AGREEMENT
Agreement, made as of the 15th day of May, 1998, by and between MIM
CORPORATION, a Delaware corporation (the "Company"), and XXXX X. XXXXX (the
"Executive").
In consideration of the mutual covenants herein contained and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Last Date of Employment. The Executive hereby resigns from his positions
with the Company and its subsidiaries as an officer and an employee, and the
Company hereby accepts such resignation, effective as of May 15, 1998 (the
"Effective Date"). The Employment Agreement, dated May 30, 1996 (the "Employment
Agreement"), between the Company and the Executive shall terminate as of the
Effective Date and shall be superseded for all purposes by this Agreement.
Notwithstanding anything to the contrary contained in the Employment Agreement,
the Executive shall not be entitled to any payments or benefits in connection
with the termination of his employment, other than the benefits specifically
identified herein. In addition, the Executive hereby agrees that he will resign
from the Company's Board of Directors effective as of the Effective Date.
2. Transition. The Executive agrees that he shall be reasonably available,
upon the Company's prior reasonable request, to answer questions that any of the
Company's officers may have with respect to activities that were previously the
responsibility of the Executive in order to facilitate the transition. Without
limiting the foregoing, the Executive agrees to cooperate fully with the Company
with respect to litigation. Notwithstanding the foregoing, the Executive's
obligations under this Section 2 shall survive for 12 months after the date
hereof in all cases other than any assistance which the Company may require in
connection with the pending investigation of the TennCare program by the grand
jury in the Western District of Tennessee, as to which assistance the
Executive's obligations under this Section 2 shall survive indefinitely. The
Company shall reimburse the Executive for reasonable out-of-pocket expenses in
connection with any such assistance, provided that the Executive delivers to the
Company satisfactory receipts or other documentation therefor.
3. Benefits. In full and complete satisfaction of the Company's obligations
under the Employment Agreement, the Company agrees to pay the Executive, for the
one year-period commencing on the Effective Date and ending on May 14, 1999, the
sum of $325,000 per year subject to applicable withholding, payable in
substantially equal weekly installments by wire transfer of immediately
available funds. To the extent permitted by applicable law and the Company's
existing plans, the Company will permit 401(k) deductions from payments made
hereunder. Notwithstanding the foregoing, if, prior to May 14, 1999, the
Executive violates any of the material terms hereof, or any of the terms of
Section 8 hereof, then the Company shall have no further obligation to make any
payments under this Section 3 on or after the date of such violation; provided,
however, that, unless the Company determines in good faith that a violation is
not susceptible to remediation, the Company shall provide written notice of any
violation and the Executive shall have a 10-day opportunity to cure after
receipt of such notice. The Company shall continue to provide the
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Executive with medical and dental coverage on the same basis as active employees
during the period of salary continuation but in no event shall said coverage
continue beyond May 14, 1999. After such date, the Executive shall be entitled
to elect to continue such medical and dental coverage at his own expense in
accordance with the continuation requirements of COBRA. The Company shall
reimburse the Executive for all reasonable and customary business expenses
incurred prior to the Effective Date by the Executive in connection with the
Executive's performance of his duties under the Employment Agreement, in
accordance with the Company's policies.
4. Confidentiality. Except as required by applicable law, rule or
regulation, by court order or by the rules and regulations of the Nasdaq Stock
Market, or any other national securities exchange on which the Company's shares
are listed (in which event the Executive shall be provided a copy of any
proposed release or other announcement or disclosure as early as possible prior
to release or disclosure and an opportunity to oppose or limit such release or
disclosure), the Company shall not issue any press release or other announcement
or disclosure concerning this Agreement or the Executive's resignation without
the prior written consent of the Executive, and, except in connection with
governmental or judicial proceedings or investigations, the Company and the
Executive will not disparage each other or their reputations in the business
community.
5. Release by the Executive. In consideration of, among other things, the
agreements of the Company set forth herein, the Executive hereby releases on
behalf of himself, his spouse, heirs, successors and assigns, the Company and
each of its affiliates, subsidiaries and divisions and their respective
successors, assigns, officers, directors, agents, employees and representatives,
from and against any and all claims, demands, grievances, and causes of action,
administrative, court or otherwise, known or unknown, which he has, had, or may
have had against any of them through the Effective Date, including, but not
limited to: (i) any claim arising under the Age Discrimination in Employment
Act, 29 U.S.C. xx.xx. 621 et seq., as amended, and/or Title VII of the Civil
Rights Act of 1964, 42 U.S.C. xx.xx. 2000e et seq., as amended, and/or the
Americans with Disabilities Act, 42 U.S.C. ss.ss.12111-12117; (ii) any claim for
employment discrimination, whether based on a federal, state or local statute or
court decision; (iii) any claim, whether statutory, common law or otherwise,
arising out of the terms and conditions of the Executive's employment or
relationship with the Company, the termination of his employment and
relationship with the Company, or the events surrounding that termination; and
(iv) any claim for attorneys' fees, costs, disbursements and the like. The
foregoing sentence shall not apply to claims arising under this Agreement or
claims arising after the date hereof under the agreements listed on Schedule A
attached hereto, it being understood that all such agreements shall continue in
full force and effect.
