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Exhibit 10.1
CONSULTING AGREEMENT
THIS AGREEMENT, made, entered into, and effective this 10/th/ day of
August, 2000 (the "Effective Date"), by and between STEPHEN WATTERS, an
individual resident of Florida (hereinafter referred to as "Consultant"), and
DRUGMAX.COM INC., a Nevada corporation with its principal place of business in
Largo, Florida (hereinafter referred to as "Corporation").
W I T N E S S E T H:
WHEREAS, Consultant has been a valuable employee of the Corporation and the
Corporation realizes that Consultant has demonstrated a keen understanding of
the Corporation's operations such that it would be desirable to retain
Consultant's services under a consulting agreement;
WHEREAS, Consultant desires to provide such consulting services for the
Corporation as an independent contractor, with the understanding that he shall
not be required to devote his full time to the business of the Corporation and
shall be free to pursue other personal and business interests; and
WHEREAS, Consultant and the Corporation further agree that the employment
agreement made as of April 15, 1999 by and between this Corporation, as the
Employer, and the Consultant, as the Executive (the "Employment Agreement")
shall terminate effective as of the Effective Date of this Agreement, provided
however, that all accrued payments under the Employment Agreement shall remain
an outstanding obligation of the Corporation.
NOW, THEREFORE, in consideration of the premises, the mutual covenants of
the parties herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties
hereto, it is agreed as follows:
1. CONSULTING ARRANGEMENT. The Corporation hereby contracts for the services
of Consultant and Consultant agrees to perform such duties and responsibilities
and to render advice and consulting as may be requested by the Corporation from
time to time during the term of this consulting arrangement in connection with
the Corporation's business throughout the United States and world wide
("Consulting Arrangement"). Said consulting services shall include, but not be
limited to, [ . . . customer development and sales, warehouse operations,
inventory management, and product selection . . . ] Consultant shall use his
best efforts to keep the Corporation informed of all corporate business
opportunities which shall come to his attention and appear beneficial to the
Corporation's business so that the Corporation can obtain the maximum benefits
from Consultant's knowledge, experience, and personal contacts.
2. RELATIONSHIP BETWEEN PARTIES. During the term of the Consulting
Arrangement, Consultant shall be deemed to be an independent contractor. He
shall be free to devote his time, energy and skill to any such person, firm or
company as he deems advisable except to the extent he is obligated to devote his
time, energy and skill to the Corporation pursuant to the terms of this
Agreement. Consultant shall not be considered as having an employee status
vis-a-vis the Corporation, or by virtue of the Consulting Arrangement being
entitled to participate in any plans, arrangements or distributions by the
Corporation pertaining to or in connection with any pension, stock, bonus,
profit sharing, welfare benefits, or similar benefits for the regular
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employees of the Corporation. The Corporation shall not withhold any taxes in
connection with the compensation due Consultant hereunder, and Consultant will
be responsible for the payment of any such taxes and hereby agrees to indemnify
the Corporation against nonpayment thereof.
3. COMPENSATION FOR THE CONSULTING ARRANGEMENT. As part of the consideration
for the services to be rendered under the Consulting Arrangement by Consultant
and as compensation for the income he could have otherwise earned if he had not
agreed to keep himself available to the Corporation hereunder, the Corporation
shall pay Consultant compensation at the rate of Eight Thousand Three Hundred
Thirty-three Dollars and Thirty-three cents ($8,333.33) per month commencing
August 10, 2000, and continuing each month thereafter for a total of thirty-six
months. All compensation due to Consultant under this Section 3 shall accrue
until such time as the Corporation has sufficient funds therefore.
4. TERM OF CONSULTING ARRANGEMENT. The Consulting Arrangement shall begin
effective as of the Effective Date of this Agreement and shall continue for a
period of thirty-six (36) months, until August 10, 2003 (the "Consulting
Period").
