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Consulting Services Agreement

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Sectors: Health Products and Services
Governing Law: Florida, View Florida State Laws
Effective Date: April 23, 1998
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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


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second year hereunder would be $132,000.00. Fee increases shall not exceed 10% per year. Consultant's fees shall be payable within (10) ten days following receipt of invoice. In addition, Consultant shall receive a bonus. The bonus paid to Consultant shall be determined by the compensation committee as an annual plan to be determined each year as a percentage of the monthly net operating income of the Company pursuant to internally created financials of the Company, payable beginning no later than sixty (60) days after the end of each year, quarter and/or month subject to the compensation committee plan during the term hereunder; provided however that no such monthly bonus shall be paid or payable except and unless the monthly net operating income of the Company equals at least $75,000.00. The Consultant shall be entitled to participate in any key management bonus or incentive compensation program including, but not limited to stock options and warrants, instituted by the Board of Directors of the Company, in the sole discretion of the Board of Directors. The fees and bonus payments hereunder shall be subject to withholding and any other applicable tax law.


b. Upon the execution of this Agreement by Consultant, the Company shall grant to Consultant a stock option for a period of ten years to purchase up to one million (1,000,000) shares of the Company's common stock, $.001 par value per share (collectively, the "Shares"), at an exercise price of five dollars ($5.00) per Share. Such options shall vest and become exercisable in ten equal installments of one hundred thousand (100,000) shares each over ten (10) years with the first vesting to occur immediately (the "Vesting Date"), and subsequent vestings to occur upon the next nine anniversaries of the Vesting Date. The options shall have such additional terms and conditions as set forth in an option agreement to be executed between the Company and Consultant in the form attached hereto as Exhibit A.


4. Fees Guarantee. All fees payable to the Consultant under the Agreement
-------------- will be guaranteed (the "Guaranteed Payments") as of the effective date of the Agreement for the full Services Term of the Agreement except for terminations found in Section 6(b), (d) or (e) hereof.


a. None of the Guaranteed Payments described in this Section shall prevent the Consultant from receiving the Termination Benefits described in Section 12 of the Agreement.


b. All Guaranteed Payments described in this Section and payable to the Consultant shall be payable to the Estate of Consultant and or beneficiary designee in the event of the death of the Consultant.


c. In the event of any mental disability which renders the Consultant unable to fulfill his duties pursuant to Section 1 of this Agreement, all Guaranteed Payments shall be made to Consultant's company, his attorney in fact, his personal representative, his guardian, or any other such person legally specifically listed, to whomever is legally authorized to receive monetary payments due and owing to.


d. In the event of any physical disability which renders the Consultant unable or unwilling to fulfill his duties pursuant to Section 1 of this Agreement, all Guaranteed Payments shall be made directly to the Consultant.


e. Upon the termination of Consultant's services for any reason other than pursuant to Section 6(b), (d), or (e) hereof, the Company shall continue to pay to Consultant the


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fees received by him on the date of such termination for a minimum period of five (5) years following such date of termination, payable on the Company's regular fees payment date.


5. Reimbursement for Expenses. The Company shall, during the Services Term,
-------------------------- 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


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his services. In all other events of termination, Consultant shall continue to receive the Guaranteed Payments.


7. Agreement Not To Compete. Consultant agrees that if his services are
------------------------- 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.


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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
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