EXHIBIT 10.24
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of March 27, 2000, 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 XXXXX XXXXXXX, who resides at 0 Xxx Xxxxx, Xxxxxxxxx, 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.
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 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"). 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 notice to the other of the election of the Company or the Employee 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 shall be hereinafter referred to as the
"Employment Period".)
1.2 As used in this Agreement, the term "Commencement Date" shall mean May
1, 2000.
2. DUTIES.
2.1 During the Employment Period, the Employee shall be employed by the
Company and shall serve as its Chief Financial Officer. Employee shall report on
a regular basis directly to the Company's President and Chairman and shall
perform such duties consistent with his position as of such nature as are
usually associated with such office, and the Employee shall 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.
2.2 During the Employment Period, the Employee shall devote his full
business time, best efforts,energies, attention and ability 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, payable in twenty-six (26)
equal installments or other more frequent installments in accordance with the
regular pay policies of the Company. Employee's compensation shall be increased
by an amount to be determined by the parties each year of the Extended Term. In
addition, the Employee shall be entitled to receive a bonus of $25,000 at the
end of the Initial Term, provided Employee is in the employ of the Company at
such time. Employee shall also be entitled to participate in the bonus pool
allocated for senior executives.
3.2 During the Employment Period, the Employee shall also be entitled to
(a) three (3) 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.
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.
4. STOCK OPTIONS.
Simultaneously upon the execution of this Agreement, the Employee will be
granted by the Company an option to purchase 35,000 shares of Common Stock of
the Company, such options to vest in accordance with the terms of the Stock
Option Agreement attached hereto and made part of this Agreement as Exhibit A.
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 terminate at the end
of the month during which death or disability occurs. 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.
5.2 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 Employee written notice upon the occurrence of any of the
following events:
(a) commission by the Employee of a material breach of this Agreement
which, if curable, remains uncured for fifteen (15) days after Employee receives
written notice thereof, or
(b) indictment of the Employee for a felony or other serious crime.
5.3 In the event that the Company terminates this Agreement for a reason
other than those set forth in Section 5.2 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 annual salary, exclusive of any
bonuses, and shall continue group medical insurance and similar health benefits
(the "Severance Pay"), for one year after termination of employment (the
"Severance Period"). However, such Severance Pay shall immediately be reduced by
the amount of salary received by the Employee during the Severance Period upon
Employee's obtaining employment with another employer. 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.
5.4 The Employee shall have "Good Reason" to terminate his employment
hereunder if such termination shall be the result of: (a) a material diminution
during the Employment Period in the Employee's duties, responsibilities,
reporting relationship or title as set forth in Section 2.1 hereof; (b) a breach
by the Company of the compensation and benefits provisions set forth in Section
3 hereof; (c) a material breach by the Company of any of the other terms of this
Agreement; (d) relocation of the Employee's office more than 35 miles from Port
Washington, Long Island; or (e) if there is a "Change of Control" as defined in
Section 5.5 of this Agreement.
5.5 The term "Change of Control" shall mean: (i) the acquisition by any
Person or Persons acting as a group (other than any existing shareholder of the
Company) following the Commencement Date of more than 50% of the Company's
outstanding voting stock; (ii) the merger of the Company with or into another
corporation where the Company is not the surviving entity; (iii) any reverse
merger in which the Company's shareholders immediately prior to the merger do
not have the right to elect a majority of the Board of the surviving entity; or
(iv) the sale of all or substantially all of the assets of the Company. The term
"Person" shall mean any individual, company, limited liability company,
partnership or other entity. As used in this definition, "control" of a Person
means the possession, directly or indirectly, of the unilateral power to cause a
change in the direction of the management and policies of such Person, whether
through the ownership of voting securities or otherwise.
6. COVENANT NOT TO DISCLOSE.
6.1 The Employee covenants and undertakes that he will not at any time
during or after the termination of his employment hereunder 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 customers' lists, trade secrets, or any secret or any confidential
information ("Confidential Information") 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 upon termination of his employment with the Company,
return same to the Company. Employee shall, if asked to by the Company, sign a
statement acknowledging, among other things, that Employee has returned all such
Confidential Information.
7. COVENANT NOT TO COMPETE; NON-INTERFERENCE.
7.1 The Employee covenants and undertakes that, during the Employment
Period hereunder and should the Company terminate Employee's employment
hereunder pursuant to Sections 5.2 (a) or (b), or should Employee voluntarily
terminate his employment hereunder for other than Good Reason, for a period of
one (1) year after 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) engage anywhere
in a business which is similar to or in competition with any of the material
businesses carried on by the Company (a "Similar Business") in the New York City
metropolitan area, 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 (but without otherwise participating in the activities of
such 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 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, a customer of the Company or in the habit of dealing with the Company.
8. COVENANT TO REPORT; 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, and whether or not patentable or
copyrightable, (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 in the course of his employment by the Company. The Employee shall
also promptly communicate and disclose to the Company all other data obtained by
him concerning the business or affairs of the Company 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 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, pursuant hereto during the Employment Period as the
Company may request.
8.3 The Employee will assign to the Company all right in 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, all patents and/or copyrights which may
issue thereon, said Inventions 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 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 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 injunctive relief to
restrain any breach or threatened breach of or otherwise to specifically enforce
any of the covenants of such Sections.
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 incurred by the other in connection with any
of the following:
(a) any breach of the foregoing representations and warranties;
(b) any lawsuit or other legal proceeding in which it is claimed that the
other has breached any trust, confidence or duty of loyalty, etc.;
(c) any action or matter relating to the above representations and
warranties.
11. 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.
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 and in the case of notices to the Employee, a copy shall
be similarly sent to Xxxxxx & Associates, P.C., 000 Xxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, Attn: Xxxxx X. Xxxxxx, Esq.
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 (insofar as they relate to the Employment Period) of this Agreement and
the covenants of the Company contained in Section 5.3, if applicable, shall
survive the termination 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 of this Agreement is so broad as to be unenforceable,
such provisions shall be interpreted to be only so broad as is enforceable.
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.
19. INDEMNIFICATION.
The Company shall, to the fullest extent permitted by law and by its
Certificate of Incorporation and By-laws, indemnify the Employee and hold him
harmless for any acts or decisions made by him in good faith while performing
his duties pursuant to this Agreement.
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/Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Chairman
By:/s/Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
