 421 and 422 of the Code, the Options shall nevertheless be valid and
carried into effect.
14. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
------------------------
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
15. COMPLIANCE WITH APPLICABLE LAWS. THE CORPORATION'S OBLIGATION TO ISSUE
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SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS EXPRESSLY CONDITIONED
UPON THE COMPLETION BY THE
CORPORATION OF ANY REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY
STATE AND/OR FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY GOVERNMENTAL
REGULATORY BODY, OR THE MAKING OF SUCH INVESTMENT REPRESENTATIONS OR OTHER
REPRESENTATIONS AND UNDERTAKINGS BY THE OPTIONEE OR ANY PERSON ENTITLED TO
EXERCISE THE OPTION IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION
FROM ANY SUCH REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE
CORPORATION SHALL, IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH
REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY INCLUDE REPRESENTATIONS AND
AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION (i)
IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND (ii) AGREES TO HAVE PLACED
UPON THE FACE AND REVERSE OF ANY CERTIFICATES A LEGEND SETTING FORTH ANY
REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN TO THE CORPORATION OR A
REFERENCE THERETO.
16. MISCELLANEOUS.
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16.1 Binding Effect. This Agreement shall bind and inure to the benefit
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of the successors, assigns, transferees, agents, personal representatives, heirs
and legatees of the respective parties.
16.2 Further Acts. Each party agrees to perform any further acts and
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execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
16.3 Amendment. This Agreement may be amended at any time by the written
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agreement of the Corporation and the Optionee.
16.4 Syntax. Throughout this Agreement, whenever the context so
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requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
16.5 Choice of Law. The parties hereby agree that this Agreement has
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been executed and delivered in the State of California and shall be construed,
enforced and governed by the laws thereof. This Agreement is in all respects
intended by each party hereto to be deemed and construed to have been jointly
prepared by the parties and the parties hereby expressly agree that any
uncertainty or ambiguity existing herein shall not be interpreted against either
of them.
16.6 Severability. In the event that any provision of this Agreement
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shall be held invalid or unenforceable, such provision shall be severable from,
and such invalidity or unenforceability shall not be construed to have any
effect on, the remaining provisions of this Agreement.
16.7 Notices. All notices and demands between the parties hereto shall
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be in writing and shall be served either by registered or certified mail, and
such notices or demands shall be deemed given and made forty-eight (48) hours
after the deposit thereof in the United States mail, postage prepaid, addressed
to the party to whom such notice or demand is to be given or made, and the
issuance of the registered receipt therefor. If served by telegraph, such notice
or demand shall be deemed given and made at the time the telegraph agency shall
confirm to the sender, delivery thereof to the addressee. All notices and
demands to Optionee or the Corporation may be given to them at the following
addresses:
If to Optionee: CTM Group, Inc.
X.X. Xxx 0000
Xxxxxxxx, Xxxxxxx 00000
If to Corporation: CPC of America, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
16.8 Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties hereto pertaining to the subject matter hereof, this
Agreement supersedes all prior and contemporaneous agreements and understandings
of the parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
16.9 Attorneys' Fees. In the event that any party to this Agreement
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institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
"CORPORATION"
CPC OF AMERICA, INC.,
a Nevada corporation
By: /s/ XXX X. XXXXXXX
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Xxx X. Xxxxxxx,
President and Chief Executive Officer
"OPTIONEE"
CTM GROUP, INC.
a Nevada corporation
By: /s/ XXXXXXX SHABTY
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Xxxxxxx Shabty, President
