<PAGE>
As filed with the Securities and Exchange Commission on July 14, 1998.
Registration No.____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------------------------
CPC OF AMERICA, INC.
--------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 11-3320709
- --------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1133 Fourth Street, Suite 200, Sarasota, FL 34236
------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
CPC OF AMERICA, INC.
1996 STOCK OPTION PLAN
AND OTHER PLAN STOCK OPTIONS
----------------------------
(Full title of the plan)
Rod A. Shipman
1133 Fourth Street, Suite 200
Sarasota, FL 34236
---------------------------------
(Name and address of agent for service)
(941) 906-9546
---------------------------------------------------------------
(Telephone number, including area code, of agent for service)
Calculation of Registration Fee
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Proposed Proposed
Title of maximum maximum
securities to be Amount to be offering price aggregate Amount of
registered registered per unit offering price registration fee
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 7,220,000 $13.125/(1)/ $94,762,500 $27,955
$.0005 par value shs./(2)//(3)/
- -------------------------------------------------------------------------------------
</TABLE>
(1) Based upon the average of the high and low prices for the registrant's
common stock on July 8, 1998 for purposes of computing the registration fee
on 7,220,000 shares of common stock underlying options in accordance with
Rules 457(c) and 457(h) under the Securities Act of 1933, as amended.
(2) Includes 4,000,000 shares issuable upon exercise of stock options to
consultants, which are not part of the 1996 Stock Option Plan.
(3) Pursuant to Rule 416, there are also being registered such additional
shares as may become issuable pursuant to anti-dilution provisions of the
various options.
<PAGE>
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING
SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
CPC OF AMERICA, INC.
Common Stock
------------------------------------------------
CPC OF AMERICA, INC.
1996 STOCK OPTION PLAN
AND OTHER PLAN STOCK OPTIONS
------------------------------------------------
7,220,000 Shares of Common Stock, $.0005 Par Value
This Prospectus relates to shares of the Common Stock, $.0005 par value
("Common Stock"), of CPC of America, Inc. (the "Company") which may be issued
from time to time by the Company (i) to employees, officers, directors,
consultants and independent contractors upon their exercise of stock options
granted under the CPC of America, Inc. 1996 Stock Option Plan; (ii) to Rod A.
Shipman, the President and Chief Executive Officer of the Company, upon his
exercise of stock options granted pursuant to a separate employment and
consulting services agreement dated April 23, 1998 ("Shipman Agreement"); and
(iii) to the CTM Group, Inc. upon its exercise of stock options granted pursuant
to a separate consulting services agreement dated April 23, 1998 ("CTM
Agreement"). The per unit price of the shares of Common Stock issued upon
exercise of options granted under the CPC of America, Inc. 1996 Stock Option
Plan will be determined from time to time based upon the market price of the
Common Stock in accordance with the terms of the CPC of America, Inc. 1996 Stock
Option Plan. It is suggested that this Prospectus be retained for further
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------------
This Prospectus does not cover resales of shares of CPC of America, Inc. Common
Stock acquired hereunder. However, persons who are not affiliates of CPC of
America, Inc. as defined in Rule 405 of the Securities Act of 1933, as amended
(the "Act") ordinarily may publicly resell such shares acquired hereunder
without registration under the Act, in reliance on Section 4(1) thereof. An
affiliate of CPC of America, Inc. may not publicly resell shares acquired
hereunder without compliance with Rule 144 promulgated under the Act or
registration under the Act.
-----------------------------------
The date of this Prospectus is July 10, 1998.
<PAGE>
TABLE OF CONTENTS
PAGE
THE COMPANY......................................................... 1
INFORMATION ABOUT THE CPC OF AMERICA, INC. 1996 STOCK OPTION
PLAN........................................................... 1
Introduction................................................... 1
General Purpose................................................ 1
ERISA.......................................................... 1
Shares Available............................................... 1
Administration................................................. 2
Eligibility.................................................... 2
Grant of Options............................................... 2
Exercise of Options............................................ 2
Nontransferability............................................. 3
Termination of Employment...................................... 3
Death or Disability............................................ 3
Duration, Amendment and Termination............................ 3
Options Outstanding............................................ 3
OTHER PLAN STOCK AND STOCK OPTIONS.................................. 4
FEDERAL INCOME TAX CONSEQUENCES..................................... 4
ISO's Under the 1996 Plan...................................... 4
NSO's Under the 1996 Plan and the Agreements................... 5
Exercise of Options Through Use of Previously
Acquired Common Stock of the Company...................... 5
RESTRICTIONS ON RESALE.............................................. 6
LEGAL MATTERS....................................................... 6
EXPERTS............................................................. 7
AVAILABLE INFORMATION............................................... 7
i
<PAGE>
PART I
Item 1. Plan Information
THE COMPANY
-----------
CPC of America, Inc. (the "Company") was incorporated in the State of Nevada
on April 11, 1996. The Company's executive offices are located at 1133 Fourth
Street, Suite 200, Sarasota, Florida 34236; telephone (941) 906-9546.
INFORMATION ABOUT THE CPC OF AMERICA, INC. 1996 STOCK OPTION PLAN
-----------------------------------------------------------------
Introduction
The summary of the CPC of America, Inc. 1996 Stock Option Plan ("1996 Plan"),
included below highlights the principal features of that plan and is qualified
in its entirety by reference to the 1996 Plan and the form of agreement to be
received by the Company from those individuals who are granted options (the
"Option Agreement"), copies of which are available from the Company's Chief
Executive Officer. All share information set forth herein gives effect to a two
for one split of the outstanding shares of Common Stock effective as of June 17,
1998.
General Purpose
On May 2, 1996, the Board of Directors of the Company adopted the 1996 Plan to
provide officers, directors, employees, consultants and independent contractors
added incentive for high levels of performance and unusual efforts to increase
the earnings of the Company by providing an opportunity to acquire, maintain and
increase a proprietary interest in the Company's success and thus encouraging
those employees to continue their employment with the Company. Options granted
under the 1996 Plan are designed either as incentive stock options ("ISO's")
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
or as non-qualified stock options ("NSO's").
ERISA
The 1996 Plan is not an "employee pension benefit plan" as defined in Section
3(2) of the Employee Retirement Income Security Act ("ERISA") and is not
qualified as a profit sharing plan as described in Section 401 of the Code.
Shares Available
A total of 6,000,000 shares of Common Stock have been reserved for issuance
under the 1996 Plan, which may be authorized but unissued shares or shares
reacquired by the Company at any time. Of the shares of Common Stock reserved
for issuance under the 1996 Plan, 3,220,000 are being registered pursuant to
this Registration Statement on Form S-8.
If an option granted under the 1996 Plan is not exercised prior to its
expiration or otherwise terminates, the shares which are subject to that option
will be available for the grant of further options under the 1996 Plan.
The number of shares of Common Stock reserved for issuance under the 1996 Plan
is subject to equitable adjustments for any recapitalizations, mergers,
consolidations, stock dividends, split-ups, combinations, exchanges or any other
similar changes which may be required to prevent dilution. Similarly, the Stock
Option Committee which administers the 1996 Plan ("Committee"), in its sole
discretion, may adjust the number of shares a selected optionee is permitted to
acquire if any event occurs prior to that employee's exercise of an option
granted pursuant to the 1996 Plan which causes an increase or decrease in the
amount of outstanding capital stock.
-1-
<PAGE>
Administration
The 1996 Plan is administered by the Committee, which consists of the
Company's Board of Directors. The Committee members act in the capacity of plan
administrators. The Committee has the authority to determine who will be
granted options, the time or times those selected persons will be granted and
may exercise all or any part of those options and the number of shares to be
subject to each option, the purchase price of the shares of Common Stock covered
by each option and the method of payment of such price. The Committee also has
the authority to construe and interpret the 1996 Plan, decide all questions and
settle all controversies and disputes which may arise in connection with the
1996 Plan and prescribe, amend and rescind rules and regulations relating to
administration of the 1996 Plan.
Eligibility
Only officers, employees and directors who are also employees of the Company
or any subsidiary are eligible to receive grants of ISO's. Officers, employees
and directors (whether or not they are also employees) of the Company or any
subsidiary, as well as consultants, independent contractors or other service
providers of the Company or any subsidiary are eligible to receive grants of
NSO's.
