EXHIBIT 10.25
CONSULTING AGREEMENT AND
DEPARTURE AGREEMENT AND GENERAL RELEASE
(PLEASE READ CAREFULLY. THIS DEPARTURE AGREEMENT AND GENERAL
RELEASE HAS IMPORTANT LEGAL CONSEQUENCES.)
This Consulting Agreement and
Departure Agreement and General Release (this “
Agreement ”) is between National Medical Health
Card Systems, Inc. (“ Company ”) and Bill
Masters (“ Employee ”) and is a complete,
final and binding settlement of all claims and potential claims, if
any, with respect to their employment relationship. Employee and
the Company may sometimes be referred to collectively as the
“ Parties .”
WHEREAS,
the Company and Employee are parties to an Employment Agreement
dated on or about October 4, 2004 (the “
Employment Agreement ”); and
WHEREAS,
the Company and Employee are parties to a letter dated
November 28, 2005 (the “ Severance Letter
”); and
WHEREAS,
the Company and Employee have agreed on certain terms and
conditions regarding the termination of Employee’s employment
under the Employment Agreement and Severance Letter (without
“Cause” as such term is defined in the Employment
Agreement and Severance Letter) but wish to do so only after a
Consulting Period (as hereinafter defined);
NOW,
THEREFORE, in consideration of the mutual promises and covenants
set forth herein, be it agreed as follows:
1. As of May 21, 2007,
Employee’s employment relationship as Chief Information
Officer with the Company will terminate (the “
Termination Date ”), but Employee shall
continue to provide consulting services as set out in paragraph 2
of this Agreement as an employee of the Company. This Agreement has
been presented to Employee on or before the Termination Date and
will become effective seven (7) days (the
“Effective Date” ) after the
execution of this Agreement by the Employee (the
“Execution Date” ).
2. Consulting Period and Payments
During the Consulting Period.
(a) Employee agrees that he shall
provide consulting services from the Termination Date hereof
through June 28, 2007 (the “Consulting
Period” ), as may be reasonably requested by the
Chief Executive Officer of the Company, or his designee. Such
consulting services shall include providing information with regard
to the information systems of the Company, providing information
with regard to personnel or legal matters, or such other duties as
may reasonably be directed by the Company.
(b) Such services shall not exceed an
average of ten hours per week, although there may be some weeks in
which more than ten hours may be requested.
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(c) The Company will pay Employee his
regular base salary in the amount of $8,750 per bi-weekly pay
period through the Consulting Period (the
“Payments” ), less applicable federal,
state, and local legally required deductions and less any
deductions authorized by Employee to pay his portion to continue
group health coverage. The Payments will not commence until this
Agreement is executed and the Revocation Period (as defined below)
expires. On the first regular pay date following the expiration of
the Revocation Period, the Company will pay Employee any Payments
that accrued during the Review Period (as defined below) and the
Revocation Period. For the period for which Employee is eligible to
continue benefits under the Consolidated Omnibus Budget
Reconciliation Act (“ COBRA ”), and so
long as Employee is not employed by another employer offering group
health coverage, but not to exceed the end of the later of the
Consulting Period and Severance Period (as defined below), Company
will pay the Company’s portion of the premiums for
Employee’s medical, dental, and prescription coverage.
(d) In all matters relating to the
provisions of this paragraph 2, Employee shall continue to be an
employee of the Company, but his participation and eligibility in
any employee benefit plans sponsored by the Company shall be only
in accordance with the terms of such employee benefit plans.
(e) During the Consulting Period,
Employee shall comply with all provisions contained in
Sections 6 through 11 of the Employment Agreement, but nothing
in this Agreement shall imply any limitation on the time duration
of any obligation of Employee in paragraphs 6 through 11 of the
Employment Agreement.
(f) During the Consulting Period,
Employee will not make any defamatory or disparaging remarks
regarding the Company, its officers, or its products or services to
any person with whom the Company has business relations, including
any vendor, customer, supplier or employee of the Company.
(g) During the Consulting Period,
Employee may be employed or may pursue other business
opportunities, and the Company will use reasonable efforts to
ensure that the consulting services may be rendered at times that
do not conflict with such employment or other business
opportunities. However and notwithstanding the foregoing, during
the Consulting Period, Employee will continue to owe duties of
loyalty and confidentiality to the Company, and Employee will not,
for himself or on behalf of another, accept employment, pursue any
business opportunity, render any services for or with any
competitor of the Company, or otherwise engage in any competitive
activity against the Company.
