EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of December 1, 1998, by
and between MIM Corporation, a Delaware corporation, with its principal place of
business at 100 Clearbrook Road, Elmsford, New York 10523 (hereinafter referred
to as the "Company"), and Richard H. Friedman, residing at 2 Palmer Place,
Armonk, NY 10504 (hereinafter referred to as the "Executive").
WHEREAS, the Company wishes to offer employment to the Executive, and the
Executive wishes to accept such offer, on the terms and provisions set forth
below; Accordingly, the parties hereto agree as follows:
1. Term. The Company hereby employs the Executive, and the Executive hereby
accepts such employment, commencing as of December 1, 1998 and ending November
30, 2003, as Chief Executive Officer and Chairman of the Board of Directors of
the Company (the "Board") unless sooner terminated in accordance with the
provisions of Section 4 or Section 5 (the period during which the Executive is
employed hereunder, including any extensions or renewals thereof, being
hereinafter referred to as the "Term").
2. Duties. The Executive, in his capacity as Chief Executive Officer and
Chairman of the Board, shall faithfully perform for the Company the duties of
said office and position and such other duties of an executive, managerial, or
administrative nature as shall be specified and designated from time to time by
the Board. The Executive shall devote all of his business time and effort to the
performance of his duties hereunder.
3. Compensation.
3.1 Salary. The Company shall pay the Executive during the Term an
initial base salary at the rate of $425,000 per annum (the "Annual
Salary"), in accordance with the customary payroll practices of the Company
applicable to senior executives, in installments not less frequently than
monthly.
3.2 Benefits - In General. The Executive shall be permitted during the
Term to participate in any group life, hospitalization or disability
insurance plans, health programs, pension and profit sharing plans, salary
reviews, and similar benefits (other than bonuses and stock options or
other equity-based compensation, which are provided for under Section 3.3
and 3.4 hereof, or severance, displacement or other similar benefits) which
are of a type available from time to time to other senior executives of the
Company generally, in each case to the extent that the Executive is
eligible under the terms of such plans or programs.
3.3 Specific Benefits.
(a) During the Term, the Executive shall be entitled to receive a
bonus each calendar year, payable in cash in accordance with, and
subject to the terms and conditions of the Annual Bonus Compensation
Section of the Company's 1998 Senior Executive Bonus Program (the
"Bonus Program"), a copy of which is attached hereto as Exhibit A.
Such Annual Bonus Compensation shall be determined in accordance with
the terms and provisions of the Bonus Program and shall be payable
within ten (10) days of the completion of the audited financial
results of the Company.
(b) Upon execution and delivery of this Agreement, the Executive
shall be granted and shall receive 200,000 "Performance Units" (as
defined in the Bonus Program), subject to the terms and conditions of
the Bonus Program.
(c) Upon execution and delivery of this Agreement, the Executive
shall be granted and shall receive 300,000 "Performance Shares" (as
defined in the Bonus Program), subject to the terms and conditions of
the Bonus Program.
3.4 Grant of Option. Upon execution and delivery of this Agreement,
the Executive shall be granted and shall receive options ("Options") to
purchase 800,000 shares of the common stock, par value $0.0001 per share,
of the Company ("Common Stock"), at a price per share equal to $4.50 per
share, being the closing sales price per share of the Common Stock on the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") on December 2, 1998, the date on which the Company's
Compensation Committee granted the Executive these Options and the
compensation contemplated hereby. The Options shall, to the extent
permitted by Section 422 of
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the Internal Revenue Code of 1986, as amended (the "Code"), be qualified as
incentive stock options ("ISO's"). Options in excess of the number
permitted to receive ISO treatment under Section 422 of the Code shall not
be qualified as ISO's. Subject to Sections 3.8, 4 and 5 hereof and the
applicable stock option award agreement (i) 266,667 of such Options shall
vest and become exercisable on each of the first and second anniversaries
of the date thereof, and (ii) the remaining 266,666 Options shall vest and
become exercisable, on the third anniversary of the date hereof. The
Options shall be subject to the terms of a definitive stock option
agreement to be provided by the Company.
3.5 Vacation. The Executive shall be entitled to vacation of 20
business days per year from and after the date hereof, to be accrued and
available in accordance with the policies applicable to senior executives
of the Company generally.
3.6 Automobile. During the Term, the Company will provide the
Executive a monthly allowance of $1,500 for the use of an automobile.
