EMPLOYMENT AND NON-COMPETITION AGREEMENT
Lynn L. Shallcross
This EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement"), dated
as of January 30, 1995, is between Newrxco, Inc., a Delaware corporation (the
"Employer"), and Lynn L. Shallcross (the "Employee").
WHEREAS, the Employer intends to purchase all of the stock (the
"Stock") of Community Distributors, Inc., a Delaware corporation (the
"Company"), pursuant to a Stock Purchase Agreement, dated as of August 26, 1994
(the "Stock Purchase Agreement"), among the Employer, Jules Siegel, Arlene
Siegel and Martin Daffner;
WHEREAS, the Employee is currently employed as an executive officer of
the Company and the Employer desires that the Employee continue to work as an
executive officer of the Company;
WHEREAS, immediately after the purchase of the Stock, the Employer will
merge with and into the Company with the Company as the surviving corporation,
and after such merger the term "Employer" shall be deemed to mean and refer to
the Company; and
WHEREAS, in connection with the foregoing, the Employer wishes to
employ the Employee as an executive officer of the Employer, and the Employee
wishes to work as an executive officer of the Employer, on the terms set forth
below.
NOW, THEREFORE, it is hereby agreed as follows:
ss.1. EMPLOYMENT. The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and subject to the conditions
hereinafter set forth.
ss.2. DUTIES. The Employee shall be employed as the President of the
Cost Cutters division of the Employer. In such capacity, the Employee shall have
such executive responsibilities and duties as are assigned by the Employer's
Board of Directors (the "Board") or the President of the Employer. The Employee
agrees to devote his full time and best efforts to the performance of his duties
to the Employer.
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ss.3. TERM. The initial term of employment of the Employee hereunder
shall commence on the closing date of the acquisition under the Stock Purchase
Agreement (the "Commencement Date") and shall continue until the third
anniversary of the Commencement Date (the "Initial Term"), unless earlier
terminated pursuant to ss.6, and shall be renewed automatically for additional
one (1) year terms thereafter unless terminated by either party by written
notice to the other given at least ninety (90) days prior to the expiration of
the then current term.
ss.4. COMPENSATION AND BENEFITS. Until the termination of the
Employee's employment hereunder, in consideration for the services of the
Employee hereunder, the Employer shall compensate the Employee as follows:
(a) Base Salary. The Employer shall pay the Employee, in accordance
with the Employer's then current payroll practices, a base salary (the "Base
Salary"). The Base Salary will be paid at an annual rate of $157,500. Such Base
Salary may be increased from time to time at the sole discretion of the Board
and is in addition to the other benefits set forth herein.
(b) Vacation. The Employee shall be entitled to three (3) weeks
vacation each calendar year. Any vacation shall be taken at the reasonable and
mutual convenience of the Employer and the Employee. Accrued vacation not taken
in any calendar year will not be carried forward or used in any subsequent
calendar year.
(c) Insurance; Other Benefits. Accident, disability, life and health
insurance for the Employee shall be provided by the Employer under group
accident, life and health insurance plans maintained by the Employer for its
full-time, salaried employees as such employment benefits may be modified from
time to time by the Board for all full-time, salaried employees. In addition,
the Employer shall either continue the Employee's current individual disability
insurance policy or arrange for coverage under an alternative disability
insurance policy which is no less favorable. The amount and extent of such
coverage shall be subject to the discretion of the Board; provided, that the
amount and extent of such coverage shall be no less favorable than such coverage
provided by the Employer to the Employee immediately prior to the date hereof.
ss.5. EXPENSES. The Employer shall reimburse the Employee for all
reasonable expenses of types authorized by the Employer and incurred by the
Employee in the performance of his duties hereunder. The Employee shall comply
with such budget limitations and approval and reporting
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requirements with respect to expenses as the Employer may establish from time to
time.
