EXHIBIT 10.26
DEPARTURE AGREEMENT AND GENERAL RELEASE
(PLEASE READ CAREFULLY. THIS DEPARTURE AGREEMENT AND GENERAL
RELEASE HAS IMPORTANT LEGAL CONSEQUENCES.)
This Departure Agreement and General
Release (this “ Agreement ”) is between
National Medical Health Card Systems, Inc. (the “
Company ”) and Tery Baskin (“
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 June 4, 2001 (the “ Employment
Agreement ”); and
WHEREAS,
the Company and Employee have agreed on certain terms and
conditions regarding the termination of employment under the
Employment Agreement;
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 with the Company will
terminate (the “ Termination Date ”).
This Agreement has been presented to Employee on or before the
Termination Date.
2. In consideration for the covenants
and promises set forth herein, following the execution of the
Agreement by Employee ( the “ Execution Date
”):
(a) The Company will pay
Employee’s present salary for twelve months (such period to
be referred to as the “ Severance Period
”), but only so long as Employee has not breached and does
not breach the provisions of paragraphs 6 through 11 of the
Employment Agreement, for a total sum not to exceed $230,000,
payable in twenty-six bi-weekly installments of $8,846.15 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.
(b) Employee has received 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) Provided that Employee does not
violate paragraphs 6 through 11 of the Employment Agreement and
provided that Employee provides any assistance reasonably requested
by the Company in connection with the renewal of such contracts,
the Company will pay Employee a commission (the “
Commission Payments ”) equal to three cents per
net paid claim for the Arkansas
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State Employees
account ( “ASE” ) and State of Arkansas
Public School account (“ SAPS” ), for
each net paid claim submitted during the period commencing on the
2007 renewal dates of each such account and ending on the third
anniversary of the 2007 renewal dates. The Commission Payments
shall not exceed a total of $83,333 per calendar year, and the
total Commission Payments shall be no greater than $250,000. Each
Commission Payment will be made on a quarterly basis and will be
paid by the sixtieth day following each calendar quarter, and each
Commission Payment shall be paid only if Employee has continued to
provide any assistance reasonably requested by the Company in
connection with such accounts and has otherwise not breached this
Agreement. Such payments will be subject to withholding if and as
required by law. Any dispute arising out of or relating to the
Commission Payments shall be submitted to binding arbitration by a
party’s giving written notice to such effect to the other
party and the office of the American Arbitration Association (the
“AAA” ) in New York, New York.
Arbitration of such controversy, disagreement, or dispute shall be
conducted by a single arbitrator in accordance with the Federal
Arbitration Act and the Employment Arbitration Rules of the
AAA.
(d) For the period for which Employee
is eligible to continue benefits under the Consolidated Omnibus
Budget Reconciliation Act (“ COBRA ”), so
long as Employee has not breached and does not breach the
provisions of paragraphs 6 through 11 of the Employment Agreement,
the Company will pay the Company’s portion of the premiums as
of the date of this Agreement ($7,121 per annum, subject to
adjustment at the renewal date in February 2008) 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 earlier of the date that (x) Employee is
employed by an employer offering health coverage or (y) the
end of the Severance Period. In addition, the Company will assign
its interest in the life insurance policy purchased with respect to
Employee within thirty (30) days of the execution of this
Agreement and waive any claim to reimbursement for premiums
paid.
(e) Employee has received all
reimbursable expenses pursuant to the Company’s Travel &
Entertainment policy incurred through the Termination Date and
submitted within thirty (30) days after the Termination
Date.
(f) Employee has received all accrued
vacation pay to which Employee is entitled through and including
the Termination Date, which amount is $11,315.34.
(g) 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 thirty
(30) days after the signature of Employee and the Company to
this Agreement and will be paid within thirty (30) days after
Employee presents a summary invoice for such services.
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(h) 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.
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” ), the termination of Employee’s
employment will be considered as an involuntary termination without
cause. Accordingly, under the terms of the Stock Option Plan,
Employee will have 90 days following the Termination Date to
exercise any of his vested options. The Parties acknowledge
that, on the 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 Company’s 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. Release Provisions.
(a) As a material inducement to
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 against the Company and each of its
current and former owners (including, without limitation, New
Mountain Capital, L.L.C., New Mountain Partners, L.P., New Mountain
Affiliated Investors, L.P., and their respective affiliates),
predecessors, assigns, employees, representatives, attorneys,
benefit plans, insurers, parent companies, divisions, subsidiaries,
affiliates, directors, managers, partners, members, and officers,
including any and all persons acting by, through, or under or in
concert with any of them (collectively “
Releasees ”), Employee hereby releases and
forever discharges the Releasees from any all actions, causes of
action, suits, dues, sums of money, reckonings, covenants,
contracts, bonuses, controversies, agreements, claims, promises,
charges, obligations, complaints and demands whatsoever in law or
equity, which Employee (and Employee’s heirs, executors,
administrators, successors and/or assigns) may now have or
hereafter can, shall, may, or may have had for, upon, or by reason
of any matter, cause or actual or alleged act, omission,
transaction, practice, conduct, occurrence, or other matter up to
and including the execution of this Agreement by Employee,
including without limitation, any claim arising out of or relating
to Employee’s employment by the Company and each of its
subsidiaries and affiliated entities, and any and all obligations
and liabilities of the Company under the Employment Agreement, the
letter agreement dated November 28, 2005 between the Company
and Employee (to the extent such letter agreement exists and is
effective), or any other agreement between Employee and any of the
Releasees, including, without limitation, any claim for car
allowances, club dues, unused vacation time, or other benefits
incident to Employee’s employment, and the ownership,
acquisition,
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offer or sale
of, or rights to any equity interest, or any option to purchase or
acquire any equity interest in the Company, excepting only the
rights and obligations (i) created by this Agreement;
(ii) that may exist under any indemnification agreement or the
Company’s Certificate of Incorporation and Bylaws, as
amended, to indemnify Employee; (iii) Employee’s rights
under state worker’s compensation laws (for occupational
illness or injury only) (iv) Employee’s vested rights
under the Company’s health, dental, pharmacy and 401(k)
benefit plans, (v) any rights, whenever arising, Employee may have
in his capacity as a shareholder of the Company and not arising
from his capacity as officer, employee or agent of the Company;
provided , however , that Employee shall neither
(A) initiate any claim based in whole or in part upon
Employee’s status as a shareholder of the Company nor
(B) directly or indirectly counsel or encourage another person
or entity to initiate, or voluntarily provide assistance in respect
of, any claims based in whole or in part upon any person’s or
entity’s status as a shareholder of the Company;
provided , further , that nothing herein is intended
to nor shall it preclude Employee from providing truthful testimony
if under legal compulsion as a witness regarding any such claim and
(vi) any cause of action that arises in whatever capacity
after the date of this Agreement.
(b) Without limiting the generality
of the foregoing, this Agreement is intended to and shall release
Releasees from any and all claims, whether known or unknown, which
Employee ever had, has, or may have against any Releasee with
respect to Employee’s employment, the terms, benefits, and
conditions of that employment, and/or the termination thereof,
including without limitation those arising under the Civil Rights
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