5. CONFIDENTIALITY COVENANTS.
5.1 Acknowledgments by the Consultant. The Consultant acknowledges that
(a) during the Consulting Period and as a part of his Consulting Arrangement,
the Consultant will be afforded access to Confidential Information (as defined
below); (b) public disclosure of such Confidential Information could have an
adverse effect on the Corporation and its business; (c) because the Consultant
possesses substantial technical expertise and skill with respect to the
Corporation's business, the Corporation desires to obtain exclusive ownership of
each Consultant Invention (as defined below), and the Corporation will be at a
substantial competitive disadvantage if it fails to acquire exclusive ownership
of each Consultant Invention; (d) the provisions of this Section 5 are
reasonable and necessary to prevent the improper use or disclosure of
Confidential Information and to provide the Corporation with exclusive ownership
of all Consultant Inventions.
5.2 Agreements of the Consultant. In consideration of the compensation and
benefits to be paid or provided to the Consultant by the Corporation under this
Agreement, the Consultant covenants as follows:
(a) Confidentiality.
(i) During and following the Consulting Period, the Consultant
will hold in confidence the Confidential Information and will not disclose it to
any person except with the specific prior written consent of the Corporation or
except as otherwise expressly permitted by the terms of this Agreement.
(ii) Any trade secrets of the Corporation will be entitled to
all of the protections and benefits under Chapter 688, Florida Statutes and any
other applicable law. If any information that the Corporation deems to be a
trade secret is found by a court of competent jurisdiction not to be a trade
secret for purposes of this Agreement, such information will, nevertheless, be
considered Confidential Information for purposes of this Agreement. The
Consultant hereby waives any requirement that the Corporation submit proof of
the economic value of any trade secret or post a bond or other security.
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(iii) None of the foregoing obligations and restrictions applies
to any part of the Confidential Information that the Consultant demonstrates was
or became generally available to the public other than as a result of a
disclosure by the Consultant.
(iv) The Consultant will not remove from the Corporation's
premises (except to the extent such removal is for purposes of the performance
of the Consultant's duties at home or while traveling, or except as otherwise
specifically authorized by the Corporation) any document, record, notebook,
plan, model, component, device, or computer software or code, whether embodied
in a disk or in any other form (collectively, the "Proprietary Items"). The
Consultant recognizes that, as between the Corporation and the Consultant, all
of the Proprietary Items, whether or not developed by the Consultant, are the
exclusive property of the Corporation. Upon termination of this Agreement by
either party, or upon the request of the Corporation during the Consulting
Period, the Consultant will return to the Corporation all of the Proprietary
Items in the Consultant's possession or subject to the Consultant's control, and
the Consultant shall not retain any copies, abstracts, sketches, or other
physical embodiment of any of the Proprietary Items.
(b) Consultant Inventions. Each Consultant Invention will belong
exclusively to the Corporation. The Consultant acknowledges that all of the
Consultant's writing, works of authorship, and other Consultant Inventions are
works made for hire and the property of the Corporation, including any
copyrights, patents, or other intellectual property rights pertaining thereto.
If it is determined that any such works are not works made for hire, the
Consultant hereby assigns to the Corporation all of the Consultant's right,
title, and interest, including all rights of copyright, patent, and other
intellectual property rights, to or in such Consultant Inventions. The
Consultant covenants that he will promptly:
(i) disclose to the Corporation in writing any Consultant
Invention;
(ii) assign to the Corporation or to a party designated by the
Corporation, at the Corporation's request and without additional compensation,
all of the Consultant's right to the Consultant Invention for the United States
and all foreign jurisdictions;
(iii) execute and deliver to the Corporation such applications,
assignments, and other documents as the Corporation may request in order to
apply for and obtain patents or other registrations with respect to any
Consultant Invention in the United States and any foreign jurisdictions;
(iv) sign all other papers necessary to carry out the above
obligations; and
(v) give testimony and render any other assistance in support
of the Corporation's rights to any Consultant Invention.
5.3 Disputes or Controversies. The Consultant 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
Corporation, the Consultant, and their respective attorneys and experts, who
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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.
