EMPLOYMENT AGREEMENT
This
Employment Agreement (this "Agreement")
is
made effective as of this 1st
day of
May, 2006, notwithstanding any other execution date, by and between Assured
Pharmacy, Inc., a Nevada corporation (the "Company"),
and
Xxxxxx Xxxxx ("Executive").
R
E C I T A L S
A. The
Company is a corporation incorporated and in good standing under the laws of
the
State of Nevada engaged in Business as defined below.
B. The
Company desires to employ Executive, and Executive desires to be employed by
the
Company in accordance with the terms and conditions contained
herein.
NOW,
THEREFORE,
in
consideration of the premises and the mutual promises and agreements contained
herein, the Company and Executive hereby covenant and agree as
follows:
ARTICLE
1
DEFINITIONS
The
defined terms utilized throughout this Agreement shall have the following
meanings which shall govern and control the interpretation of this Agreement:
"Agreement"
means
this Employment Agreement.
"Base
Salary"
shall
have the meaning set forth in Section 3.1 of this Agreement.
"Benefits"
shall
have the meaning set forth in Section 3.2 of this Agreement.
"Business"
shall
mean the business of the Company which is engaged in operating pharmacies that
specialize in dispensing highly regulated pain medication.
"Confidential
Information"
shall
mean any and all information about the Business, the Company, its subsidiaries
and affiliates, and their respective clients and customers that is not available
to the general public and that is learned by Executive in the course of his
employment by the Company, including, without limitation, any and all of the
following:
(A)
trade
secrets, market studies, business plans, computer software and programs
(including object code and source code), computer software and database
technologies, systems, structures, and architectures (and related formulae,
compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information, and any other
information), however documented, that is a trade secret within the meaning
of
the Uniform Trade Secrets Act (the "Act"),
N.R.S.
§§600A.0.010 to 600A.100 et seq.; and
1
(B) proprietary knowledge, data, business and product development opportunities, formulae, information, and suppliers, vendors, distributors, manufacturers and customer lists and all papers, resumes, records (including computer records) and the documents containing such Confidential Information.
"Date
of Termination"
shall be
two weeks following the date on which either party gives its written notice
of
termination in accordance with Section 7.5, provided Executive’s employment
continues for such time. In the event Executive’s employment with the Company
ends prior to such two week period, the Date of Termination shall be Executive’s
last day of employment.
"Effective
Date"
means
the date set forth in the preamble to this Agreement.
"Fiscal
Year" means
the
Company's fiscal year, as it exists on the Effective Date or as changed from
time to time.
"Proprietary
Items" shall
mean any of the Company’s tangible property, trade secrets, business
opportunities, and product development opportunities.
ARTICLE
2
EMPLOYMENT
TERMS AND DUTIES
Section
2.1 Employment.
The
Company hereby employs the Executive, and the Executive hereby accepts and
agrees to furnish the Company with all the Executive’s skills and abilities to
perform the duties and responsibilities of the Chief
Operating Officer,
upon the terms and conditions set forth in this Agreement commencing as of
the
Effective Date and ending on the Date of Termination.
Section
2.2 Duties.
The
Executive will have such duties consistent with the position of Chief Operating
Officer and Chief Financial Officer and additional duties as are assigned or
delegated to the Executive by the board of directors. The Executive will use
his
best efforts and devote whatever business time, attention, skill, and energy
that are necessary to promote the success of the Business, and will cooperate
fully with the board of directors of the Company in the advancement of the
best
interests of the Company. Nothing in this Section 2.2, however, will prevent
the
Executive from continuing his existing business as a broker / dealer or from
engaging in additional business activities or activities in connection with
personal investments and community affairs that are not inconsistent with the
Executive's duties under this Agreement or federal or state law. Executive
shall
perform all duties reasonably requested of him, and agrees to abide by the
policies, practices, procedures or rules of the Company.
Section
2.3 Employment
Relationship.
