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EXHIBIT 99.1
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of the 13th day of August, 1996, by and between
NCS HEALTHCARE OF OKLAHOMA, INC., an Oklahoma corporation (the "Company"), and
WILLIS SMITH, an individual ("Employee").
RECITALS:
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A. Employee is a principal officer and shareholder of Thrifty Medical
Supply, Inc. ("Thrifty Medical"), Med-Equip Homecare Equipment Service, Inc.
("Med-Equip"), and Northside Pharmacy, Inc. ("Northside"), each an Oklahoma
corporation, and a principal officer and member of Thrifty Medical of Tulsa,
L.L.C., an Oklahoma limited liability company ("Thrifty Tulsa," and together
with Thrifty Medical, Med-Equip and Northside, the "Acquired Companies").
B. Employee has obtained valuable knowledge and experience pertaining to
the Acquired Companies' businesses (the "Businesses") of providing
pharmaceuticals, drugs, biologicals, medical devices, durable medical equipment
and other health or medical supplies and related services to nursing homes,
other institutional care facilities and individuals residing in such
facilities.
C. The Company is acquiring substantially all of the assets of Med-Equip
and Thrifty Tulsa related to the Businesses pursuant to those two certain Asset
Purchase Agreements, each dated August 13, 1996 (collectively, the "Asset
Purchase Agreements"), by and among the Company, each of Med-Equip and Thrifty
Tulsa, and their respective shareholders or members. The Company is also
acquiring Northside by means of a merger of Northside with and into the
Company, pursuant to an Agreement of Merger dated as of August 13, 1996 (the
"Merger Agreement"), by and among Northside, the shareholders thereof, the
Company, and NCS HealthCare, Inc., a Delaware corporation and the parent
corporation of the Company ("NCS"). NCS is acquiring all of the outstanding
capital stock of Thrifty Medical pursuant to a certain Stock Purchase
Agreement, dated August 13, 1996 (the "Stock Purchase Agreement"), by and among
NCS, the shareholders of Thrifty Medical, and Employee.
D. As a condition to all of such acquisitions, Employee and the Company
desire to enter into an agreement to provide for the employment of Employee by
the Company.
In consideration of and in reliance upon the covenants, obligations and
agreements contained herein, the Company and Employee hereby agree as follows:
1. EMPLOYMENT SERVICES. For the five (5) year period commencing on the
date hereof (the "Employment Period"), the Company hereby agrees to employ
Employee as an employee. As such,
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Employee shall perform such reasonable and appropriate duties for the Company
as may be assigned to him by the Board of Directors of the Company (the
"Board") or its designee. Throughout the Employment Period, Employee shall
devote his efforts diligently and faithfully on a full-time basis to the
business and welfare of the Company in accordance with and in furtherance of
the policies and directives of the Board. Employee will not engage in any
activity which interferes with the performance of his duties hereunder and in
any case will not hold any part-time job or perform any consulting services;
PROVIDED, HOWEVER, that Employee may provide consulting services to (i) the
retail pharmacy businesses operated by Thrifty Pharmacy No. 3, Inc. at such
sites as that entity operates as of the date hereof, as long as such sites
collectively service less than 200 institutional or other long-term care beds,
and (ii) to Captiva L.L.C., an Oklahoma limited liability company, and may
continue to sell wound care supplies and services, of the types which Employee
is engaged in selling as of the date hereof, in Oklahoma as a commissioned
salesman, it being understood that NCS has declined to purchase such wound care
business from Employee (such wound care activities, Thrifty Pharmacy No. 3,
Inc., and Captiva L.L.C. are herein referred to collectively as the "Retained
Interests"), as long as such services and activities do not interfere with the
performance of Employee's duties to the Company hereunder. Employee shall not
be required to move his residence outside of the Oklahoma City, Oklahoma,
metropolitan area without his consent.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. The Company shall pay Employee a base salary (the "Base
Salary") during his employment at the rate of $110,000.00 per year, less such
deductions and withholdings as are required by law, payable in accordance with
the Company's standard payroll practices. Employee's Base Salary shall be
subject to annual reviews and such increases as the Company may determine in
its sole discretion from time to time.