In determining (i) the number of shares to be covered by each option, (ii) the
purchase price for such shares and the method of payment of such price, (iii)
the individuals of the eligible class to whom options shall be granted, (iv)
terms and provisions of the respective Option Agreements, and (v) the times at
which such options shall be granted, the Committee shall take into account such
factors as it shall deem relevant in connection with accomplishing the purpose
of the 1996 Plan.
Grant of Options
Options granted under the 1996 Plan entitle optionees to purchase shares of
Common Stock at the exercise price specified in the Option Agreement. The 1996
Plan does not specify any maximum or minimum amount of options which may be
granted to any optionee. However, in no event shall ISO's be granted such that
the sum of (i) aggregate fair market value (determined at the time the ISO's are
granted) of the stock subject to all stock options granted under the 1996 Plan
which are first exercisable during the same calendar year plus (ii) the
aggregate fair market value (determined at the time the options are granted) of
all stock subject to all other incentive stock options granted to such optionee
by the Company, its parent and subsidiaries which are exercisable for the first
time during such calendar year, exceeds $100,000. Options may be granted for a
term up to ten (10) years from the date it is granted, and in the case of an
optionee owning at the time an ISO is granted, more than 10% of the total
combined voting power of all classes of stock of the Company or of its parent or
subsidiaries such ISO shall not be exercisable later than five (5) years after
the date of grant.
Exercise of Options
The exercise price per share for each share which the optionee is entitled to
purchase under an ISO shall be determined by the Committee but shall not be less
than the fair market value per share on the date of the grant of the ISO;
provided, however, that the exercise price shall not be less than one hundred
ten percent (110%) of the fair market value per share of Common Stock on the
date of grant of the ISO in the case of an individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any parent or subsidiary. The Committee determines the fair market
value of shares for this purpose.
The exercise price for each share which an optionee is entitled to purchase
under an NSO shall be determined by the Committee but shall not be less than
eighty-five percent (85%) of the fair market value per share on the date of the
grant of the NSO.
-2-
<PAGE>
The consideration to be paid for the shares to be issued upon exercise of an
option, including the method of payment, shall be determined by the Committee
and may consist of cash, shares of common stock of the Company or such other
consideration and method of payment for the shares as may be permitted under
applicable state and federal laws.
Nontransferability
Options granted under the 1996 Plan are not transferable, otherwise than by
will or the laws of descent and distribution. During the lifetime of an
optionee, options are exercisable only by such optionee.
Termination of Employment
If an optionee ceases to be employed by, or ceases to have a relationship
with, the Company or any subsidiary for any reason other than death, disability
or cause, all options granted to such optionee under the 1996 Plan will
terminate not later than three (3) months thereafter. If an optionee ceases to
be employed by, or ceases to have a relationship with, the Company or any
subsidiary by reason that the employment or relationship has been terminated by
the Company for cause, all options granted to such optionee shall expire
immediately; provided, however, the Committee may, in its sole discretion,
within thirty (30) days of such termination, waive the expiration of the Option.
Death or Disability
If an optionee ceases to be employed by, or ceases to have a relationship
with, the Company or any subsidiary by reason of death or disability (as defined
in Section 22(e)(3) of the Code), an optionee will have the right, during the
one (1) year period following the date of such termination, to purchase all or
any part of the shares of Common Stock which such optionee would have been
entitled to purchase if exercised on the date of such termination, except in no
case shall an option be exercisable more than ten (10) years after grant.
Duration, Amendment and Termination
Unless previously terminated, the 1996 Plan will terminate on May 2, 2006 and
no options may be granted after that date under the 1996 Plan (although options
granted before termination and exercisable afterwards will not be affected).
The Committee may at any time and from time to time modify, amend, suspend or
terminate the 1996 Plan. However, except in certain limited circumstances, the
Committee may not increase the maximum number of shares which may be purchased
pursuant to options granted under the 1996 Plan, either in the aggregate or by
an optionee; change the designation of the class of employees eligible to
receive ISO's; extend the term of the 1996 Plan or the maximum option period
thereunder; decrease the minimum ISO exercise price or permit reductions of the
price at which shares may be purchased for ISO's; or cause ISO's issued under
the 1996 Plan to fail to meet the requirements of incentive stock options under
Section 422 of the Code. No termination or amendment of the 1996 Plan may
terminate an option or adversely affect an optionee's rights without the
optionee's consent.
Options Outstanding
As of July 14, 1998, options to purchase a total of 4,420,000 shares of Common
Stock at exercise prices ranging from $1.125 to $1.25 per share had been granted
pursuant to the 1996 Plan. This Registration Statement on Form S-8 is
registering the shares underlying options to purchase a total 3,220,000 shares
of Common Stock at exercise prices ranging from 1.125 to 1.25 per share.
-3-
<PAGE>
OTHER PLAN STOCK AND STOCK OPTIONS
----------------------------------
Rod A. Shipman, the President and Chief Executive Officer of the Company
("Shipman") entered into an employment agreement with the Company dated April
23, 1998. The CTM Group, Inc., a Nevada corporation (CTM), entered into a
consulting services agreement with the Company also dated April 23, 1998. (The
Shipman Agreement and the CTM Agreement are collectively referred to herein as
the "Agreements.") Pursuant to the terms of the Agreements, Shipman and CTM
have each received options ("Options") to purchase 2,000,0000 shares of Common
Stock at an exercise price of $2.50 per share. The exercise price of the
options was equal to the last sale price on the date of grant. The Options
shall vest at a rate of 200,000 shares per year commencing on the date of grant,
provided that all of the Options shall vest immediately upon the conveyance by
the Company of substantially all of its assets or the consolidation or merger of
the Company with another corporation in which the Company is not the successor.
FEDERAL INCOME TAX CONSEQUENCES
-------------------------------
ISO's Under the 1996 Plan
Grant and Exercise of ISO's. In general, an optionee realizes no income upon
---------------------------
the grant of 1996 Plan ISO's (assuming these options qualified as "incentive
stock options" under the Code when they were granted) or upon the exercise of
ISO's. But see, "Alternative Minimum Tax," below. The amount paid by the
optionee for the Common Stock received pursuant to the exercise of ISO's will
generally constitute his basis (or cost) for tax purposes. The holding period
for such Common Stock generally begins on the date the optionee exercises ISO's.
See below for a discussion of the exceptions to these general rules when the
optionee uses previously acquired stock of the Company to exercise ISO's.
Alternative Minimum Tax. Although no current taxable income is realized upon
-----------------------
the exercise of ISO's, Section 56(b)(3) of the Code provides that the excess of
the fair market value on the date of exercise of the Common Stock acquired
pursuant to such exercise over the option price is an item of tax adjustment.
As such, the exercise of ISO's may result in the optionee being subject to the
"Alternative Minimum Tax" for the year ISO's are exercised. The "Alternative
Minimum Tax" is calculated on a taxpayer's adjusted gross income, subject to
special adjustments, plus specified items of tax preference minus specified
itemized deductions. The resulting amount is the alternative minimum taxable
income.
If the shares are disposed of in a "disqualifying disposition" -- that is,
within one year of exercise or two years from the date of the option grant -- in
the year in which the ISO is exercised, the maximum amount that will be included
as Alternative Minimum Tax income is the gain on the disposition of the ISO
stock. In the event there is a disqualifying disposition in a year other than
the year of exercise, the income on the disqualifying disposition will not be
considered income for Alternative Minimum Tax purposes. In addition, the basis
of the ISO stock for determining gain or loss for Alternative Minimum Tax
purposes will be the exercise price for the ISO stock increased by the amount
that Alternative Minimum Tax income was increased due to the earlier exercise of
the ISO. Alternative Minimum Tax incurred by reason of the exercise of the ISO
does not result, for regular income tax purposes, in an increase in basis of the
shares acquired upon exercise. The alternative minimum tax attributable to the
exercise of an ISO may be applied as a credit against regular tax liability in a
subsequent year, subject to certain limitations. The gain recognized upon a
sale or exchange of shares acquired through the exercise of the ISO's will be
limited to the excess of the amount received in the sale or exchange over the
fair market value of the shares at the time the ISO was exercised.
The application of the Alternative Minimum Tax for each optionee will depend
on such optionee's total income and deductions for the year of exercise. As
such, the extent to which, if any, the tax adjustment item generated by the
exercise of ISO's in conjunction with any other tax adjustment items or
alternative minimum tax adjustments may result in an Alternative
-4-
<PAGE>
Minimum Tax liability for any optionee cannot be determined. Accordingly, each
optionee should consult his own tax counsel to determine the potential impact of
the Alternative Minimum Tax on his exercise of ISO's.