3.7 Expenses. The Company shall pay or reimburse the Executive
ordinary and reasonable out-of-pocket expenses actually incurred (and, in
the case of reimbursement, paid) by the Executive during the Term in the
performance of the Executive's services under this Agreement, including,
but not limited to, business related travel and/or entertainment expenses;
provided, that the Executive submits proof of such expenses, with the
properly completed forms and supporting receipts and other documentation as
prescribed from time to time by the Company, in accordance with the
policies applicable to senior executives of the Company generally.
3.8 Shareholder Approval. The compensation set forth in Sections 3.3,
3.4, 4, 5.2 and 5.3 hereof shall be subject to the approval of this
Agreement by the Company's shareholders at an annual or special meeting of
the stockholders of the Company or by written consent in lieu thereof
("Shareholder Approval") on or before December 31, 1999. Notwithstanding
anything to the contrary contained in this Agreement or in the Bonus
Program, if approval of this Agreement by the Company's shareholders is not
obtained by December 31, 1999, the
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Executive shall not be entitled to receive any of the benefits set forth in
Section 3.3 and 3.4 hereof. Notwithstanding anything to the contrary
contained in this Agreement, in the event that Shareholder Approval is not
obtained by December 31, 1999, the Company and the Executive shall, for the
90-day period commencing January 1, 2000, negotiate in good faith in order
to provide the Executive with an alternative compensation arrangement
mutually agreeable to the Company and the Executive. In the event that the
Executive and the Company are unable to agree on an alternative
compensation arrangement within such 90-day period, the Executive shall
have the right to terminate this Agreement on not less than six (6) months
prior written notice, in which event the Executive shall be entitled to
receive, for a period of two (2) years after the termination of his
employment, the Annual Salary that the Executive was receiving at the time
of the termination of employment (and reimbursement for expenses incurred
prior to the date of termination as set forth in Section 3.7 hereof).
3.9 Incorporation By Reference. The terms and provisions of the Bonus
Program, as amended from time to time, are hereby incorporated herein by
reference as if fully set forth herein; provided, however, that in the
event that Shareholder Approval is not obtained on or before December 31,
1999, Sections 3.3 and 3.4 hereof, and the incorporation by reference of
the Bonus Program, shall be null and void and of no further force and
effect.
4. Termination upon Death or Disability.
4.1 Termination upon Death. If the Executive dies during the Term, the
obligations of the Company to or with respect to the Executive shall
terminate in their entirety except as otherwise provide under this Section
4. Upon death, (i) the Executive's estate or beneficiaries shall be
entitled to receive any Annual Salary and other benefits (including bonuses
awarded or declared but not yet paid) earned and accrued under Sections 3.1
and 3.2 of this Agreement prior to the date of termination and
reimbursement for expenses incurred prior to the date of termination as set
forth in Section 3.7 hereof; (ii) all fully vested and exercisable Options
granted under Section 3.4 hereof and held by the Executive may be exercised
by his estate for a period of one (1) year from and after the date of the
Executive's death; (iii) all Performance Units granted to the Executive
under Section 3.3(b) hereof shall vest at the accrued value (if any) under
the Bonus Program measured at the end of the fiscal year immediately
following the Executive's death; (iv) that portion of the Performance
Shares granted to the Executive under Section 3.3(c) hereof to which the
Executive would have been entitled to receive in
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accordance with the Bonus Program, as measured at the end of the fiscal
year immediately following the Executive's death shall vest in favor of the
Executive's estate; and (v) the Executive's estate and beneficiaries shall
have no further rights to any other compensation or benefits hereunder on
or after the termination of employment, or any other rights hereunder.
Notwithstanding anything to the contrary contained in this Section 4.1, it
is expressly understood and agreed that nothing in the foregoing clause (v)
shall restrict the ability of the Company to amend or terminate such
benefits plans and programs from time to time in its sole and absolute
discretion; provided, however, that the Company shall in no event be
required to provide any coverage contemplated by Section 3.2 hereof after
such time as the Executive becomes entitled to coverage under the benefit
plans and programs of another employer or recipient of the Executive's
services (and provided, further, that such entitlement shall be determined
without regard to any individual waivers or other arrangements).
