Attached files
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EX-31.2 - EX-31.2 - HONG YUAN HOLDING GROUP | c21246exv31w2.htm |
EX-31.1 - EX-31.1 - HONG YUAN HOLDING GROUP | c21246exv31w1.htm |
EXCEL - IDEA: XBRL DOCUMENT - HONG YUAN HOLDING GROUP | Financial_Report.xls |
EX-32.2 - EX-32.2 - HONG YUAN HOLDING GROUP | c21246exv32w2.htm |
EX-32.1 - EX-32.1 - HONG YUAN HOLDING GROUP | c21246exv32w1.htm |
10-Q - FORM 10-Q - HONG YUAN HOLDING GROUP | c21246e10vq.htm |
Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED AGREEMENT by and between Cereplast, Inc., a Nevada corporation, and
any organization(s) under common control as defined in the Internal Revenue Code (the Company),
and Frederic Scheer (the Executive) is effective as of August 1, 2011.
WHEREAS, the Board of Directors of the Company (the Board) has determined that it is in the
best interests of the Company and its shareholders to continue to employ the Executive as President
and Chief Executive Officer of the Company, and the Executive desires to continue to serve in that
capacity;
WHEREAS, the Executive and the Company entered into an Employment Agreement dated as of August
1, 2006 and set to expire on July 31, 2011;
WHEREAS, the Executive and the Company desire to amend the employment terms to reflect the
changes in the Executives compensation and to accurately set forth the Executives restrictive
covenants; and
WHEREAS, in recognition that Executives skills and experience are essential to the on-going
business, operations and prospects of the Company, the Company and Executive have agreed to this
Amended and Restated Employment Agreement (Agreement);
NOW, THEREFORE, IT IS HEREBY AGREED THAT THE EMPLOYMENT AGREEMENT SHALL BE AMENDED AND
RESTATED, EFFECTIVE AS OF AUGUST 1, 2011, TO READ AS FOLLOWS:
1. Term of Agreement.
The Company hereby agrees to continue to employ Executive, and Executive hereby accepts such
continued employment, on the terms and conditions set forth herein, for a period commencing on
August 1, 2011 and ending July 31, 2015 (the Term). Six months prior to the expiration of the
Term, the Company and the Executive agree in good faith to enter into discussions on a new
employment term and related employment agreement. Any rights that the Executive has to severance
pay arising from a termination of his employment under this Agreement shall be governed exclusively
by the provisions of Section 5.
2. Position and Duties. (a) The Executive shall be employed as President and Chief
Executive Officer of the Company with responsibility for overall supervision and management of the
Companys operations. The Executive also serves as Chairman of the Board of Directors. In his
executive capacities, the Executive shall report to and perform the duties reasonably assigned by,
and shall comply with all lawful and reasonable directives and instructions of the Board.
(b) The Executive shall devote substantially all of his attention and time during normal
business hours to the business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive under this Agreement, use the Executives reasonable
best efforts to carry out such responsibilities faithfully and efficiently, and not to engage in
any other business activities while employed by the Company, except with the express consent of the
Board. Notwithstanding the above, executive may serve as a non-fulltime member of the board of
directors or other governing body of three organizations (provided that Executives service on the
boards of the SPI Bioplastics Council and the Biodegradable Products Institute shall not count
toward such limitation), or may participate in, charitable endeavors, political bodies, and other
organizations, provided that such service or participation does not substantially and materially
interfere with the performance of Executives duties hereunder.
3. Compensation. (a) Annual Base Salary. The Executive shall receive an
annual base salary (Annual Base Salary) of Five Hundred Sixty Five Thousand Dollars
($565,000.00), payable in accordance
with the regular payroll practices of the Company. The Base Salary shall become the minimum
base salary under this Agreement and may not be decreased thereafter without the written consent of
Employee. Executives Annual Base Salary shall be paid at periodic intervals in accordance with
the Companys normal payroll practices for its salaried employees.
(b) Performance-Based Annual Bonus and Discretionary Bonus. In addition to the
Annual Base Salary, the Executive shall be eligible to receive, for each fiscal year or, in the
case of a partial fiscal year, on a pro rata basis, a performance-based annual bonus and a
discretionary bonus (together, Annual Bonus).
(i) The performance bonus shall not exceed fifty percent (50%) of Executives Annual Base
Salary then in effect, with criteria set forth in writing and determined in good faith by the Board
and its Compensation Committee.
(ii)The discretionary bonus shall be discretionary in nature and, if awarded, shall be
determined by the Board and its Compensation Committee.
For any partial year at the beginning of the Employment Period, the Annual Bonus shall be
prorated based on the number of days in the calendar year during which Executive is employed by the
Company divided by three hundred sixty-five (365).
The Annual Bonus, less required tax deductions, shall be paid in a lump sum on or before the
15th day of the third month following the end of the Companys fiscal year.
(c) Group Long Term Disability Benefits. The Company shall use commercially
reasonable best efforts to secure a group long term disability policy (the Policy) that will cover
Executive and the senior executives of the Company, which would provide income replacement
benefits to the Executive on the most favorable terms reasonably obtainable.
Notwithstanding the foregoing, the Company would not be obligated to purchase and maintain the
Policy if (i) the premium for such policy exceeds $1,200 per month (with respect to the Executive), in which case the Company
shall procure the best possible such policy for $1,200 per month (with respect to the Executive), and (ii) the Executive does not cooperate in, or fails to pass, any medical examination reasonably
required by the insurer.