ss.6. TERMINATION. The Employee's employment hereunder shall commence
on the Commencement Date and continue until the expiration of the Initial Term,
and any extension of such term pursuant to ss.3, except that the employment of
the Employee hereunder shall earlier terminate:
(a) Death or Disability. Upon the death of the Employee during the term
of his employment hereunder or, at the option of the Employer, in the event of
the Employee's disability, upon thirty (30) days' written notice from the
Employer. The Employee shall be deemed disabled if an independent medical doctor
(selected by the Employer's health or disability insurer) certifies that the
Employee has for 180 days, consecutive or non-consecutive, in any twelve (12)
month period been disabled in a manner which seriously interferes with his
ability to perform his responsibilities under this Agreement. Any refusal by the
Employee to submit to a medical examination for the purpose of certifying
disability under this ss.6(a) shall be deemed to constitute conclusive evidence
of the Employee's disability.
(b) For Cause. For "Cause" immediately upon written notice by the
Employer to the Employee. For purposes of this Agreement, a termination shall be
for Cause if the Board shall determine that any one or more of the following has
occurred:
(i) the Employee shall have committed an act of fraud,
embezzlement, misappropriation or breach of fiduciary duty against the
Employer, including, but not limited to, the offer, payment,
solicitation or acceptance of any unlawful bribe or kickback with
respect to the Employer's business; or
(ii) the Employee shall have been convicted by a court of
competent jurisdiction of, or pleaded guilty or nolo contendere to,
any felony; or
(iii) the Employee shall have committed a breach of any of
the covenants, terms and provisions of ss.ss.8 or 9 hereof; or
(iv) the Employee shall have breached any one or more of the
provisions of this Agreement (excluding ss.ss.8 and 9 hereof) or any
one or more of the provisions of the Stockholder Agreement of even date
herewith among CDI Group, Inc. and its stockholders, and such breach
shall have continued for a period of ten (10) days after written notice
to the Employee specifying such breach in reasonable detail; or
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(v) the Employee shall have refused, after explicit written
notice, to obey any lawful resolution of or direction by the Board
which is consistent with his duties hereunder.
(c) Resignation or Termination Without Cause. Upon ninety (90) days'
written notice by either the Employee or the Employer to the other party hereto.
(d) Rights and Remedies on Termination. (i) If the Employee's
employment hereunder is terminated pursuant to ss.6(a) or by the Employer
pursuant to ss.6(c), then the Employee (or his estate, as applicable) shall be
entitled to receive payment, in accordance with the Employer's then current
payroll practices, of the Employee's Base Salary in effect at the time of such
termination for one year following such termination; provided, however, that in
the case of a termination by the Employer pursuant to ss.6(c), the Employee
shall be required to mitigate his damages by accepting other suitable employment
during such period and the Employer shall be entitled to reduce the amount
payable by the Employer under this ss.6(d)(i) by an amount equal to the income
received by the Employee pursuant to such new employment.
(ii) Except as otherwise set forth in this ss.6(d), the Employee shall
not be entitled to any severance or other compensation after termination other
than payment of any portion of his Base Salary through the date of his
termination and any expense reimbursements under ss.5 hereof for expenses
incurred in the performance of his duties prior to termination.
ss.7. INVENTIONS; ASSIGNMENT. All rights to discoveries, inventions,
improvements and innovations (including all data and records pertaining thereto)
related to the Employer's business, whether or not patentable, copyrightable,
registrable as a trademark, or reduced to writing, that the Employee may
discover, invent or originate during the term of his employment hereunder, and
for a period of twelve (12) months thereafter, either alone or with others and
whether or not during working hours or by the use of the facilities of the
Employer ("Inventions"), shall be the exclusive property of the Employer. The
Employee shall promptly disclose all Inventions to the Employer, shall execute
at the request of the Employer any assignments or other documents the Employer
may deem necessary to protect or perfect its rights therein, and shall assist
the Employer, at the Employer's expense, in obtaining, defending and enforcing
the Employer's rights therein. The Employee hereby appoints the Employer as his
attorney-in-fact to execute on his behalf any assignments or other documents
deemed necessary by the Employer to protect or perfect its rights to any
Inventions.
