Exhibit 10.50
EMPLOYMENT AGREEMENT
The Employment Agreement dated as of November 20th, 2002 (the "Effective
Date") is by and between National Medical Heath Card Systems, Inc., a Delaware
Corporation (the "Company"), and Xxxxx Xxxx (the "Executive").
WHEREAS, the Company is engaged in providing comprehensive prescription
benefit management services to the general commercial market; and
WHEREAS, the Company and the Board of Directors of the Company desire to
deem Executive an Executive Officer of the Company and issue her an employment
agreement pursuant to the terms and conditions set forth herein; 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 the 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 the 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 crime
resulting in material injury to the business or property of the Company, or (c)
the material breach by the Executive of the 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 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 to the Company, which breach shall not have been cured by
the Executive within ten (10) days of receipt of written notice of said material
breach.
"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 members of the Board of the surviving entity; or (iv)
the sale of all or substantially all of the assets of the Company.
"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 2 and Section 5 of
the Agreement.
"Executive" means Xxxxx Xxxx.
"Intellectual Property" has the meaning set forth in Section 7 of the
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 the
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 the 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 the 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
Chief Information Officer for Company and will perform such executive and
management duties as may, from time to time, be determined and assigned to the
Executive by the President of the Company or his designee and shall relate
primarily to the business and operations of the Company.
3.2 Performance of Duties; Other Activities. The Executive shall devote her
best efforts, attention and skills toward performing her duties on behalf of the
Company, and her full business and professional time to fully and faithfully
perform such duties and responsibilities to the best of her abilities 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 her duties and responsibilities hereunder.
3.3 Reporting. The Executive will report to the president of the Company or
other person designated by the president of the Company.
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 $180,000 per annum (the "Base Salary"), plus increases
the Board approves in its sole discretion from time to time, 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 an annual bonus (the "Bonus"), in accordance and payable with the
Company's Management Bonus Plan.
4.3 Transaction Bonus. In the event of a Change of Control, Executive shall
be entitled to receive a transaction Bonus payable as follows: (i) 50% of the
Executive's current Base Salary payable on the closing of the transaction
constituting the Change of Control and (ii) 50% of the Executive's current Base
Salary payable the earlier of six month from the closing of the transaction
constituting the Change of Control or the Unjustified Termination of Executive.
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 her full-time employment hereunder, be
immediately enrolled in the Company's current benefit plans; and
(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); and
(c) temporary housing in one of the Company's corporate apartments.
4.4 Expenses. The Company shall reimburse the Executive for any and all
reasonable expenses incurred by her in the course of performing her duties under
the 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 Term. The Executive's full-time employment hereunder shall commence
upon the (the "Effective Date"), and, unless renewed or modified by written
agreement between the Company and the Executive, the Employment Period will
terminate on the first anniversary following the Effective Date (the "Term");
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. Notwithstanding the foregoing,
this Agreement shall automatically be renewed for successive additional terms of
one (1) year each (upon the expiration of the Term). The renewal term shall be
subject to the right of the Company to terminate this Agreement by giving not
less than thirty (30) days written notice of termination to the Executive prior
to the commencement of any renewal term, such termination to be effective at the
conclusion of the term or such renewal term.
5.2 Unjustified Termination. Except as otherwise provided in Section 5.3
below, if the Employment Period shall be terminated by the Company for any
reason other than (a) for Cause, (b) as a result of the Executive's resignation,
or (c) as a result of the death or Permanent Disability of the Executive
(collectively, an "Unjustified Termination"), 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 the 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 first anniversary of the Effective Date hereof (a) for
Cause, (b) as a result of the Executive's 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 her 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 the 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 her, 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 the 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 her 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 her 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. The Executive covenants and agrees that during
her employment by the Company, and for a period of one (1) year following the
termination for any reason of such employment, she shall not, either directly or
indirectly, without the prior written consent of the Company, on her 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 benefit management services ("PBM Services") that are similar
to or competitive to those provided, offered or sold by the Company; and for a
period of two (2) 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.
Section 10. Agreement Not to Solicit Employees.The Executive covenants and
agrees that during her employment by the Company, and for a period of two (2)
years following termination, for any reason, of such employment, she will not,
either directly or indirectly, on her 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 her of any of her covenants contained in Sections 6, 7, 8, 9 or 10 of the
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 her covenants contained in Sections 6, 7, 8, 9 or 10 of the
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 the Agreement by Executive, her
employment by the Company, and the performance of her 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 the Agreement. To the extent that Employee had any oral or written
employment agreement or understanding with the Company, the Agreement shall
automatically supersede such agreement or understanding, and upon execution of
the 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 and the Executive will have all rights and
remedies set forth in the 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 the Agreement and to
exercise all other rights granted by law or available in equity.
13.2 Waivers and Amendments. The provisions of the 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 the 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 the
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of any of the parties hereto will bind and inure to the benefit of
the parties and their respective heirs, executors, administrators, personal
representatives, successors and assigns, whether so expressed or not; provided
that the Executive may not assign her rights or delegate her obligations under
the Agreement without the written consent of the Company.
13.4 Severability. Whenever possible, each provision of the Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the 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 the
Agreement.
13.5 Counterparts. The 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 the Agreement are
inserted for convenience only and do not constitute a part of the Agreement.
13.7 Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of the 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:
Xxxxx Xxxx
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. The 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. The 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 the 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 the Agreement means "including
without limitation" and is intended by the parties to be by way of example
rather than limitation.
13.11 Survival. Sections 6, 7, 8, 9, 10 and 11 of the Agreement will
survive and continue in full force in accordance with their terms
notwithstanding any termination of the Employment Period.
13.12 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THER AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND
NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW YORK.
13.13 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 the 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. 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 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 the Agreement to the contrary, the arbitrator shall have no power
to delete from, add to or modify the terms of the 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 the Agreement as of
the date first above written.
National Medical Health Card Systems, Inc.
By: ______________________________
Name:
Title:
By: _________________________
Xxxxx Xxxx
