Exhibit 10.1

 

CHANGE IN CONTROL AGREEMENT

 

WPCS INTERNATIONAL - SUISUN CITY, INC.

 

This Change in Control Agreement (“Agreement”) is made and entered into as of
October 21, 2015 (the “Execution Date”), by and between WPCS International -
Suisun City, Inc. (together with its successors and assigns, the “Company”), a
wholly-owned subsidiary of WPCS International Incorporated, a Delaware
corporation (the “Parent”), and Robert Roller (“Executive,” together with the
Company, the “Parties”).

 

RECITALS

 

A. Executive is employed by the Company and possesses intimate and essential
knowledge about the Parent and the Company and their operations.

 

B. The Company recognizes the possibility of a future Change in Control (as
defined in Section 3 below), which may alter the nature and structure of the
Parent or the Company, and recognizes that the uncertainty regarding the
consequences of such an event may adversely affect the Company’s ability to
retain Executive.

 

C. In order to induce Executive to remain employed with the Company, the Company
desires to provide severance benefits to Executive in the event Executive’s
employment is terminated for certain reasons in connection with a Change in
Control, and Executive desires to be so induced.

 

D. The Parties desire to set forth in writing the terms and conditions of their
agreement with respect to the Company’s provision of severance benefits to
Executive in the event Executive’s employment is terminated for certain reasons
in connection with a Change in Control.

 

NOW, THEREFORE, in consideration of the mutual covenants and obligations herein
contained, it is mutually agreed between the Parties as follows:

 

1. Term. This Agreement shall continue for a term commencing on the Execution
Date and ending on the second anniversary of the Execution Date (the “Initial
Term”), and shall be automatically renewed from year to year thereafter for
successive one-year terms (each, a “Renewal Term”), unless at least 30 days
prior to the expiration of the Initial Term or any Renewal Term, either Party
gives written notice of non-renewal to the other, in which case this Agreement
will expire at the conclusion of either the Initial Term or the Renewal Term,
whichever is applicable. Notwithstanding the foregoing sentence, if a Change in
Control occurs during the Initial Term or any Renewal Term, this Agreement shall
continue for a term commencing on the date of the Change in Control and ending
on the second anniversary of the Change in Control; provided, however, that the
expiration of this Agreement following such two-year period shall in no way
eliminate, reduce or otherwise impact any previously accrued obligations under
Section 4 below or the obligations contained in Section 10 below.
Notwithstanding any provision of this Agreement to the contrary, this Agreement
may be terminated at any time prior to the expiration of the Initial Term or a
Renewal Term (as applicable), as provided in Section 2 below.

 

2. At-Will Status. Notwithstanding any provision of this Agreement to the
contrary, Executive is employed at-will, so that either Party may terminate
Executive’s employment at any time, with or without notice, for any or no
reason. This Agreement shall terminate on Executive’s last day of employment
with the Company, if Executive’s employment ceases for any reason other than due
to an Involuntary Termination upon a Change in Control (as defined in Section 3
below).

 

3. Definitions. As used in this Agreement, the following terms have the meanings
set forth below:

 

   

 

(a) “Cause” shall be defined as that term is defined in Executive’s offer letter
or other applicable employment or service agreement; or, if there is no such
definition, “Cause” means Executive’s:

 

(i) conviction of a felony or a crime involving fraud or moral turpitude; or

 

(ii) theft, material act of dishonesty or fraud, intentional falsification of
any employment or Parent or Company records, or commission of any criminal act
that impairs Executive’s ability to perform appropriate duties for the Parent or
the Company; or

 

(iii) intentional or reckless conduct or gross negligence materially harmful to
the Parent or the Company or the successor to the Parent or the Company after a
Change in Control, including violation of a non-competition or confidentiality
agreement; or

 

(iv) willful failure to follow lawful instructions of the person to whom or body
to which Executive reports; or

 

(v) gross negligence or willful misconduct in the performance of Executive’s
assigned duties, provided that Cause shall not include mere unsatisfactory
performance in the achievement of Executive’s job objectives.

 

Further, Executive shall be deemed to have separated for Cause if, after
Executive’s Termination (as defined below), facts and circumstances arising
during the course of Executive’s service with the Parent or the Company are
discovered that would have constituted a separation for Cause.

 

Further, all rights Executive has or may have under this Agreement shall be
suspended automatically during the pendency of any investigation by the Company
or its designee or during any negotiations between the Company or its designee
and Executive regarding any actual or alleged act or omission by Executive of
the type described in the applicable definition of “Cause.”