4.2 Termination upon Disability. If the Executive by virtue of ill
health or other disability is unable to perform substantially and
continuously the duties assigned to him for more than 180 consecutive or
non-consecutive calendar days out of any consecutive twelve-month period,
the Company shall have the right, to the extent permitted by law, to
terminate the employment of the Executive upon notice in writing to the
Executive; provided that the Company will have no right to terminate the
Executive's employment if, in the opinion of a qualified physician
reasonably acceptable to the Company, it is reasonably certain that the
Executive will be able to resume the Executive's duties on a regular
full-time basis within 30 days of the date the Executive receives notice of
such termination. Upon termination of employment by virtue of disability,
(i) the Executive shall receive Annual Salary and other benefits (including
Bonuses awarded but not yet paid) earned and accrued under Section 3.2, of
this Agreement prior to the effective date of the termination of employment
and reimbursement for expenses incurred prior to the effective date of the
termination of employment as set forth in Section 3.7 hereof; (ii) all
fully vested and exercisable Options granted under Section 3.4 hereof and
held by the Executive may be exercised by the Executive or his estate or
beneficiaries for a period of one (1) year from and after the date of the
Executive's disability; (iii) all Performance Units granted to the
Executive under Section 3.3 (b) hereof shall vest at the accrued value (if
any) under the Bonus Program measured
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at the end of the fiscal year immediately following the Executive's
termination of employment; (iv) that portion of the Performance Shares
granted to the Executive under Section 3.3(c) hereof to which the Executive
would have been entitled to receive in accordance with the Bonus Program,
as measured at the end of the fiscal year immediately following the
Executive's termination of employment shall vest in favor of the Executive;
and (v) if the Executive's disabilities shall continue for a period of six
(6) months after his termination under this Section 4.2, the Executive
shall receive for a period for two (2) years after termination of
employment (A) the Annual Salary that the Executive was receiving at the
time of such termination of employment, less the gross proceeds paid to the
Executive on account of Social Security or other similar benefits and
Company provided long-term disability insurance, payable in accordance with
Section 3.1 hereof; and (B) such continuing coverage under the benefit
plans and programs the Executive would have received under Section 3.2
hereof as would have applied in the absence of such termination; it being
expressly understood and agreed that nothing in this clause (v) shall
restrict the ability of the Company to amend or terminate such benefits
plans and programs from time to time in its sole and absolute discretion;
provided, however, that the Company shall in no event be required to
provide any coverage contemplated in Section 3.2 hereof after such time as
the Executive becomes entitled to coverage under the benefit plans and
programs of another employer or recipient of the Executive's services (and
provided, further, that such entitlement shall be determined without regard
to any individual waivers or other arrangements); and (vi) the Executive
shall have no further rights to any other compensation or benefits
hereunder on or after the termination of employment, or any other rights
hereunder.
5. Certain Terminations of Employment
5.1 Termination for "Cause"; Termination of Employment by the
Executive Without Good Reason. (a) For purposes of this Agreement, "Cause"
shall mean (i) the Executive's conviction of a felony or a crime of moral
turpitude; or (ii) the Executive's commission of unauthorized acts intended
to result in the Executive's personal enrichment at the material expense of
the Company; or (iii) the Executive's material violation of the Executive's
duties or responsibilities to the Company which constitute willful
misconduct or dereliction of duty, or the material breach of the covenants
contained in Section 6
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hereof; or (iv) the Executive's other material breach of this Agreement
which breach shall have continued unremedied for ten (10) days after
written notice by the Company to the Executive specifying such breach.
(b) The Company may terminate the Executive's employment hereunder for
Cause. If the Company terminates the Executive for Cause, (i) the Executive
shall receive Annual Salary and other benefits (including bonuses awarded
or declared but not yet paid) earned and accrued under this Agreement prior
to the effective date of the termination of employment (and reimbursement
for expenses incurred prior to the effective date of the termination of
employment as set forth in Section 3.7); (ii) the Executive shall be
entitled to retain only those Performance Shares which shall have vested on
or prior to the date of termination under this Section 5.1; (iii) all
vested and unvested options shall lapse and terminate immediately and may
no longer be exercised; (iv) all Performance Units shall terminate
immediately; and (v) the Executive shall have no further rights to any
other compensation or benefits hereunder on or after the termination of
employment, or any other rights hereunder.
