Exhibit 10.9
EMPLOYMENT AGREEMENT
This AGREEMENT is made this 19th day of October, 2001 and effective as of
the date set forth below between Discount Rx, Inc., a Louisiana corporation (the
"Company"), and Xxxxxxx Xxxxxxx Xxxxx (the "Employee").
WHEREAS, the Employee and the Company entered into an Employment Agreement
dated August 31, 2000 (the "Prior Agreement") and wish to amend, modify and
replace the Prior Agreement with this Agreement'
WHEREAS, the Employee possesses skills and expertise which make him
valuable to the Company and which will contribute to the Company's future
success; and
WHEREAS, the Company desires to employ the Employee and the Employee
desires to serve in the employ of the Company upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency whereof is hereby acknowledged, the parties hereby agree as follows:
1. Employment, Acceptance and Term
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1.1 Subject to the terms and conditions of this Agreement, the
Company hereby agrees to employ the Employee, and the Employee hereby agrees to
serve the Company, commencing on the Effective Date (as defined below), as its
Vice President of Sales and Purchasing for the term set forth in Section 1.2
below. The Effective Date shall be the Effective Date of the First Amended Plan
of Reorganization filed by Xxxxxx & Xxxxxx, Inc. Until the Effective Date, the
Company shall owe no obligations to the Employee.
1.2 The term of this Agreement shall be for a three (3) year period
commencing as of the Effective Date and ending on the third anniversary hereof.
This Agreement may be renewable by mutual agreement of the Company and the
Employee for subsequent terms of one (1) year by giving the Employee notice of
such renewal at least sixty (60) days prior to the end of any term hereof.
2. Duties and Authority
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During the term of this Agreement, the Employee shall devote his full time
and energies to the business and affairs of the Company. The Employee shall not
accept any other employment during the term of this Agreement, nor shall he
permit such personal business interests as he may have to interfere with the
performance of his duties hereunder. The Employee agrees to use his best
efforts, skill and abilities to promote the Company's interests and to
faithfully and diligently perform, to the best of his abilities, such duties as
may from time to time be assigned to him by the Employee's immediate supervisor.
It is understood that Employee's base of operation will be the New Orleans area,
and he will not be required to move during the term of the contract. All such
services shall be rendered for and in consideration of the compensation payable
to the Employee under Section 3 hereof.
3. Compensation
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3.1 Salary. The Employee shall receive an annual base salary during
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the term of this Agreement of $125,000 payable in installments consistent with
the Company's normal payroll schedule. The Company shall review this base salary
at annual intervals, and may increase the Employee's annual base salary from
time to time as the Company deems to be appropriate.
3.2 Additional Compensation for Execution of Non-Competition
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Agreement. As a condition of this Agreement, Employee has agreed to execute that
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certain Restrictive Covenants Agreement and Agreement Not to Compete (the "Non-
Competition Agreement"). As consideration for Employee executing the Non-
Competition Agreement, the Employee shall also be entitled to receive such
additional compensation as set forth in Exhibit "A" attached hereto and made a
part hereof.
4. Expenses.
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The Company shall pay or reimburse the Employee for all reasonable and
necessary expenses incurred by the Employee, and authorized by the Company,
during the term of this Agreement in connection with the business of the
Company; provided, however, the Employee shall render to the Company a complete
and accurate accounting of all such expenses in accordance with the
substantiation requirements of Section 274 of the Internal Revenue Code of 1986,
as amended.
5. Additional Benefits
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During the term of this Agreement the Employee shall be allowed to
participate (subject to uniformly applicable requirements for participation) at
the Company's expense in any health, medical, dental, disability, insurance or
pension plan made available by the Company for the benefit of its employees
generally, and shall be entitled to an annual vacation of two (2) weeks for the
first year hereof with full pay and allowances and two (2) weeks in subsequent
years to be taken at such time or times as shall be mutually agreed between the
Company and the Employee. The Company shall provide Employee with dental and
health benefits reasonably comparable to that of Employee's previous employment.
6. Discharge for Cause
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The Company shall have the right to terminate this Agreement and to
discharge the Employee at any time for "cause". As used herein, termination for
"cause" shall mean termination by action of the Company's Board of Directors
based upon the occurrence of any of the following:
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(i) Employee commits, is arrested, or otherwise officially charged
with a felony or any crime involving moral turpitude, or any
other criminal activity or unethical conduct which, in the good
faith opinion of the Company, would impair Employee's ability to
perform his duties hereunder or would impair the business
reputation of the Company.