 

(b) “Change in Control” means the first to occur of the following:

 

(i) a tender offer (or series of related offers) is made and consummated for the
ownership of 50% or more of the outstanding voting securities of the Parent or
the Company, unless as a result of such tender offer more than 50% of the
outstanding voting securities of the surviving or resulting corporation are
owned in the aggregate by the stockholders of the Parent or the Company (as of
the time immediately prior to the commencement of such offer), any employee
benefit plan of the Parent or the Company or their respective Subsidiaries, and
their affiliates;

 

(ii) the Parent or the Company is merged or consolidated with another entity,
unless as a result of such merger or consolidation more than 50% of the
outstanding voting securities of the surviving or resulting entity is owned in
the aggregate by the stockholders of the Parent or the Company (as of the time
immediately prior to such transaction), any employee benefit plan of the Parent
or the Company or their respective Subsidiaries, and their affiliates;

 

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(iii) the Parent or the Company sells substantially all of its assets to another
entity that is not wholly owned by the Parent or the Company, unless as a result
of such sale more than 50% of such assets are owned in the aggregate by the
stockholders of the Parent or the Company (as of the time immediately prior to
such transaction), any employee benefit plan of the Parent or the Company or
their respective Subsidiaries, and their affiliates; or

 

(iv) a Person (as defined below) acquires 50% or more of the outstanding voting
securities of the Parent or the Company (whether directly, indirectly,
beneficially or of record), unless as a result of such acquisition more than 50%
of the outstanding voting securities of the surviving or resulting corporation
are owned in the aggregate by the stockholders of the Parent or the Company (as
of the time immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Parent or the Company or their
respective Subsidiaries, and their affiliates.

 

For purposes of this definition of Change in Control, ownership of voting
securities shall take into account and shall include ownership as determined by
applying the provisions of Rule 13d-3(d)(I)(i) under the Exchange Act. In
addition, for such purposes, “Person” has the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
provided, however, that a Person shall not include the following: (A) the Parent
or the Company or any of their respective Subsidiaries; (B) a trustee or other
fiduciary holding securities under an employee benefit plan of the Parent or the
Company or any of their respective Subsidiaries; (C) an underwriter temporarily
holding securities pursuant to an offering of such securities; or (D) a
corporation owned, directly or indirectly, by the stockholders of the Parent or
the Company in substantially the same proportion as their ownership of stock of
the Parent or the Company.

 

Notwithstanding the foregoing provisions of this definition of Change in
Control, in no event will a Change in Control of the Company be deemed to have
occurred, with respect to Executive, if Executive is part of a purchasing group
that consummates the Company Change in Control transaction. Executive shall be
deemed “part of a purchasing group” for purposes of the preceding sentence if
Executive is an equity participant or has agreed to become an equity participant
in the purchasing company or group (excluding passive ownership of less than 5%
of the voting securities of the purchasing company or ownership of equity
participation in the purchasing company or group that is otherwise deemed to be
not significant, as determined prior to the Change in Control by the Company);

 

Further notwithstanding the foregoing provisions of this definition of Change in
Control, (1) the Company may waive the requirement described in paragraph (iv)
above that a Person must acquire more than 50% of the outstanding voting
securities of the Parent or the Company for a Change in Control to have occurred
if the Company determines that the percentage acquired by a person is
significant (as determined by the Company in its discretion) and that waiving
such condition is appropriate in light of all facts and circumstances, and (2)
no compensation that has been deferred for purposes of Code Section 409A shall
be payable as a result of a Change in Control unless the Change in Control
qualifies as a change in ownership or effective control of the Parent or the
Company within the meaning of Code Section 409A.

 

(c) “Code” means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. References to the Code shall include the valid and binding
governmental regulations, court decisions and other regulatory and judicial
authority issued or rendered thereunder.

 

(d) “Exchange Act” means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended. References to the Exchange Act shall include the valid
and binding governmental regulations, court decisions and other regulatory and
judicial authority issued or rendered thereunder.

 

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(e) “Involuntary Termination upon a Change in Control” means, at any time within
the two-year period immediately following the first Change in Control to occur
following the Execution Date, (i) the termination of Executive’s employment by
the Company without Cause (and other than in connection with Executive’s death
or disability) or (ii) the termination of Executive’s employment by Executive
for Good Reason, provided, however, that Executive shall only be entitled to
terminate for Good Reason in accordance with this Section 3(e) by delivering
written notice to the Company prior to the two-year anniversary of the Change in
Control and not later than 90 days after the occurrence of the event
constituting Good Reason, and such notice must contain a detailed description of
the event(s) constituting Good Reason, and Executive’s intent to resign for Good
Reason unless the Company cures such event(s) within 30 days following receipt
of said written notice from Executive in accordance with this Section 3(e).