(c) The Executive may terminate his employment upon written notice to
the Company which specifies an effective date of termination not less than
30 days from the date of such notice. If the Executive terminates his
employment and the termination is not covered by Section 4, 5.2, or 5.3,
(i) the Executive shall receive Annual Salary and other benefits (including
bonuses awarded or declared but not yet paid) earned and accrued under this
Agreement prior to the effective date of the termination of employment (and
reimbursement for expenses incurred prior to the effective date of the
termination of employment as set forth in Section 3.7); (ii) all fully
vested and exercisable options granted under Section 3.4 hereof and held by
the Executive may be exercised by the Executive for a period of 30 days
from and after the date of the Executive's effective date of termination;
(iii) all Performance Units and Performance Shares shall lapse and
terminate immediately; and (iv) the Executive shall have no further rights
to any compensation or other benefits hereunder on or after the termination
of employment, or any other rights hereunder.
5.2 Termination Without Cause; Termination for Good Reason. (a) For
purposes of this Agreement, "Good Reason" shall mean the existence of any
one or more of the following conditions that shall continue for more than
45 days following written notice thereof by the Executive to the Company:
(i)
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the material reduction of the Executive's authority, duties and
responsibilities, or the assignment to the Executive of duties materially
inconsistent with the Executive's position or positions with the Company;
or (ii) the Company's material and continuing breach of this Agreement.
(b) The Company may terminate the Executive's employment at any time
for any reason whatsoever. If the Company terminates the Executive's
employment and the termination is not covered by Section 4, 5.1 or 5.3
hereof, , (i) the Executive shall receive Annual Salary and other benefits
(including bonuses awarded but not yet paid) earned and accrued under this
Agreement prior to the effective date of the termination of employment (and
reimbursement for expenses incurred prior to the effective date of the
termination of employment as set forth in Section 3.7); (ii) the Executive
shall receive (A) for the longer of (x) two (2) years after termination of
employment or (y) the period of time remaining under the Term, the Annual
Salary that the Executive was receiving at the time of such termination of
employment, payable in accordance with Section 3.1 hereof, and (B) for a
period of two (2) years after termination of employment, such continuing
coverage under the benefit plans and programs the Executive would have
received under Section 3.2 hereof as would have applied in the absence of
such termination, it being expressly understood and agreed that nothing in
this clause (ii) shall restrict the ability of the Company to amend or
terminate such benefits plans and programs from time to time in its sole
and absolute discretion; provided, however, that the Company shall in no
event be required to provide any coverage contemplated by Section 3.2
hereof after such time as the Executive becomes entitled to coverage under
the benefit plans and programs of another employer or recipient of the
Executive's services (and provided, further, that such entitlement shall be
determined without regard to any individual waivers or other arrangements);
(iii) all outstanding unvested Options granted under Section 3.4 hereof and
held by the Executive shall vest and become immediately exercisable and
shall otherwise be exercisable in accordance with their terms and the
Executive shall become vested in any pension or other deferred compensation
other than pension or deferred compensation under a plan intended to be
qualified under Section 401(a) or 403(a) of the Internal Revenue Code of
1986, as amended; (iv) that portion of the Performance Units granted under
Section 3.3(b) hereof to which the Executive would have been entitled to
receive in accordance with the Bonus Program, as measured on the date of
the Executive's termination of employment shall vest and
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become immediately payable at any time and from time to time from and after
the termination date at the then applicable target rate set forth in the
Bonus Program; and (v) that portion of the Performance Shares granted under
Section 3.3(c) hereof to which the Executive would have been entitled to
receive in accordance with the Bonus Program as at the end of the fiscal
year immediately following the termination of the Executive's employment
shall vest and become immediately transferable free of any restrictions on
transferability of the Performance Shares (other than restrictions on
transfer imposed under Federal and state securities laws) by the Executive
and all other restrictions imposed thereon shall cease, other than those
restrictions, limitations and/or obligations contained in the Bonus Program
that expressly survive the termination of the Executive's employment with
the Company; and (vi) the Executive shall have no further rights to any
other compensation or benefits hereunder on or after the termination of
employment, or any other rights hereunder.