(d) Other Benefits. During his employment pursuant to this Agreement: (i) The
Executive shall be entitled to participate in all equity and other incentive, savings and
retirement plans, practices, policies and programs of the Company to at least the same extent as
other senior executives of the Company and (ii) the Executive and/or the Executives family, as the
case may be, shall be eligible for participation, and shall receive all benefits under, all
vacation pay, welfare benefit plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental, disability, salary continuance,
employee life insurance, group life insurance, accidental death and travel accident insurance plans
and programs) to at least the same extent as other comparable executives of the Company. Without
limiting the scope of the foregoing, if during the Term or any extended term of this Agreement the
Company adopts any long-term incentive plan, bonus plan, stock option plan, or similar arrangement,
and if under any such arrangement awards, grants or similar interests (Awards) are
given to other executive employees of the Company, then at the time such Award is given to other
executive employees the Executive shall be entitled to an Award of the same type on no less
favorable terms as the highest-value Award given to any other executive employee.
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(e) Automobile Allowance. Notwithstanding anything else herein to the contrary, the
Company shall pay to the Executive a fixed amount equal to one thousand dollars ($1,000.00) per
month on the last day of each month during the term of this Agreement as reimbursement to the
Executive on a non-accountable basis of all expenses incurred by the Executive for the use of his
automobile for Company business purposes, including but not limited to depreciation, repairs,
maintenance, fuel and insurance. After the expiration of the first year of the term of this
Agreement, the Companys Board of Directors will review and may in its discretion authorize the
Company to lease an automobile for the Executive.
(f) Expenses. The Executive shall be entitled to receive prompt reimbursement for all
necessary and reasonable business expenses incurred by the Executive in carrying out the
Executives duties under this Agreement (which shall include reasonable relocation, car allowance,
and temporary living expenses in connection with Executives forthcoming employment assignment in
Italy), provided that the Executive complies with the generally applicable policies, practices and
procedures of the Company and complies with the proper submission of expense reports, receipts, or similar documentation of
such expenses.
(g) Notwithstanding any provision of this Agreement (i) the compensation paid to Executive
shall not exceed the amount that may be deducted by the Company on its federal income tax return
for the fiscal year in which the compensation is paid, and (ii) any incentive-based compensation
within the meaning of Section 10D of the Exchange Act will be subject to claw-back by the Company
in the manner required by Section 10D(b)(2) of the Exchange Act, as determined by the applicable
rules and regulations promulgated thereunder from time to time by the U.S. Securities and Exchange
Commission.
4. Termination of Employment. (a) Death or Disability. The Executives
employment shall terminate automatically upon the Executives death. The Company shall be entitled
to terminate the Executives employment because of the Executives Disability during his
employment. Disability means that the Executive has been unable, for a period of six (6)
consecutive months, after reasonable accommodation, to perform the Executives duties under this
Agreement, as a result of physical or mental illness or injury.
(b) By the Company. The Company may terminate the Executives employment for Cause or
without Cause. Cause means: (i) a material breach of this Agreement; (ii) a major violation of
the Companys policies which would normally result in immediate discharge; (iii) repeated violation
of the Companys policies which, after warning, would normally result in discharge; (iv) theft or
dishonesty; (v) personal conduct which reflects in a significant manner unfavorably on the
Companys reputation or business; (vi) willful, deliberate and premeditated acts of
material significance which are against the Companys interest; provided, however, that the Company
may only terminate the Executive by reason of clauses (i) or (iii) above if the Executive has not
remedied such breach or violation, as applicable, within thirty (30) days after receiving written
notice from the Company specifying the details thereof.
(c) Date of Termination. The Date of Termination means (i) the date of the
Executives death or,(ii) the effective date of the termination of the Executives employment by
the Company for Executives Disability, for Cause or without Cause, or by the Executive
voluntarily.
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5. Obligations of the Company upon Termination.
(a) Termination Other Than For Cause by Company or Termination by Executive for Good
Reason. If Executives services under this Agreement are terminated by the Company for any
reason other than Cause, excluding termination in conjunction with a Change in Control of the Company (as defined
below), prior to June 30, 2015 or if Executive resigns for Good Reason (as defined below), then, in
consideration for the covenants contained in Section 8 below, Executive shall be entitled to
receive the following payments and benefits (the Separation Package) and all other Company
obligations to Executive under this Agreement will be automatically terminated and completely
extinguished:
(i) the Company shall pay Executive an amount equal to one and one half times (1.5x) the
Annual Base Salary in effect at the date of the termination; which amount (less applicable tax
withholdings) shall be paid, subject to Section 5(e) below, in a lump sum on the sixtieth (60th)
day following the date of Executives termination of employment;
(ii) the Company shall pay Executive the average of the previous two Annual Bonus payments or
the previous years Annual Bonus if less than two years of bonuses have been paid under Section
3(b), which amount (less applicable tax withholdings) shall be paid, subject to Section 5(e) below,
in a lump sum on the sixtieth (60th) day following the date of Executives termination of
employment; and
(iii) the Company shall timely pay all required COBRA premiums to the Companys health plan
insurer in order to continue Executives health care coverage for the maximum period permitted by
law, provided Executive timely elects COBRA coverage.
The Company shall also pay to the Executive, in a lump sum on the Date of Termination, the
Executives accrued but unpaid cash compensation, that shall include but not be limited to, any
portion of the Executives Annual Base Salary and or Annual Bonus previously approved by the
Committee that has not yet been paid (the Accrued Obligations).