(ii) Employee commits an act, or omits to take action in bad faith.
(iii) Employee commits a proven intentional act which destroys
property belonging to the Company, or it is proven that employee
has stolen funds or property of the Company or any affiliate of
the Company.
(iv) Employee fails or refuses to comply with the policies or
regulations of the Company as set forth in the DrugMax and
Affiliates, (including Employer) Employee Handbook, a copy of
which, Employee hereby acknowledges that he has received.
(v) Employee uses illegal drugs or alcohol to an extent which
materially impairs the Employee's performance of his duties
hereunder.
(vi) Employee knowingly and continually violates a material term of
this Agreement.
7. Termination of Agreement
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Notwithstanding the provisions of Section 1 hereof, this Agreement shall
terminate upon the happening of any one of the following events and the Company
shall have no obligations to the Employee hereunder for any period after the
effective date of such termination:
(i) automatically and without notice, if the Employee shall
die during the term hereof;
(ii) by resolution of the Company's Board of Directors and upon
not less than sixty (60) days' prior written notice to the Employee if the
Employee shall become "disabled" as defined in any group disability policy
maintained by the Company for the benefit of its employees; provided that in the
event of such termination, the Employee shall be entitled to receive all
compensation and benefits payable to him pursuant to this Agreement until the
date set forth in such notice;
(iii) automatically and without notice if the Employee
voluntarily terminates his employment with the Company without the Company's
consent;
(iv) upon termination of the Employee's employment with the
Company by mutual agreement between the Company and the Employee;
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(v) upon written notice to the Employee of action taken by the
Board of Directors of the Company to discharge the Employee for "cause" pursuant
to Section 6 of this Agreement, which notice shall specify the reason for such
discharge; provided, however, that if the Board notifies the Employee of action
taken to discharge the Employee for any of the reasons set forth in either
subsection (iv), (v) or (vii) of Section 6, the Employee shall have 30 days from
receipt of such written notice to cure the specified deficiencies. If the Board,
in its sole discretion, is not satisfied that such deficiencies have been cured,
it shall so notify the Employee and the Employee shall be terminated effective
on the date of such notification.
8. Non-Competition
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Employee agrees that he and the Company shall execute and be bound by the
terms of the Restrictive Covenants Agreement and Agreement Not to Compete
executed contemporaneously herewith and incorporated herein by reference.
9. Employment Policies
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Employee hereby acknowledges the receipt of the DrugMax Employee Handbook.
10. Notices
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All notices hereunder and other communications required or permitted to be
given to either party hereto shall be in writing and delivered by hand or sent
by overnight or by certified mail, return receipt requested, postage prepaid,
addressed to such party at its address referred to above, or at such other
address as such party may from time to time designate by written notice to the
other party hereto, given in accordance with the provisions of this Section 9.
Any such notice or other communication shall be deemed to have been given on the
date delivered by hand or the date actually received.
11. Waivers
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No waiver by either party hereto of any breach of any provision of this
Agreement shall be deemed to constitute a waiver of any other breach of such
provision or a waiver of any breach of any other provision of this Agreement.
12. Agreement Complete; Amendments
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This Agreement embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter, including without limitation the Prior
Agreement. This Agreement may not be amended, supplemented, cancelled or
discharged except by a written instrument executed by the party to be charged.
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13. Non-Assignability
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The respective rights and obligations hereunder of the parties hereto are
personal to such parties and shall not be transferred or assigned by them, in
whole or in part, to any other person, firm or corporation; provided that the
Company may assign this Agreement and the benefits hereunder without the consent
of the Employee, without being relieved from any liability hereunder, to any of
its direct or indirect "affiliates" or "associates" (as such terms are defined
in Rule 405 of the Rules and Regulations promulgated under the Securities Act of
1933). Furthermore, it is understood that the rights and obligations of the
Company will inure to the benefit of and will be binding upon the successors and
assigns of Company.
14. Governing Law
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This Agreement shall be governed by and construed in accordance with the
laws of the State of Louisiana applicable to agreements made and to be performed
entirely within such State.
