General Counsel Employment Agreement

EXHIBIT 10.1


EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (this "Agreement"), is executed and delivered to be effective as of January 17, 2006 (the "Effective Date"), by and between Endocare, Inc., a Delaware corporation (the "Company"), and Clint B. Davis, an individual resident of the State of California ("Employee").


1. POSITION AND RESPONSIBILITIES


a. POSITION. Employee is employed by the Company to render services to the Company in the position of Senior Vice President, Legal Affairs and General Counsel. Employee shall report directly to the Company's Chief Executive Officer, subject to applicable legal requirements, including, without limitation, Section 307 of the Sarbanes-Oxley Act of 2002 and the rules adopted by the Securities and Exchange Commission thereunder. Employee shall perform such duties and responsibilities as are normally related to such position, in accordance with industry standards, and any additional duties now or hereafter reasonably assigned to Employee by the Company or the Chief Executive Officer. Employee shall abide by the Company's rules, regulations and policies, as adopted or modified from time to time in the Company's sole discretion.


b. OTHER ACTIVITIES. Except with the prior written consent of the Company, Employee shall not, during the term of this Agreement, (i) accept any other employment, or (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary gain) that might interfere with Employee's duties and responsibilities hereunder or create a conflict of interest with the Company. Employee may serve as a member of the board of directors of any company that does not compete with the Company. Notwithstanding the foregoing, Employee may also devote reasonable time and attention to civic, charitable or social organizations so long as such activities do not interfere with the performance of his duties to the Company.


c. NO CONFLICT. Employee represents and warrants that Employee's execution of this Agreement, Employee's employment with the Company and the performance of Employee's proposed duties under this Agreement shall not violate any obligations Employee may have to any prior employer, or any other person or entity, including, without limitation, any obligations with respect to proprietary or confidential information of any prior employer, or any other person or entity.


2. COMPENSATION AND BENEFITS


a. BASE SALARY. In consideration of the services to be rendered under this Agreement, the Company shall pay to Employee a salary at the rate of $238,000 per year (the "Base Salary"). The Base Salary shall be paid in accordance with the Company's regular payroll practices. The Base Salary will be reviewed from time to time in accordance with the Company's procedures for adjusting salaries for senior executives and may be increased or decreased at any time in the Company's sole discretion.


b. BONUS. Employee shall be eligible to receive an annual bonus of up to forty percent (40%) of the Base Salary, subject to Employee's attainment of corporate goals and objectives to be established in accordance with the Company's Board-approved bonus plan, which may be modified at any time in the Company's sole discretion.


c. STOCK OPTIONS. The Company shall grant to Employee an option (the "Option") to purchase two hundred fifty thousand (250,000) shares (the "Shares") of the Company's Common Stock, $0.001 par value per share (the "Common Stock"). The exercise price per share of the Option shall be the fair market value of the Common Stock on the grant date, as determined in accordance with the terms of the Company's 2004 Stock Incentive Plan (the "2004 Plan"). The Option shall vest as to twenty-five percent (25%) of the Shares at the end of the first anniversary of the Effective Date and 1/48th of the Shares at the end of each monthly anniversary of the Effective Date thereafter. The vesting of the Option shall accelerate upon the occurrence of a Corporate Transaction or Change in Control, as such terms are defined in the 2004 Plan. The Option shall expire on the tenth (10th) anniversary of the grant date. Employee's entitlement to the Option is conditioned upon the approval of the Company's Board of Directors. The Option shall be subject to the terms and conditions of the 2004 Plan and the Company's standard stock option agreement under the 2004 Plan.


d. BENEFITS. As of the Effective Date, Employee shall be eligible to participate in the benefits made generally available by the Company to similarly-situated employees, in accordance with the benefit plans established by the Company, as such plans may be amended from time to time in the Company's sole discretion. The Company shall reimburse Employee for all costs incurred for the purchase of COBRA coverage until such time that he and his dependents become eligible to participate in the Group Health Plan.


e. PAID TIME OFF. Employee shall receive four (4) weeks of paid time off per calendar year. Employee may take such accrued paid time off at such times as are mutually convenient to Employee and the Company. In addition, Employee shall be entitled to all holidays provided under the Company's regular holiday schedule.


f. BUSINESS EXPENSES. The Company will reimburse Employee for reasonable and necessary expenses appropriately incurred by Employee in performing his duties and obligations to the Company in accordance with, and subject to, such policies and procedures regarding executive officer expenses generally as the Company may from time to time have in effect.


g. RELOCATION REIMBURSEMENT. The Company shall reimburse Employee for reasonable moving expenses, in an amount of up to $5,000. In addition, the Company shall reimburse Employee for the amount of any home selling price commission, in an amount of up to 5% of the selling price. If the home selling price commission is less than 5%, then the Company shall split the difference 50/50 between the actual home selling price commission and 5%. For example, if the actual home selling price commission is 3%, then the Company shall reimburse Employee for 1.5% of the selling price.


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3. AT-WILL EMPLOYMENT


a. AT-WILL TERMINATION BY COMPANY. The employment of Employee shall be "at-will" at all times. The Company may terminate Employee's employment with the Company at any time, without any advance notice, for any reason or no reason at all, notwithstanding anything to the contrary contained in or arising from any statements, policies or practices of the Company relating to the employment, discipline or termination of its employees. Upon and after the date of such termination, all obligations of the Company shall cease, except as set forth below in Section 3(c).


b. AT-WILL TERMINATION BY EMPLOYEE. Employee may terminate employment with the Company at any time for any reason or no reason at all, upon two weeks' advance written notice. During such notice period Employee shall continue to diligently perform all of Employee's duties hereunder. The Company shall have the option, in its sole discretion, to make Employee's termination effective at any time prior to the end of such notice period as long as the Company pays Employee all compensation (including all accrued Base Salary (as then in effect), accrued, but unused Paid Time Off, and subject to payment of all reimbursable expenses) incurred to which Employee is entitled up through the last day of the two-week notice period. Any and all shares of Common Stock that have vested under the Option (or any other Option that Employee shall receive while employed by the Company hereunder) shall continue to belong to Employee, subject to the terms of exercise set forth in the related option agreements. Thereafter all obligations of the Company shall cease, except as set forth below in Section 3(c).


c. TERMINATION BY COMPANY WITHOUT CAUSE OR BY EMPLOYEE FOR GOOD REASON.


