AGREEMENT dated this 4th day of June, 1998, between XXX XXXX ("Xxxx"),
residing at 00 Xxxxxx Xxxx, Xxxx Xxxxxxxxx, Xxx Xxxxxx 00000, and DG
LIQUIDATION, INC. ("DGL"), a New Jersey corporation with offices at 0
Xxxxxxxxxx Xxx Xxxx, Xxxxxxxx X, Xxxxxxxxx, Xxx Xxxxxx 00000.
WHEREAS Xxxx is currently employed by Xxxxxx Distributors, Inc. and/or
Xxxxxx Health Services, Inc. (herein referred to collectively or singly as
"Xxxxxx") in its Drug Guild division; and
WHEREAS with the consent of Xxxxxx, Xxxx currently provides services to DGL
pursuant to a Bridging Agreement between Xxxxxx and DGL; and
WHEREAS in the event Reba's employment by Xxxxxx terminates, DGL and Xxxx
wish to agree on terms and conditions for Xxxx to continue to provide services
to DGL subsequent to termination of his current employment at Xxxxxx; and
WHEREAS from October, 1992 through and including May, 1996, there were
substantial inventory defalcations ("Defalcations") from Drug Guild
Distributors, Inc. (DGL's predecessor) in amounts in excess of $14,900,000; and
WHEREAS Xxxx is reluctant to continue future consulting for DGL unless DGL
will provide him with a covenant not to xxx him with regard to such
Defalcations; and
WHEREAS Xxxx represents that he had no participation in the Defalcations;
NOW, THEREFORE, it is agreed by the parties as follows:
1. Xxxx shall be retained by DGL as a consultant upon termination of
his employment at Xxxxxx for a minimum of three (3) months and for so long
thereafter as Xxxx remains available and DGL elects to continue his retention.
DGL agrees to pay Xxxx for consulting services at the rate of $11,400 per month
plus reasonable and customary expenses as long as Xxxx remains available as a
full-time consultant and until such time after the initial three (3) months as
Xxxx gives DGL thirty (30) days notice or DGL gives Xxxx thirty (30) days notice
of the termination of the consulting arrangement. Xxxx may terminate this
Agreement after three (3) months from the commencement of his consulting
arrangement upon thirty (30) days notice without losing his severance. DGL
shall pay Xxxx the sum of $34,200 as severance upon termination of this
consulting agreement unless such termination is for cause. Cause shall be
defined as dishonesty, fraud, willful misconduct, conviction of a crime or
willful failure to perform his duties hereunder.
2. In consideration of Reba's services on behalf of DGL pursuant to the
Bridging Agreement since July 1, 1997 (when he became a Xxxxxx employee) and
providing he is not terminated by DGL for cause DGL hereby indemnifies and holds
Xxxx harmless for any claims, actions, suits or damages that may be asserted by
Xxxxxx including reasonable attorneys fees, as a result of Reba's assistance to
DGL in reviewing, confirming or contesting the figures on the Audited Balance
Sheet.
3. In consideration of Reba's continued consulting services to be
rendered to DGL and providing that Xxxx: (a) does not admit participation in
the Defalcations; (b) does not plead guilty to any crime related to or involved
with the Defalcations referred to above; (c) is not convicted of a crime related
to the Defalcations; (d) is not terminated for cause by DGL; and (e) does not
materially breach this Agreement, DGL will not institute, bring or commence any
action at law or in equity or any civil proceeding in any court of the United
States or any state thereof, for damages that it sustained as a result of the
Defalcations.
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4. It is also understood that this "covenant not to xxx" is contingent
upon Xxxx during the period of this Agreement and for a period of 5 years from
the termination of this Agreement, assisting DGL either to assert claims on
behalf of DGL or to defend claims brought against DGL, its officers, directors,
employees, counsel and consultants ("Claims"), whether asserted or threatened,
to the extent (i) that he has knowledge of the facts or issues and (ii) that his
assistance is reasonably necessary to the defense or assertion of these claims.
Such assistance with regard to the Claims shall include but not be limited to
(a) cooperating with the attorneys, experts and other professionals retained by
DGL, (b) retrieving schedules and documents, (c) testifying truthfully at
examinations before trial and at trial on behalf of DGL, if requested, and (d)
assisting in all other reasonable ways in the processing of the Claims but
excluding the preparation of schedules and documents. In the event Reba's
assistance is requested subsequent to his termination as a consultant, DGL will
reimburse Xxxx for all reasonable expenses incurred by him and shall pay Xxxx a
consulting fee of $1,000 per day. Any request for Reba's assistance shall be
reasonable considering the circumstances of the action and/or claim and the
obligations of Xxxx, in this then current occupation. In connection with DGL's
litigation against Anchin Block & Anchin and third party claims in connection
therewith Xxxx shall serve only as a fact witness. Xxxx acknowledges that DGL
has no control of actions taken by Anchin Block and Anchin or their counsel in
connection with this litigation.
5. It is understood and agreed that this Agreement is not to be
construed as a release of Xxxx by DGL and is to be construed only as a covenant
not to xxx.
6. In the event this Agreement is in effect on June 11-18, 1998 and
July 30-August 3, 1998, it is understood Xxxx will be on vacation; however, he
shall continue to be paid the full monthly rate for his consulting services.
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7. A modification or waiver of any of the provisions of this Agreement,
at any time hereafter, shall be effective only if made in writing and executed
with the same formality as this Agreement. No such modification shall be
effective unless it specifically sets forth that the parties are thereby
modifying the terms, conditions and provisions of this Agreement. The failure
of either party to insist upon a strict performance of any of the provisions of
this Agreement shall not be construed as a waiver of any subsequent default of
the same or similar nature.
8. The provisions of this Agreement shall be binding upon, and inure to
the benefit of, the respective assigns and successors in interest of DGL and the
heirs, next of kin, executors or administrators of Xxxx.
9. Each party shall at any time make, execute and deliver any written
instrument as the other of the Parties shall require for the purpose of giving
full force and effect to this Agreement and the covenants and conditions herein
contained.
10. This Agreement shall be construed and governed in accordance with
the laws of the State of New Jersey.
11. The Parties hereto have incorporated in this Agreement their entire
contract. No oral statement or prior written matter shall have any force or
effect, and each represents that he or she believes this Agreement to be fair
and reasonable when made. Each Party signs this Agreement freely and
voluntarily.
IN WITNESS WHEREOF, the said parties have hereunto set their hands and
seals the day and year first above written.
/s/ Xxx Xxxx
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Xxx Xxxx
DG LIQUIDATION, INC.
By: /s/ Xxxxxx Xxxxxxxxxxxx
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Xxxxxx Xxxxxxxxxxxx, President
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