Exhibit 10.49
NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of October 14, 2002, by and between NATIONAL
MEDICAL HEALTH CARD SYSTEMS, INC., a Delaware 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 "Executive").
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 Executive for
the period provided in this Agreement, and the Executive 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 Executive, and the Executive hereby
accepts employment with the Company, all in accordance with the terms and
conditions hereof, for a term of one (1) year (the "Employment Period")
commencing on the Commencement Date (as defined in Subsection 1.2 hereof). This
Agreement shall automatically be renewed for successive additional terms of one
(1) year each (upon the expiration of the Term). The term and each renewal term
shall be subject to the right of the Company to terminate this Agreement by
giving not less than ninety (90) days written notice of termination to the
Executive, such termination to be effective at the conclusion of such renewal
term.
1.2 As used in this Agreement, the term "Commencement Date" shall mean July
1, 2002.
2. DUTIES.
During the Employment Period, the Executive shall be employed by the
Company and shall serve as its Executive Chairman of the Board 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 Executive 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 Executive's
obligations under this Agreement.
3. COMPENSATION.
3.1 As full compensation for his services and undertakings pursuant to this
Agreement, the Executive shall receive a salary per year equal to Executive's
current salary under Executive's Employment Agreement dated July 1 1999, as
amended, with the Company, subject to adjustments from time to time as may be
determined in the sole discretion of the Compensation Committee of the Company.
Such salary shall be payable in equal monthly installments or other more
frequent installments in accordance with the regular pay policies of the
Company. In addition, the Executive 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 provided the same is approved by the Compensation
Committee of the Company.
3.2 During the Employment Period, the Executive 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 Executives. Premiums regarding medical insurance
and other benefits or programs of the Company shall be paid for by the Company
3.3 The Company shall deduct from the Executive'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 Executive, 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 Executive shall have
previously furnished to the Company an itemized account, satisfactory to the
Company, in substantiation of such expenditures.
4. OPTIONS.
4.1 From time to time and at the discretion of the Board of Directors, the
Executive 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.
4.2 The Company shall hold Executive harmless from any golden parachute tax
imposed by any federal, state or local taxing authority as a result of any of
the payments made pursuant to this Agreement, including any Stock Options
granted to Executive by the Company. Payment of such golden parachute tax plus
any additional taxes imposed as a result of the payment by the Company of such
golden parachute tax, shall be made at the time Executive is required to pay
such golden parachute tax. Executive agrees to cooperate fully with the Company
in any protest or appeal by the Company in the event of the imposition of such
golden parachute tax.
5. TERMINATION.
5.1 If the Executive dies or becomes disabled during the Employment Period,
his salary and all other rights under this Agreement shall continue for the
remaining Employment Period subsequent to the date of the occurrence of such
death or disability. For the purposes of this Agreement, the Executive 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 Executive is receiving disability insurance benefits during any period prior
to termination of this Agreement as provided in this Section 5.1, the
Executive's salary shall be reduced by an amount equal to such disability
insurance benefits during such period.
5.2 Company may terminate this Agreement without cause by delivering to
Executive written notice of same four (4) weeks prior to such effective date of
termination. Executive 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. NON-COMPETITION.
The Executive covenants and agrees that during his employment by the
Company, and for a period of one (1) year following the termination for any
reason of such employment, he shall not, either directly or indirectly, without
the prior written consent of the Company, on his own behalf or in the service or
on behalf of others serve anywhere in the United States as an owner, manager,
stockholder (except as a holder of no more than l% of the issued and outstanding
stock of a publicly traded company), consultant, director, officer or employee
of any business entity that provides, develops or sells prescription PBM
Services that are similar to or competitive to those provided, offered or sold
by the Company; and for a period of two years following the termination for any
reason of such employment the Executive shall not, either directly or indirectly
(i) solicit or divert or appropriate to or for any competing business, or (ii)
attempt to solicit, divert or appropriate to or for any competing business, any
PBM Services offered, sold or provided by the Company to or from those entities
who are now clients of the Company, joint venturers, or partners with the
Company or parties to which Company has submitted a proposal to offer any
products or services to customers of Third Party Clients within six (6) months
prior to such termination. As used herein, "Third Party Clients" shall mean
those institutions and businesses whose clients, customers or members are
solicited by the Company for the purchase of PBM services. As used herein, "PBM
Services" shall mean services associated with the prescription benefit
management business, including but not limited to: (i) claims administration,
(ii) establishment and administration of a pharmacy network and benefits, (iii)
mail order pharmacy services (by phone, fax or internet), (iv) drug utilization
review, (v) disease state management and delivery of specialty pharmacy
benefits, (vi) formulary creation al1d administration, (vii) rebate negotiation
and administration, and (viii) therapeutic substitution programs.
7. WAIVERS.
A waiver by the Company or the Executive of a breach of any of the
provisions of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
8. 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 Executive is concerned, this
Agreement, being personal, cannot be assigned.
9. 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.
10. 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 Executive 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.
11. HEADINGS.
The headings contained in this Agreement are for reference purposes only
and shall not affect the construction or interpretation of this Agreement.
12. 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.
13. 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.
14. 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:
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Xxxxx Xxxx
President and Chief Executive Officer
By:
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Xxxx X. Xxxxxxx