5.4 Definitions.
(a) For the purposes of this Section 5, "Confidential Information"
shall mean any and all:
(i) trade secrets concerning the business and affairs of the
Corporation, product specifications, data, know-how, formulae, compositions,
processes, designs, sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current, and planned research and development, current and
planned manufacturing or distribution methods and processes, customer lists,
current and anticipated customer requirements, price lists, 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 Chapter 688, Florida Statutes;
(ii) information concerning the business and affairs of the
Corporation (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials, however documented; and
(iii) notes, analysis, compilations, studies, summaries, and
other material prepared by or for the Corporation containing or based, in whole
or in part, on any information included in the foregoing.
(b) For the purposes of this Section 5, "Consultant Invention" shall
mean any idea, invention, technique, modification, process, or improvement
(whether patentable or not), any industrial design (whether registerable or
not), any mask work, however fixed or encoded, that is suitable to be fixed,
embedded or programmed in a semiconductor product (whether recordable or not),
and any work of authorship (whether or not copyright protection may be obtained
for it) created, conceived, or developed by the Consultant, either solely or in
conjunction with others, during the Consulting Period, or a period that includes
a portion of the Consulting Period, that relates in any way to, or is useful in
any manner in, the business then being conducted or proposed to be conducted by
the Corporation, and any such item created by the Consultant, either solely or
in conjunction with others, following termination of the Consultant's Consulting
Arrangement with the Corporation, that is based upon or uses Confidential
Information.
6. NON-COMPETITION AND NON-INTERFERENCE
6.1 Acknowledgments by the Consultant. The Consultant acknowledges that:
(a) the services to be performed by him under this Agreement are of a special,
unique, unusual, extraordinary, and intellectual character; (b) the
Corporation's business is national in scope and its products are marketed
throughout the United States and world wide; (c) the Corporation competes with
other businesses that are or could be located
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in any part of the United States and world wide; (d) the provisions of this
Section 6 are reasonable and necessary to protect the Corporation's business.
6.2 Covenants of the Consultant. In consideration of the acknowledgments
by the Consultant, and in consideration of the compensation and benefits to be
paid or provided to the Consultant by the Corporation, the Consultant covenants
that he may, directly or indirectly:
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(a) during the Consulting Period, except in the course of his
Consulting Arrangement hereunder, and during the Post-Consulting Period (as
defined below), engage or invest in, own, manage, operate, finance, control, or
participate in the ownership, management, operation, financing, or control of,
be employed by, associated with, or in any manner connected with, lend the
Consultant's name or any similar name to, lend Consultant's credit to or render
services or advice to, any business whose products or activities compete in
whole or in part with the products or activities of the Corporation anywhere
within the United States; provided, however, that the Consultant may purchase or
otherwise acquire up to (but not more than) one percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national or
regional securities exchange or have been registered under Section 12(g) of the
Securities Exchange Act of 1934;
(b) whether for the Consultant's own account or for the account of
any other person, at any time during the Consulting Period and the Post-
Consulting Period, solicit business of the same or similar type being carried on
by the Corporation, from any person known by the Consultant to be a customer of
the Corporation, whether or not the Consultant had personal contact with such
person during and by reason of the Consultant's Consulting Arrangement with the
Corporation;
(c) whether for the Consultant's own account or the account of any
other person (i) at any time during the Consulting Period and the Post-
Consulting Period, solicit, employ, or otherwise engage as an employee,
independent contractor, or otherwise, any person who is or was an employee of
the Corporation at any time during the Consulting Period or in any manner induce
or attempt to induce any employee of the Corporation to terminate his Consulting
Arrangement with the Corporation; or (ii) at any time during the Consulting
Period and for three years thereafter, interfere with the Corporation's
relationship with any person, including any person who at any time during the
Consulting Period was an employee, contractor, supplier, or customer of the
Corporation; or
(d) at any time during or after the Consulting Period, disparage the
Corporation or any of its shareholders, directors, officers, employees, or
agents.
For purposes of this Section 6.2, the term "Post-Consulting Period"
means the three year period beginning on the date of termination of the
Consultant's Consulting Arrangement with the Corporation.