The
parties acknowledge and agree that the employment relationship created hereby
is
"At Will" which allows either the Executive or the
2
board
of
directors to terminate this relationship at any time for any reason or no
reason, under no particular procedure, except upon two weeks written notice.
ARTICLE
3
COMPENSATION
Section
3.1 Base
Salary.
Commencing on the Effective Date, the Company shall pay to Executive an annual
base salary of One Hundred Fifty Thousand Dollars ($150,000.00) (“Base
Salary”),
to be
adjusted from time to time as Executive and the board of directors may agree.
Executive’s Base Salary shall be payable in accordance with Company’s normal
payroll procedures. Notwithstanding, Executive shall have the exclusive
authority to accrue a portion or the entire amount of the Executive’s annual
base salary for an indefinite period of time in the event that the Company
has
insufficient financing to implement its business plan.
Section
3.1.1 Stock
Option Grant. Upon
execution of this Agreement, Executive shall receive a grant of stock options
to
purchase 1,133,334 shares of common stock in the Company at the exercise price
of $0.60 per share. All stock options are exercisable for a period of ten years
from the date of issuance. These stock options will vest as follows: 566,667
become fully vested on September 29, 2006 and 566,667 become fully vested on
September 29, 2007. Executive may exercise all vested options granted herein
at
any time, and from time to time, until termination of the option. During
Executive’s lifetime, this option shall be exercisable only by Executive.
This
option
shall not be transferable by Executive other than by the laws of descent and
distribution upon Executive’s death.
Section
3.1.2 Notice and Payment.
Any
exercisable portion of the stock options granted in Section 3.1.1 may be
exercised only by delivery of a written notice to the Company prior to the
time
when such stock option becomes unexercisable, stating the number of shares
being
purchased and tendering payment in full of the exercise price of such option
by,
as applicable, delivery of: (a) cash or check for an amount equal to the
aggregate stock option exercise price for the number of shares being purchased,
(b) a copy of instructions to a broker directing such broker to sell the Common
Stock for which such options are exercised, and to remit to the Company the
aggregate exercise price of such stock options (a “cashless exercise”), or (c)
shares of the Company's Common Stock owned by the Executive, duly endorsed
for
transfer to the Company, with a Fair Market Value on the date of delivery equal
to the aggregate purchase price of the shares with respect to which such stock
options or portion is thereby exercised (a "stock-for-stock exercise").
Section
3.1.3 Demand Registration Rights.
At any
time after the execution of this Agreement, the Executive may demand
registration (a "Demand Registration") under the Securities Act of 1933, as
amended (the "1933 Act"), of all or any portion of the common stock underlying
the options issued under this Agreement. In order to accomplish such demand,
the
Executive shall send written notice of the demand to the Company’s board of
directors, and such notice shall specify the number of securities sought to
be
registered. The Company shall only be required to effect two Demand
Registrations, and shall only be required to proceed with a
3
Demand
Registration requested by the Executive if the number of securities that the
Executive shall have elected to include in such Demand Registration pursuant
to
this Section 3.1.3 has an aggregate fair market value, in the opinion of an
investment banker selected by the Executive and reasonably acceptable to the
Company, in excess of $500,000. The Company will not be obligated to affect
any
Demand Registration within six months after the effective date of a previous
registration of securities of the Company. In a Demand Registration, the Company
will pay the registration expenses.
Section
3.1.4 Piggyback Registration.
If at
any time the Company proposes to register any of its common stock under the
Securities Act, whether as a result of an offering for its own account or the
account of others, excluding any registrations to be effected on Forms S-4
or
S-8 or other applicable successor Forms, on a registration statement that is
to
become effective prior to the termination date of the options, the Company
shall
offer Executive the opportunity to include the common stock underlying each
option in such registration statement. The Company shall include in any such
registration statement all or part of the underlying common stock that Executive
requests to be registered. In a Piggyback Registration, the Company will pay
the
registration expenses.