6. Release By the Company. In consideration of the performance of the
Executive's obligations hereunder, the Company hereby releases on behalf of
itself, its successors and assigns, the Executive from and against any and all
claims, demands, grievances and causes of action, administrative, court or
otherwise, known or unknown, which it has, had, or may have had against him
arising out of his services as an officer or director of the Company pursuant to
the Employment Agreement for the period from May 30, 1996 through the Effective
Date.
7. Indemnification. To the fullest extent provided by the Company's
Certificate of Incorporation and By-Laws and permitted by the provisions of the
General Corporation Law of the State of Delaware, as all of the same are in
effect as of the date hereof and as any of the same shall be amended or restated
from time to time hereafter (provided, however, that no such amendment or
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restatement shall decrease or reduce the protections and benefits available to
the Executive as in effect on the date hereof), (i) the Executive shall have no
personal liability to the Company or its stockholders for monetary damages for
breach of a fiduciary duty as a director or officer of the Company, and (ii) the
Company shall indemnify, including, without limitation, the advancement of
expenses in defense of any actions, the Executive, without regard to the
termination of his service as a director or the termination of his employment.
The Company shall use its best efforts to continue to maintain in full force and
effect, for a period of at least three (3) years from the date hereof,
director's and officer's liability insurance covering the Executive in an amount
not less than Five Million Dollars ($5,000,000). The Executive shall furnish
such information concerning the Executive as may be reasonably requested from
time to time by such insurer. The Company shall, upon the Executive's request,
provide proof of the insurance coverage required under this Section 7.
8. Certain Covenants of the Executive. The Executive acknowledges that: (i)
he is one of the limited number of persons or entities who has developed, or is
familiar with, the business of the Company (the "Business"); (ii) the Company
conducts its business throughout the United States; (iii) his work for the
Company has brought the Executive into close contact with many confidential
affairs not readily available to the public; (iv) the Company would not agree to
make the payments required pursuant to this Agreement but for the agreements and
covenants of the Executive contained herein; and (v) the covenants contained in
this Section 8 will not involve a substantial hardship upon the Executive's
future livelihood. In order to induce the Company to enter into this Agreement,
the Executive covenants and agrees that:
(a) Employees of the Company. During the period commencing on the date
hereof and ending on May 15, 1999, the Executive shall not, directly or
indirectly, initiate communications with, solicit, persuade, entice, induce
or encourage any individual who is then or who has been within the 12-
month period preceding May 15, 1998, an employee of the Company or any
affiliate to terminate employment with the Company or such affiliate or to
become employed by or enter into a contract or other agreement with any
other person, and the Executive shall not approach any such employee for
any such purpose or authorize or knowingly approve the taking of any such
actions by any other person.
(b) Solicitation of Customers. During the period commencing on the
date hereof and ending on May 15, 1999, the Executive shall not, directly
or indirectly, initiate communications with, solicit, persuade, entice,
induce, encourage (or assist in connection with any of the foregoing) any
person who is then or has been within the 12-month period preceding May 15,
1998 a customer or account of the Company or any affiliate or any potential
customer or account whose identity the Executive learned during the course
of the Executive's employment with the Company, to terminate or to
adversely alter its contractual or other relationship with the Company or
any affiliate.
(c) Confidential Company Information. The Executive shall not
knowingly use for his own benefit or disclose or reveal to any unauthorized
person any trade secret or other confidential information relating to the
Company or its business associates, or to any of the actual, planned or
contemplated businesses thereof, including, without limitation, customer
lists, customer needs, price and performance information, processes, supply
sources and characteristics, business opportunities, potential business
interests, marketing, promotional pricing and financing techniques,
business plans and strategies, and the Executive confirms that such
information constitutes the exclusive property of the Company. Such
restriction on confidential information shall remain in effect unless,
until and only to the extent that it is (i)
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disclosed in published literature or otherwise generally available in the
industry through no fault of Executive, or (ii) obtained by the Executive
from a third party with the prior right to make such disclosure. The
Executive agrees that he will return to the Company any physical embodiment
of such confidential information upon the Effective Date.
(d) Non-Competition. For a period of one year following (i) the
Effective Date or (ii) the last payment of any compensation in accordance
with the terms hereof, whichever occurs last, the Executive shall not
engage, directly or indirectly (which includes, without limitation, owning,
managing, operating, controlling, being employed by, giving financial
assistance to, participating in or being connected in any material way with
any person or entity other than the Company), anywhere in the United States
in the businesses of (i) pharmacy benefit management, (ii) any business in
which the Company is engaged as of May 15, 1998, and (iii) any component of
any of the foregoing businesses; provided, however, that the Executive's
ownership as a passive investor of less than two percent (2%) of the issued
and outstanding stock of a publicly held corporation shall not be deemed to
constitute competition. Further, during such period the Executive shall not
act to induce any of the Company's customers or employees to take action
which might be disadvantageous to the Company.
