EXHIBIT 10.61
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of June 4, 2001 by and between NATIONAL
MEDICAL HEALTH CARD SYSTEMS, INC., a New York corporation with an office and
place of business at 00 Xxxxxx Xxxx Xxxxx, Xxxx Xxxxxxxxxx, Xxx Xxxx 00000
(inclusive of subsidiaries, hereinafter shall be collectively referred to as the
"Company"), and XXXX XXXXXX, who resides at Two Xxxx Xxxx Xxxxx, Xxxxxx Xxxx, XX
00000 (the "Employee"). RECITALS:
A. The Company is engaged in providing comprehensive prescription benefit
management services to the general commercial market.
B. The Company wishes to assure itself of the services of the Employee for
the period provided in this Agreement, and the Employee is willing to serve in
the employ of the Company on a full-time basis, for said period, and upon the
other terms and conditions hereinafter provided.
C. NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
AGREEMENT:
1. TERM OF EMPLOYMENT.
1.1 The Company hereby employs the Employee, and the Employee hereby
accepts employment with the Company, for an initial term of one (1) year
commencing on the Commencement Date (as defined in Subsection 1.2 hereof) and
ending (subject to the provisions of Section 5 hereof) on the date immediately
preceding the first anniversary of the Commencement Date (the "Initial Term").
Thereafter, the employment of the Employee shall continue hereunder after the
Initial Term to commence on the first anniversary of the Commencement Date (such
period being hereinafter referred to as the "Extended Term"), unless the Company
or the Employee shall give thirty (30) days' written notice to the other of its
or his election to terminate the employment of the Employee at the end of the
Initial Term or at any time during the Extended Term as the case may be. The
period of the Company's employment of the Employee including the Extended Term,
if any, shall be hereinafter referred to as the "Employment Period".
1.2 As used in this Agreement, the term "Commencement Date" shall mean June
4, 2001.
2. DUTIES.
2.1 During the Employment Period, the Employee shall be employed by the
Company as its Chief Operating Officer. Employee shall report on a regular basis
directly to the Company's President and shall perform such duties, consistent
with his position, as are usually associated with such office, and the Employee
shall have such powers relating to the Company as shall from time to time be
assigned to him by the Board of Directors of the Company consistent with the
duties set forth herein.
2.2 During the Employment Period, the Employee shall devote his full
business time, attention and efforts to the business and interests of the
Company.
3. COMPENSATION.
3.1 As full compensation for his services and undertakings pursuant to this
Agreement, the Employee shall receive a salary at the rate of $150,000.00 per
year, subject to adjustment as hereafter provided (the "Base Salary"), payable
in twenty-six (26) equal installments or other more frequent installments in
accordance with the regular pay policies of the Company. Employee's Base Salary
shall be increased by an amount to be determined by the Board Directors of the
Company each year of the Extended Term, if any. In addition, the Employee shall
be entitled to participate in the bonus pool allocated for senior executives of
the Company.
3.2 During the Employment Period, the Employee shall also be entitled to
(a) four (4) weeks paid vacation annually and (b) participate in group medical
insurance and other benefits or programs of the Company hereafter established
and made available by the Company to its employees, the cost of which will be
borne by the Company. The Company agrees to waive, where applicable and
permissible pursuant to the terms of any such plan, any enrollment waiting
period in the Company's group medical insurance plans and retirement plans.
Further, during the Employment Period the Company shall maintain for the
Employee a pharmacists liability malpractice policy.
3.3 The Company shall deduct from the Employee's Base Salary, commission
payments, bonus or incentive compensation any federal, state or city withholding
taxes, social security contributions and any other amounts which may be required
to be deducted or withheld by the Company pursuant to any federal, state or city
laws, rules or regulations.
3.4 The Company shall reimburse the Employee, or cause him to be
reimbursed, for accountable expenses incurred by him in the performance of his
duties hereunder or in furtherance of the business and/or interest of the
Company.
3.5 The Company has provided the Employee with a motor vehicle of
Employee's choice; payment and maintenance expenses for such automobile will
continue to be made by the Company throughout the Employment Period.