Section
3.2 Benefits.
Executive
shall be entitled to participate in all Executive welfare and health benefit
plans, if any, established by the Company from time to time for the benefit
of
all Executives of the Company. Executive shall be required to comply with the
conditions attendant to coverage by such plans and shall comply with and be
entitled to benefits only in accordance with the terms and conditions of such
plans as they may be amended from time to time. Nothing herein contained shall
be construed as requiring the Company to establish or continue any particular
benefit plan in discharge of its obligations under this Agreement.
Section
3.3 Bonus Compensation.
The
Executive is eligible for bonus compensation based upon both the Company's
and
the Executive’s individual performance for each fiscal year or portion thereof
during which the Executive was employed by the Company hereunder. The amount
and
time for payment of the Bonus Compensation for any year, if any, shall be
determined by the Board of Directors in its discretion based on performance
and
industry standards that are to be determined.
4
ARTICLE
4
TERMINATION
Section
4.1 Termination
of Employment Relationship.
Except
as otherwise provided in this Article 4, either Executive or the Company may
terminate the employment relationship at anytime, upon two weeks written notice,
and without liability or recourse to the other except for a breach by the
Executive of the provisions of Article 5 and/or Article 6 which shall survive
the cessation of the employment relationship and remain binding and enforceable.
Section
4.1.1 Termination
by Death.
The
employment relationship shall terminate on the date of the Executive’s death, in
which event Executive’s Base Salary and Benefits owing to Executive through the
date of Executive’s death shall be paid to his estate. Executive’s estate will
not be entitled to any other compensation under this Agreement.
Section
4.1.2 Termination
by Disability.
If,
during the employment relationship, in the opinion of the Company, Executive,
because of physical or mental illness or incapacity, shall become unable to
perform substantially all of the duties and services required of him under
this
Agreement for a period of twenty (20) days in the aggregate during any
twelve-month period, the Company may, upon at least ten (10) days’ prior written
notice given at any time after the expiration of twenty (20) day period, notify
Executive of its intention to terminate this Agreement as of the date set forth
in the notice. In case of such termination, Executive shall be entitled to
receive Base Salary and Benefits owing to Executive through the Date of
Termination. The Company shall have no further obligation or liability to
Executive.
ARTICLE
5
NON-DISCLOSURE
COVENANT
Section
5.1 Acknowledgments
by the Executive.
The
Executive acknowledges that:
(A) as
a part of his employment, the Executive will be afforded access to Confidential
Information;
(B) public
disclosure of such Confidential Information could have an adverse effect on
the
Company and its Business;
(C) the
Company has required that the Executive make the covenants in this Article
5 as
a condition to Executive’s employment, and to the additional benefits provided
to Executive under this Agreement; and
(D) the
provisions of this Article 5 are reasonable and necessary to prevent the
improper use or disclosure of Confidential Information. Executive further
acknowledges that his position with the Company is special, unique and
intellectual in character and his position in the
5
Company
will place him in a position of confidence and trust with Executives and
customers of the Company.
Section
5.2 Confidentiality.
In
consideration of the compensation and benefits to be paid or provided to the
Executive by the Company under this Agreement, the Executive unconditionally
covenants as follows:
(A)
the
Executive will hold in strictest confidence the Confidential Information and
will not disclose it to any individual or entity except with the specific prior
written consent of the Company, except as necessary to discharge his duties
to
the Company during the course of his employment with the Company, except as
otherwise expressly permitted by the terms of this Agreement, or otherwise
compelled by the actual legal process. The foregoing obligation and restriction
does not apply to any part of the Confidential Information that the Executive
demonstrates:
(ii)
becomes publicly known and made generally available after disclosure to the
Executive through no action or inaction of the Executive; or
(iii)
is
in the possession of or previously developed independently by the Executive,
without confidentiality restrictions, at the time of disclosure as shown by
the
Executive’s files and records immediately prior to the time of disclosure. Upon
receiving notice of any legal demand, request or requirement for disclosure
of
Confidential Information, the Executive shall:
1)
immediately notify the Company of the existence, terms and circumstances of
such
demand, request or requirement;
2)
consult with the Company on the advisability of taking legally available steps
to resist or narrow such demand, request or requirement; and
3)
assist
the Company in taking any such steps the Company deems to be advisable.