Payment of the Separation Package and any related benefits shall be conditioned upon Executive
properly executing on or after the Date of Termination, and not revoking or attempting to revoke
within the permitted timeframe, a general release of claims against the Company, its Board of
Directors, its affiliates, and their employees and agents substantially in the form of Exhibit
A or, in the event of a change in the law that would limit the effect of the release attached
as Exhibit A, a general release that would have the same scope and effect as the release attached
as Exhibit A (such release, the Release) and the Release becoming irrevocable. Executive
shall not be entitled to receive the Separation Package and related benefits specified in this
Agreement in the event Executive fails to timely execute the Release or if Executive timely revokes
the Release.
For purposes of this Agreement, Executives resignation for Good Reason shall mean the
resignation of employment by Executive following the occurrence of:
(i) a material diminution in Executives Base Salary without the consent of Executive;
(ii) the removal of the Executive as President, as Chief Executive Officer, or as the Chairman
of the Board of Directors of the Company, the appointment of any co-President, co-Chief Executive
Officer, or co-Chairman of the Board, the requirement that the Executive report or be subordinate
to any person other than the Board, or the removal of the Executives right to hire or terminate
employees of the Company;
(iii) a relocation of Executives regular office by more than fifty (50) miles from the
Companys headquarters or from one of the Companys major manufacturing facilities (for the
avoidance of doubt, Executives forthcoming employment assignment in Italy shall not be considered
Good Reason;); or
(iv) The Companys material breach of this Agreement.
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In order for Executive to resign for Good Reason, Executive must provide advance written
notice of such resignation to the Company within thirty (30) days following the initial existence
of the action or event giving rise to Good Reason. The notice must specify an Effective Date of
Termination that is not less than fifteen (15) days, nor more than thirty (30) days, after the date
of the written notice, and Executive agrees that should the Company
remedy the basis for such resignation prior to the Effective Date of Termination specified in
the written notice, then Executives resignation will not be considered to be for Good Reason. The
Company may relieve Executive of some or all of his duties, responsibilities and authority during
any notice period, and such relief shall not serve as a basis for Executive to claim Good Reason
under this Section 5, that the Company reinstates such duties, responsibilities and authority not
later the last day of such notice period.
(b) Death or Disability. If the Executives employment is terminated by reason of the
Executives death or Disability, the Company shall pay the Accrued Obligations to the Executive or the Executives estate or legal representative,
as applicable, in the form and manner described in subsection (a) above. In addition, to the
extent permitted by applicable law or regulation, the Company will assign to Executives estate as sole
beneficiary the existing Company-purchased key man life insurance policy, to be kept in effect throughout the Term of
this Agreement and any extensions, having death benefits equal to or greater than Executives
Annual Base Salary; provided however, the Company would not be obligated to purchase and maintain
such life insurance policy if (i) the premium on such policy exceeds $1,500 per year and (ii) the Executive does not cooperate in, or fails to pass, any medical
examination reasonably required by the insurer. Beyond these benefits, the Company shall have no
further obligations under this Agreement.
(c) Cause or Voluntary Termination. If the Executives employment is terminated by
the Company for Cause, the Company shall pay the Executive Annual Base Salary through the Date of
Termination and shall have no further obligations under this Agreement. If the Executive
terminates voluntarily, the Company shall pay the Executive the Accrued Obligations and the Company
shall have no further obligations under this Agreement.
(d) Change of Control. Change of Control is defined as (i) a sale of all or
substantially all of the Companys assets or more than fifty (50) percent of the total fair market
value or total voting power of the Companys outstanding stock to a purchaser or group (as defined
in the regulations under Section 409A) that is unaffiliated with the Company in a single
transaction or series of related transactions or (ii) a merger where the Company is not the
surviving corporation with any entity that is unaffiliated with the Company. Notwithstanding the
provisions of section 5(a) above, upon a Change of Control, Executive has the right to terminate
this Agreement pursuant under the terms of this section and shall be entitled to benefits set forth
hereunder. If a Change of Control occurs, Executive may elect to terminate this Agreement within
120 days after such Change of Control by giving written notice of such election to the Company. If
Executive elects to terminate as a result of a Change of Control, the Company shall pay to
Executive the total of 2.99 times his Annual Base Salary and the average of the previous two Annual
Bonus payments or the previous years Annual Bonus if less than two years of bonuses have been
paid, over 36 months after his Date of Termination. Executives unvested stock options, if any,
shall immediately vest and Executive will also be entitled to continued health benefits as outlined
in Section 5(d) above.
(e) Parachute Payment. If any payment or benefit the Executive would receive pursuant
to a Change of Control or otherwise (Payment) would (i) constitute a parachute payment within
the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise
tax imposed by Section 4999 of the Code (the Excise Tax), then such Payment shall be reduced to
the Reduced Amount. The Reduced Amount shall be either (x) the largest portion of the Payment
that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount, after taking into account
all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all
computed at the highest applicable marginal rate), results in the Executives receipt, on an
after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of
the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting
parachute payments is necessary so that the Payment equals the Reduced Amount, reduction shall
occur in the following order unless the Executive elects in writing a different order (provided,
however, that such election shall be subject to Company approval if made on or after the effective
date of the event that triggers the Payment): (1) reduction of cash payments, (2) cancellation of
accelerated vesting of equity awards, and (3) reduction of employee benefits. In the event that
acceleration of vesting of equity
award compensation is to be reduced, such acceleration of vesting shall be cancelled in the
reverse order of the date of grant of the Executives equity awards unless the Executive elects in
writing a different order for cancellation.