(c) The Executive may terminate the Executive's employment with the
Company for "Good Reason". If the Executive terminates his employment for
Good Reason and such termination is not covered by Section 5.3 hereof, (i)
the Executive shall receive Annual Salary and other benefits (including
bonuses awarded but not yet paid) earned and accrued under this Agreement
prior to the effective date of the termination of employment (and
reimbursement for expenses incurred prior to the effective date of the
termination of employment as set forth in Section 3.7); (ii) the Executive
shall receive for a period of two (2) years after termination of employment
(A) the Annual Salary that the Executive was receiving at the time of such
termination of employment, payable in accordance with Section 3.1 hereof,
and (B) such continuing coverage under the benefit plans and programs the
Executive would have received under Section 3.2 hereof as would have
applied in the absence of such termination, it being expressly understood
and agreed that nothing in this clause (ii) shall restrict the ability of
the Company to amend or terminate such benefits plans and programs from
time to time in its sole and absolute discretion; provided, however, that
the Company shall in no event be required to provide any coverage
contemplated by Section 3.2 hereof after such time as the Executive becomes
entitled to coverage under the benefit plans and programs of another
employer or recipient of the Executive's services (and provided, further,
that such entitlement shall be determined without regard to any individual
waivers or other arrangements); (iii) all
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outstanding unvested Options granted under Section 3.4 hereof and held by
the Executive shall vest and become immediately exercisable and shall
otherwise be exercisable in accordance with their terms and the Executive
shall become vested in any pension or other deferred compensation other
than pension or deferred compensation under a plan intended to be qualified
under Section 401(a) or 403(a) of the Internal Revenue Code of 1986, as
amended; (iv) all Performance Units granted under Section 3.3(b) hereof and
held by the Executive shall vest and become immediately payable at any time
and from time to time from and after the termination date at the maximum
target rate set forth in the Bonus Program; and (v) all Performance Shares
granted under Section 3.3(c) hereof and held by the Executive shall vest
and become immediately transferable free of any restrictions on
transferability of the Performance Shares (other than restrictions on
transfer imposed under Federal and state securities laws) by the Executive
and all other restrictions imposed thereon shall cease, other than those
restrictions, limitations and/or obligations contained in the Bonus Program
that expressly survive the termination of the Executive's employment with
the Company; and (vi) the Executive shall have no further rights to any
other compensation or benefits hereunder on or after the termination of
employment, or any other rights hereunder.
5.3 Certain Terminations after Change of Control. (a) For purposes of
this Agreement, "Change of Control" means the occurrence of one or more of
the following: (i) a "person" or "group" within the means the meaning of
sections 13(d) and 14(d) of the Securities and Exchange Act of 1934 (the
"Exchange Act") other than the Executive, becomes the "beneficial owner"
(within the meaning of Rule l3d-3 under the Exchange Act) of securities of
the Company (including options, warrants, rights and convertible and
exchangeable securities) representing 30% or more of the combined voting
power of the Company's then outstanding securities in any one or more
transactions unless approved by at least two-thirds of the Board of
Directors then serving at that time; provided, however, that purchases by
employee benefit plans of the Company and by the Company or its affiliates
shall be disregarded; or (ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the operating assets of the Company; or (iii) a
merger or consolidation, or a transaction having a similar effect, where
(A) the Company is not the surviving corporation, (B) the majority of the
Common Stock of the Company is no longer held by the
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stockholders of the Company immediately prior to the transaction, or (C)
the Company's Common Stock is converted into cash, securities or other
property (other than the common stock of a company into which the Company
is merged), unless such merger, consolidation or similar transaction is
with a subsidiary of the Company or with another company, a majority of
whose outstanding capital stock is owned by the same persons or entities
who own a majority of the Company's Common Stock at such time; or (iv) at
any annual or special meeting of stockholders of the Company at which a
quorum is present (or any adjournments or postponements thereof), or by
written consent in lieu thereof, directors (each a "New Director" and
collectively the "New Directors") then constituting a majority of the
Company's Board of Directors shall be duly elected to serve as New
Directors and such New Directors shall have been elected by stockholders of
the Company who shall be an (I) "Adverse Person(s)"; (II) "Acquiring
Person(s)"; or (III) "40% Person(s)" (as each of the terms set forth in
(I), (II), and (III) hereof are defined in that certain Rights Agreement,
dated November 24, 1998, between the Company and American Stock Transfer &
Trust Company, as Rights Agent.
