NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 1, 1999, 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 (the
"Company"), and XXXX X. XXXXXXX, who resides at Xxxxx Xxxx, Xxxxxx Xxxxx, Xxxxx
Xxxxx, Xxx Xxxx 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, except for other disclosed obligations and
investments, for said period, and upon the other terms and conditions
hereinafter provided.
AGREEMENT:
1. TERM OF EMPLOYMENT.
1.1 The Company hereby employs the Employee, and the Employee hereby
accepts employment with the Company, all in accordance with the terms and
conditions hereof, for a term of two (2) years (the "Employment Period")
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 second anniversary of the Commencement Date.
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1.2 As used in this Agreement, the term "Commencement Date" shall
mean July 1, 1999.
2. DUTIES.
During the Employment Period, the Employee shall be employed by the
Company and shall serve as its Chairman of the Board and Chief Executive Officer
and shall perform such duties and 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. Notwithstanding the foregoing, the Employee may, with or without the
consent of the Company, perform duties for entities other than the Company on a
part-time basis, provided, however that such duties do not interfere with the
Employee's obligations under this Agreement.
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
$200,000.00 per year, subject to adjustment as hereafter provided, payable in
equal monthly installments or other more frequent installments in accordance
with the regular pay policies of the Company. In addition, the Employee shall
be entitled to receive such bonus or incentive compensation and salary
increases as the Board of Directors of the Company may, on the basis of the
Company's performance or other reasonable criteria, deem appropriate.
3.2 During the Employment Period, the Employee shall also be (a)
provided with a full-time use of a Company automobile (b) entitled to five (5)
weeks paid vacation annually and (c) entitled to participate in group medical
insurance and other benefits or programs of the Company hereafter established
and made available by the Company to its employees.
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3.3 The Company shall deduct from the Employee's salary, 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 all reasonable out-of-pocket expenses incurred by him in the
performance of his duties hereunder or in furtherance of the business and/or
interest of the Company, provided, however, that the Employee shall have
previously furnished to the Company an itemized account, satisfactory to the
Company, in substantiation of such expenditures.
4. OPTIONS.
From time to time and at the discretion of the Board of Directors, the
Employee may be granted options to purchase shares of the Company's common
stock, which may be exercised in accordance with the terms of the Company's
option plans.
5. TERMINATION.
5.1 If the Employee dies or becomes disabled during the Employment
Period, his salary and all other rights under this Agreement shall continue for
two (2) years subsequent to the date of the occurrence of such death or
disability. For the purposes of this Agreement, the Employee shall be deemed to
be "disabled" if he has been unable to perform his duties for six consecutive
months or nine months in any twelve-month period, all as determined in good
faith by the Board of Directors of the Company. 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 5.1, the Employee's
salary shall be reduced by an amount equal to such disability insurance benefits
during such period.
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5.2 Company may terminate this Agreement with cause by delivering to
Employee written notice of same ten (10) weeks prior to such effective date of
termination. Employee shall be entitled to severance pay for the balance of the
Employment Period based on the annual rate of compensation in effect at the time
of termination or one year's compensation, whichever is greater.
6. WAIVERS.
A waiver by the Company or the Employee of a breach of any of the
provisions of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
7. BINDING EFFECT; BENEFITS.
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.
8. 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 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.
9. 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, including but not limited to that certain
Employment Agreement dated July 1, 1999, having a
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Commencement Date thirty (30) days after the date of closing of the Company's
public offering. 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 (insofar as they
relate to the Employment Period) of this Agreement shall survive the termination
of the Employment Period.
10. HEADINGS.
The headings contained in this Agreement are for reference purposes
only and shall not affect the construction or interpretation of this Agreement.
11. 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 of this Agreement is so broad as to be
enforceable, such provisions shall be interpreted to be only so broad as is
enforceable.
12. 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.
13. 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.
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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/ Xxxxxxxx X. X'Xxxxxx
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Xxxxxxxx X. X'Xxxxxx
President
By: /s/ Xxxx X. Xxxxxxx
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