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ss.8. CONFIDENTIAL INFORMATION. The Employee recognizes and
acknowledges that certain assets of the Employer, including without limitation
information regarding customers, pricing policies, methods of operation,
proprietary computer programs, sales, products, profits, costs, markets, key
personnel, formulae, product applications, technical processes, and trade
secrets (hereinafter called "Confidential Information") are valuable, special,
and unique assets of the Employer and its affiliates. The Employee shall not,
during or after his term of employment, disclose any or any part of the
Confidential Information to any person, firm, corporation, association, or any
other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to his employment hereunder; provided, that
Confidential Information shall in no event include (a) Confidential Information
which was generally available to the public at the time of disclosure by the
Employer or (b) Confidential Information which becomes publicly available other
than as a consequence of the breach by the Employee of his confidentiality
obligations hereunder. In the event of the termination of his employment,
whether voluntary or involuntary and whether by the Employer or the Employee,
the Employee shall deliver to the Employer all documents and data pertaining to
the Confidential Information and shall not take with him any documents or data
of any kind or any reproductions (in whole or in part) or extracts of any items
relating to the Confidential Information.
ss.9. NON-COMPETITION. During the term of the Employee's employment
hereunder and until one year after termination of the Employee's employment
hereunder, the Employee will not (a) anywhere within New Jersey, New York or
Pennsylvania or anywhere within 100 miles of any store operated by the Employer
at the time of the Employee's termination, engage, directly or indirectly, alone
or as a shareholder (other than as a holder of less than five percent (5%) of
the common stock of any publicly traded corporation), partner, officer,
director, employee or consultant of any other business organization that is
engaged or becomes engaged in a business involving or relating to the operation
of retail drug stores or in any other business activity that the Employer is
conducting at the time of the Employee's termination or has notified the
Employee that it proposes to conduct and for which the Employer has, prior to
the time of such termination, expended substantial resources (the "Designated
Industry"), (b) divert to any competitor of the Employer any customer of the
Employer, or (c) solicit or encourage any officer, key employee or consultant of
the Employer to leave its employ for alternative employment or hire or offer
employment to, any person to whom the Employer has offered employment. The
Employee will continue to be bound by the provisions of this ss.9 until their
expiration and shall not be entitled to any compensation from the Employer with
respect thereto except as provided in ss.6(d) hereof. If at any time the
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provisions of this ss.9 shall be determined to be invalid or unenforceable, by
reason of being vague or unreasonable as to area, duration or scope of activity,
this ss.9 shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter; and the Employee agrees that this ss.9 as so amended shall be
valid and binding as though any invalid or unenforceable provision had not been
included herein.
ss.10. GENERAL.
(a) Notices. All notices and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally or if mailed by certified mail, return receipt
requested, postage prepaid or sent by written telecommunication or telecopy, to
the relevant address set forth below, or to such other address as the recipient
of such notice or communication shall have specified to the other party hereto
in accordance with this ss.10(a):
If to the Employer, to:
Community Distributors, Inc.
251 Industrial Parkway
Somerville, New Jersey 08876
Attention: Mr. Frank Marfino, President
With a copy to:
Robert M. Wolf, Esq.
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110-1726
If to the Employee, to:
Mr. Lynn L. Shallcross
c/o Community Distributors, Inc.
251 Industrial Parkway
Somerville, New Jersey 08876
(b) Equitable Remedies. Each of the parties hereto acknowledges and
agrees that upon any breach by the Employee of his obligations under ss.ss.7, 8
and 9 hereof, the Employer will have no adequate remedy at law, and accordingly
will be entitled to specific performance and other appropriate injunctive and
equitable relief.
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(c) Severability. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.
(d) Waivers. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.
(e) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) Assigns. This Agreement shall be binding upon and inure to the
benefit of the heirs and successors of each of the parties hereto, including any
entity which acquires substantially all of the assets or stock of the Employer.
(g) Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the
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subject matter hereof and shall not be amended except by a written instrument
hereafter signed by each of the parties hereto.
(h) Governing Law. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of New Jersey.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties hereto have caused this Agreement to be duly executed as of the date and
year first above written.
NEWRXCO, INC.
By: /s/ Mark H. DeBlois
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Title: President
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/s/ Lynn L. Shallcross
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Lynn L. Shallcross