Exhibit 10.71
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of January 29, 2002 is by and between
National Medical Heath Card Systems, Inc., a New York Corporation (the
"Company"), and Xxxxxxx XxXxxxxxxx (the "Executive").
WHEREAS, the Company is engaged in providing comprehensive prescription
benefit management services to the general commercial market; and
WHEREAS, the Company is a party to an Asset Purchase Agreement (the
"Purchase Agreement") with Centrus Pharmacy Benefit Management Inc., a company
that Executive is currently an Officer of; and
WHEREAS, the Company desires to employ the Executive and to have the
benefit of his skills and services subsequent to the closing of the Purchase
Agreement; and
WHEREAS, The Executive desires to enter into employment with the Company on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein, and the performance of each, the parties,
intending legally to be bond, hereby agree as follows:
AGREEMENTS
Section 1. Definitions. For purposes of this Agreement, the following terms
have the meanings set forth below:
"Base Salary" has the meaning set forth in Section 4.1.
"Board" means the Board of Directors of the Company as the same is
constituted from time to time.
"Cause" means (a) the commission by the Executive of any act, on or after
the date of this Agreement, constituting, as to any cash funds or other receipts
of the Company, or any material property of the Company or any other Person, (i)
theft, (ii) embezzlement, (iii) fraud, (iv) misappropriation of material
property under applicable law, or (v) wilful non-disclosure and misappropriation
of any corporate opportunity, (b) the conviction of the Executive of a
misdemeanor or felony resulting in material injury to the business or property
of the Company, or (c) the material breach by the Executive of this Agreement,
including but not limited to the failure by the Executive to follow all
reasonable and lawful directions of the Board or the President of the Company,
which are consistent with the Executive's obligations hereunder, as to any
material matter (including, but not limited to, observance of the Company's
normal business hours), or the taking of any action by the Executive that would
be reasonably likely to cause material injury to the Company or that would be in
conflict with any material interest of the Company, which breach shall not have
been cured by the Executive within ten (10) days of his receipt of written
notice specifying the circumstances constituting said material breach.
"Confidential Information" means information that is not generally known to
the public and that was or is used, developed or obtained by the Company in
connection with its business, including (a) products or services, (b) fees,
costs and pricing structures, (c) designs, (d) analyses, (e) drawings,
photographs and reports, (f) computer software, including operating systems,
applications and program listings, (g) flow charts, manuals and documentation,
(h) data bases, (i) accounting and business methods, (j) inventions, devices,
new developments, methods and processes, whether patentable or unpatentable and
whether or not reduced to practice, (k) customers and clients and customer or
client lists, (l) other copyrightable works, (m) all technology and trade
secrets, and (n) all similar and related information in whatever form or medium.
Confidential Information does not include any information that has been
published in a form generally available to the public prior to the date of
disclosure or use of such information. Information will not be deemed to have
been published merely because individual portions of the information have been
separately published, but only if all material features comprising such
information have been published in combination.
"Employment Period" has the meaning set forth in Section 5 of this
Agreement.
"Executive" means Xxxxxxx XxXxxxxxxx.
"Intellectual Property" has the meaning set forth in Section 7 of this
Agreement.
"Permanent Disability" shall have occurred if as a result of physical or
mental incapacity, the Employee shall have been incapable of performing
Employee's duties hereunder for a period in excess of 26 consecutive weeks in
any calendar year, or an aggregate of 30 weeks in any 12 month period.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Reimbursable Expenses" has the meaning set forth in Section 4.5 of this
Agreement.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (a) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or a combination thereof, or
(b) if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interests
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more Subsidiaries of the Person or a combination thereof. For
purposes of this Agreement, a Person or Persons will be deemed to have a
majority ownership interest in a partnership, limited liability company,
association or other business entity if such Person or Persons are allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses or control the managing director or member or
general partner of such partnership, limited liability company, association or
other business entity.
Section 2. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement, for the period provided in Section 5
(the "Employment Period").
Section 3. Position and Duties.