 

(f) “Good Reason” means the occurrence of any of the following events, without
Executive’s consent, during the two-year period immediately following the
effective date of the first Change in Control to occur following the Execution
Date, which event is not cured by the Company within 30 days following
Executive’s written notice to the Company as described in Section 3(e) above:
(i) a substantial reduction of Executive’s base salary, incentive pay
eligibility or benefits in effect immediately prior to such reduction; (ii) a
substantial reduction in Executive’s duties or responsibilities from Executive’s
duties or responsibilities in effect immediately preceding the date of a Change
in Control, or a detrimental change in Executive’s reporting relationship from
Executive’s reporting relationship in effect immediately preceding the date of
the Change in Control; or (iii) the permanent relocation of Executive’s primary
workplace to a location more than 20 miles away from Executive’s workplace in
effect immediately prior to such relocation.

 

(g) “Subsidiary” of any entity means any corporation or other entity a majority
of whose outstanding voting stock or voting power is beneficially owned directly
or indirectly by such entity.

 

(h) “Termination” means Executive’s termination of employment from the Company
and each parent, affiliate and Subsidiary thereof, at any time, for any or no
reason; provided, however, that if any amount or benefit under this Agreement
that is deferred compensation for purposes of Code Section 409A is to be
distributed on a Termination, then the definition of Termination for such
purposes shall comply with the definition of “separation from service” provided
in Code Section 409A.

 

4. Effect of Involuntary Termination upon a Change in Control. In the event of
an Involuntary Termination upon a Change in Control, Executive shall be entitled
to the following:

 

(a) Subject to Section 5 below, a lump-sum severance payment in an amount equal
to $150,000, to be made no later than 60 days following the date of Termination;
and

 

(b) Unpaid compensation and benefits, and unused vacation, accrued through the
date of Termination. Executive shall also be entitled to receive reimbursement
for final expenses that Executive reasonably and necessarily incurred on behalf
of the Company prior to Termination, provided that Executive submits expense
reports and supporting documentation of such expenses in accordance with the
Company’s expense reimbursement policies in effect at that time, such payment or
payments to be made no later than the time required by applicable law, but in no
event later than 60 days following the date of Termination.

 

5. Conditions to Severance Benefits. In the event of an Involuntary Termination
upon a Change in Control, Executive shall receive the severance benefits set
forth in Section 4(a) above only if Executive (a) executes and does not revoke a
general release in a form reasonably satisfactory to the Company within 21 days
(or such longer period to the extent required by applicable law) of the date of
Termination, which release shall be provided to Executive as of the date of
Termination; (b) has returned all Company Property (as defined in Section 10(c)
below), confidential information and documentation to the Company; and (c)
provides the Company with a signed, written resignation of Executive’s status as
an officer and/or director of the Company and each Subsidiary, parent and
affiliate of the Company, as applicable. In the event the Company reasonably
believes that Executive has breached, or has threatened to breach, any provision
of this Agreement, the Company shall immediately terminate all severance
benefits and Executive shall no longer be entitled to such benefits and further
shall be required to reimburse all severance benefits, including payments under
Section 4(a) above, previously made by the Company. Such termination of benefits
shall be in addition to any and all legal and equitable remedies available to
the Company, including injunctive relief.

 

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6. Taxes. All payments and benefits described in this Agreement shall be subject
to any and all applicable federal, state and local income, employment and other
taxes, and the Company will deduct from each payment to be made to Executive
under this Agreement such amounts, if any, required to be deducted or withheld
under applicable law.

 

7. Section 409A. This Agreement is intended to comply with Code Section 409A to
the extent subject thereto and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted and administered to be in compliance
therewith. Any payments described in this Agreement that are due within the
“short-term deferral period” as defined in Code Section 409A shall not be
treated as deferred compensation unless applicable laws require otherwise.
Notwithstanding any other provision with respect to the timing of payments under
Section 4(a) above, if, at the time of Termination, Executive is deemed to be a
“specified employee” (within the meaning of Code Section 409A) of the Company
(or a Company affiliate), then only to the extent necessary to comply with the
requirements of Code Section 409A, any payments to which Executive may become
entitled under Section 4(a) above that are subject to Code Section 409A (and not
otherwise exempt from its application) will be withheld until the first business
day of the seventh month following Termination, at which time Executive shall be
paid the lump-sum distribution pursuant to Section 4(a) above.