(b) If within the one (1) year period commencing upon any Change of
Control, the Executive is terminated by the Company or a successor entity
and the termination is not covered by Section 4 or 5. 1, or, within such
one (1) year period, the Executive elects to terminate his employment after
the Company or a successor entity materially reduces the Executive's
authority, duties and responsibilities, or assigns the Executive duties
materially inconsistent with the Executive's position or positions with the
Company or a successor entity immediately prior to such Change of Control,
(I) the Executive shall receive Annual Salary and other benefits (including
bonuses awarded or declared but not yet paid) earned and accrued under this
Agreement prior to the effective date of the termination of employment (and
reimbursement for expenses incurred prior to the effective date of the
termination of employment as set forth in Section 3.7); (ii) the Executive
shall receive (A) for the longer of (x) three (3) years after termination
of employment; or (y) the period of time remaining under the Term, the
Annual Salary that the Executive was receiving at the time of such
termination of employment, payable in accordance with Section 3.1 hereof,
and (B) such continuing coverage under the benefit plans and programs the
Executive would have received under Sections 3.2 of this Agreement as would
have
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applied in the absence of such termination; it being expressly understood
and agreed that nothing in this clause (ii) shall restrict the ability of
the Company to amend or terminate such plans and programs from time to time
in its sole and absolute discretion; provided, however, that the Company
shall in no event be required to provide any coverage under Section 3.2
hereof after such time as the Executive becomes entitled to coverage under
the benefit plans and programs of another employer or recipient of the
Executive's services (and provided, further, that such entitlement shall be
determined without regard to any individual waivers or other arrangements);
(ill) all outstanding unvested Options granted under Section 3.4 hereof and
held by the Executive shall vest and become immediately exercisable and
shall otherwise be exercisable in accordance with their terms and the
Executive shall become vested in any pension or other deferred compensation
other than pension or deferred compensation under a plan intended to be
qualified under Section 401(a) or 403(a) of the Internal Revenue Code of
1986, as amended; (iv) all Performance Units granted under Section 3.3(b)
hereof and held by the Executive shall vest and become immediately payable
at any time and from time to time from and after the termination date, at
the maximum target rate set forth in the Bonus Program; (v) all Performance
Shares granted under Section 3.3 (c) hereof and held by the Executive shall
vest and become immediately transferable free of any restrictions on
transferability of the Performance Shares (other than restrictions on
transfer imposed under Federal and state securities laws) by the Executive
and all other restrictions imposed thereon shall cease other than those
restrictions, limitations and/or obligations contained in the Bonus Program
that expressly survive the termination of the Executive's employment with
the Company or any successor entity, as the case may be; and (vi) the
Executive shall have no further rights to any other compensation or
benefits hereunder on or after the termination of employment or any other
rights hereunder.
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6. Covenants of the Executive.
6.1 Covenant Against Competition, Other Covenants. The Executive
acknowledges that (i) the principal business of the Company (which, for
purposes of this Section 6 shall include the Company and each of its
subsidiaries and affiliates) is the provision of a broad range of services
designed to promote the cost-effective delivery of pharmacy benefits,
including pharmacy benefit management services, claims processing and/or
the purchasing of pharmaceutical products on behalf of pharmacy networks
and long term care facilities (including assisted living facilities and
nursing homes) (such business, and any and all other businesses that after
the date hereof, and from time to time during the Term, become material
with respect to the Company's then-overall business, herein being
collectively refereed to as the "Business'); (ii) the Company is dependent
on the efforts of a certain limited number of persons who have developed,
or will be responsible for developing the Company's Business, (iii) the
Company's Business is national in scope; (iv) the Executive's work for the
Company has given and will continue to give him access to confidential
affairs and proprietary information of the Company; (v) the covenants and
agreements of the Executive contained in this Section 6 are essential to
the business and goodwill of the Company; and (vi) the Company would not
have entered into do Agreement but for the covenants and agreements set
forth in this Section 6. Accordingly, the Executive covenants and agrees
that:
(a) At any time during his employment with the Company and ending
one (1) year following (i) termination of the Executive's employment
with the Company (irrespective of the reason for such termination) or
(ii) payment of any Annual Salary in accordance with Section 4 or 5
hereof (unless such termination is by the Company without Cause),
whichever occurs last, the Executive shall not engage, directly or
indirectly (which includes, without limitation owning, managing
operating, controlling, being employed by, giving financial assistance
to, participating in or being connected in any material way with any
person or entity other than the Company), anywhere in the United
States in (A) the Business or (B) any material component of the
Business; provided, however, that the Executive's ownership as a
passive investor of less than two percent (2%) of the issued and
outstanding stock of a publicly held corporation shall not be deemed
to constitute competition.
