1
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into on July 15, 1997, by and between
DIRECT Rx, INC. an Ohio corporation (the "Company"), and ▇▇▇▇▇ ▇. TUNEJA
("Executive") currently holding the position of President.
W I T N E S S E T H:
WHEREAS, the Company believes that the attraction and retention of key
employees such as Executive is essential to the Company's growth and success;
and
WHEREAS, the Company desires to employ Executive as its Chairman of the
Board and Secretary and Executive desires to accept such employment, all on the
terms and conditions as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and covenants set forth
in this Agreement, the parties hereto agree as follows:
I. TERM
1.1 The Company hereby employs Executive and Executive hereby accepts
employment by the Company for a period of two years beginning on the date
of this Agreement, subject to the terms and conditions contained in this
Agreement. This Agreement will be renewed automatically thereafter for
successive periods of one year, unless not less than thirty days prior to
the end of the initial two year period or prior to the end of any one year
renewal period, one of the parties sends written notice to the other party
of its intent to terminate this Agreement at the end of such period.
II. DUTIES
2.1 Executive shall hold the office of and shall function as Chairman of the
Board and Secretary. In such capacities, Executive shall perform such
duties as determined by the Board of Directors and will report to the Board
of Directors.
III. BASE SALARY
3.1 As compensation for the services to be rendered by Executive hereunder and
all services as an officer of the Company, the Company agrees to pay or
cause to be paid to Executive an annual base salary of not less than
Seventy-Five Thousand Dollars ($75,000), payable in equal bi-weekly
installments in accordance with the Company's standard payroll schedule.
Executive's base salary shall be increased annually by an amount to be
determined in the sole discretion of the Board of Directors based upon the
Board's review of Executive's individual performance and the financial
performance of the Company.
2
3.2 This salary is based on the assumption that Executive continues to accept
the responsibilities assigned to him by the Board of Directors, meets the
Company's goals agreed to by the Executive and the Board of Directors, and
continues to satisfactorily perform the duties of President, as presented
in this Agreement and as indicated to the Board of Directors.
IV. PERFORMANCE BONUS AND STOCK OPTIONS
4.1 As additional compensation, Executive shall receive an annual bonus in
the first year of this Agreement as determined in the sole discretion of
the Board of Directors based upon the Board's evaluation of Executive's
individual performance and the financial performance of the Company.
4.2 Executive shall receive an annual bonus in the second year of this
Agreement in an amount to be determined as set forth below, with any such
amount to be subject to an increase or decrease as determined by the Board
of Directors based upon the Board's evaluation of Executive's individual
performance and the financial performance of the Company:
4.2.1 Two and one-half percent (2.5%,) of income before federal and
state income taxes, and
4.2.2 Two percent (2%) of annual revenues exceeding the "Base".
Executive's bonus for Year 2 will have a base equal to the total
audited revenues for Year 1. Subsequent years will be calculated in
the same manner.
4.3 The bonus shall be paid to Executive, or Executive's designee, as soon as
practicable following the close of the Company's fiscal year and the
preparation of the Company's financial statements. This bonus shall
continue as long as Executive is employed by the Company. Upon termination
of Executive's employment, Executive shall receive a pro rata amount of
this Bonus through the date of such termination.
4.4 Subject to the grant and approval of the Board of Directors, Executive
shall be eligible for the grant of stock options to purchase additional
common shares of the Company at such times and on such terms as shall be
determined by the Board of Directors.
V. FULL TIME
5.1 Executive agrees to devote 100* of his professional time, attention and
energies during each normal business day to the performance of the
business of the Company, except as may otherwise be authorized by the
Board of Directors, or except for minor personal matters.
VI. FRINGES
6.1 Executive shall be entitled to vacations, health care benefits, fringe
benefits and
3
reimbursement for reasonable out-of-pocket expenses, including but not
limited to those hereinafter detailed, in accordance with the Company's
practices covering executive personnel. The Company shall use reasonable
efforts to seek waivers of waiting periods, if any, applicable to
particular benefits. Such benefits shall include:
6.1.1 Health Insurance coverage with major medical, dental and disability
insurance benefits equal to those benefits available to employees;
the Company will pay 100% of the monthly premiums for Executive and
immediate family members;
6.1.2 Reimbursement of all properly approved travel and business related
expenses normally paid by the Company. All expense reports must be
approved by the President or the Board of Directors prior to
reimbursement;
6.1.3 Paid vacation per calendar year of not more than 3 weeks unless
otherwise authorized by the Board of Directors at any time or times
selected by Executive taking into account the convenience of the
Company. Executive shall give the Board of Directors of the Company
at least 14 calendar days prior notice of selected vacation times
of one week or more. Unused vacation time will not be cumulative
from year to year unless approved by the Board of Directors.