3.1 Position. During the Employment Period, the Executive will serve as the
Executive Vice President of Managed Care of Company and will perform such
executive and management duties as may, from time to time, be determined and
assigned to him by the Board, the President of the Company or Xx. Xxxxx Xxxxxx,
the Chief Operating Officer of the Company, relating to the business and
operations of the Company. Such position and duties shall be similar to the
position occupied with, and the services the Executive rendered to, Health
Solutions, Ltd. d/b/a/ Centrus Pharmacy Benefit Management, Inc.("Centrus"),
provided such prior duties and responsibilities are consistent with the similar
business and operations of the Company subsequent to the Asset Purchase. Company
reserves the right, in its commercially reasonable discretion, to vary the
duties of Executive upon reasonable notice provided that such varied duties
remain consistent with the position set forth above; provided however, that if
such change is not consistent with the position and duties set forth above,
Executive may resign and such resignation shall be deemed an Unjustified
Termination entitling Executive to the payments and benefits provided for in
Section 5.2.
3.2 Performance of Duties; Other Activities. The Executive shall devote his
best efforts, attention and skills toward performing his duties on behalf of the
Company, and his full business and professional time to fully and faithfully
perform such duties and responsibilities in a diligent, trustworthy,
businesslike and efficient manner. The Executive shall do such traveling as may
reasonably be required in connection with the performance of his duties and
responsibilities hereunder. The nature of the duties and responsibilities
assigned to Executive hereunder shall not be such as to make it impractical for
Executive to live in his primary residence in Albany, New York.
3.3 Reporting. The Executive will report to Xx. Xxxxx Xxxxxx or other
individuals of comparable executive status to that of Xx. Xxxxxx, as may be
designated by the Board or the President of the Company from time to time.
Section 4. Base Salary and Benefits.
4.1 Base Salary. During the Employment Period, the Executive's base salary
will be at the rate of $140,000 per annum (the "Base Salary"), plus increases
the Board approves in its sole discretion from time to time consistent with that
given to other comparable executives of the Company, which Base Salary will be
payable by the Company in regular installments in accordance with the general
payroll practices of the Company as in effect from time to time.
4.2 Bonus. In addition to the Base Salary, the Company shall pay to the
Executive a bonus (the "Bonus"), in accordance with the Company's Management
Bonus Plan. The Bonus will be payable in accordance with such Plan.
4.3 Earn Out Equity Compensation. On the Effective Date (as defined
herein), Executive shall be granted stock options of the Company, at an exercise
price and in accordance with a vesting schedule in accordance with the terms and
provisions contained in the Stock Option Agreement attached hereto as Exhibit A
All Stock Options granted thereunder shall qualify as incentive stock options
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
subject to the limitations of Section 422 of the Code.
In the event that the Executive shall be subject to Justified Termination
(as defined below) by the Company, any stock options granted to the Executive by
the Company pursuant to the terms and provisions of the Stock Option Agreement
shall expire and become null and void, provided however if such termination
results from the death or permanent disability of the Executive, any stock
options granted to Executive pursuant to the terms and Provisions of the Stock
Option Agreement shall continue to vest in accordance with the vesting schedule
set forth in Exhibit A notwithstanding such termination.
4.4 Benefits. In addition to the Base Salary, the Executive shall be
entitled to the following further benefits during the Employment Period:
(a) such major medical, dental, life insurance and disability insurance
coverage (collectively, "Benefits") as is, or may from time to time during the
Employment Period, be provided for other executive officers of the Company
(provided that nothing herein contained shall be deemed to require the Company
to maintain any particular plan or policy); and, in connection herewith, the
Executive shall, upon commencement of his full-time employment hereunder, be
immediately enrolled in the Company's current benefit plans with full credit for
the term of his prior service with Centrus unless expressly prohibited by law;
(b) four (4) weeks of paid vacation per year during the Employment Period
(to be taken at mutually convenient times so as not to unduly interfere with the
business of the Company).
(c) Reasonable auto and auto expenses, cell phone, pager and computer
expenses and club dues.
4.5 Expenses. The Company shall reimburse the Executive for any and all
reasonable expenses incurred by him in the course of performing his duties under
this Agreement which are consistent with the Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses
("Reimbursable Expenses"), subject to the Company's requirements with respect to
reporting and documentation of expenses.
Section 5. Term and Termination.