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The accounting firm engaged by the Company for general audit purposes as of the day prior to
the effective date of the Change of Control shall perform the foregoing calculations. If the
accounting firm so engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, or is unwilling to perform this function, then the
Company shall appoint a nationally recognized accounting firm to make the determinations required
hereunder. The Company shall bear all expenses with respect to the determinations by such
accounting or law firm required to be made hereunder.
The accounting firm engaged to make the determinations hereunder shall provide its
calculations, together with detailed supporting documentation, to the Executive and the Company
within fifteen (15) calendar days after the date on which the Executives right to a Payment is
triggered (if requested at that time by the Executive or the Company) or such other time as
requested by the Executive or the Company. If the accounting or law firm determines that no Excise
Tax is payable with respect to a Payment, either before or after the application of the Reduced
Amount, it shall furnish the Executive and the Company with an opinion reasonably acceptable to the
Executive that no Excise Tax will be imposed with respect to such Payment. Any good faith
determinations of the accounting or law firm made hereunder shall be final, binding and conclusive
upon the Executive and the Company.
(f) Sole Compensation Upon Termination. The Separation Package provided Executive
under this Section 5 are the only severance benefits to which Executive is entitled upon the
termination of his employment with the Company, and no other benefits shall be provided to
Executive by the Company pursuant to any other severance plan or program of the Company, except as
required by applicable law. Executive acknowledges and agrees that but for his execution of this
Agreement, he would not be entitled to the Separation Package provided under this Section 5.
(g) Specified Employee Payments. Notwithstanding the foregoing, if the Executive is
a specified employee, as defined under Section 409A(a)(2)(B)(i) of the Code, on the date of
Executives Date of Termination, to the extent that the payments or benefits under this Section 5
are considered deferred compensation under Section 409A of the Code, then all such payments or
portions thereof that would have been paid during the six-month period following the Date of
Termination shall instead be paid or distributed to Executive in a lump sum on the day next
following the earlier of (i) the expiration of such six-month period or (ii) the date of
Executives death.
(h) Vesting of Interests. If the Executives employment terminates under the
circumstances described in subsection (a) or (b) above, then effective on the Date of Termination
all unvested rights held by the Executive to any equity, quasi-equity, or similar interests,
including but not limited to options, stock units, or stock appreciation rights, shall become fully
vested.
6. No Mitigation. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of
whether the Executive obtains other employment.
7. Confidential Information; Non-Solicitation; No Conflict.
(a) The Executive shall hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data, customer information, supplier information,
cost and pricing information, marketing and sales techniques, strategies and programs, research and
development, unannounced product specifications and prototypes, computer programs and software and
financial information relating to the Company or any of its affiliated companies and their
respective businesses that the Executive obtains during the Executives employment by the Company
or any of its affiliated companies and that is not public knowledge (other than as a result of the
Executives violation of this paragraph (a) of Section 8) (Confidential Information). The
Executive acknowledges that such Confidential Information is valuable and gives the Company a
competitive advantage over those who do not know the information, and agrees to take all reasonable
precautions necessary to
prevent such disclosure or misuse. The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the Executives employment with
the Company except in the good faith performance of his duties hereunder, with the prior written
consent of the Company or as otherwise required by law or legal process.
6
(b) Upon termination of the Executives employment with the Company for any reason, the
executive agrees to return to the Company all of its property including originals and copies of
Company issued keys, computers, cellular phones, business documents, computer software, printouts,
advertisements, brochures, equipment, prototypes, manuals, notebooks, and any other record,
document or tangible property relating to the Company and its business and shall not procure,
photocopy or copy any property of the Company after notification of, or in anticipation of,
termination of employment.
(c) (i) During his employment with the Company, the Executive will not, except with the prior
written consent of the Board, directly or indirectly, own, manage, operate, join, control, finance
or participate in the ownership, management, operation, control or financing of, or be connected as
an officer, director, employee, partner, principal, agent, representative, consultant or otherwise
with, or use or permit Executives name to be used in connection with, any business or enterprise
which is engaged in any business that is competitive with any business or enterprise in which the
Company is engaged, both within the United States and internationally.
(ii) The restrictions of subparagraph (c)(i) shall not be construed to prohibit the ownership
by the Executive of less than two percent of any class of securities of any corporation which is
engaged in any of the foregoing businesses having a class of securities registered pursuant to the
Securities Exchange Act of 1934 (the Exchange Act), provided that such ownership represents a
passive investment and that neither the Executive nor any group of persons including the Executive
in any way, either directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its business, other than
exercising the Executives rights as a shareholder, or seeks to do any of the foregoing.
(iii) In addition, the Executive agrees that he will not, for a period of 24 months after the
termination of the Executives employment with the Company for any reason, or for a period of 36
months if the Executive terminates as a result of a Change of Control, without the prior written
consent of the Company, whether directly or indirectly, (A) disrupt, damage, impair or interfere
with the business of the Company by soliciting any employee, whether soliciting such person to be
an employee, officer, director, agent, consultant or independent contractor, who is or at any time
during the previous twelve months was an employee, representative, officer or director of the
Company or any of its subsidiaries or (B) disrupt, damage, impair or interfere with the business of
the Company by soliciting any customers or actively solicit, divert, or take away any of the
Companys customers using Confidential Information.
(d) The Executive represents to the Company that neither his continuation of employment
hereunder nor the performance of his duties hereunder conflicts with any contractual commitment on
his part to any third party or violates or interferes with any rights of any third party.