In
the
event any Confidential Information must be disclosed as a result of any such
demand, request or requirement, the Executive shall disclose only that portion
of the Confidential Information which it is advised by qualified legal counsel
is legally required to be disclosed, and exert its best efforts to obtain
assurance that confidential treatment will be accorded to the Confidential
Information disclosed; and
(B)
the
Executive will not remove from the Company's premises (except to the extent
such
removal is for purposes of the performance of the Executive's duties at home
or
6
while
traveling, or except as otherwise specifically authorized by the Company)
Confidential Information and Proprietary Items. The Executive recognizes that,
as between the Company and the Executive, all of the Proprietary Items, whether
or not developed by the Executive, are the exclusive property of the Company.
Upon termination of this Agreement by either party, or upon the request of
the
Company during employment, the Executive will return to the Company all of
the
Proprietary Items in the Executive's possession or subject to the Executive's
control, and the Executive shall not retain any copies, abstracts, sketches,
or
other physical embodiment of any of the Proprietary Items. This obligation
is
supplementary to and in addition to the Company’s confidentiality and
non-disclosure policies and procedures adopted by the Company from time to
time.
Section
5.3 Disputes
or Controversies.
The
Executive recognizes that should a dispute or controversy arising from or
relating to this Agreement be submitted for adjudication to any court,
arbitration panel, or other third party, the preservation of the secrecy of
Confidential Information may be jeopardized. All pleadings, documents,
testimony, and records relating to any such adjudication will be maintained
in
secrecy and will be available for inspection by the Company, the Executive,
and
their respective attorneys and experts, who will agree, in advance and in
writing, to receive and maintain all such information in secrecy, except as
may
be limited by them in writing.
ARTICLE
6
NON-COMPETITION
AND NON-SOLICITATION
Section
6.1 Restrictions
During Employment.
Executive agrees and covenants that during his employment with the Company,
Executive shall not, either directly as an individual, partner, agent,
independent contractor, Executive or indirectly through a corporation,
partnership, limited liability company, affiliate, subsidiary or
otherwise:
(A) establish
or operate a business or enterprise, or provide services which are in
competition with the Business.
(B) solicit,
induce or attempt to induce any Executive, consultant, supplier, customer,
distributor, manufacturer, service provider, vendor or other person associated
with the Company to leave the employment of, or to discontinue their association
with the Company, or any affiliate thereof.
Section
6.2 Restrictions
after Employment.
Executive agrees and covenants that during the time period described below
at
Section 6.3 (the "Restricted Period"), Executive shall not either directly
as an
individual, partner, agent, independent contractor, Executive or indirectly
through a corporation, partnership, limited liability company, affiliate,
subsidiary or otherwise:
7
(A) establish,
operate or provide services which are in competition with the
Business.
(B) solicit,
induce or attempt to induce any Executive, consultant, supplier, customer,
distributor, manufacturer, service provider, vendor or other person associated
with the Company to leave the employment of, or to discontinue their association
with the Company, or any affiliate thereof.
Section
6.3 Post-Employment
Restricted Period.
Executive agrees and covenants that Executive will comply with the
post-employment restrictions set forth above in Section 6.2 for one (1) year
after cessation of employment with the Company (the "Restricted
Period")
in the
event Executive is terminated by the Company for cause. In the event the
Executive resigns or is terminated without cause then the Restricted Period
shall be thirty (30) days. In the event the Company ceases the Business of
the
Company, then this Article 6 shall become null and void and of no further force
or effect.
Section
6.4 Election
of Remedy by the Company.