5.1 Conditions Precedent, Term. This Agreement is contingent upon the
closing of the Purchase Agreement. The Executive's full-time employment
hereunder shall commence upon the closing of the Purchase Agreement (the
"Effective Date"), and, unless renewed or modified by written agreement between
the Company and the Executive, the Employment Period will terminate on the
second anniversary following the Effective Date; provided, that (a) the
Employment Period shall terminate prior to such date upon the Executive's
resignation, death or Permanent Disability and (b) the Employment Period may be
terminated by the Company at any time prior to such date, if such termination
shall be for Cause.
5.2 Unjustified Termination. Except as otherwise provided in Section 5.3
below, if the Employment Period shall be terminated (1) by the Company prior to
the second anniversary of the Effective Date for any reason other than (a) for
Cause, or (b) as a result of the death or Permanent Disability of the Executive
(collectively, an "Unjustified Termination"), or (2) as a result of the
Executive's resignation following an uncured material breach of the Company's
obligations under this Agreement, the Executive shall be entitled to receive (i)
an amount equal to the Executive's then current Base Salary and the benefits to
be provided to Executive, as set forth in paragraph 4.4 (a) hereof, for a six
(6) month period ("Severance Period") following the Unjustified Termination
("Severance Pay"), so long as the Executive has not breached and does not breach
the provisions of Sections 6, 7, 8 or 9 of this Agreement and (ii) reimbursement
of all Reimbursable Expenses incurred by the Executive prior to the termination
of the Employment Period. However, such Severance Pay shall immediately be
reduced dollar for dollar by the amount of any salary or other compensation
received by the Executive during the Severance Period from any other entity or
Person.
5.3 Justified Termination. If the Employment Period shall be terminated by
the Company prior to the second anniversary of the Effective Date hereof (a) for
Cause, (b) as a result of the Executive's unjustified resignation , or (c) as a
result of the death or Permanent Disability of the Executive (collectively, a
"Justified Termination"), the Executive shall be entitled to receive his Base
Salary through the date of termination and reimbursement of all Reimbursable
Expenses incurred by the Executive prior to the termination of the Employment
Period. A termination for Cause shall become effective on the date designated by
the Company. In the case of Justified Termination, Executive shall not be
eligible to receive, and the Company shall not be required to pay, any Severance
Pay pursuant to Section 5.2 hereof.
5.4 Benefits. Except as otherwise required by law, all of the Executive's
rights to fringe benefits under this Agreement, if any, accruing after the
termination of the Employment Period as a result of a Justified Termination will
cease upon such Justified Termination.
Section 6. Nondisclosure and Non-Use of Confidential Information. The
Executive will not at any time disclose or use any Confidential Information of
which the Executive is or becomes aware, whether or not such information is
developed by him, except to the extent that such disclosure or use is directly
related to and required by the Executive's performance of duties assigned to the
Executive pursuant to this Agreement. The Executive will take all appropriate
steps to safeguard Confidential Information and to protect it against
disclosure, misuse, espionage, loss and theft.
Section 7. Ownership of Intellectual Xxxxxxxx.Xx the event that the
Executive, as part of his activities on behalf of the Company or any Subsidiary
of the Company, generates, authors, or contributes to any service, design, new
development, device, product, method, trade secret or process (whether or not
patentable or reduced to practice or compromising Confidential Information) or
any other form of Confidential Information relating directly or indirectly to
the business of the Company or any Subsidiary as now or hereinafter conducted
(collectively, "Intellectual Property"), the Executive acknowledges that such
Intellectual Property is and shall be the sole and exclusive property of the
Company and its Subsidiaries, and hereby assigns all right, title and interest
in and to such Intellectual Property to the Company. Any copyrightable work
prepared in whole or in part by the Executive will be deemed "a work made for
hire" under Section 201(b) of the Copyright Act of 1976, as amended, and the
Company will own all of the rights comprised in the copyright herein. The
Executive will promptly and fully disclose all Intellectual Property and will
cooperate with the Company and its Subsidiaries to protect the Company's
interests in and rights to such Intellectual Property (including providing
reasonable assistance in securing patent protection and copyright registrations
and executing all documents as reasonably requested by the Company or its
Subsidiaries), whether such requests occur prior to or after termination of the
Executive's employment hereunder.