(e) The Executive acknowledges and agrees that the restrictions contained in this Section are
reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill and
business of the Company, that the Company would not have entered into this Agreement in the absence
of such restrictions and that irreparable injury will be suffered by the Company should the
Executive breach any of those provisions. The Executive represents and acknowledges that (i) the
Executive has been advised by the Company to consult Executives own legal counsel in respect of
this Agreement, and (ii) that the Executive has had full opportunity, prior to execution of this
Agreement, to review thoroughly this Agreement with the Executives counsel. The Executive further
acknowledges and agrees that a breach of any of the restrictions in this Section cannot be
adequately compensated by monetary damages. The Executive agrees that, in the case of any
violation of the provisions of this Section 7, the Executive shall forfeit all payments not yet
made under this Agreement at the time of any violation of this Section 7 and that the Company shall
be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual
damages or posting of a bond, which rights shall be
cumulative and in addition to any other rights or remedies to which the Company may be
entitled at law or in equity. In the event that any of the provisions of this Section should ever
be adjudicated to exceed the time or other limitations permitted by applicable law in any
jurisdiction, it is the intention of the parties that the provision shall be amended to the extent
of the maximum time or other limitations permitted by applicable law, that such amendment shall
apply only within the jurisdiction of the court that made such adjudication and that the provision
otherwise be enforced to the maximum extent permitted by law.
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8. Inventions and Patents. (a) The Executive agrees that with respect to any
inventions made by him or the Company during the Executives employment, solely or jointly with
others, (i) that are made with the Companys equipment, supplies, facilities, trade secrets or
time, or (ii) that relate to the business of the Company or the Companys actual or demonstrably
anticipated research or development, or (iii) that result from the any work performed by the
Executive for the Company, such inventions belong to the Company. The Executive also agrees that
the Company shall have the right to keep such inventions as Confidential Information, if the
Company chooses.
(b) As a condition of Executives receipt of the benefits provided for in this Agreement,
Executive will execute the Companys Confidential Information and Assignment of Inventions
Agreement, a true and correct copy of which is attached to this Agreement as Exhibit B.
Executives obligations under this Paragraph 8 (b). and Exhibit B shall continue in effect after
the termination of his employment with the Company, whatever the reason or reasons for such
termination, and Executive acknowledges and agrees that the Company shall have the right to
communicate with any future or prospective employer of Executive concerning Executives continuing
obligations under this Paragraph 8(b). and Exhibit B.
9. Successors. (a) This Agreement is personal to the Executive and, without the
prior written consent of the Company, shall not be assignable by the Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executives legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns (whether direct or indirect, by purchase, merger, consolidation or
otherwise). As used in this Agreement, Company shall mean both the Company as defined above and
any such successor by operation of law or otherwise.
10. Cooperation. Any time following the Date of Termination, promptly upon request by
the Company, the Executive shall cooperate with the Company to the extent necessary to assist the
Company in the transition of Executives responsibilities and in any litigation or administrative
proceedings involving any matters with which the Executive was involved during his employment by
the Company. The Company shall compensate the Executive for all time exceeding 8 hours per matter
and reimburse Executive for any reasonable expenses incurred in providing the assistance.
11. Arbitration. The Company and the Executive mutually consent to the resolution by
arbitration, in accordance with the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association, of all claims or controversies arising out of the Executives
employment (or its termination) that the Company may have against the Executive or that the
Executive may have against the Company or against its officers, directors, shareholders, employees
or agents in their capacity as such other than a claim which is primarily for an injunction or
other equitable relief. The Executive and the Company acknowledge that this Agreement waives any
right to trial by jury or class action relief. The Company shall bear all costs associated with
the arbitration including, but not limited to, filing and/or administration costs, arbitrators
fees and location expenses. The prevailing party in any arbitration or in any action involving
injunctive relief shall be entitled to recover his or its attorneys; fees and costs as permitted by
applicable law.
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12. Miscellaneous. (a) This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect.
(b) This Agreement may not be amended or modified except by a written agreement executed by
the parties hereto or their respective successors and legal representatives.
(c) All notices and other communications under this Agreement shall be in writing and shall be
given by hand to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Frederic Scheer
Personal & Confidential
at the address listed in Executives personnel file
Personal & Confidential
at the address listed in Executives personnel file
If to the Company:
Cereplast, Inc.
300 N. Continental Blvd., Suite 100
El Segundo, California 90245
Attn: Chair, Compensation Committee of the Board of Directors
Cereplast, Inc.
300 N. Continental Blvd., Suite 100
El Segundo, California 90245
Attn: Chair, Compensation Committee of the Board of Directors
With a required copy to:
Cereplast, Inc.
300 N. Continental Blvd., Suite 100
El Segundo, California 90245
Attn: Legal Department
Cereplast, Inc.
300 N. Continental Blvd., Suite 100
El Segundo, California 90245
Attn: Legal Department
or to such other address as either party furnishes to the other in writing in accordance with this
paragraph (c) of Section 11. Notices and communications shall be effective when actually received
by the addressee.
(d) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any provision of this
Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision,
together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(e) Notwithstanding any other provision of this Agreement, the Company may withhold from
amounts payable under this Agreement all federal, state, local and foreign taxes that are required
to be withheld by applicable laws or regulations.
(f) The Executives or the Companys failure to insist upon strict compliance with any
provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of
such provision or right or of any other provision of or right under this Agreement.