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(b) During and after the period during which the Executive is
employed, the Executive shall keep secret and retain in strictest
confidence, and shall not use for his benefit or the benefit of
others, except in connection with the business and affairs of the
Company, all confidential matters relating to the Company and/or the
Company's Business, learned by the Executive heretofore or hereafter
directly or indirectly from the Company (the "Confidential Company
Information"), including, without limitation, information with respect
to (i) the strategic plans, budgets, forecasts, intended expansion of
product, service or geographic markets of the company and it's
affiliates, (ii) sales figures, contracts agreements, and undertakings
with or with respect to the Company's customers or prospective
customers, (iii) profit or loss figures, and (iv) then existing or
then prospective customers, clients, suppliers and sources of supply
and customer lists, and shall not disclose such Confidential Company
Information to anyone outside of the Company except with the Company's
express written consent and except for Confidential Company
Information which is at the time of receipt or thereafter becomes
publicly known through no wrongful act of the Executive or is received
from a third party not under an obligation to keep such information
confidential and without breach of this Agreement. Notwithstanding the
foregoing, this Section 6.1(b) shall not apply to the extent that the
Executive is acting to the extent necessary to comply with legal
process; provided that in the event that the Executive is subpoenaed
to testify or to produce any information or documents before any
court, administrative agency or other tribunal relating to any aspect
pertaining to the Company, he shall immediately notify the Company
thereof.
(c) During the period commencing on the date hereof and ending
two (2) years following the later to occur of dates upon which the
Executive shall cease to be an (i) employee or (ii) an "affiliate", as
defined in Rule 144 promulgated under the Securities Act of 1993, and
the rules and regulations promulgated thereunder (as amended, the
"1993 Act"), of the Company, the Executive shall not, without the
Company's prior written consent, directly or indirectly, solicit or
encourage to leave the employment or other service of the Company any
employee or independent contractor thereof or hire (on behalf of the
Executive or any other person, firm, corporation or entity) any
employee or independent contractor who has left the employment or
other service of the Company within one (1)
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year of the termination of such employee's or independent contractor's
employment or other service with the Company. During such a one (1)
year period, the Executive will not, whether for his own account or
for the account of any other person, firm, corporation or other
entity, intentionally interfere with the Company's relationship with,
or endeavor to entice away from the Company any person who during the
Term is or was a customer or client of the Company.
(d) All memoranda, notes, lists, records, property and any other
tangible product and documents (and all copies thereof) made, produced
or compiled by the Executive or made available to the Executive
concerning the Business of the Company, including all Confidential
Company Information, shall be the Company's property and shall be
delivered to the Company at any time on request.
6.2 Rights and Remedies upon Breach. (a) The Executive acknowledges
and agrees that any breach by him of any of the provisions of Section 6.1
hereof (the "Restrictive Covenants") would result in irreparable injury and
damage for which money damages would not provide an adequate remedy.
Therefore, if the Executive breaches or threatens to commit a breach of any
of the provisions of Section 6. 1 hereof, the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights
and remedies shall be in addition to , and not in lieu of, any other rights
and remedies available to the Company under law or in equity (including,
without limitation, the recovery of damages):
(i) The right and remedy to have the Restrictive Covenants
specifically enforced (without posting bond and without the need to
prove damages) by any court having equity jurisdiction, including,
without limitation, the right to an entry against the Executive of
restraining orders and injunctions (preliminary, mandatory, temporary
and permanent) against violations, threatened or actual, and whether
or not then continuing, of such covenants.
(ii) The right and remedy to require the Executive to account for
and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits
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(collectively, "Benefits") derived or received by him as the result of
any transactions constituting a breach of the Restrictive Covenants,
and the Executive shall account for and pay over such Benefits to the
Company and, if applicable, its affected subsidiaries and/or
affiliates.
(b) The Executive agrees that in any action seeking specific
performance or other equitable relief, he will not assert or contend that
any of the provisions of this Section 6 are unreasonable or otherwise
unenforceable. The existence of any claim or cause of action by the
Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement of the Restrictive Covenants.