Section 8. Delivery of Materials upon Termination of Employment. As
requested by the Company from time to time and upon the termination of the
Executive's employment with the Company for any reason, the Executive will
promptly deliver to the Company all copies and embodiments, in whatever form or
medium, of all Confidential Information or Intellectual Property in the
Executive's possession or within his control (including, without limitation, any
written records, notes, photographs, manuals, notebooks, documentation, program
listings, flow charts, projections, customer or supplier lists, magnetic media,
disks, diskettes, tapes and all other materials containing any Confidential
Information or Intellectual Property) irrespective of the location or form of
such material and, if requested by the Company, will provide the Company with
written confirmation that all such materials have been delivered to the Company.
Section 9. Non-Competition Agreement. The Executive covenants and agrees
that during his employment by the Company, and for a period of two (2) years
following the termination for any reason of such employment, except by reason of
Executive's resignation as a result of the Company's uncured material breach of
its obligations hereunder, he will 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 (a) 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, or participate in the development or
provision of goods or services which are similar to or competitive with those
goods or services provided by the Company during the term of this Agreement; (b)
solicit or divert or appropriate to or for any competing business, or (c)
attempt to solicit, divert or appropriate to or for any competing business, any
business or services which are the same as the products or services of 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
customers or members are solicited by the Company for the purchase of products
and services. With respect to paragraph (a) hereof, any products or services not
offered by the Company on the date of this Agreement but subsequently offered
during the Term hereof shall be covered by paragraph (a) if they are related or
similar to those services and products offered on the date of this Agreement.
Section 10. Agreement Not to Solicit Employees.The Executive covenants and
agrees that during his employment by the Company, and for a period of two (2)
years following termination, for any reason, of such employment, he will not,
either directly or indirectly, on his own behalf or in the service or on behalf
of others, solicit, divert or hire away, or attempt to solicit, divert or hire
away, to any competing business any person employed by the Company, whether or
not such employee is a full-time employee or a temporary employee of the
Company, and whether or not such employment is pursuant to written agreement and
whether or not such employment is for a determined period or is at will.
Section 11. Affiliates; Equitable Relief. It is expressly understood that
the provisions and limitations of Sections 6, 7, 8, 9 and 10 above shall apply
to and with respect to any and all Confidential Information, Intellectual
Property, employees and businesses of the Company and any of their subsidiaries
or affiliates, as if such Persons and their Confidential Information,
Intellectual Property, employees and businesses were expressly named and
described herein. The Executive acknowledges that a breach or threatened breach
by him of any of his covenants contained in Sections 6, 7, 8, 9 or 10 of this
Agreement could cause irreparable harm to the Company and their respective
affiliates, for which it or they would have no adequate remedy at law.
Accordingly, and in addition to any remedies which the Company or their
affiliates may have at law, in the event of an actual or threatened breach by
the Executive of his covenants contained in Sections 6, 7, 8, 9 or 10 of this
Agreement, the Company and their affiliates shall have the absolute right to
apply to any court of competent jurisdiction for such injunctive or other
equitable relief as such court may deem necessary or appropriate in the
circumstances.
Section 12. No Prior Agreements. The Executive hereby represents and
warrants to the Company that the execution of this Agreement by Executive, his
employment by the Company, and the performance of his duties hereunder will not
violate or be a breach of any agreement with a former employer, client, or any
other Person. Further, Executive agrees to indemnify and hold harmless the
Company and its officers, directors, and representatives for any claim,
including, but not limited to, reasonable attorney's fees and expenses of
investigation, of any such third party that such third party may now have or may
hereafter come to have against the Company or such other persons, based upon or
arising out of any non-competition agreement, invention, secrecy, or other
agreement between Employee and such third party that was in existence as of the
date of this Agreement. To the extent that Employee had any oral or written
employment agreement or understanding with the Company, this Agreement shall
automatically supersede such agreement or understanding, and upon execution of
this Agreement by Employee and the Company, such prior agreement or
understanding automatically shall be deemed to have been terminated and shall be
null and void.
Section 13. Miscellaneous.