4. STOCK OPTIONS.
4.1 Simultaneously upon the execution of this Agreement, the Employee will
be granted by the Company an option to purchase 20,000 shares of Common Stock of
the Company at an exercise price of $5.00 per share, such options to vest in
accordance with and otherwise be subject to, the terms of such Stock Option
Agreement.
5. TERMINATION.
5.1 If the Employee dies or becomes disabled during the Employment Period,
his right to receive the Base Salary, and all other rights under this Agreement,
shall terminate at the end of the month during which death occurs.
5.2 If, during the Employment Period, in the good faith opinion of the
President of the Company, the Employee shall become physically or mentally
incapacitated to perform his duties for the Company hereunder ("Disabled") for a
continuous period of three (3) months or for an aggregate of at least ninety
(90) days during any twelve (12) month period, the Company shall have the right,
by written notice, to terminate the Employee's employment hereunder as of a date
(not less than thirty (30) days after the date of the sending of such notice) to
be specified in such notice. The Employee agrees to submit himself for
appropriate medical examination to a physician of the Company's designation as
necessary for purposes of this Paragraph 5.2. Notwithstanding the definition of
disabled contained in the preceding sentence, in the event that the Employee is
receiving disability insurance benefits during any period prior to termination
of this Agreement as provided in this Section 5.2, the Employee's Base Salary
shall be reduced by an amount equal to such disability insurance benefits during
such period.
5.3 The Company, in addition to any other remedies available to it, either
at law or in equity, may terminate this Agreement without any further liability
or obligation to the Employee from and after the date of such termination, by
delivering to the Employee written notice specifying the date of such
termination, upon the occurrence of any of the following events:
(a) A material breach of this Agreement by the Employee which, if curable,
remains uncured for fifteen (15) days after Employee receives written notice
thereof;
(b) Employee's commission of any act in the performance of his duties
constituting common law fraud, a felony, or other gross malfeasance of duty;
(c) Any material misrepresentation by the Employee (i) relating to his
ability to enter into this Agreement, or (ii) during the Employment Period,
relating to the services to be performed by him hereunder; or
(d) Employee's engagement in misconduct which is materially injurious to
the Company or its subsidiaries.
5.4 In the event that the Company terminates this Agreement for a reason
other than those set forth in Section 5.3 hereof or should Employee terminate
the Agreement for "Good Reason" as hereinafter defined (but not in the event of
termination by Employee without Good Reason), the Company shall pay the Employee
an amount equal to the Employee's then current Base Salary, exclusive of any
bonuses and accountable expenses, for a period of three (3) months (the "Initial
Severance Payment"), and an additional amount (the "Additional Severance
Payment") equal to the Employee's then current Base Salary, exclusive of any
bonuses and accountable expenses, for an additional period not to exceed three
(3) months commencing on the three (3) month anniversary of the date of
termination of employment. However, such Additional Severance Payment shall
immediately be reduced by the amount of salary received by the Employee as a
result of Employee's obtaining employment with another employer during the six
(6) month period following the date of termination of employment (the "Severance
Period"). The Company shall assist Employee in procuring new employment and
Employee agrees to give consideration to any and all prospective employers
procured by the Company. The Initial Severance Payment (and the Additional
Severance Payment, if any) shall be paid to the Employee in accordance with the
regular payroll practices of the Company following his termination of
employment.
5.5 The Employee shall have "Good Reason" to terminate his employment
hereunder upon the occurrence of any of the following events:
(a) a material diminution during the Employment Period in the Employee's
duties, responsibilities, reporting relationship or title as set forth herein; (
b) a breach by the Company of the compensation and benefits provisions set
forth in Section 3.1 hereof; or
(c) a breach by the Company of any of the other material terms of this
Agreement
6. COVENANT NOT TO DISCLOSE.
6.1 The Employee covenants and agrees that he will not at any time during
or after the Employment Period reveal, divulge, or make known to any person,
firm, corporation, or other business organization (other than the Company or its
affiliates, if any), or use for his own account, any Confidential Information
(as such term is hereinafter defined) of any kind used by the Company during his
employment by the Company, and made known (whether or not with the knowledge and
permission of the Company, whether or not developed, devised, or otherwise
created in whole or in part by the efforts of the Employee, and whether or not a
matter of public knowledge unless as a result of authorized disclosure) to the
Employee by reason of his employment by the Company. The Employee further
covenants and agrees that he shall retain such knowledge and information which
he has acquired or shall acquire and develop during his employment respecting
such Confidential Information in trust for the sole benefit of the Company, its
successors and assigns and that upon termination of his employment with the
Company, he shall return to the Company, any and all notebooks, software, data
and other documents and materials, including all copies to in his possession or
under his control relating to any Confidential Information. Employee shall, if
asked to by the Company, sign a statement acknowledging, among other things,
that Employee has returned all such Confidential Information. For purposes
hereof, the term "Confidential Information" shall mean all information given to
the Employee, directly or indirectly, by the Company and all other information
relating to the Company otherwise acquired by the Employee during the course of
his employment with the Company (whether on or prior to the date hereof or
hereafter), other than information which (i) was in the public domain at the
time furnished to, or acquired by, the Employee, or (ii) thereafter enters the
public domain other than through disclosure, directly or indirectly, by the
Employee or others in violation of an agreement of confidentiality or
nondisclosure.
7. COVENANT NOT TO COMPETE; NON-INTERFERENCE.
7.1 The Employee covenants and agrees that, during the Employment Period
hereunder and should the Company terminate Employee's employment hereunder
pursuant to Sections 5.3(a) or (b), or should Employee voluntarily terminate his
employment hereunder for other than Good Reason, for a period of eighteen (18)
months after the later of (a) the expiration or termination of this Agreement or
(b) the expiration or termination of the Severance Period, Employee will not,
without the prior written consent of the Company, directly or indirectly, and
whether as principal or as agent, officer, director, employee, consultant, or
otherwise, alone or in association with any other person, firm, corporation, or
other business organization, carry on, or be engaged, concerned, or take part
in, or render services to, or own, share in the earnings of, or invest in, the
stock, bonds, or other securities of any person, firm, corporation, or other
business organization (other than the Company or its affiliates, if any) engaged
in a business which is similar to or in competition with any of the material
businesses carried on by the Company (a "Similar Business"), except in the
course of his employment hereunder; provided, however, that the Employee may
invest in stock, bonds, or other securities of any Similar Business if (A) such
stock, bonds, or other 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; and (B) his investment does not exceed, in the
case of any class of the capital stock of any one issuer, two (2%) percent of
the issued and outstanding shares, or in the case of bonds or other securities,
two (2%) percent of the aggregate principal amount thereof issued and
outstanding.
7.2 The Employee covenants and undertakes that during the Employment Period
and for a period of three (3) years after the later of (a) the expiration or
termination of this Agreement, or (b) the expiration or termination of the
Severance Period, he will not, whether for his own account or for the account of
any other person, firm, corporation or other business organization, interfere
with the Company's relationship with, or endeavor to entice away from the
Company any person, firm, corporation or other business organization who or
which at any time during the Employee's employment with the Company was an
employee, consultant, agent, supplier, or customer of the Company or in the
habit of dealing with the Company or its affiliates.
8. INVENTIONS, PATENT, ETC.
8.1 The Employee shall promptly communicate and disclose to the Company all
inventions, discoveries, improvements and new writings, in any form whatsoever
(hereinafter "Inventions") including, without limitation, all software,
programs, routines, techniques, procedures, training aides and instructional
manuals conceived, developed or made by him during his employment by the
Company, whether solely or jointly with others, whether during or after usual
business hours and whether or not patentable, copyrightable, or otherwise
capable of protection (A) which relate to any matters or business carried on or
being developed by the Company, or (B) which result from or are suggested by any
work done by him or by the duties assigned to him in the course of his
employment by the Company.
8.2 All written materials, records and documents made by the Employee or
coming into his possession during the Employment Period concerning the business
or affairs of the Company shall be the sole property of the Company, and, upon
the expiration or termination of the Employment Period or upon the request of
the Company during the Employment Period, the Employee agrees to render to the
Company such reports of the activities undertaken by the Employee or conducted
under the Employee's direction during the Employment Period as the Company may
request.