15. Waiver of Jury Trial; Binding Arbitration.
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Employer and Employee, on behalf of themselves and their respective
officers, directors, employees, agents, successors and assigns, agree that if
they cannot resolve any dispute or claim between themselves, including but not
limited to any dispute as to whether a particular matter must be arbitrated or
any claim that a party was fraudulently induced into entering this Agreement or
any part of this Agreement, the dispute or claim shall be decided solely and
exclusively by final and binding arbitration. The location of the arbitration
shall be in New Orleans, Louisiana. The arbitration shall be in lieu of
litigation in State or Federal Court and in lieu of trial by judge or by jury,
and shall instead be conducted American Arbitration Association ("AAA") in
accordance with its applicable arbitration rules and procedures then in effect,
except as modified by this paragraph. The parties agree that there shall only be
one arbitrator and that such arbitrator shall be a former or retired judge. The
parties agree that such arbitrator shall be selected by the parties in
accordance with the then existing arbitration rules and procedures of AAA. The
parties hereby agree to commence any arbitration within ninety (90) days
following a demand therefor made by either of the parties and to conclude such
arbitration proceeding within thirty (30) days following its inception. The
arbitration may award any extensions of time deadlines to the prevailing party
as may be appropriate. Judgment upon the award rendered by the arbitrator(s) may
be entered in any court having jurisdiction, and the parties shall be entitled
to utilize the courts to enforce the award. The parties hereby knowingly,
voluntarily, and irrevocably waive their right to a trial by jury and agree that
if the foregoing binding arbitration provision is determined for any reason to
be unenforceable or inapplicable to a particular dispute, then such dispute
shall be decided solely by a judge (without the use of a jury) sitting in a
court of competent jurisdiction. This binding arbitration and jury trial waiver
provision shall survive termination of this Agreement.
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16. Captions
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All captions and headings herein contained are inserted for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
Discount Rx, Inc., Employer
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
EMPLOYEE:
/s/ Xxxxxxx Xxxxxxx Xxxxx
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Xxxxxxx Xxxxxxx Xxxxx
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JOINDER
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XxxxXxx.xxx, Inc., a Nevada corporation, hereby joins in the Employment
Agreement for purpose of guaranteeing the obligations of the Company set forth
in Sections 3 of the Agreement and agreeing to the issuance of its shares as
contemplated in Exhibit A; provided, however, that Parent shall be entitled to
all of the defenses and rights of the Company as set forth in this Agreement.
XXXXXXX.XXX, INC.
Guarantor
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Chief Executive Officer
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EXHIBIT A
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Whereas, Discount Rx, Inc., a Louisiana corporation (the "Company"),
desires to encourage Xxxxxxx Xxxxxxx Xxxxx' (the "Employee") sense of
proprietorship in the Company and its affiliates and to provide an incentive to
the Employee for remaining with and enhancing the value of the Company and its
affiliates, the Company hereby agrees to cause its parent company, DrugMax,
Inc., a Nevada corporation ("Parent") to pay to Employee the following
additional compensation:
1. Company hereby grants to Employee non-qualified stock options (the
"Options") to purchase up to a total of 100,000 shares of Common Stock of
the Company at a price per share of $8.00 (the "Option Price") pursuant to
the following provisions: Employee shall receive an option to purchase up
to 33,333 shares of Common Stock within 60 days of the first anniversary of
this Agreement if the Company attains at least $100,000.00 in gross profits
during such year; Employee shall receive an option to purchase up to 33,333
shares of Common Stock within 60 days of the second anniversary of this
Agreement if the Company attains at least $100,000.00 in gross profits
during such year; and Employee shall receive an option to purchase up to
33,333 shares of Common Stock within 60 days of the third anniversary of
this Agreement if the Company attains at least $100,000.00 in gross profits
during such year. If gross profits do not exceed $100,000.00 for any given
year during the term of the Employment Agreement, Employee shall not be
entitled to any options during such year; provided that such event shall
not prohibit Employee from being eligible to receive options upon the
attainment of the above referenced performance goals in the remaining years
of this Employment Agreement. Notwithstanding the foregoing, if Employee is
terminated by the Company for any reason without Cause, as defined in the
Employment Agreement, then Employee shall immediately be granted options to
purchase the entire 100,000 shares of stock contemplated above. In the
event the Employee is terminated for Cause or terminates the Employment
Agreement, all options which have not been exercised shall automatically
and immediately be canceled.
2. During the term of this Employment Agreement, the Company will pay Employee
a $500.00 per month allowance for car and car related expenses payable on
the 15/th/ day of each month in accordance with the payroll practices of
Employer in effect from time to time.