(g) This Agreement may be executed in several counterparts, each of which shall be deemed an
original, and said counterparts shall constitute but one and the same instrument.
13. The respective rights and obligations of the parties hereunder shall survive any
termination of the Executives employment or arrangements to the extent necessary to the intended
preservation of such rights and obligations, including, but not by way of limitation, those rights
and obligations set forth in Sections 3, 5, 7 and 8, subject to giving effect to any explicit
termination of such rights pursuant to the applicable Section.
[SIGNATURES APPEAR ON NEXT PAGE]
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IN WITNESS WHEREOF, the Executive has hereunto set the Executives hand and, pursuant to the
authorization of its Board of Directors, the Company has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.
CEREPLAST, INC. | FREDERIC SCHEER | |||||
By:
|
/s/ Petros Kitsos | /s/ Frederic Scheer | ||||
Its:
|
Director and Chairman of the Compensation Committee |
Dated: August 12, 2011
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EXHIBIT A TO
FREDERIC SCHEER EMPLOYMENT AGREEMENT
Dated August 1, 2011
GENERAL RELEASE AND WAIVER OF CLAIMS
In consideration of the payments and other benefits set forth in the Employment Agreement
dated August 1, 2011 (the Agreement), to which this form shall be deemed to be attached, Frederic
Scheer (Executive) hereby agrees to the following general release and waiver of claims (General
Release).
In exchange for the consideration provided to Executive by the Agreement that Executive is not
otherwise entitled to receive, Executive hereby generally and completely releases Cereplast, Inc.
(the Company) and its directors, officers, employees, shareholders, partners, agents, attorneys,
predecessors, successors, parent and subsidiary entities, insurers, affiliates, and assigns from
any and all claims, liabilities and obligations, both known and unknown, that arise out of or are
in any way related to events, acts, conduct, or omissions occurring prior to my signing this
General Release. This general release includes, but is not limited to: (1) all claims arising out
of or in any way related to Executives employment with the Company or the termination of that
employment; (2) all claims related to Executives compensation or benefits from the Company,
including salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, or any other ownership interests in the Company; (3) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing;
(4) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in
violation of public policy; and (5) all federal, state, and local statutory claims, including
claims for discrimination, harassment, retaliation, attorneys fees, or other claims arising under
Title VII of the 1964 Civil Rights Act, as amended, the Age Discrimination in Employment Act, the
California Fair Employment and Housing Act, the Equal Pay Act of 1963, as amended, the provisions
of the California Labor Code, the Americans with Disabilities Act, the Fair Labor Standards Act,
the Employee Retirement Income Security Act of 1974, as amended (ERISA), the Dodd-Frank Wall
Street Reform and Consumer Protection Act, the Sarbanes-Oxley Act of 2002, and any other state,
federal, or local laws and regulations relating to employment and/or employment discrimination. The
only exceptions are claims Executive may have for unemployment compensation and workers
compensation, Annual Base Salary (through the date of termination), outstanding business expenses,
unused vacation earned through the date of termination of Executive, claims to accrued and vested
benefits under the Companys employee benefit plans, and claims to the severance benefits which are
the consideration for this General Release.
Executive expressly waives and relinquishes any and all rights and benefits Executive now has
or may have in the future under the terms of Section 1542 of the Civil Code of the State of
California, which sections reads in full as follows:
A general release does not extend to claims which the creditor does not know or suspect to exist in
his or her favor at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor.
Notwithstanding said Code Section, Executive knowingly and voluntarily waives the provisions of
Section 1542 as well as any other statutory or common law provisions of similar effect and
acknowledges and agrees that this waiver is an essential part of this Agreement.
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Executive acknowledges that, among other rights, Executive is waiving and releasing any rights
Executive may
have under ADEA, that this General Release is knowing and voluntary, and that the consideration
given for this General Release is in addition to anything of value to which Executive was already
entitled as an executive of the Company. Executive further acknowledge that Executive has been
advised, as required by the Older Workers Benefit Protection Act, that: (a) the General Release
granted herein does not relate to claims under the ADEA which may arise after this General Release
is executed; (b) Executive has the right to consult with an attorney prior to executing this
General Release (although Executive may choose voluntarily not to do so); and (c) Executive has
twenty-one (21) days from the date of termination of Executives employment with the Company in
which to consider this General Release (although Executive may choose voluntarily to execute this
General Release earlier, in which case he voluntarily waives the remainder of the twenty-one (21)
day period); (d) Executive has seven (7) days following the execution of this General Release to
revoke his consent to this General Release; and (e) this General Release shall not be effective
until the seven (7) day revocation period has expired.
Executive acknowledges his continuing obligations under the Proprietary Information and
Inventions Agreement and the non-solicitation provisions set forth in Section 6 of the Agreement.
Nothing contained in this General Release shall be deemed to modify, amend or supersede the
obligations set forth in that agreement.
By signing this General Release, Executive hereby represents that he is not aware of any
affirmative conduct or the failure to act on the part of the Company, its officers, directors,
and/or employees concerning the Companys business practices, its reporting obligations, its
customers and/or prospective customers, its products, and/or any other any other aspect of the
Companys business, which Executive has any reason to believe rises to the level of unfair,
improper and/or unlawful conduct pursuant to any state or federal law, rule, regulation or order,
including, but not limited to, any rule, regulation or decision promulgated or enforced by the
Securities and Exchange Commission, or which has been promulgated or enforced by any other state or
federal office or administrative body pursuant to the Sarbanes-Oxley Act of 2002.