(h) The Company may terminate
Employee’s employment as a consultant and the Payments if
Employee (i) refuses to perform consulting services reasonably
requested by the Company; (ii) fails to perform such
consulting services to the reasonable satisfaction of the Company;
(iii) breaches any promise contained in this Agreement or
Sections 6 through 11 of the Employment Agreement; or
(iv) dies or becomes disabled, with reasonable accommodation,
to perform the essential functions of his consulting
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services. The
Consulting Period will not renew upon its expiration and no renewal
of the Consulting Period will be implied by law.
3. For purposes of the National
Medical Health Card Systems, Inc. 1999 Stock Option Plan, as
amended (the “Stock Option Plan” ) and
the National Medical Health Card Systems, Inc. Amended and Restated
2000 Restricted Stock Grant Plan (the “Restricted Stock
Plan” ), Employee’s credited service will
continue until the date of termination or date of expiration
(whichever occurs first) of the Consulting Period (such date to be
referred to as the “Consulting Period Termination
Date” ). Accordingly, except as otherwise
provided by the Stock Option Plan (with respect to the effect of
termination of service by the Company for “cause” or by
the Employee voluntarily or due to Employee’s death or
disability), Employee will have 90 days following the
Consulting Period Termination Date to exercise any of his
vested options. The Parties acknowledge that, on the
Consulting Period Termination Date, Employee will forfeit and have
no further right, title or interest in or with respect to, any and
all non-vested options, shares of restricted stock and
restricted stock unit awards held by Employee under the Stock
Option Plan and/or the Restricted Stock Plan. Employee affirms the
provision of any Restricted Stock Agreement that the Company shall
have the right to instruct the Company’s transfer agent to
transfer any unvested restricted stock to the Company.
4. Severance Payments.
(a) Provided that the Employee
executes an additional release substantially in the form attached
hereto as Exhibit “B” at the end of the Consulting
Period, Company will pay Employee’s present salary for a
period not to exceed one year (such period to be referred to as the
“ Severance Period ”), beginning on the
Consulting Period Termination Date, but only so long as Executive
has not breached and does not breach the provisions of
Sections 6 through 11 of the Employment Agreement, for a total
sum not to exceed $227,500, payable in twenty-six installments of
$8,750 each, all in accordance with the Company’s general
payroll practices, less applicable federal, state, and local
legally required deductions and less any deductions authorized by
Employee to pay his portion to continue group health coverage. Any
payments to which Employee is entitled pursuant to this paragraph
4(a) shall be payable to Employee’s estate in the event of
Employee’s death prior to the end of the Severance
period.
(b) Employee shall receive all
accrued salary through the Termination Date in accordance with the
Company’s general payroll practices, less applicable federal,
state, and local legally required deductions.
(c) For the period for which Employee
is eligible to continue benefits under COBRA, Company will pay the
Company’s portion of the premiums for Employee’s
medical, dental, and prescription coverage from the Termination
Date through the end of such period of eligibility but not to
exceed the end of the Severance Period, subject to Employee’s
strict compliance with Sections 6 through 11 of the Employment
Agreement and the terms and provisions of this Agreement.
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(d) Employee shall receive all
reimbursable expenses pursuant to the Company’s Travel &
Entertainment policy incurred through the Consulting Period
Termination Date and submitted within thirty (30) days after
the Consulting Period Termination Date.
(e) Employee shall receive all
accrued vacation pay to which Employee is entitled through and
including the Termination Date, which amount is $2,840.47.
(f) The Company will reimburse
Employee for attorney’s fees reasonably incurred in the
review and execution of this Agreement, not to exceed $5,000. Such
request for reimbursement must be submitted no later than
July 15, 2007 and will be paid within thirty (30) days
after Employee presents an itemized invoice for such
services.
(g) Employee acknowledges and agrees
that he is not entitled to any additional wages, bonus payments,
benefits or other compensation from the Company except as set forth
herein.
5. Release Provisions.
(a) As a material inducement to the
Employee to enter this Agreement, and in consideration for the
Company’s payments to Employee as set forth in this
Agreement, and for other good and valuable consideration, as and
for Employee’s complete release of all statutory, contract,
tort and all other claims ag
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