13.1 Remedies. The Company will have all rights and remedies set forth in
this Agreement, all rights and remedies which the Company has been granted at
any time under any other agreement or contract and all of the rights which the
Company has under any law. The Company will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law or available in equity.
13.2 Waivers and Amendments. The provisions of this Agreement may be
amended or waived only by a written agreement executed and delivered by the
Company and the Executive. No other course of dealing between the parties to
this Agreement or any delay in exercising any rights hereunder will operate as a
waiver of any rights of any such parties.
13.3 Successors and Assigns. All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of any of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and assigns, whether so
expressed or not; provided that the Executive may not assign his rights or
delegate his obligations under this Agreement without the written consent of the
Company.
13.4 Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
13.5 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all of which counterparts taken together will constitute one and
the same agreement.
13.6 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
13.7 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient, two business days after the date when sent to the recipient by
certified or registered mail, return receipt requested and postage prepaid. Such
notices, demands, and other communications will be sent to the Executive and to
the Company at the addresses set forth below.
If to the Executive:
Xxxxxxx XxXxxxxxxx
c/o Health Solutions
00 Xxxxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxx, Xxx Xxxx 00000
If to the Company:
National Medical Health Card Systems, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxxxxx Xxxxxxxx, Esq.
With a copy to (which shall not constitute notice):
National Medical Health Card Systems, Inc.
00 Xxxxxx Xxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxx
Or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
13.8 No Third Party Beneficiary. This Agreement will not confer any rights
or remedies upon any person other than the Company, the Executive and their
respective heirs, executors, administrators, personal representatives,
successors and permitted assigns.
13.9 Entire Agreement. This Agreement constitutes the entire agreement
among the parties and supersedes any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
in any way to the subject matter hereof.
13.10 Construction. The language used in this Agreement will be deemed to
be the language chosen by the parties to express their mutual intent, and no
rule of strict construction will be applied against any party. Any reference to
any federal, state, local or foreign statute or law will be deemed also to refer
to all rules and regulations promulgated thereunder, unless the context requires
otherwise. The use of the word "including" in this Agreement means "including
without limitation" and is intended by the parties to be by way of example
rather than limitation.
13.11 Life Insurance. The Company agrees to purchase and maintain
throughout the term of employment life insurance for Executive in the amount of
one hundred and forty thousand dollars ($140,000) for the benefit of Executives
heirs and assigns. Furthermore, the Company shall have the right to obtain life
insurance on the Executive's life, at the sole expense of the Company, as the
case may be, with the Company as the sole beneficiary thereof. The Executive
shall (a) cooperate fully in obtaining such life insurance, (b) sign any
necessary consents, applications and other related forms or documents and (c)
take any reasonably required medical examinations.
13.12 Survival. Sections 6, 7, 8, 9, 10 and 11 of this Agreement will
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
13.13 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW YORK.
13.14 Arbitration. Except for any proceeding seeking equitable remedies in
respect hereof (including, without limitation, for enforcement of Sections 6 and
9 above), any dispute or controversy under this Agreement shall be resolved by
final and binding arbitration before a single impartial arbitrator designated
and acting under the rules and regulations of the American Arbitration
Association ("AAA") located in Nassau County, Long Island if such arbitration is
commenced by the Executive and in Albany, New York, if such arbitration is
commenced by the Company. The decision and award of the arbitrator selected in
accordance with the then obtaining rules and regulations of the AAA shall be
final and binding upon the parties thereto, and may be enforced by the
prevailing party in any court of competent jurisdiction. As part of his or her
award, the arbitrator shall allocate the fees of the AAA, any and all other
costs of the arbitration, and the parties' reasonable attorneys' fees and
expenses, in accordance with the arbitrator's determination of the relative
merits of the parties' positions in the arbitration. Notwithstanding any other
provision of this Agreement to the contrary, the arbitrator shall have no power
to delete from, add to or modify the terms of this Agreement, and may not award
any remedy which effectively conflicts directly or indirectly with any provision
of the Agreement as written. The arbitrator's power shall be limited to
interpreting and enforcing the terms of the Agreement as written.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
National Medical Health Card Systems, Inc.
By: ______________________________
Name:
Title:
By: ____________________________
Xxxxxxx XxXxxxxxxx
EXHBIT A