Executive acknowledges and agrees that if Executive breaches the covenants
contained in Sections 6.1 and/or 6.2, it will be difficult to calculate the
precise amount of the Company’s damages. As a result, the parties agree that in
the event of such a breach, the Company may seek and obtain all legal and
equitable relief available under this Agreement or other provision of
law.
Section
6.5 Necessity
of Remedy.
Executive acknowledges and agrees that the covenants contained in Article 5
and
this Article 6 survive the termination of this Agreement, and are necessary
to
protect the business and goodwill of the Company and that a breach of these
covenants will result in irreparable harm and continuing damage to the Company.
As a result, Executive agrees that in the event Executive breaches or threatens
to breach such covenants, the Company shall be entitled to specific performance
and/or injunctive or other equitable relief in order to prevent the continuation
of such harm, as well as money damages.
Section
6.6 Reformation.
The
parties have attempted to limit the provisions of Article 5 and this Article
6
to the greatest extent possible while still protecting each party’s interest.
However, the parties hereby agree that, in the event any provision of Article
5
or this Article 6 is adjudged by any court or other arbiter of competent
jurisdiction to be void or unenforceable, in whole or in part, such tribunal
shall modify and enforce any such provision, section or subsection to the
maximum extent that it believes to be reasonable under the
circumstances.
Section
6.7 Assignment.
Executive agrees to be bound by the covenants contained in Article 5 and this
Article 6 in the event of the Company’s merger, consolidation, or sale of
substantially all of its assets with or to a third party. Executive acknowledges
that this provision was negotiated at arm's length and supported by additional
and separate consideration from that given in exchange for the covenants
themselves and is expressly made a condition of employment by the Company.
8
ARTICLE
7
GENERAL
PROVISIONS
Section
7.1 Representations
and Warranties by the Executive.
The
Executive represents and warrants to the Company that the execution and delivery
by the Executive of this Agreement does not, and the performance by the
Executive of the Executive's obligations hereunder will not, with or without
the
giving of notice or the passage of time, or both: (a) violate any judgment,
writ, injunction, or order of any court, arbitrator, or governmental agency
applicable to the Executive; or (b) conflict with, result in the breach of
any provisions of or the termination of, or constitute a default under, any
agreement to which the Executive is a party or by which the Executive is or
may
be bound. The Executive has no reason to believe he will be unable to discharge
the duties hereunder, or otherwise comply with this Agreement
Section
7.2 Waiver.
The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by either party in exercising
any
right, power, or privilege under this Agreement will operate as a waiver of
such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege.
To
the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of
any obligation of such party or of the right of the party giving such notice
or
demand to take further action without notice or demand as provided in this
Agreement.
Section
7.3 Binding
Effect.
Each
covenant and condition of this Agreement shall be binding on and inure to the
benefit of the parties hereto and their respective successors, assigns, heirs,
and legal representatives, including any entity with which the Company may
merge
or consolidate or to which all or substantially all of its assets may be
transferred.
Section
7.4 Assignment.
Neither
the Company or the Executive shall voluntarily subcontract or assign any of
their respective rights, duties or obligations hereunder without first obtaining
the other party’s written consent; provided, however, such consent from the
Executive shall not be required in the event of the Company’s merger,
consolidation, or sale of substantially all of its assets with or to a third
party.
Section
7.5 Notices.
All
notices, consents, waivers, and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by facsimile (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested),
or
(d) by regular mail, postage prepaid, returned receipt
9
requested
in each case to the appropriate addresses and facsimile numbers set forth below
(or to such other addresses and facsimile numbers as a party may designate
by
notice to the other parties):
|
If
to Company:
|
Assured Pharmacy, Inc. |
| Attn: Xxxxxxx Xxxxxxx, Chairman of the Board of Directors | |
| 00000 Xxx Xxxx Xxxxxx, Xxxxx X | |
| Xxxxxx, Xxxxxxxxxx 00000 |
|
If
to the Executive:
|
Xxxxxx Xxxxx |
| 00 Xxxxxxxxx Xxxxx | |
| Xxxxxxxxx, Xxx Xxxxxx 00000 |
Section
7.6 Amendments
and Modifications.