Employment and Holding Requirements of ISO's. The Code requires that the
--------------------------------------------
optionee remain an employee of the Company or its subsidiaries at all times
during the period beginning on the date that the ISO's are granted and ending on
the day three (3) months (or one (1) year in the case of permanent and total
disability) before the date that each ISO is exercised. Under the 1996 Plan,
upon termination of employment for any reason other than cause or disability the
options terminate three (3) months after the termination date unless by their
terms the options terminate earlier. If termination occurs as a result of
disability, the options will expire one (1) year after such termination unless
they expire before that date by their terms. Therefore, if the options
constituted incentive stock options at grant, permissible exercises after
termination automatically meet the employment requirements.
In order for an optionee exercising ISO's to qualify for the income tax free
treatment set forth in the preceding section such optionee must not dispose of
the Common Stock acquired pursuant to the exercise of ISO's within two (2) years
from the date the ISO's were granted, nor within one (1) year after the exercise
of the ISO's. If the optionee meets these employment and holding requirements,
any future gain or loss realized and recognized from the sale or exchange of the
Common Stock should be long-term capital gain or loss, if the stock is held as a
capital asset. If the optionee disposes of the shares of Common Stock acquired
upon exercise of an ISO within two years from the granting of options or one
year after the exercise of options (collectively, an "early disposition"), any
gain will constitute, in the year of disposition, ordinary compensation income
to the extent of the excess of the fair market value of the Common Stock on its
acquisition date over the price paid for it by the optionee. Any additional
gain will be treated as capital gain. If the optionee disposes of the shares of
Common Stock at a loss, such loss will be a capital loss.
For purposes of this section, the transfer of Common Stock by reason of the
optionee's death does not constitute a disposition of the Common Stock. In
addition, the transferee of the Common Stock is not subject to the holding and
employment requirements.
If the Recipient disposes of options instead of exercising them, the incentive
stock option rules discussed herein have no application. The recipient-
transferor will recognize either long or short-term capital gain or loss and the
purchaser will not be subject to any of these rules.
NSO's Under the 1996 Plan and Under the Agreements
In general, an optionee who receives an NSO realizes income either at the date
of grant or at the date of exercise, but not at both. Unless the NSO has a
"readily ascertainable fair market value" at the date of grant, the optionee
recognizes no income on the date of grant and the compensatory aspects are held
open until the NSO is exercised. In this case, upon exercise, the optionee will
have compensation income to the extent of the difference between the fair market
value of the stock at the time of exercise and the exercise price paid by the
optionee.
An NSO is deemed to have a "readily ascertainable fair market value" if (a)
the NSO's are actively traded on an established market or (b) the fair market
value can be measured with reasonable accuracy which means that (i) the NSO's
are transferable, (ii) the NSO's are exercisable immediately in full, (iii) the
NSO's and underlying stock are not subject to restrictions which have a
significant effect on the NSO's value and (iv) the fair market value of the
"option privilege" is readily ascertainable.
Exercise of Options Through Use of Previously Acquired Common Stock of the
Company
Under the 1996 Plan, in some circumstances an optionee may be allowed to use
previously acquired Common Stock to exercise both ISO's and NSO's. Such
previously acquired Common Stock may include Common Stock acquired pursuant to
an earlier partial
-5-
<PAGE>
exercise of options. Generally the Internal Revenue Service (the "Service")
recognizes that an exchange of Common Stock for other Common Stock does not
constitute a taxable disposition of any shares of Common Stock. The Service
treats such exchanges as two transactions. First, to the extent of the number of
previously acquired shares of Common Stock, a share for share exchange occurs
with each new share of Common Stock ("Carryover shares") succeeding to the cost
basis and holding period of the old shares of Common Stock. Second, the
remaining new shares of Common Stock are deemed acquired at a zero cost with
their holding period commencing on the date of acquisition ("Noncarryover
shares").
The foregoing rules generally apply to the use of previously acquired Common
Stock to acquire Common Stock under the 1996 Plan. An optionee may use Common
Stock owned at the date options are exercised to acquire Common Stock upon
exercise of the options. However, despite a "carryover" holding period, all of
the new shares of Common Stock are still subject to the holding requirements
discussed above. If optionee disposes of such Common Stock acquired pursuant to
the exercises of ISO's before the later of two years from the granting or one
year from exercise, an early disposition occurs first to the extent of the
Noncarryover shares and then to the extent of the Carryover shares.
In addition, if an optionee uses Common Stock acquired through a previous
partial exercise of options ("First Stock") to acquire new Common Stock through
an exercise of options ("Second Stock") before the First Stock has met the above
holding requirements, the First Stock will be treated as having been disposed of
in an early disposition. Therefore, the optionee will have to recognize
ordinary compensation to the excess of the fair market value of the First Stock
on its acquisition dates over its price paid. Despite the early disposition,
any excess gain is not recognized, but is deferred and carried over to the
Second Stock. If the First Stock is used to acquire other Common Stock which is
not subject to either the 1996 Plan, no early disposition will generally occur
and the tax free exchange rules may apply.
The discussion regarding the Federal income tax consequences of the 1996 Plan
is intended only as a broad discussion of the general rules applicable to the
grant and exercise of options and the acquisition and disposition of Common
Stock acquired pursuant to the exercise of options. Specific situations may be
subject to different rules and may result in different tax consequences. Each
optionee is strongly urged to consult his or her own tax advisor with specific
reference to the optionee's tax situation.
RESTRICTIONS ON RESALE
----------------------
The Company is subject to Section 16(b) of the Securities Exchange Act of
1934, as amended. Section 16(b) permits recovery by the Company of any profit
realized by any officer or director of the Company from any purchase and sale,
or sale and purchase, of Common Stock within any period of less than six months.
For purposes of Section 16(b), the grant of an option, but not its exercise, is
a purchase of Common Stock. Further, affiliates of the Company who acquire
shares of Common Stock of the Company pursuant to an option described in this
prospectus will not be able to resell such shares of Common Stock in reliance
upon this prospectus. Accordingly, affiliates of the Company exercising options
must insure that any resale of shares of the Company's Common Stock acquired
upon exercise complies with an available exemption from the registration
provisions of the Federal securities law, such as Rule 144 under the Securities
Act of 1933, as amended.
LEGAL MATTERS
-------------
Certain legal matters in connection with the Common Stock offered hereby are
being passed upon for the Company by Oppenheimer Wolff & Donnelly LLP, Newport
Beach, California.
-6-
<PAGE>
EXPERTS
-------
The financial statements of CPC of America, Inc. as of December 31, 1997 and
1996 and for the year ended December 31, 1997 and for the period from inception
(April 11, 1996) to December 31, 1996 have been incorporated by reference herein
in reliance upon the report of Cacciamatta Accountancy Corporation, independent
public accountants and upon the authority of said firm as experts in accounting
and auditing.
Item 2. Registrant Information and Employee Plan Annual Information
AVAILABLE INFORMATION
---------------------
CPC of America, Inc. (the "Company") is subject to the information
requirements of the Securities and Exchange Act of 1934 and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copies can be made at the
office of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of this material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. This
Prospectus does not contain all the information set forth in the Registration
Statement and exhibits thereto which the Company has filed with the Commission
under the Securities Act of 1933, as amended (the "Act"), to which reference is
hereby made.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company hereby incorporates by reference the following documents on file
with the Commission:
1. The Company's Registration Statement on Form 10-SB filed with the
Securities and Exchange Commission as of April 20, 1998.
All documents hereafter filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, subsequent to the date of
this Prospectus and prior to the sale of all of the Common Stock offered hereby,
shall be deemed to be incorporated herein by reference and to be a part hereof
from the respective dates of filing thereof.
The Company will provide without charge to each person to whom a copy of this
Prospectus has been delivered, upon the written or oral request of such person,
a copy of any or all of the documents incorporated herein by reference,
excluding the exhibits thereto. Requests for such documents should be directed
by mail to Rod A. Shipman, President, 1133 Fourth Street, Suite 200, Sarasota,
FL 34236, or by telephone (941) 906-9546.