7. Other Provisions.
7.1 Severabilitv. The Executive acknowledges and agrees that (i) he
has had an opportunity to seek advice of counsel in connection with this
Agreement and (ii) the Restrictive Covenants are reasonable in geographical
and temporal scope and in all other respects. If it is determined that any
of the provisions of this Agreement, including, without limitation, any of
the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the provisions of this Agreement shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions thereof.
7.2 Duration and Scope of Covenants. If any court or other
decision-maker of competent jurisdiction determines that any of Executive's
covenants contained in this Agreement, including, without limitation, any
of the Restrictive Covenants, or any part thereof, is unenforceable because
of the duration or geographical scope of such provision, then, after such
determination has become final and unappealable, the duration or scope of
such provision, as the case may be, shall be reduced so that such provision
becomes enforceable and, in its reduced form, such provision shall then be
enforceable and shall be enforced.
7.3 Enforceability; Jurisdictions. Any controversy or claim arising
out of or relating to this Agreement or the breach of this Agreement that
is not resolved by Executive and the Company (or its subsidiaries or
affiliates, where applicable), other than those arising under Section 6
thereof, to the extent necessary for the Company (or its subsidiaries or
affiliates, where applicable) to
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avail itself of the rights and remedies provided under Section 6.2 hereof,
shall be submitted to arbitration in New York, New York in accordance with
New York law and the procedures of the American Arbitration Association.
The determination of the arbitrator(s) shall be conclusive and binding on
the Company (or its subsidiaries or affiliates, where applicable) and
Executive and judgment may be entered on the arbitrator(s)' award in any
court having jurisdiction.
7.4 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be
deemed given when so delivered personally, telegraphed, telexed or sent by
facsimile transmission or, if mailed, five days after the date of deposit
in the United States mails as follows:
(i) If to the Company, to:
MIM Corporation
100 Clearbrook Road
Elmsford, New York 10523
Attention: General Counsel
with a copy to:
Rogers & Wells
200 Park Avenue - Suite 5200
New York, New York 10166-0153
Attention: Richard A. Cirillo
(ii) If to the Executive, to:
Richard H. Friedman
2 Palmer Place
Armonk, NY 10504
Any such person may by notice given in accordance with this Section
7.4 to the other parties hereto designate another address or person
for receipt by such person of notices hereunder.
7.5 Entire Agreement. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
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7.6 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by
a written instrument signed by the parties or, in the case of a waiver, by
the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege nor any single or partial exercise of any such
right, power or privilege, preclude any other or further exercise thereof
or the exercise of any other such right, power or privilege.
7.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPALS OF CONFLICTS OF LAW.
7.8 Assignment. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive; any purported
assignment by the Executive in violation hereof shall be null and void. In
the event of any sale, transfer or other disposition of all or
substantially all of the Company's assets or business, whether by merger,
consolidation or otherwise, the Company (without limiting the Executive's
rights under Section 5.3) may assign this Agreement and its rights
hereunder.
7.9 Withholding. The Company shall be entitled to withhold from any
payments or deemed payments any amount of tax withholding required by law.
7.10 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors, permitted
assigns, heirs, executors and legal representatives.
7.11 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and
delivered shall be an original but all such counterparts together shall
constitute one and the same instrument. Each counterpart may consist of two
copies hereof each signed by one of the parties hereto.
7.12 Survival. Anything contained in this Agreement to the contrary
not withstanding, the provisions of Sections 5, 6, 7.3 and 7.9, and the
other provisions of this Section 7 (to
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the extent necessary to effectuate the survival of Sections 5, 6, 7.3 and
7.9), shall survive termination of this Agreement and any termination of
the Executive's employment hereunder.
7.13 Existing Agreements. Executive represents to the Company that he
is not subject or a party to any employment or consulting agreement,
non-competition covenant or other agreement, covenant or understanding
which might prohibit him from executing this Agreement or limit his ability
to fulfill his responsibilities hereunder.
7.14 Headings. The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.
7.15 Supercedes Prior Agreements. Upon execution and delivery of this
Agreement, this Agreement shall supercede in its entirety any and all prior
agreements with respect to the Executive's employment.
IN WITNESS WHEREOF, the parties hereto have signed their names as of the
day and year first above written.
MIM CORPORATION
By:
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Barry A. Posner
Vice President & General Counsel
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Richard H. Friedman
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