6.1.4 5 days paid sick leave annually;
6.1.5 A holiday on the following days with full pay: New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day,
Christmas Day, the Executive's birthday, one floating holiday and
such other holidays or personal days as the Company shall declare;
VII. TERMINATION
7.1 Executive's employment by the Company may be terminated by the Company at
any time upon:
7.1.1 the death or disability of Executive (as defined below);
7.1.2 the termination of this Agreement by the Company for justifiable
cause (as defined below); or
7.1.3 a decision by the Board of Directors of the Company, in the
exercise of their reasonable business judgment, to cease to conduct
operations.
7.2 In the event that this Agreement is terminated as a result of the
Executive's death or disability, the Company shall pay to Executive or
Executive's estate or beneficiary Executive's base salary as provided in
Section III for a period of three months following the
4
date of death or termination for disability as defined in 7.3.
7.3 The term "disability" shall mean the inability of Executive, due to
illness, accident, or any other physical or mental incapacity, to perform
Executive's duties is a normal manner for a period for a period of twelve
(12) consecutive weeks or for a total of twenty (20) weeks (whether or not
consecutive) in any twelve-month period during the term of this Agreement.
7.4 The term "justifiable cause," shall be defined as the commission by the
Executive of (a) fraud, (b) embezzlement, (c) a felony, or (d) an act
which (I) involves moral turpitude, (ii) action that brings the Company
into public disrespect or disgrace, (iii) action that injures the goodwill
of the Company, or (iv) causes material harm to its customer, supplier, or
employee relations or the operations or business prospects of the Company
(unless such act was expressly authorized or ratified by the Board). If
there is a dispute as to whether or not "justifiable cause" shall exist,
the parties agree to settle the dispute by arbitration in accordance with
the commercial arbitration rules of the American Arbitration Association
and the judgement upon award of the arbitrators may be entered in any
court having jurisdiction thereof.
7.5 If Executive terminates this Agreement, Executive shall be entitled to
receive Executive's base salary earned through the date of termination by
Executive and a pro rata amount of the performance bonus and fringe
benefits, including vacation through date of such termination. No
additional remuneration shall be payable by the Company to Executive and
the Company shall have no other obligations or liabilities to Executive,
except to the extent provided by law.
7.6 Notwithstanding any other provisions of this Agreement, the Company can
terminate Executive's employment at any time upon giving not less than
four weeks advance notice of such termination to Executive, and if the
Company so terminates Executive, the Company shall pay to Executive as
consideration for the Executive's covenants set forth below in Section
VIII:
7.6.1 Executive's base salary through the end of the then applicable
term of this Agreement pursuant to Section I; and
7.6.2 any bonus payable to Executive pursuant to Section IV.
VIII. NONDISCLOSURE, NONSOLICITATION AND AGREEMENT NOT TO COMPETE
8.1 Executive understands and agrees that Executive will acquire certain
confidential information regarding the Company, including, without
limitation, information concerning customers, accounts, employees;
suppliers, prices, business methods, competitive and marketing strategies,
and similar business matters, (the "Confidential Information"). Executive
further understands and agrees that use or disclosure of the Confidential
5
Information to compete, directly or indirectly, with the Company, will result in
irreparable harm and financial loss to the Company.
For a period of three (3) years after termination of this Agreement, Executive
shall not without prior written consent of the Company:
8.1.1 disclose directly or indirectly any Confidential Information to
any individual, firm, company, or other entitiy, or use any of
the Confidential Information to Executive's own-benefit;
8.1.2 contact or solicit, directly or indirectly, any of the Company's
customers, accounts, or vendors for purposes of diverting such
customers, accounts, or vendors to Executive's benefit or for the
benefit of any individual, entity, or person (other than the
Company) which is engaged or intends to engage in the same or
substantially the same businesses) in which the Company is then
engaged.
8.1.3 engage in any business in which the Company is then engaged, or
otherwise compete with the Company in any manner in the markets
in which the Company operates in the United States and Canada;
8.1.4 offer employment to any present employee of the Company or offer
any independent Contractor relationship to any contractor of the
Company.
IX. REPRESENTATION
9.1 Executive represents and warrants that Executive is free to enter into
this Agreement and that Executive is not a party to or otherwise bound by
any other contracts preventing full performance of Executive's duties
hereunder.
X. INDEMNIFICATION
10.1 The Company agrees to indemnify Executive to the maximum extent permitted
by the corporate laws of the State of Ohio including all amendments
thereto, if such are applicable; subject, however, to the limitations of
other applicable laws, if any.
XI. ENTIRE AGREEMENT/BINDING EFFECT
11.1 This Agreement contains the entire agreement of the parties and supersedes
all prior understandings and agreements between the parties with respect to
the subject matter hereof. This Agreement shall be binding upon the legal
representatives, heirs, distributees, successors and assigns of the parties
and may not be changed orally but only by a writing signed by the parties.
It is agreed that a waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any
subsequent breach by that same party. This Agreement shall be governed by
the laws of the State of Ohio.
6
IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to
be executed the day and year first above written.
EXECUTIVE: DIRECT Rx, INC.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------- -------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