Any statement contained in a document incorporated by reference herein as set
forth above shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained herein or in any
other subsequently filed document incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
-7-
<PAGE>
Item 4. Description of Securities.
Inapplicable.
Item 5. Interests of Named Experts and Counsel.
Inapplicable.
Item 6. Indemnification of Directors and Officers.
Nevada Statutes
---------------
Section 78.751 of the Nevada General Corporation Law provides for the
indemnification of the Company's officers, directors and corporate agents under
certain circumstances as follows:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, has no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually paid and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
-8-
<PAGE>
4. Any indemnification under subsections 1 and 2, unless ordered by a
court or advanced pursuant to subsection 5, must be made by the corporation only
as authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so orders, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in a
written opinion.
5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be
indemnified by the corporation. The provisions of this subsection do not affect
any rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the certificate
or articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to subsection 2 or for the
advancement of expenses made pursuant to subsection 5, may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
Bylaws
------
The Company's Bylaws provide for the permissive indemnification of the
Company's officers and directors under certain circumstances as follows:
(a) Right of Indemnity. To the full extent permitted by law, this
------------------
corporation shall indemnify its directors, officers, employees and other persons
described in Subsection 78.751 of the Nevada Revised Statutes, including persons
formerly occupying any such position, against all expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred by them in
connection with any "proceeding," as that term is used in such Subsection and
including an action by or in the right of the corporation to prove a judgment in
its favor, by reason of the fact that such person is or was a person described
by such Subsection. "Expenses", as used in this Bylaw, shall have the same
meaning as in Section 78.751 of the Nevada Revised Statutes.
-9-
<PAGE>
(b) Approval of Indemnity. Upon written requests to the Board of
---------------------
Directors by any person seeking indemnity under Section 78.751 of the Nevada
Revised Statutes, the Board shall promptly determine whether such person has met
the applicable standard of conduct set forth in such Subsection. If the Board
determines the person seeking indemnity has not met such standard of conduct,
the Board shall promptly call a meeting of shareholders at which the
shareholders shall determine whether the person seeking indemnity has met such
standard of conduct.
(c) Advancement of Expenses. To the full extent permitted by law and
-----------------------
except as shall otherwise be determined by the Board of Directors in the
specific instance, expenses incurred by a person seeking indemnity under this
Bylaw in defending any proceeding covered by this Bylaw shall be advanced by the
corporation prior to the final disposition of the proceeding upon receipt of an
undertaking by or on behalf of such person to repay such amount unless it shall
ultimately be determined that such person is entitled to be indemnified by the
corporation therefore.
Item 7. Exemption from Registration Claimed.
Inapplicable.
Item 8. Exhibits.
Exhibit Number Description
- -------------- -----------
4.1(1) Specimen of Common Stock Certificate.
5.1 Opinion of Oppenheimer Wolff & Donnelly LLP re: legality of
shares.
10.3 1996 Stock Option Plan dated May 2, 1996.
10.4 Consulting Services Agreement between the Company and the CTM
Group, Inc. dated April 23, 1998.
10.5 Employment Contract between the Company and Rod A. Shipman
dated April 23, 1998.
23.1 Consent of Oppenheimer Wolff & Donnelly LLP (filed as Exhibit
5.1 herein).
23.2 Consent of Cacciamatta Accountancy Corporation.
Notes:
(1) Incorporated by reference to Form 10-SB dated April 20, 1998.
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes to file during
any period in which offers or sales of the securities are being made, a post-
effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed or
any material change to such information set forth in the Registration Statement.
B. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
-10-
<PAGE>
C. The undersigned registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the offering.
D. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
E. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
-11-
<PAGE>
SIGNATURES
----------
The Registrant
- --------------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized on July 14, 1998.
CPC OF AMERICA, INC.
a Nevada corporation
By: /s/ ROD A. SHIPMAN
-------------------------------
Rod A. Shipman
Chief Executive Officer and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ ROD A. SHIPMAN President, Chief Executive July 14, 1998
- ---------------------------- Officer, Chief Financial
ROD A. SHIPMAN Officer and Director
/s/ RAFE COHEN Director July 14, 1998
- ----------------------------
RAFE COHEN
/s/ WILLIAM LIEVENSE Director July 14, 1998
- ----------------------------
WILLIAM LIEVENSE
-12-
<PAGE>
EXHIBIT 5.1
OPPENHEIMER WOLFF & DONNELLY LLP
500 Newport Center Drive
Suite 700
Newport Beach, California 92660
(949) 719-6000
(949) 719-6040 (Fax)
July 10, 1998
CPC of America, Inc.
1133 Fourth Street, Suite 200
Sarasota, Florida 34236
Re: Registration Statement on Form S-8
----------------------------------
Gentlemen:
As counsel for CPC of America, Inc., a Nevada corporation (the "Company"),
we have examined its Articles of Incorporation, as amended, Bylaws, as amended,
and such other corporate records, documents and proceedings, and such questions
of law as we have deemed relevant for the purpose of this opinion. We have also,
as such counsel, examined the Registration Statement on Form S-8 of the Company
as filed with the Securities and Exchange Commission, covering the registration
under the Securities Act of 1933, as amended, of a total 7,220,000 shares of
$.0005 par value common stock ("Common Stock"), including the exhibits and form
of Prospectus (the "Prospectus") pertaining thereto, and any amendments thereto
(collectively, the "Registration Statement").
Upon the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly authorized and validly existing in
good standing under the laws of the State of California, with all requisite
power to conduct the business described in the Registration Statement.
2. The shares of the Company's Common Stock registered pursuant to the
Registration Statement have been duly and validly authorized and, subject to the
payment therefor pursuant to the terms contemplated in the final Prospectus,
such shares of Common Stock will be duly and validly issued as fully paid and
non-assessable securities of the Company.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ OPPENHEIMER WOLFF & DONNELLY LLP
<PAGE>
EXHIBIT 10.3
CPC OF AMERICA, INC.
1996 STOCK OPTION PLAN
1. PURPOSE. The purpose of the CPC of America, Inc. 1996 Stock Option Plan
-------
(the "Plan") is to strengthen CPC of America, Inc., a Nevada corporation
("Corporation"), by providing to employees, officers, directors, consultants and
independent contractors of the Corporation or any of its subsidiaries (including
dealers, distributors, and other business entities or persons providing services
on behalf of the Corporation or any of its subsidiaries) added incentive for
high levels of performance and unusual efforts to increase the earnings of the
Corporation. The Plan seeks to accomplish this purpose by enabling specified
persons to purchase shares of the common stock of the Corporation, $.001 par
value, thereby increasing their proprietary interest in the Corporation's
success and encouraging them to remain in the employ or service of the
Corporation.
2. CERTAIN DEFINITIONS. As used in this Plan, the following words and
-------------------
phrases shall have the respective meanings set forth below, unless the context
clearly indicates a contrary meaning:
2.1 "Board of Directors": The Board of Directors of the Corporation.
------------------
2.2 "Committee": The Committee which shall administer the Plan shall
---------
consist of the entire Board of Directors.
2.3 "Fair Market Value Per Share": The fair market value per share of
---------------------------
the Shares as determined by the Committee in good faith. The Committee is
authorized to make its determination as to the fair market value per share of
the Shares on the following basis: (i) if the Shares are traded only otherwise
than on a securities exchange and are not quoted on the National Association of
Securities Dealers' Automated Quotation System ("NASDAQ"), but are quoted on the
bulletin board or in the "pink sheets" published by the National Daily Quotation
Bureau, either (a) the average of the mean between the average daily bid and
average daily asked prices of the Shares during the thirty (30) day period
preceding the date of grant of an Option, as quoted on the bulletin board or in
the "pink sheets" published by the National Daily Quotation Bureau, or (b) the
daily closing price of the Shares on the date of grant, as published on the
bulletin board or in such "pink sheets;" (ii) if the Shares are traded on a
securities exchange or on the NASDAQ, either (a) the average of the daily
closing prices of the Shares during the ten (10) trading days preceding the date
of grant of an Option, as quoted in the Wall Street Journal, or (b) the daily
closing price of the Shares on the date of grant of an Option, as quoted in the
Wall Street Journal; or (iii) if the Shares are traded only otherwise than as
described in (i) or (ii) above, or if the Shares are not publicly traded, the
value determined by the Committee in good faith based upon the fair market value
as determined by completely independent and well qualified experts.