If any covenant in this Section 6.2 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time, and geographic area, and such lesser
scope, time, or geographic area, or all of them, as a court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Consultant.
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The period of time applicable to any covenant in this Section 6.2 will
be extended by the duration of any violation by the Consultant of such covenant.
7. 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, or (c) when received by the
addressee, if sent by a nation-ally recognized overnight delivery service
(receipt 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):
8. OPTIONS. All options (50,000) previously granted to Mr. Watters will become
immediately vested per Board approval given on August 10, 2000.
9. OFFICER POSITIONS. Mr. Watters resigns all officer and Board Positions of
Drugmax.com, Inc. subsidiaries which include Vetmall.com, Inc. and Desktop Media
Inc.
If to the Corporation: Drugmax.com Corp.
12505 Starkey Rd., Ste. A
Largo, FL 33773
Attention: William LaGamba, CEO
Facsimile No.: (727) 531-1280
With a copy to: Schifino & Fleischer, P.A.
201 North Franklin Street
Suite 2700
Tampa, FL 33602
Attention: Lina Angelici, Esq.
Facsimile No.: (813) 223-3070
If to the Executive: Stephen Watters
12505 Starkey Rd., Ste. A
Largo, FL 33773
Facsimile No.: (727) 531-1280
10. BINDING EFFECT. This Agreement shall extend to, shall inure to the benefit
of and shall be binding upon all the parties hereto and upon all of their
respective heirs, successors and representatives.
11. ENTIRE AGREEMENT. This Agreement, including the agreements incorporated by
reference, contains the entire Agreement among the parties hereto with respect
to the matters contemplated hereby and supersedes all prior agreements and
undertakings between the parties with respect to such matters. This Agreement
may not be amended, modified or terminated in whole or in part, except in
writing, executed by each of the parties hereto.
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12. INDEMNIFICATION. Consultant hereby agrees to hold harmless and indemnify
Corporation from and against any and all loss, damage, expense, and cost
(including reasonable attorneys' fees incurred in connection with the same)
incurred by Corporation as a result of Consultant's breach of any covenant or
agreement made herein.
13. SPECIFIC PERFORMANCE. The Consultant acknowledges that his obligations
hereunder are unique, and that it would be extremely impracticable to measure
the resulting damages if he should default in his obligations under this
Agreement. Accordingly, in the event of the failure by Consultant to perform his
obligations hereunder, which failure constitutes a breach hereof by him, the
Corporation may, in addition to any other available rights or remedies, sue in
equity for specific performance and, in connection with any such suit, the
Consultant expressly waives the defense therein that the Corporation has an
adequate remedy at law.
14. SEVERABILITY. Should any part of any provision of this Agreement be
declared invalid by a court of competent jurisdiction, such decision or
determination shall not affect the validity of any remaining portion of such
provision or any other provision and the remainder of the Agreement shall remain
in full force and effect and shall be construed in all respects as if such
invalid or unenforceable provision or portion thereof were not contained herein.
In the event of a declaration of invalidity, the provision or portion thereof
declared invalid shall not necessarily be invalidated in its entirety, but shall
be observed and performed by the parties to the Agreement to the extent such
provision is valid and enforceable.
15. SECTION HEADINGS. The section headings contained herein are for convenience
of reference only and shall not be considered any part of the terms
of this Agreement.
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16. CHOICE OF LAW. This Agreement shall be interpreted and performed in
accordance with the laws of the State of Florida, and the parties agree,
notwithstanding the principles of conflicts of law, that the internal laws of
the State of Florida shall govern and control the validity, interpretation,
performance, and enforcement of this Agreement.
IN WITNESS WHEREOF, Consultant has hereunto put his hand, and the
Corporation has caused this instrument to be executed in its corporate name by
its duly authorized officer, all as of the day and year first above written.
CONSULTANT:
/s/ Stephen M. Watters
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Stephen M. Watters
CORPORATION:
DRUGMAX.COM INC.
By: /s/ William LaGamba
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William LaGamba, CEO
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