This
Agreement shall not be modified, amended, supplemented or extended except by
a
written document executed by both the Company and Executive, except as expressly
provided herein to the contrary.
Section
7.7 Governing
Law.
This
Agreement will be governed by the laws of the State of Nevada excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Agreement to the substantive law of
another jurisdiction.
Section
7.8 Arbitration.
Any and
all disputes, controversies or claims arising under or in connection with this
Agreement, including without limitation, fraud in the inducement of this
Agreement, or the general validity or enforceability of this Agreement, shall
be
governed by the laws of the State of Nevada, without giving effect to its
conflict of laws provisions and shall be submitted to binding arbitration before
one arbitrator of and in accordance with the commercial arbitration rules of
the
American Arbitration Association and conducted in a private manner in Xxxxx
County, Nevada. The award of the arbitrator shall be final and enforceable
in
the courts of Nevada. In reaching his or her decision, the arbitrator shall
have
no authority to change or modify any provision of this Agreement. Each party
shall have the right to discovery in accordance with the Nevada Rules of Civil
Procedure so long as all discovery is conducted under a confidentiality order
issued by the arbitrator prohibiting the use of any information disclosed or
delivered in the discovery process except for use within the Arbitration. Upon
conclusion of the arbitration, all documents or tangible items disclosed must
be
returned to the party who produced the items.
Section
7.9 Jurisdiction.
Notwithstanding the arbitration clause in Section 7.8 above, any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against either of the parties in the
courts of the State of Nevada, County of Xxxxx, or, if it has or can acquire
jurisdiction, in the United States District Court for the District of Nevada,
and each of the parties consents to the jurisdiction of such courts (and of
the
appropriate appellate courts) in any such action or proceeding and waives any
10
objection
to venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on either party anywhere in the
world.
Section
7.10 Section
Headings; Construction.
The
headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Article,"
"Articles," "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement unless otherwise specified. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms. In the event of any dispute regarding any
provision of this Agreement, the terms of this Agreement shall be construed
neutrally and shall not be construed against or in favor of either party,
notwithstanding the fact that one party may have been responsible for drafting
the initial form of this Agreement.
Section
7.11 Severability.
If any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
Section
7.12 Time.
Time is
of the essence for all obligations contemplated in this Agreement.
Section
7.13 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
Section
7.14 Entire
Agreement.
This
Agreement contains the entire agreement between the parties with respect to
the
subject matter hereof and supersedes all prior agreements and understandings,
oral or written, between the parties hereto with respect to the subject matter
hereof.
Section
7.15 Legal
Counsel.
Each
party hereto acknowledges that they have had full and fair opportunity to seek
and consult with independent legal counsel with respect to the legal
consequences to them arising from or connected with this Agreement and has
freely and voluntarily entered into this Agreement with knowledge of the legal
and financial consequences of such action. If the Executives has failed to
review this Agreement with legal counsel of his own selection, he has
voluntarily waived this right.
Section
7.16 Attorneys'
Fees and Arbitration Expenses.
In any
judicial action, arbitration or proceeding among the parties to enforce any
of
the provisions of this Agreement or any right of any party hereto, regardless
of
whether such action or proceeding is prosecuted to judgment and in addition
to
any other remedy, the unsuccessful party shall pay to the successful
11
party
all
costs and expenses, including reasonable attorneys' fees and arbitration
expenses, incurred therein by the successful party.
IN
WITNESS WHEREOF, the parties have agreed to be bound under this
Agreement.
|
Assured
Pharmacy, Inc., a Nevada corporation
/s/
Xxxxxxx Xxxxxxx
Xxxxxxx
Xxxxxxx
Chairman
of the Board of Directors
|
/s/
Xxxxxx Xxxxx
Xxxxxx
Xxxxx
|