<PAGE>
2.4 "Option": A stock option granted under the Plan.
------
2.5 "Incentive Stock Option": An Option intended to qualify for
----------------------
treatment as an incentive stock option under Code Sections 421 and 422, and
designated as an Incentive Stock Option.
2.6 "Nonqualified Option": An Option not qualifying as an Incentive
-------------------
Stock Option.
2.7 "Optionee": The holder of an Option.
--------
2.8 "Option Agreement": The document setting forth the terms and
----------------
conditions of each Option.
2.9 "Shares": The shares of common stock $.001 par value of the
------
Corporation.
2.10 "Code": The Internal Revenue Code of 1986, as amended.
----
2.11 "Subsidiary": Any corporation of which fifty percent (50%) or
----------
more of total combined voting power of all classes of stock of such corporation
is owned by the Corporation or another Subsidiary (as so defined).
3. ADMINISTRATION OF PLAN.
----------------------
3.1 In General. This Plan shall be administered by the Committee. Any
----------
action of the Committee with respect to administration of the Plan shall be
taken pursuant to (i) a majority vote at a meeting of the Committee (to be
documented by minutes), or (ii) the unanimous written consent of its members.
3.2 Authority. Subject to the express provisions of this Plan, the
---------
Committee shall have the authority to: (i) construe and interpret the Plan,
decide all questions and settle all controversies and disputes which may arise
in connection with the Plan and to define the terms used therein; (ii)
prescribe, amend and rescind rules and regulations relating to administration of
the Plan; (iii) determine the purchase price of the Shares covered by each
Option and the method of payment of such price, individuals to whom, and the
time or times at which, Options shall be granted and exercisable and the number
of Shares covered by each Option; (iv) determine the terms and provisions of the
respective Option Agreements (which need not be identical); (v) determine the
duration and purposes of leaves of absence which may be granted to participants
without constituting a termination of their employment for purposes of the Plan;
and (vi) make all other determinations necessary or advisable to the
administration of the Plan. Determinations of the Committee on matters referred
to in this Section 3 shall be conclusive and binding on all parties howsoever
concerned. With respect to Incentive Stock Options, the Committee shall
administer the Plan in compliance with the provisions of Code Section 422 as the
-2-
<PAGE>
same may hereafter be amended from time to time. No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option.
4. ELIGIBILITY AND PARTICIPATION.
-----------------------------
4.1 In General. Only officers, employees and directors who are also
----------
employees of the Corporation or any Subsidiary shall be eligible to receive
grants of Incentive Stock Options. Officers, employees and directors (whether
or not they are also employees) of the Corporation or any Subsidiary, as well as
consultants, independent contractors or other service providers of the
Corporation or any Subsidiary shall be eligible to receive grants of
Nonqualified Options. Within the foregoing limits, the Committee, from time to
time, shall determine and designate persons to whom Options may be granted. All
such designations shall be made in the absolute discretion of the Committee and
shall not require the approval of the stockholders. In determining (i) the
number of Shares to be covered by each Option, (ii) the purchase price for such
Shares and the method of payment of such price (subject to the other sections
hereof), (iii) the individuals of the eligible class to whom Options shall be
granted, (iv) the terms and provisions of the respective Option Agreements, and
(v) the times at which such Options shall be granted, the Committee shall take
into account such factors as it shall deem relevant in connection with
accomplishing the purpose of the Plan as set forth in Section 1. An individual
who has been granted an Option may be granted an additional Option or Options if
the Committee shall so determine. No Option shall be granted under the Plan
after May 2, 2006, but Options granted before such date may be exercisable after
such date.
4.2 Certain Limitations. In no event shall Incentive Stock Options be
-------------------
granted to an Optionee such that the sum of (i) aggregate fair market value
(determined at the time the Incentive Stock Options are granted) of the Shares
subject to all Options granted under the Plan which are exercisable for the
first time during the same calendar year, plus (ii) the aggregate fair market
value (determined at the time the options are granted) of all stock subject to
all other incentive stock options granted to such Optionee by the Corporation,
its parent and Subsidiaries which are exercisable for the first time during
such calendar year, exceeds One Hundred Thousand Dollars ($100,000). For
purposes of the immediately preceding sentence, fair market value shall be
determined as of the date of grant based on the Fair Market Value Per Share as
determined pursuant to Section 2.3.
5. AVAILABLE SHARES AND ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
---------------------------------------------------------------
5.1 Shares. Subject to adjustment as provided in Section 5.2 below,
------
the total number of Shares to be subject to Options granted pursuant to this
Plan shall not exceed 3,000,000 Shares. Shares subject to the Plan may be either
authorized but unissued shares or shares that were once issued and subsequently
reacquired by the Corporation; the Committee shall be empowered to take any
appropriate action required to make Shares
-3-
<PAGE>
available for Options granted under this Plan. If any Option is surrendered
before exercise or lapses without exercise in full or for any other reason
ceases to be exercisable, the Shares reserved therefore shall continue to be
available under the Plan.
5.2 Adjustments. As used herein, the term "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 authorized number and kind of shares and exercise price for
the shares subject to the Options which may thereafter be granted under this
Plan, (ii) appropriate and proportionate adjustments shall be made to the number
and kind of and exercise price for the shares subject to the then outstanding
Options granted under this Plan, and (iii) appropriate amendments to the Option
Agreements shall be executed by the Corporation and the Optionees if the
Committee determines that such an amendment is necessary or desirable to reflect
such adjustments. If determined by the Committee to be appropriate, in the event
of an Adjustment Event which involves the substitution of securities of a
corporation other than the Corporation, the Committee shall make arrangements
for the assumptions by such other corporation of any Options then or thereafter
outstanding under the Plan. Notwithstanding the foregoing, such adjustment in an
outstanding Option shall be made without change in the total exercise price
applicable to the unexercised portion of the Option, but with an appropriate
adjustment to the number of shares, kind of shares and exercise price for each
share subject to the Option. The determination by the Committee as to what
adjustments, amendments or arrangements shall be made pursuant to this Section
5.2, and the extent thereof, shall be final and conclusive. No fractional Shares
shall be issued under the Plan on account of any such adjustment or arrangement.
6. TERMS AND CONDITIONS OF OPTIONS.
-------------------------------
6.1 Intended Treatment as Incentive Stock Options. Incentive Stock
---------------------------------------------
Options granted pursuant to this Plan are intended to be "incentive stock
options" to which Code Sections 421 and 422 apply, and the Plan shall be
construed and administered to implement that intent. If all or any part of an
Incentive Stock Option shall not be an "incentive stock option" subject to
Sections 421 or 422 of the Code, such Option shall nevertheless be valid and
carried into effect. All Options granted under this Plan shall be subject to the
terms and conditions set forth in this Section 6 (except as provided in Section
5.2) and to such other terms and conditions as the Committee shall determine to
be appropriate to accomplish the purpose of the Plan as set forth in Section 1.
-4-
<PAGE>
6.2 Amount and Payment of Exercise Price.
------------------------------------
6.2.1 Exercise Price. The exercise price per Share for each
--------------
Share which the Optionee is entitled to purchase under a Nonqualified Option
shall be determined by the Committee but shall not be less than eighty-five
percent (85%) of the Fair Market Value Per Share on the date of the grant of the
Nonqualified Option. The exercise price per Share for each Share which the
Optionee is entitled to purchase under an Incentive Stock Option shall be
determined by the Committee but shall not be less than the Fair Market Value Per
Share on the date of the grant of the Incentive Stock Option; provided, however,
that the exercise price shall not be less than one hundred ten percent (110%) of
the Fair Market Value Per Share on the date of the grant of the Incentive Stock
Option in the case of an individual then owning (within the meaning of Code
Section 425(d)) more than ten percent (10%) of the total combined voting power
of all classes of stock of the Corporation or of its parent or Subsidiaries.
6.2.2 Payment of Exercise Price. The consideration to be paid for
-------------------------
the Shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Committee and may consist of promissory
notes, shares of the common stock of the Corporation or such other consideration
and method of payment for the Shares as may be permitted under applicable state
and federal laws.