8.3 The Employee hereby assigns and transfers to the Company all right,
title and interest in and to the Inventions, and will assist the Company or its
designee during and subsequent to his employment, at the Company's sole expense,
in filing patent and/or copyright applications on, and obtaining for the
Company's benefit patents and/or copyrights for such Inventions in any and all
countries, and will assign to the Company all such patent and/or copyright
applications, and all patents and/or copyrights which may issue thereon, it
being understood and agreed that said Inventions are to be and remain the sole
and exclusive property of the Company or its designee, whether or not patented
and/or copyrighted.
8.4 Any Invention conceived, developed or made by the Employee and related
to Employee's responsibilities at the Company, within one (1) year of the
termination of his employment, whether such termination of employment is
voluntary or involuntary, shall be deemed to have arisen out of and been
conceived, developed or made by the Employee during his employment by the
Company, unless established to have been conceived, developed or made after the
termination of such employment.
9. REMEDIES.
The Employee acknowledges and agrees that the Company will have no adequate
remedy at law if the Employee violates the terms of Section 6, 7 or 8 hereof. In
such event, the Company shall have the right, in addition to any other rights it
may have, to obtain in any court of competent jurisdiction temporary or
permanent injunctive relief to restrain any breach or threatened breach of, or
to specifically enforce, any of the provisions of such Sections, in any such
event without the necessity of proving damages.
10. COMPLIANCE WITH OTHER AGREEMENTS.
10.1 Employee and Company represent and warrant to the other that each is
under no contract, restriction or obligation which is inconsistent with
execution of this Agreement or the performance of his/its duties hereunder. Each
hereby agrees to indemnify the other for all losses, damages, costs, fees and
expenses including attorney's fees ("Losses") incurred by the other in
connection with any breach of the foregoing representations and warranties
contained in this Section 10, including Losses related to any lawsuit or other
legal proceeding, action or matter in which it is finally adjudicated that the
other has breached any of such representations and warranties.
11. WAIVERS. A waiver by the Company of a breach of any of the provisions
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of the same or any other provision.
12. BINDING EFFECT; BENEFITS.
Subject to the provisions of Section 5 hereof, this Agreement shall inure
to the benefit of, and shall be binding upon, the parties hereto and their
respective successors, assigns, heirs, and legal representatives, including any
corporation or other business organization with which the Company may merge or
consolidate or to which it may transfer substantially all of its assets. Insofar
as the Employee is concerned, this Agreement, being personal, cannot be
assigned.
13. NOTICES.
All notices, requests, demands and other communications which are required
or may be given under this Agreement shall be in writing and shall be deemed to
have been duly given or made when delivered in person, by courier, by facsimile
transmission (with proof of delivery), or four (4) days after dispatch by
registered or certified mail, postage paid, return receipt requested, to the
party to whom the same is so given or made, to the address of such party
hereinabove set forth.
14. ENTIRE AGREEMENT; AMENDMENTS; SURVIVAL COVENANTS.
This Agreement contains the entire Agreement, and supersedes all prior
agreements and understandings, oral or written, between the parties hereto with
respect to the subject matter hereof. This Agreement may not be waived, changed,
amended, modified or discharged orally, but only by an agreement in writing
signed by the party against whom any waiver, change, amendment, modification or
discharge is sought. The covenants of the Employee contained in Sections 6, 7
and 8 of this Agreement shall survive the termination or expiration of the
Employment Period.
15. HEADINGS.
The headings contained in this Agreement are for reference purposes only
and shall not affect the construction or interpretation of this Agreement.
16. SEVERABILITY.
The invalidity of all or any part of any Section of this Agreement shall
not render invalid the remainder of this Agreement or the remainder of such
Section. If any provision, or part thereof, of this Agreement is so broad as to
be unenforceable, such provision shall be interpreted such that provision or
part thereof would be valid, legal and enforceable to the fullest extent
permitted by law.
17. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall, when executed, be deemed to be an original, but all of which together
shall constitute one and the same instrument.
18. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without giving effect to principles relating to
conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
NATIONAL MEDICAL HEALTH
CARD SYSTEMS, INC.
By:
/s/Xxxxx Xxxx
Xxxxx Xxxx
President
/s/Xxxx Xxxxxx
XXXX XXXXXX