 

The Parties will negotiate in good faith and jointly execute an amendment to
modify this Agreement to the extent necessary to comply with the requirements of
Code Section 409A. Executive hereby acknowledges that the Company makes no
representations or warranties regarding the tax treatment or tax consequences of
any compensation, benefits or other payments under this Agreement, including by
operation of Code Section 409A.

 

8. Code Section 280G Limitation on Benefits. It is the intention of the Parties
that no payments by the Company to or for the benefit of Executive under this
Agreement or any other agreement or plan pursuant to which Executive is entitled
to receive payments or benefits shall be non-deductible to the Parent or the
Company by reason of the operation of Code Section 280G relating to parachute
payments. If all, or any portion, of the payments provided under this Agreement,
either alone or together with other payments and benefits that Executive
receives or is entitled to receive from the Parent or the Company, would
constitute a “parachute payment” within the meaning of Code Section 280G, the
payments and benefits provided under this Agreement shall be reduced to the
extent necessary so that no portion thereof shall fail to be tax-deductible
under Code Section 280G, in accordance with Code Section 409A. To the extent
that payments exceeding such maximum deductible amount have been made to or for
the benefit of Executive, such excess payments shall be refunded to the Parent
or the Company with interest thereon at the applicable federal rate determined
under Code Section 1274(d), compounded annually within 30 days following written
notice from the Company of such excess payments, in accordance with Code Section
409A.

 

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9. No Mitigation. If Executive’s employment by the Company is terminated due to
an Involuntary Termination upon a Change in Control, in no event will any
amounts payable hereunder be reduced in the event Executive obtains other
employment.

 

10. Nonsolicitation; Non-Disclosure; Company Property.

 

(a) While in the employ of the Company and for one year following Termination
(the “Restricted Period”), regardless of the reason for such Termination,
Executive shall not, directly or indirectly, alone or as a consultant, advisor,
partner, officer, director, employee, joint venturer, lender or stockholder of
any entity, solicit or do business in any capacity with any customer or
potential customer of the Company or any parent, affiliate or Subsidiary thereof
(i) with whom Executive has had contact during the course of Executive’s
employment with the Company or any parent, affiliate or Subsidiary thereof, or
(ii) about whom Executive obtained confidential and proprietary information
during the course of Executive’s employment with the Company or any parent,
affiliate or Subsidiary thereof, to the detriment of the Company or any parent,
affiliate or Subsidiary thereof During the Restricted Period, regardless of the
reason for Termination, Executive shall not, directly or indirectly, alone or as
a consultant, advisor, partner, officer, director, employee, joint venturer,
lender or stockholder of any entity, recruit or solicit for hire any Company or
parent, affiliate or Subsidiary employee, agent, representative or consultant,
or any such person who has terminated his/her relationship with the Company or
any parent, affiliate or Subsidiary thereof within six months of Executive’s
Termination.

 

(b) Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Company and its parent and
affiliates and Subsidiaries, as they may exist from time to time, are valuable,
special and unique assets of the business of the Company. Executive will not,
during employment or after Termination, disclose any knowledge of the past,
present, planned or considered business activities of the Company or any parent,
affiliate or Subsidiary thereof to any person, firm, corporation, or other
entity for any reason or purpose whatsoever, except as may be required by law.

 

(c) During Executive’s employment, Executive shall not make, use or permit to be
used any Company Property other than for the benefit of the Company or any
parent, affiliate or Subsidiary thereof. The term “Company Property” shall
include all notes, business plans, memoranda, reports, lists, records, drawings,
sketches, rolodexes, specifications, software programs, software code, data,
Company-provided computers and cellular telephones and any Company, parent,
affiliate or Subsidiary information contained on any personal computers and
personal cellular telephones, pagers, personal digital assistants and their
equivalents, credit and/or calling cards, keys, access cards, documentation or
other materials of any nature and in any form, whether in written, printed,
electronic or digital format or otherwise, relating to any matter within the
scope of the business of the Company or any parent, affiliate or Subsidiary
thereof or concerning any of their dealings or affairs, and any other Company or
parent, affiliate or Subsidiary property in Executive’s possession, custody or
control. Executive shall not, after Termination, use or permit others to use any
such Company Property. Executive acknowledges that all Company Property shall be
and remain the sole and exclusive property of the Company. Immediately upon
Termination, Executive shall deliver all Company Property in Executive’s
possession, and all copies thereof, to the Company.