6.3 Exercise of Options.
-------------------
6.3.1 Each Option granted under this Plan shall be exercisable at
such times and under such conditions as may be determined by the Committee at
the time of the grant of the Option and as shall be permissible under the terms
of the Plan; provided, however, in no event shall an Option be exercisable after
the expiration of ten (10) years from the date it is granted, and in the case of
an Optionee owning (within the meaning of Code Section 425(d)), at the time an
Incentive Stock Option is granted, more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation or of its
parent or Subsidiaries, such Incentive Stock Option shall not be exercisable
later than five (5) years after the date of grant.
6.3.2 An 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 and shall not
include any fractional shares.
6.4 Nontransferability of Options. All Options granted under this
-----------------------------
Plan shall be nontransferable, 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 such Optionee.
6.5 Effect of Termination of Employment or Other Relationship. Except
---------------------------------------------------------
as otherwise determined by the Committee in connection with the grant of
Nonqualified Options, the effect of termination of an Optionee's employment or
other relationship with
-5-
<PAGE>
the Corporation on such Optionee's rights to acquire Shares pursuant to the Plan
shall be as follows:
6.5.1 Termination for Other than Death, Disability or Cause. If
-----------------------------------------------------
an Optionee ceases to be employed by, or ceases to have a relationship with, the
Corporation 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 (or his estate) 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
Committee, 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.
6.5.2 Death or Disability. If an Optionee ceases to be employed
-------------------
by, or ceases to have a relationship with, the Corporation 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 by reason of death or disability and except
as so exercised, such Options shall expire at the end of such one (1) year
period unless such Options by their terms expire before such date. The decision
as to whether a termination by reason of disability has occurred shall be made
by the Committee, whose decision shall be final and conclusive.
6.5.3 Termination for Cause. If an Optionee's employment by, or
---------------------
relationship with, the Corporation is terminated for cause, such Optionee's
Option shall expire immediately; provided, however, the Committee 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 upon the date of such termination for
a reason other than disability, cause, or death. Termination for cause shall
include termination for malfeasance or gross misfeasance in the performance of
duties or conviction of illegal activity in connection therewith or any conduct
detrimental to the interests of the Corporation. The determination of the
Committee with respect to whether a termination for cause has occurred shall be
final and conclusive.
6.6 Withholding of Taxes. As a condition to the exercise, in whole or
--------------------
in part, of any Options the Board of Directors may in its sole discretion
require the Optionee
-6-
<PAGE>
to pay, in addition to the purchase price of the Shares covered by the Option an
amount equal to any Federal, state or local taxes that may be required to be
withheld in connection with the exercise of such Option.
-7-
<PAGE>
6.7 No Rights to Continued Employment or Relationship. Nothing
-------------------------------------------------
contained in this Plan or in any Option Agreement shall obligate the Corporation
to employ or have another relationship with any Optionee for any period or
interfere in any way with the right of the Corporation to reduce such Optionee's
compensation or to terminate the employment of or relationship with any Optionee
at any time.
6.8 Time of Granting Options. The time an Option is granted, sometimes
------------------------
referred to herein as the date of grant, shall be the day the Corporation
executes the Option Agreement; provided, however, that if appropriate
resolutions of the Committee indicate that an Option is to be granted as of and
on some prior or future date, the time such Option is granted shall be such
prior or future date.
6.9 Privileges of Stock Ownership. No Optionee shall be entitled to
-----------------------------
the privileges of stock ownership as to any Shares not actually issued and
delivered to such Optionee. No Shares shall be purchased upon the exercise of
any Option 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.
6.10 Securities Laws Compliance. The Corporation will diligently
--------------------------
endeavor to comply with all applicable securities laws before any Options are
granted under the Plan and before any Shares are issued pursuant to 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 or advisable 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 Committee. The Committee in its discretion may cause the
Shares underlying the Options to be registered under the Securities Act of 1933,
as amended, by the filing of a Form S-8 Registration Statement covering the
Options and Shares underlying such 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.
6.11 Option Agreement. Each Incentive Stock Option and Nonqualified
----------------
Option granted under this Plan shall be evidenced by the appropriate written
Stock Option Agreement ("Option Agreement") executed by the Corporation and the
Optionee in a form substantially the same as the appropriate form of Option
Agreement attached as Exhibit I or II hereto (and made a part hereof by this
reference) and shall contain each of the provisions and agreements specifically
required to be contained therein pursuant to this Section 6, and such other
terms and conditions as are deemed desirable by the Committee and are not
inconsistent with the purpose of the Plan as set forth in Section 1.
-8-
<PAGE>
7. PLAN AMENDMENT AND TERMINATION.
------------------------------
7.1 Authority of Committee. The Committee may at any time discontinue
----------------------
granting Options under the Plan or otherwise suspend, amend or terminate the
Plan and may, with the consent of an Optionee, make such modification of the
terms and conditions of such Optionee's Option as it shall deem advisable;
provided that, except as permitted under the provisions of Section 5.2, the
Committee shall have no authority to make any amendment or modification to this
Plan or any outstanding Option thereunder which would: (i) increase the maximum
number of shares which may be purchased pursuant to Options granted under the
Plan, either in the aggregate or by an Optionee (except pursuant to Section
5.2); (ii) change the designation of the class of the employees eligible to
receive Incentive Stock Options; (iii) extend the term of the Plan or the
maximum Option period thereunder; (iv) decrease the minimum Incentive Stock
Option price or permit reductions of the price at which shares may be purchased
for Incentive Stock Options granted under the Plan; or (v) cause Incentive Stock
Options issued under the Plan to fail to meet the requirements of incentive
stock options under Code Section 422. An amendment or modification made
pursuant to the provisions of this Section 7 shall be deemed adopted as of the
date of the action of the Committee effecting such amendment or modification and
shall be effective immediately, unless otherwise provided therein, subject to
approval thereof (1) within twelve (12) months before or after the effective
date by stockholders of the Corporation holding not less than a majority vote of
the voting power of the Corporation voting in person or by proxy at a duly held
stockholders meeting when required to maintain or satisfy the requirements of
Code Section 422 with respect to Incentive Stock Options, and (2) by any
appropriate governmental agency. No Option may be granted during any suspension
or after termination of the Plan.
7.2 Ten (10) Year Maximum Term. Unless previously terminated by the
--------------------------
Committee, this Plan shall terminate on May 2, 2006, and no Options shall be
granted under the Plan thereafter.
7.3 Effect on Outstanding Options. Amendment, suspension or
-----------------------------
termination of this Plan shall not, without the consent of the Optionee, alter
or impair any rights or obligations under any Option theretofore granted.
8. EFFECTIVE DATE OF PLAN. This Plan shall be effective as of May 2, 1996,
----------------------
the date the Plan was adopted by the Board of Directors, subject to the approval
of the Plan by the affirmative vote of a majority of the issued and outstanding
Shares of common stock of the Corporation represented and voting at a duly held
meeting at which a quorum is present within twelve (12) months thereafter. The
Committee shall be authorized and empowered to make grants of Options pursuant
to this Plan prior to such approval of this Plan by the stockholders; provided,
however, in such event the Option grants shall be made subject to the approval
of both this Plan and such Option grants by the stockholders in accordance with
the provisions of this Section 8.
-9-
<PAGE>
9. MISCELLANEOUS PROVISIONS.
------------------------
9.1 Exculpation and Indemnification. The Corporation shall indemnify
-------------------------------
and hold harmless the Committee from and against any and all liabilities, costs
and expenses incurred by such persons as a result of any act, or omission to
act, in connection with the performance of such persons' duties,
responsibilities and obligations under the Plan, other than such liabilities,
costs and expenses as may result from the gross negligence, bad faith, willful
conduct and/or criminal acts of such persons.
9.2 Governing Law. The Plan shall be governed and construed in
-------------
accordance with the laws of the State of California and the Code.
9.3 Compliance with Applicable Laws. The inability of the Corporation
-------------------------------
to obtain from any regulatory body having jurisdiction authority deemed by the
Corporation's counsel to be necessary to the lawful issuance and sale of any
Shares upon the exercise of an Option shall relieve the Corporation of any
liability in respect of the non-issuance or sale of such Shares as to which such
requisite authority shall not have been obtained.
-10-
<PAGE>
EXHIBIT 10.4
CONSULTING SERVICES CONTRACT
----------------------------
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
- - - - - - - -
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.
---------
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
----------------------------------
"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.
-------------------------------------
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
1
<PAGE>
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
--------------
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
2
<PAGE>
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,
--------------------------
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
-----------
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
3
<PAGE>
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
-------------------------
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
----------------------
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.