(e) Inventions and Improvements. The Executive hereby acknowledges
that he will treat as for the Company's sole benefit, and fully and
promptly disclose and assign to the Company without additional
compensation, all ideas, information, discoveries, inventions and
improvements which are based upon or related to any confidential
information protected under Section 8(c) herein, and which are or have been
made, conceived or reduced to practice by him during his employment by the
Company. The provisions of this subsection 8(e) shall apply whether such
ideas, discoveries, inventions, improvements or knowledge are or were
conceived, made or gained by him alone or with others, whether during or
after usual working hours, either on or off the job, to matters directly or
indirectly related to the Company's business interests (including potential
business interests), and whether or not within the realm of his duties.
(f) Future Employer. The Executive shall inform any prospective or
future employer of any and all restrictions contained in this Section 8 and
provide such employer with a copy thereof prior to the commencement of that
employment.
(g) Rights. If the Executive breaches, or threatens to commit a breach
of, any of the provisions of Sections 8(a)-8(f) hereof (collectively, the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the
other and severally enforceable, and all of which rights and remedies shall
be in addition to, and not in lieu of, any other rights and remedies
available to the Company and its affiliates under law or in equity:
(i) Specific Performance. The right and remedy to seek from any
court of competent jurisdiction specific performance of the
Restrictive Covenants or injunctive relief against any act which would
violate any of the Restrictive Covenants, it being acknowledged and
agreed that any such breach or threatened breach will cause
irreparable injury to the Company and/or its affiliates and that money
damages will not provide an adequate remedy to the Company and/or its
affiliates.
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(e) Severability of Covenants. If any of the Restrictive Covenants, or
any part thereof, is held by a court of competent jurisdiction or any
foreign, federal, state, county or local government or other governmental,
regulatory or administrative agency or authority to be invalid, void,
unenforceable or against public policy for any reason, the remainder of the
Restrictive Covenants shall remain in full force and effect and shall in no
way be affected, impaired or invalidated, and such court, government,
agency or authority shall be empowered to substitute, to the extent
enforceable, provisions similar thereto or other provisions so as to
provide to the Company and its affiliates, to the fullest extent permitted
by applicable law, the benefits intended by such provisions.
(f) Enforceability in Jurisdictions. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of
any jurisdiction within the geographical scope of such Restrictive
Covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants wholly invalid or unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the parties that
such determination not bar or in any way affect the right of the Company or
its affiliates to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants,
as to breaches of such Restrictive Covenants in such other respective
jurisdictions, such Restrictive Covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and
independent covenants.
9. General Provisions.
(a) In the event that any provision or Section of this Agreement shall be
held invalid or unreasonable, the same shall not affect in any respect
whatsoever the validity of the remainder of this Agreement which shall be deemed
severable, and such invalid or unreasonable provision(s) shall be deemed to have
been amended, and the parties hereto agree to execute all documents necessary to
evidence such amendment, so as to modify any such invalid or unreasonable
provision and to carry out the intent of the terms and provisions of this
Agreement to the greatest extent possible and to render such provisions of this
Agreement enforceable and/or reasonable in all respects as modified.
(b) Any written notice under this Agreement shall be personally delivered
or sent by certified or registered mail, return receipt requested and postage
prepaid to (i) the Company at One Blue Hill Plaza, 15th Floor, X.X. Xxx 0000,
Xxxxx Xxxxx, Xxx Xxxx 00000-0000, Attention: General Counsel and (ii) to the
Executive at 00 Xxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000, or to such other
address or addresses as either of the parties shall designate in accordance with
this Section.
(c) This Agreement shall be construed in accordance with, and its
performance shall be governed by, the laws of the State of New York.
(d) Except as otherwise noted herein, this Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes all prior agreements, representations and promises by either party or
between parties, including the Employment Agreement (except that the agreements
listed on Schedule A hereto).
(e) No modification of this Agreement shall be effective unless in a
writing executed by both parties hereto.
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(f) The Company agrees that it shall not pay to Xxxxxxx Xxxxxxxx any
payments or provide any benefits in lieu of payments which are intended to
enable Xx. Xxxxxxxx to pay all or any income taxes payable by Xx. Xxxxxxxx as a
result of his exercise of options to acquire 1,500,000 shares of the Company's
common stock unless the Company also makes a payment to the Executive to pay an
equivalent portion of any income taxes payable by the Executive as a result of
his exercise of options to acquire 1,800,000 shares of the Company's common
stock. The Executive agrees to provide to the Company such documents, papers and
other information as the Company may reasonably request in order to enable the
Company to compute the amount of taxes owed by the Executive which are
attributable to the exercise of such options and, accordingly, the amount of any
payment payable to the Executive under this Section 9(f).
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date and year first written above.
/s/ Xxxx X. Xxxxx
-----------------------------------
Executive: Xxxx X. Xxxxx
MIM CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Secretary
Schedule A
Continuing Agreements
Registration Rights Agreement IV, July 31, 1996, among the Company, E.
Xxxxx Xxxxxxx, Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxx, and MIM
HOLDINGS, LLC.