(i) If at any time the Company terminates Employee's employment other than for Cause (as defined below), or if at any time Employee terminates his employment for Good Reason (as defined below), then, during the period of time from the termination date until the first anniversary of the termination date (the "Severance Term"), the Company shall (A) pay to Employee the Base Salary, in accordance with the Company's payroll practices (the "Salary Severance Benefit"), and (B) make available to Employee the benefits made generally available by the Company to its employees, to the extent permitted under applicable law and the terms of the benefit plans. Notwithstanding anything in this Agreement to the contrary, if required to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended, then: (A) the Salary Severance Benefit for the first six (6) months of the Severance Term shall accrue during such six (6) months, but shall not be paid to Employee until the first day of the seventh month of the Severance Term; and (B) Employee shall pay the life insurance premiums and such other benefit expenses (as may be required under Section 409A of the Internal Revenue Code) applicable to the first six (6) months of the Severance Term, for which Employee shall be reimbursed on an after-tax basis on the first day of the seventh month of the Severance Term.


(ii) The Company's termination of Employee's employment shall be for "Cause" if Employee: (A) exhibits willful misconduct or dishonesty; (B) is convicted of a felony; (C) acts (or fails to act) in the performance of his duties to the Company in bad (good) faith and to the Company's detriment; (D) materially breaches this Agreement or any other agreement; or


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(E) engages in misconduct that is demonstrably and materially injurious to the Company, including, without limitation, willful and material failure to perform his duties as an officer or employee of the Company or excessive absenteeism unrelated to illness or vacation.


(iii) Employee's termination of his employment shall be for "Good Reason" if Employee terminates his employment: (A) within the thirty (30)-day period immediately following the six (6)-month anniversary of the date of the occurrence of a Change in Control (as defined below); (B) within six (6) months of the Company's material reduction of Employee's level of responsibility; or (C) within six (6) months of the Company's material reduction of the Base Salary, except for any salary reduction that is generally applicable to the Company's executives.


(iv) For purposes of this Agreement, the term "Change in Control" shall mean any of the following transactions:


(A) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;


(B) the sale, transfer or other disposition of all or
substantially all of the assets of the Company;


(C) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Company's outstanding
securities are transferred to a person or persons different from those
who held such securities immediately prior to such merger; or


(D) the acquisition in a single or series of related
transactions by any person or related group of persons (other than by
the Company or by a Company-sponsored employee benefit plan) of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities.


(v) Employee's right to receive any payments or other benefits under this Section 3(c) is expressly conditioned upon: (A) Employee's execution of a general release of all claims as of the date of Employee's termination, in substantially the form attached to this Agreement as Exhibit A (the "General Release"); and (B) Employee's compliance with his obligations under this Agreement, the General Release and all other agreements between Employee and the Company.


4. TERMINATION OBLIGATIONS


a. RETURN OF PROPERTY. Employee agrees that all property (including, without limitation, all equipment, tangible proprietary information, documents, records, notes, contracts and computer-generated materials) furnished to or created or prepared by Employee incident to


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Employee's employment belongs to the Company and shall be promptly returned to the Company upon termination of Employee's employment.


b. COOPERATION. Following any termination of employment, Employee shall perform any and all acts reasonably requested by the Company to ensure the orderly and efficient transition of Employee's duties. Such acts may include, but are not limited to: (i) participating in meetings or telephone conferences; (ii) reviewing, preparing or executing documents; and (iii) providing assistance in connection with any litigation, investigation or audit involving the Company, or any of its affiliates, directors, officers, employees, agents, attorneys, representatives, stockholders, insurers, divisions, successors and/or assigns and any related holding, parent or subsidiary corporations. To the extent Employee is required to perform any material services after the Severance Period has expired, the Employee's performance of such services shall be contingent upon the Company compensating the Employee for time and expenses on a predetermined, reasonable, and mutually agreed upon rate of compensation.


5. NON-DISCLOSURE OF THIRD-PARTY INFORMATION


Employee represents and warrants and covenants that Employee shall not disclose to the Company, or use, or induce the Company to use, any proprietary information or trade secrets of others at any time, including but not limited to any proprietary information or trade secrets of any former employer, if any; and Employee acknowledges and agrees that any violation of this provision shall be grounds for Employee's immediate termination and could subject Employee to substantial civil liabilities and criminal penalties. Employee further specifically and expressly acknowledges that no officer or other employee or representative of the Company has requested or instructed Employee to disclose or use any such third-party proprietary information or trade secrets. Employee also agrees to maintain as confidential any information protected by federal or state attorney-client privilege doctrines during and after employment, except to the extent disclosure is compelled by lawful process or authorized by the Company.


6. PROPRIETARY INFORMATION; NON-INTERFERENCE; AND NON-SOLICITATION


a. PROPRIETARY INFORMATION: For purposes of this Agreement, "Proprietary Information" means all information and any idea in whatever form, tangible or intangible, whether disclosed to or learned or developed by E ...