----------------------------------------------------------------------
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.
4
<PAGE>
10. Remedy. Consultant acknowledges that the restrictions contained in
------
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
----------------------------------------
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
--------------------
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.
------------
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
5
<PAGE>
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.
----------------------------------------------
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
6
<PAGE>
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
-----------------
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
--------
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
----------
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
-------------
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
7
<PAGE>
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
--------------
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
---------
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
--------
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.
1133 Fourth Street, Suite 200
Sarasota, Florida 34236
If to Consultant: CTM Group, Inc.
P.O. Box 5904
Sarasota, Florida 34270
22. Best Efforts and Reasonable Care. Consultant will exert his best efforts
--------------------------------
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
----------------
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
----------------
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.
8
<PAGE>
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/ ROD A. SHIPMAN
-------------------------------------------
Rod A. Shipman
President and Chief Executive Officer
CONSULTANT:
CTM Group, Inc.,
a Nevada corporation
By: /s/ DEBORAH SHABTY
-------------------------------------------
Deborah Shabty, President
9
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
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
----------------
("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
---------------------------
2.1 Option Period. The Options shall be exercisable at any time during the
-------------
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:
<TABLE>
<CAPTION>
Number of Options Exercisable On or After
----------------- --------------------------
<C> <S>
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
</TABLE>
2.2 Acceleration of the Exercise Date of Stock Options. Notwithstanding
--------------------------------------------------
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.
<PAGE>
3. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
------------------
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
------------------------
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
-------------------------
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
---------------------------------------------------------
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
-----------------------------------------------------
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.
<PAGE>
6.2 Death or Disability. If an Optionee ceases to be employed by, or
-------------------
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
---------------------
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,
-----------------------------
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
------------------------------------------
"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
<PAGE>
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
-------------------------------------------------
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,
------------------------
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
-----------------------------
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
--------------------------
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
-------------------------------------------------
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
-------------------------------
SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS EXPRESSLY CONDITIONED
UPON THE COMPLETION BY THE
<PAGE>
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.
-------------
16.1 Binding Effect. This Agreement shall bind and inure to the benefit
--------------
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
------------
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
---------
agreement of the Corporation and the Optionee.
16.4 Syntax. Throughout this Agreement, whenever the context so
------
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
-------------
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
------------
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.
<PAGE>
16.7 Notices. All notices and demands between the parties hereto shall
-------
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.
P.O. Box 5904
Sarasota, Florida 34270
If to Corporation: CPC of America, Inc.
1133 Fourth Street, Suite 200
Sarasota, Florida 34236
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
---------------
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.
<PAGE>
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/ ROD A. SHIPMAN
---------------------------------------------------
Rod A. Shipman,
President and Chief Executive Officer
"OPTIONEE"
CTM GROUP, INC.
a Nevada corporation
By: /s/ DEBORAH SHABTY
---------------------------------------------------
Deborah Shabty, President
<PAGE>
EXHIBIT 10.5
EMPLOYMENT CONTRACT
-------------------
THIS CONTRACT OF EMPLOYMENT (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 Rod A. Shipman (hereinafter "Executive").
R E C I T A L S
- - - - - - - -
A. Executive has participated in the organization of the Company and its
business.
B. Executive 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 employment of the Executive to be in
the best interest of the Company and its shareholders and desires to assure the
continued employment of Executive 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. Executive is willing to remain in the employ 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 employment is terminated by
the Company or if he voluntarily terminates his employment for good reason.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the parties to this Contract hereby agree as follows:
1. Employment. The Company hereby agrees to employ Executive as President
-----------
and Chief Executive Officer of the Company. Executive accepts such employment
and agrees to be subject to the general supervision, orders, advice and
direction of the Board of Directors of the Company, in a manner consistent with
the Articles of Incorporation and Bylaws of the Company.
2. Terms of Employment and Compensation. Executive's term of employment (the
------------------------------------
"Employment Term") hereunder shall start on the date first written above, and
continue until such employment terminates pursuant to Section 7 hereof.
3. Base Salary and Other Compensation.
-----------------------------------
a. Executive's salary for each year hereunder shall be $120,000.00 per year.
Thereafter during the Employment Term, Executive's salary shall be increased
each year by an amount equal to Executive's salary 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%, Executive's
salary for
1
<PAGE>
the second year hereunder would be $132,000.00. Salary increases shall not
exceed 10% per year. Executive's salary shall be payable on the Company's
regular salary payment date. In addition, Executive shall receive a bonus. The
bonus paid to Executive 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 Executive 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 salary and bonus payments
hereunder shall be subject to withholding and any other applicable tax law.
b. Upon the execution of this Agreement by Executive, the Company shall grant
to Executive 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 Executive in the form
attached hereto as Exhibit A.
4. Salary Guarantee. All salary payable to the Executive under the Agreement
----------------
will be guaranteed (the "Guaranteed Payments") as of the effective date of the
Agreement for the full Employment Term of the Agreement except for terminations
found in Section 7(b), (d) or (e) hereof.
a. None of the Guaranteed Payments described in this Section 13 shall prevent
the Executive from receiving the Termination Benefits described in Section 13 of
the Agreement.
b. All Guaranteed Payments described in this Section and payable to the
Executive shall be payable to the Estate of Executive and or beneficiary
designee in the event of the death of the Executive.
c. In the event of any mental disability which renders the Executive unable
to fulfill his duties pursuant to Section 1 of this Agreement, all Guaranteed
Payments shall be made to Executive's spouse, 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 Executive unable
or unwilling to fulfill his duties pursuant to Section 1 of this Agreement, all
Guaranteed Payments shall be made directly to the Executive.
2
<PAGE>
e. Upon the termination of Executive's employment for any reason other than
pursuant to Section 7(b), (d), or (e) hereof, the Company shall continue to pay
to Executive the salary 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 salary payment date.
5. Reimbursement for Expenses. The Company shall, during the Employment
--------------------------
Term, reimburse Executive for all reasonable travel, business entertainment and
other business expenses incurred by Executive 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. Fringe Benefits. During the Employment Term, Executive shall be entitled
---------------
to participate in the Company's corporate, medical and disability insurance
plans. Executive shall be entitled to all other fringe benefits generally
provided for salaried employees of the Company upon attaining eligibility as
provided under such fringe benefit programs. Executive shall be entitled to
four weeks vacation per year. Executive shall receive a car allowance as
determined by the Board of Directors. In addition, the Company shall pay for
health and life insurance benefits for the Executive.
7. Termination. The Employment Term shall terminate on the first to occur of
-----------
the following events:
a. the eleventh year anniversary of the date on which the Employment Term
becomes effective;
b. termination by the Company for cause, upon written notice (specifying the
particulars) to Executive from the Company's Board of Directors, which cause
shall be limited to:
i. refusal by Executive for any reason to comply with the material orders,
advice, directions, policies, standard and regulations of the Company and its
Board of Directors 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 Executive resulting in or
tending to result in gain to or personal enrichment of Executive at the
Company's expense;
iii. any felony conviction of Executive or material tort which is
detrimental to the Company;
iv. the persistent absence by Executive from his employment without cause
or explanation;
c. the death of Executive;
d. the 90th day after notice from the Company to Executive that Executive is
considered to be permanently disabled due to his inability to perform his duties
or fulfill his
3
<PAGE>
responsibilities hereunder, which inability existed for a period of 90 days or
more before such notice; or
e. termination by Executive, at his option only, after 90 days prior
written notice to the Company.
Upon termination of Executive's employment pursuant to Section 7(b), (d), or
(e), Executive (or his estate) shall receive (i) any unpaid salary 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 his
employment. In all other events of termination, Executive shall continue to
receive the Guaranteed Payments.
8. Agreement Not To Compete. Executive agrees that if his employment is
-------------------------
terminated by the Company pursuant to Sections 7(b) or (e) hereof he shall not,
for a period of one year from the date his employment hereunder terminates, (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 employment is terminated, (b)
directly or indirectly sell or attempt to sell any type of product or services
marketed by the Company at the time his employment is terminated to any person,
corporation or other entity that is a customer of the Company at the time his
employment is 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 Executive's
employment hereunder; provided, however, that Executive 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.
9. Technical Information. Executive covenants and agrees that during the
----------------------
Employment Term and for a period of six months after termination of the
Employment Term (regardless of whether Executive 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.