 

(d) Any breach of Executive’s obligations set forth in this Section 10 will
cause irreparable damage to the Company and in the event of such breach the
Company shall have, in addition to any and all remedies of law, the right to an
injunction, specific performance or other equitable relief to prevent the
violations of Executive’s obligations hereunder.

 

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11. Exclusive Remedy. Except as expressly set forth herein or otherwise required
by law, Executive shall not be entitled to any compensation, benefits or other
payments from the Company as a result of or in connection with a Termination.
The payments and benefits set forth in Section 4 above shall constitute
Executive’s sole and exclusive remedy for any claims, causes of action or
demands arising under or in connection with this Agreement or its alleged
breach, or Executive’s Termination; provided, however, that Executive shall
remain entitled to any other benefits under any other written agreement between
the Parties that is then in effect at the time of Termination.

 

12. Governing Law and Venue. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without giving effect to
the principles of conflicts of law. For purposes of litigating any dispute that
arises directly or indirectly from the relationship of the Parties evidenced by
this Agreement, the Parties hereby submit to and consent to the exclusive
jurisdiction of the State of New York and agree that any related litigation
shall be conducted solely in the courts of New York County, New York or the
federal courts for the United States for the Southern District of New York,
where this Agreement is made and/or to be performed, and no other courts.

 

13. Entire Agreement. This Agreement shall constitute the sole and entire
agreement between the Parties with respect to the subject matter hereof, and
supersedes and cancels all prior, concurrent and/or contemporaneous
arrangements, understandings, promises, offers, agreements and/or discussions,
including those concerning employment agreements and/or severance benefits,
whether written or oral, by or between the Parties, regarding the subject matter
hereof; provided, however, that this Agreement is not intended to, and shall
not, supersede, affect, limit, modify or terminate any written agreement or
arrangement between the Parties that does not relate to the subject matter
hereof.

 

14. Assignment. Executive acknowledges that the services to be rendered
hereunder are unique and personal in nature. Accordingly, Executive may not
assign any rights or delegate any duties or obligations under this Agreement.
The rights and obligations of the Company under this Agreement shall
automatically be assigned to the successors and assigns of the Company
(including any successor in the event of a Change in Control, as well as any
other entity that controls, is controlled by or is under common control with,
any such successor), and shall inure to the benefit of, and be binding upon,
such successors and assigns, as well as Executive’s heirs and representatives.

 

15. Notices. All notices required hereunder shall be in writing and shall be
delivered in person or by certified or registered mail, return receipt
requested, and shall be effective upon receipt if by personal delivery, or upon
the fourth business day after being sent by certified or registered mail. All
notices shall be addressed as follows or to such other address as the Parties
may later provide in writing: if to the Company, to its then current principal
business address, to the attention of the Board of Directors; and if to
Executive, to Executive’s most recent address in the records of the Company.

 

16. Severability/Reformation. If any one or more of the provisions (or any part
thereof) of this Agreement shall be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions (or any part thereof) shall not in any way be affected or impaired
thereby, and this Agreement shall be construed and reformed to the maximum
extent permitted by law. The language of all parts of this Agreement shall in
all cases be construed as a whole according to its fair meaning and not strictly
for or against either of the Parties.

 

17. Modification. This Agreement and the rights, remedies and obligations
contained in any provision hereof, may be modified or waived only in accordance
with this Section 17. No waiver by either Party of any breach by the other or
any provision hereof shall be deemed to be a waiver of any later or other breach
thereof or as a waiver of any other provision of this Agreement. This Agreement
and its terms may not be waived, changed, discharged or terminated orally or by
any course of dealing between the Parties, but only by a written instrument
signed by the Party against whom any waiver, change, discharge or termination is
sought.

 

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18. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.

 

19. Section Headings. The descriptive section headings herein have been inserted
for convenience only and shall not be deemed to define, limit or otherwise
affect the construction of any provision hereof.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Execution
Date.

 

WPCS International - suisun city, inc.

 

Sign Name: \\Sebastian Giordano\\                              

 

Print Name: Sebastian Giordano                                    

 

Title: Secretary
                                                                

 

Executive

 

Sign Name: \\Robert Roller\\                                           

 

Print Name: Robert Roller                                              

 

 

 

 

 

 

 

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