With the exception of the terms set forth in the Proprietary Information Agreement and the
non-solicitation provisions set forth in Section 6 of the Agreement, this General Release
constitutes the complete, final and exclusive embodiment of the entire agreement between the
Company and Executive with regard to the subject matter hereof. Executive is not relying on any
promise or representation by the Company that is not expressly stated herein and the Company is not
relying on any promise or representation by Executive that is not expressly stated herein. This
General Release may only be modified by a writing signed by both Executive and a duly authorized
officer of the Company.
The Company and Executive agree that for a period of ten (10) years after Executives
employment with the Company ceases, they will not, in any communication with any person or entity,
including any actual or potential customer, client, investor, vendor, or business partner of the
Company, or any third party media outlet, make any derogatory or disparaging or critical negative
statements orally, written or otherwise against the other, or against the Executives estate
or affiliates, any of the Companys directors, officers or employees. The parties acknowledge and
agree that the obligation on the part of the Company not to make any derogatory statements as set
forth in this paragraph shall only apply to the Companys officers and directors.
The parties agree that this General Release does not in any way compromise or lessen
Executives rights to be indemnified by the Company pursuant to the Companys by-laws or certificate of incorporation,
or otherwise be covered under any applicable insurance policies that Executive would otherwise be
entitled to receive and/or be covered by.
Except as limited by applicable federal and state corporate and securities laws, and the
requirements of the exchange(s) on which the Companys shares are listed including, without
limitation, requirements relating to claw-back of executive compensation, and the Companys
policies relating to such limitations, the parties agree that this General Release does not
preclude Executive from enforcing his ownership rights pertaining to any stock or stock options
which may have been purchased by Executive or granted to Executive by the Company pursuant to a
written stock option grant and/or as memorialized in a written Board Resolution (and as reported
periodically in the Companys proxy statements).
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CEREPLAST, INC. | FREDERIC SCHEER | |||||
By |
||||||
Its |
||||||
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EXHIBIT B TO
FREDERIC SCHEER EMPLOYMENT AGREEMENT
Dated August 1, 2011
CEREPLAST, INC.
CONFIDENTIAL INFORMATION AND ASSIGNMENT OF INVENTIONS AGREEMENT
As an employee of Cereplast, Inc., its subsidiary or its affiliate (together, the Company), and
in consideration of the compensation now and hereafter paid to me, I agree to the following:
1) Maintaining Confidential Information
a) Company Information. I agree at all times during the term of my employment and
thereafter, except for the benefit of the Company, to hold in the strictest confidence, and not to
use or to disclose to any person, firm or corporation without written authorization of the Board of
Directors of the Company, any trade secrets, confidential knowledge, data or other proprietary
information relating to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining to any Business of
the Company or any of its clients, consultants or licensees.
b) Former Employer Information. I agree that I will not, during my employment with the
Company, improperly use or disclose any proprietary information or trade secrets of my former or
concurrent employers or companies, if any, and that, to my knowledge, I will not bring onto the
premises of the Company any unpublished document or any property belonging to my former or
concurrent employers or companies, if any, unless consented to in writing by said employers or
companies.
c) Third Party Information. I recognize that the Company has received and in the
future will receive from third parties their confidential or proprietary information subject to a
duty on the Companys part to maintain the confidentiality of such information and to use it only
for certain limited purposes. I agree that I owe the Company and such third parties, during the
term of my employment and thereafter, a duty to hold all such confidential and proprietary
information in the strictest confidence and not to disclose it to any person, firm or corporation
(except as necessary in carrying out my work for the Company consistent with the Companys
agreement with such third party) or to use it for the Companys benefit of anyone other than for
the Company or such third party (consistent with Companys agreement with such third party) without
the express written authorization of the Board of Directors of Cereplast, Inc.
2) Retaining and Assigning Inventions and Original Works
a) Inventions and Original Works Assigned to the Company. I agree that I will promptly
make full written disclosure to the Company, will hold in trust for the sole right and benefit of
the Company, and will and hereby do assign to the Company all my right, title, and interest in and
to any and all inventions, original works of authorship, developments, improvements or trade
secrets which I may solely or jointly conceive or develop or reduce to practice, or cause to be
conceived or developed or reduced to practice, during the period of time I am in the employ of the
Company related to the Business of the Company. For purposes of this Agreement, the Business of
the Company is defined as the design and manufacture of dental lasers, ophthalmic lasers for
Presbyopia, and such other expansions related to the Business of the Company or entirely new
markets the Company may enter during the term of my employment. I recognize, however, that Section
2870 of the California Labor Code (as set forth in Exhibit 1 attached hereto) exempts from
assignment under this provision any invention as to which I can prove the
following:
i) | It was developed entirely on my own time; and | |
ii) | No equipment, supplies, facilities or trade secrets of the Company were used in its development; and |
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iii) | It did not relate, at the time of its conception or its reduction to practice, to the Business of the Company or to the Companys actual or demonstrably anticipated research and development; and | |
iv) | It did not result from any work performed by me for the Company. |
I acknowledge that all original works of authorship which are made by me (solely or jointly
with others) within the scope of my employments and which are protectable by copyright are works
made for hire, as that term is defined in the United States Copyright Act (17 USCA, Section 101).
b) Inventions Assigned to the United States. I agree to assign to the United States
government all my right, title, and interest in and to any and all inventions, original works of
authorship, developments, improvements or trade secrets whenever such full title is required to be
in the United States by a contract between the Company and the United States or any of its
agencies.