10. Covenant Against Disclosure of Technical and Confidential Information.
----------------------------------------------------------------------
Executive agrees that while he is employed by 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
4
<PAGE>
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, Executive shall deliver promptly to the Company upon termination of
his employment, 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
Executive's obligations under statute or the common law to protect the Company's
trade secrets and confidential information.
11. Remedy. Executive acknowledges that the restrictions contained in
------
Sections 8 through 10 of this Contract are reasonable and that the legal
remedies for breach of the covenants which are contained in Sections 8 through
10 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 Executive 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.
12. Undertaking To Pay Termination Benefits. In addition to the payments
----------------------------------------
Executive shall receive under Section 3 hereof, in the event of the termination
of his employment, the Company agrees to pay to the Executive the Termination
Benefits specified in Section 13 hereof if (a) control of the Company is
acquired (as defined in Section 14(a) hereof) and (b) within three years after
the acquisition of control occurs (i) the Company terminates the employment of
Executive for any reason other than pursuant to Section 7(b), 7(c) or 7(d)
hereof, or (ii) Executive voluntarily terminates his employment for good reason
(as defined in Section 14(b) hereof).
13. Termination Benefits. If Executive is entitled to termination benefits
--------------------
pursuant to paragraph 12 hereof, the Company agrees to pay to Executive as
termination compensation in a lump-sum payment within five calendar days of the
termination of Executive's employment an amount to be computed by multiplying
(a) Executive's average annual compensation payable by the Company which was
includable in the total gross income, which included any bonuses and/or stock
options of Executive 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 Executive was an employee of the
Company), by (b) 100%. For purposes of this Contract, salary and compensation
paid by any direct or indirect subsidiary of the Company, if any, will be deemed
to be salary and compensation paid by the Company. The Termination Benefits
described in this section are payable to the Executive 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.
14. Definitions.
------------
5
<PAGE>
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 Executive or with whom or which Executive 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
Executive's written consent, (i) a change in Executive's status, position or
responsibilities which, in his reasonable judgment, does not represent a
promotion from his status, position or responsibilities as in effect immediately
prior to the change in control; the assignment to Executive of any duties or
responsibilities which, in his reasonable judgment, are inconsistent with such
status, position or responsibilities; or any removal of Executive from or
failure to reappoint or reelect him to any of such positions, except in
connection with the termination of his employment for total permanent
disability, death or pursuant to Section 7(b)(ii) or 7(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 Executive's employment which is not effected pursuant
to a Notice of Termination satisfying the requirements of Section 15(c) hereof
(and, if applicable, Section 7(b) hereof); and for purposes of this Contract, no
such purported termination shall be effective; or (vi) any request by the
Company that Executive participate in an unlawful act or take any action
constituting a breach of Executive's professional standard of conduct.
Notwithstanding anything in this Section 14(b) to the contrary, Executive's
right to termination benefits pursuant to Section 12 herein shall not be
affected by his incapacity due to physical or mental illness.
15. Additional Provisions Relating to Termination.
----------------------------------------------
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 Executive
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
Executive 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 Executive 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 Executive the benefits
entitled to be provided to Executive, hereunder, and
6
<PAGE>
that Executive has complied with all of his obligations under this Contract, the
Company irrevocably authorizes Executive from time to time to retain counsel of
his choice, at the expense of the Company as provided in this Section 15(a), to
represent Executive 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 Executive entering into an attorney-client relationship
with such counsel, and in that connection the Company and Executive agree that a
confidential relationship shall exist between Executive and such counsel. The
reasonable fees and expenses of counsel selected from time to time by Executive
as herein above provided shall be paid or reimbursed to Executive by the Company
on a regular, periodic basis upon presentation by Executive 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 Executive'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 Executive for such expenses.
b. The amounts payable to Executive under this Contract shall not be
treated as damages but as severance compensation to which Executive is entitled
by reason of termination of his employment in the circumstances contemplated by
this Contract. The Company shall not be entitled to set off against the amounts
payable to Executive of any amounts earned by Executive in other employment
after termination of his employment with the Company, or any amounts which might
have been earned by Executive in other employment had he sought such other
employment.
c. Any purported termination by the Company or by Executive shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 22 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
employment under the provision so indicated. For purposes of this Contract, no
such purported termination shall be effective without such Notice of
Termination.
16. Entire Agreement. This Contract contains the entire agreement of the
-----------------
parties relating to the employment of Executive 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.
17. Benefit. Executive acknowledges that the employment to be rendered by
--------
him is unique and personal; accordingly, Executive 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.
7
<PAGE>
18. No Waiver. No failure on the part of either party at any time to require
----------
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.
19. Severability. The provisions of Sections 8 through 11 hereof are
-------------
severable, and the invalidity or unenforceability of any particular provision of
Sections 8 through 11 shall not affect or limit the enforceability of the other
provisions. If any provision in Sections 8 through 11 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.
20. Governing Law. This Contract shall be governed and construed in
--------------
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.
21. Captions. The captions in this Contract are for convenience and
---------
identification purposes only, and not an integral part of this Contract, and are
not to be considered in the interpretation of any part hereof.
22. Notices. All notices and other communications hereunder shall be in
--------
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.
1133 Fourth Street, Suite 200
Sarasota, Florida 34236
If to Executive: Rod A. Shipman
1133 Fourth Street, Suite 200
Sarasota, Florida 34236
23. Best Efforts and Reasonable Care. Executive will exert his best efforts
--------------------------------
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.
24. Confidentiality. Executive will not disclose or otherwise use an
----------------
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.
25. Indemnification. Executive will have no liability whatever for damage
----------------
suffered by any person or entity on account of the dishonesty, willful
misconduct or negligence of any
8
<PAGE>
employee of the Company. The Company agrees to indemnify the Executive and hold
him 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.
IN WITNESS WHEREOF, the Company has caused this contract to be executed on its
behalf by its duly authorized officer and Executive has hereunto set his hand as
of the date and year first above written.
CPC of America, Inc.,
a Nevada Corp.
By: /s/ ROD A. SHIPMAN
-------------------------------------
Rod A. Shipman
President and Chief Executive Officer
/s/ ROD A. SHIPMAN
----------------------------------------
ROD A. SHIPMAN
9
<PAGE>
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
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 ROD A. SHIPMAN ("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
----------------
("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
---------------------------
2.1 Option Period. The Options shall be exercisable at any time
-------------
during the 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:
<TABLE>
<CAPTION>
Number of Options Exercisable On or After
----------------- -----------------------
<C> <S>
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
</TABLE>
2.2 Acceleration of the Exercise Date of Stock Options.
--------------------------------------------------
Notwithstanding 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.
<PAGE>
3. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
------------------
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 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 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
---------------------------------------------------------
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
-----------------------------------------------------
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.
<PAGE>
6.2 Death or Disability. If an Optionee ceases to be employed by, or
-------------------
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 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,
-----------------------------
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
------------------------------------------
"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
<PAGE>
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 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, 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
-----------------------------
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 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 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 SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS EXPRESSLY
CONDITIONED UPON THE COMPLETION BY THE
<PAGE>
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.
-------------
16.1 Binding Effect. This Agreement shall bind and inure to the
--------------
benefit 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
------------
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 agreement of the Corporation and the Optionee.
16.4 Syntax. Throughout this Agreement, whenever the context so
------
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
-------------
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
------------
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.
<PAGE>
16.7 Notices. All notices and demands between the parties hereto
-------
shall 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: Rod A. Shipman
18330 Timberlane Drive
Yorba Linda, California 92886
If to Corporation: CPC of America, Inc.
1133 Fourth Street, Suite 200
Sarasota, Florida 34236
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
---------------
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.
<PAGE>
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/ ROD A. SHIPMAN
-------------------------------------------
Rod A. Shipman,
President and Chief Executive Officer
"OPTIONEE"
/s/ ROD A. SHIPMAN
---------------------------------------------
ROD A. SHIPMAN
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent to the incorporation by reference in this registration statement on
Form S-8 of CPC of America, Inc. and Subsidiaries of our report dated February
25, 1998 on our audit of the consolidated financial statements of CPC of
America, Inc. and Subsidiaries as of December 31, 1997, and for the year ended
December 31, 1997 and for the period from inception (April 11, 1996) to December
31, 1996.
/s/ Cacciamatta Accountancy Corporation
Cacciamatta Accountancy Corporation
July 10, 1998
Irvine, California