3. Employee is hereby granted an option (the "Option") to purchase up to a
total of 40,000 shares of the common stock, $.001 par value per share, of
the DrugMax, Inc. (the "Common Stock"). The exercise price of the Option is
$5.75, the closing price of the stock on October 18, 2001. This option
shall terminate on the fifth anniversary of this Agreement; provided,
however, that if Employee shall terminate the Agreement for any reason or
the Company should terminate this Agreement for cause (as defined in this
Agreement), the Employee shall have 30
days from the date of termination to exercise this Option, after which
period this Option shall immediately terminate. The Option is not intended
to qualify as an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended. When Employee elects to
exercise the Option, he shall give written notice of such exercise to the
Corporate Secretary of the Company. The notice of exercise shall state the
number of shares of Common Stock as to which the Option is being exercised
and shall be accompanied by the exercise price in cash. Employee may
exercise the Option to purchase all or any whole number portion of the
number of shares of Common Stock which Employee is then permitted to
purchase hereunder (but not for any fractional shares). Employee's rights
under the Options may not be assigned or transferred. Upon the death of
Employee, this Option shall immediately terminate. The Company may from
time to time impose any conditions on the exercise of the Option as it
deems necessary or advisable to ensure that the Option granted hereunder,
and each exercise thereof, satisfies the applicable requirements of federal
and state securities laws. Such conditions to satisfy applicable federal
and state securities laws may include, without limitation, the partial or
complete suspension of the right to exercise the Option until the offering
of the shares covered by the Option have been registered under the
Securities Act of 1933, or the printing of legends on all stock
certificates issued to Employee referring to the restrictions on the
transferability of such shares.
4. In consideration of the non-competition covenant made by Employee pursuant
to this Agreement, DrugMax, Inc. shall promptly issue to Employee 25,000
shares of Common Stock (the "Shares"). In connection with such issuance,
Employee hereby represents and warrants to the Company as follows:
a. Employee understands that the Shares will not be registered under
the Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws on the grounds that the issuance of the
Shares is exempt from registration pursuant to Section 4(2) of
the Securities Act under the Securities Act and applicable state
securities laws, and that the reliance of the Company on such
exemptions is predicated in part on Employee's representations,
warranties, covenants and acknowledgments set forth herein.
b. Employee represents and warrants that Employee has not taken the
Shares with a view to resale or other distribution within the
meaning of the Securities Act and the rules and regulations
thereunder and Employee agrees that Employee shall not distribute
any of the Shares in violation of the Securities Act and the
rules and regulations thereunder and any applicable Blue Sky
regulations.
c. Employee acknowledges that the Common Stock shall bear a
restrictive legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
In addition, the Shares may bear any legend required by applicable securities or
Blue Sky laws.
d. The principal residence of Employee is in the State of Louisiana.
e. Employee (i) acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities
Act or an exemption from registration is available, (ii) is aware
that any routine sales of Shares made pursuant to Rule 144 under
the Securities Act may be made only in limited amounts and in
accordance with the terms and conditions of that rule and that in
such cases where Rule 144 is not applicable, compliance with some
other registration exemption will be required, and (iii) is aware
that Rule 144 is not currently available for use for resale of
any of the Shares.
f. Employee represents and warrants to the Company that Employee,
either alone or together with the assistance of professional
advisors, has such knowledge and experience in financial and
business matters such that Employee is capable of evaluating the
merits and risks an investment in the Shares.
g. Employee confirms that he has had the opportunity to ask
questions of and receive answers from the Company concerning the
terms and conditions of its investment in the Shares, and has
received to his satisfaction, such additional information, in
addition to that set forth herein, about the Company's operations
and the terms and conditions of the offering as they have
requested.
h. Employee agrees that he will not sell or otherwise transfer or
dispose of the Shares or any interest therein without first
complying with Section 3 of this Agreement and either of the
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following conditions, the expenses and costs of satisfaction of
which shall be fully borne and paid for by Employee:
(i) the Company shall have received a written legal opinion
from Employee's legal counsel, which opinion and counsel shall be satisfactory
to the Company in the exercise of its reasonable judgment, or a copy of a "no-
action" or interpretive letter of the SEC, specifying the nature and
circumstances of the proposed transfer and indicating that the proposed transfer
will not be in violation of any applicable bankruptcy laws or the registration
provisions of the Securities Act and the rules and regulations promulgated
thereunder; or
(ii) the Company shall have received an opinion from its own
counsel to the effect that the proposed transfer will not be in violation of any
applicable bankruptcy laws or the registration provisions of the Securities Act
and the rules and regulations promulgated thereunder.