c) Obtaining Letters Patent, Copyrights and Mask Work Rights. I agree that my
obligation to assist the Company to obtain United States or foreign letters patent, copyrights, or
mask work rights covering inventions, works of authorship, and mask works, respectively, assigned
hereunder to the Company shall continue beyond the termination of my employment, but the Company
shall compensate me at a reasonable rate for time actually spent by me at the Companys request on
such assistance. If the Company is unable because of my mental or physical incapacity or for any
other reason to secure my signature to apply for or to pursue any application for any United States
or foreign letters patent, copyright, or mask rights covering inventions or other rights assigned
to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly
authorized officers and agents as my agent and attorney in fact, to act for and in my behalf and
stead to execute and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of letters patent, copyrights, and mask work rights with the
same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any
and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any
patents, copyrights, or mask work rights resulting from such application assigned hereunder to the
Company.
d) Exception to Assignments. I understand that the provisions of this Agreements
requiring assignment to the Company do not apply to any invention which qualifies fully under the
provisions of Section 2870 of the California Labor Code, a copy of which is attached hereto as
Exhibit 1. I understand that the Company will keep in confidence and will not disclose to third
parties without my consent any confidential information disclosed in writing to the Company
relating to inventions that qualify fully under the provisions of Section 2870 of the California
Labor Code.
3) Returning Company Documents. I agree that to my best efforts, at the time of leaving the
employ of the Company, I will deliver to the Company (and will not keep in my possession or deliver
to anyone else) any and all devices, records, data, notes, reports, proposals, lists,
correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other
documents or property, or reproductions of any aforementioned items belonging to the Company, its
successors or assigns, which constitutes a trade secret(s) and/or proprietary information of the
Company. In the event of the termination of my employment, I agree to sign and deliver the
Termination Certification attached hereto as Exhibit 2.
4) Representations. I agree to execute any proper oath or verify any proper document
required to carry out the terms of this Agreement. I represent that my performance of all the terms
of this Agreement will not breach any agreement to keep in confidence proprietary information
acquired by me in confidence or in trust prior to my employment by the Company. I have not entered
into, and I agree I will not enter into, any oral or written agreement in conflict herewith.
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5) General Provisions
a) Governing Law. This Agreement will be governed by the laws of the State of
California.
b) Entire Agreement. This Agreement, together with the Employment Agreement to which
it is attached as an exhibit, set forth the entire agreement and understanding between the Company
and me relating to the subject matter herein and merges all prior discussions between us. No
modification of or amendment to this Agreement, nor any waiver of any rights under this agreement,
will be effective unless in writing signed by the party to be charged. Any subsequent change or
changes in my duties, salary or compensation will not affect the validity or scope of this
Agreement.
c) Severability. If one or more of the provisions in this Agreement are deemed void by
law, then the remaining provisions will continue in full force and effect.
d) Successors and Assigns. This Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of the Company, its
successors, its assigns, and any third parties for which the company has developed proprietary
technology.
e) Notification to New Employer. In the event that I leave the employ of the Company,
I hereby grant consent to notification by the Company to my new employer about my rights and
obligations under this agreement.
Dated as of August 11, 2011
Signature | ||||
Frederic Scheer | ||||
Witness |
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EXHIBIT 1
TO
CONFIDENTIAL INFORMATION AND ASSIGNMENT OF INVENTIONS AGREEMENT
CONFIDENTIAL INFORMATION AND ASSIGNMENT OF INVENTIONS AGREEMENT
CALIFORNIA LABOR CODE SECTION 2870
EMPLOYMENT AGREEMENTS; ASSIGNMENT OF RIGHTS
(a) Any provision in an employment agreement which provides that an employee shall assign, or
offer to assign, any of his or her rights in an invention to his or her employer shall not apply to
an invention that the employee developed entirely on his or her own time without using the
employers equipment, supplies, facilities, or trade secret information except for those inventions
that either:
1) | Relate at the time of conception or reduction to practice of the invention to the employers business, or actual demonstrably anticipated research or development of the employee. | ||
2) | Result from any work performed by the employee for the employer. |
(b) To the extent a provision in an employment agreement purports to require an employee to
assign an invention otherwise excluded from being required to be assigned under subdivision (a),
the provision is against the public policy of this state and is unenforceable.
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EXHIBIT 2
TO
CONFIDENTIAL INFORMATION AND ASSIGNMENT OF INVENTIONS AGREEMENT
CEREPLAST, INC.
TERMINATION CERTIFICATION
This is to certify that based on a reasonably diligent search by me, and to the best of my
knowledge, I do not have in my possession, nor have I failed to return, any devices, records, data,
notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches,
materials, equipment, other documents or property, or reproductions of any aforementioned items
which is a trade secret and/or proprietary information belonging to Cereplast, Inc., its
subsidiaries, affiliates, successors or assigns (together, the Company).
I further certify that, to the best of my knowledge, I have complied with all the terms of the
Companys Confidential Information And Assignment of Inventions Agreement signed by me.
I further agree that, in compliance with the Employee Proprietary Information Agreement, I will
preserve as confidential all trade secrets, confidential knowledge, data or other proprietary
information relating to products, processes, know-how, designs, formulas, developmental or
experimental work, computer programs, data bases, other original works of authorship, customer
lists, business plans, financial information or other subject matter pertaining to any Business of
the Company or any of its clients, consultants or licensees which is proprietary and/or
confidential information to the Company.
Date:
Frederic Scheer |
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