2.2 BONUS. In addition to the Base Salary provided under Section 2.1,
the Company shall pay Employee a bonus (the "EBIT-A Bonus") based upon the net
earnings of the Company before interest, taxes and amortization ("EBIT-A") for
its fiscal year ending June 30, 1997, in accordance with the provisions of
EXHIBIT A attached hereto and incorporated herein by reference. The amount of
the EBIT-A Bonus, if any, shall be payable to Employee within 90 days after the
close of such fiscal year. The EBIT-A Bonus in subsequent fiscal years shall
be discretionary with the Company and subject to such period adjustments as the
Company may determine in its sole discretion from time to time.
2.3 BENEFITS. The Company shall provide Employee during the Employment
Period with substantially the same benefits as are generally provided other
executive employees of the Company.
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2.4 EXPENSES. The Company shall reimburse Employee for reasonable
expenses incurred by him on behalf of the Company in the performance of his
services during his employment. Employee shall furnish the Company with the
documentation in connection with such expenses required by the Internal Revenue
Code and the regulations promulgated thereunder.
2.5 VACATION. During the Employment Period Employee shall be entitled to
six (6) weeks of paid vacation per year. All vacations shall be taken at such
time or times as are mutually convenient for Employee and the Company.
2.6 AUTOMOBILE. The Company shall furnish Employee during his employment
with the same automobile which Employee was being furnished by the Acquired
Companies as of the date of this Agreement (the "Automobile"), and which the
Company acquired pursuant to the Asset Purchase Agreements; PROVIDED, that
following the expiration of the lease on the Automobile or the end of the
useful life thereof, Employee's entitlement to the use of a Company automobile
will be subject to the Company's standard policies regarding automobile usage.
3. NON-DISCLOSURE, NON-COMPETITION AND NON-INTERFERENCE.
3.1 NON-COMPETITION. Employee agrees that during the seven (7) year
period commencing on the date of this Agreement, he shall not directly or
indirectly, without the prior written approval of the Board, enter into the
employ of, render any services or assistance to, acquire any financial interest
in, or otherwise become associated in any way with any person or entity
("Competitor"), whether in the capacity of principal, agent, partner, officer,
director, employee, consultant, shareholder, or otherwise, which provides
pharmaceuticals, drugs, biologicals, medical devices, durable medical equipment
or other health or medical supplies to nursing homes or other institutional
care facilities in the states of Oklahoma, Ohio, Indiana, Pennsylvania,
Kentucky, Illinois, Wisconsin, Minnesota, Michigan, Maine, New Hampshire,
Massachusetts, Vermont, Connecticut, New York, New Jersey, Missouri, Iowa,
Kansas or Oregon, or to individuals residing in any such home or facility in
such geographic region. Nothing in this Section 3 shall prevent Employee from
being a member or officer of or from participating in the activities of any
trade or professional association, or from acquiring an equity interest in the
Company or any of its affiliates or an equity interest of less than one percent
(1%) in a Competitor whose shares are traded on a national securities exchange
or over-the-counter, or from performing consulting or referral services to or
maintaining his interests in the Retained Interests subject to the limitations
and conditions of Section 1 hereof.
Notwithstanding the foregoing provisions of this Section 3.1, following his
employment hereunder, Employee shall be
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permitted to provide services as a pharmacist in a hospital pharmacy,
mail-order pharmacy, or a retail pharmacy, so long as such retail pharmacy
services less than two hundred (200) long-term care beds and Employee has no
contract with administrators or owners of such long-term care facilities.
3.2 NON-DISCLOSURE. Employee agrees that he shall not directly or
indirectly disseminate verbally or in writing (except for such disclosure of
the terms of this Agreement and the Acquisition Agreements as may be required
to be made to Employee's legal or accounting advisors for purposes of rendering
consultation to Employee), or use for his personal benefit any Confidential
Information, regardless of how it may have been acquired, except for the
disclosure of such information as may be required by law, or authorized in
writing by the Board. Employee further agrees that upon termination of his
employment he will return promptly to the Company all memoranda, notes,
records, reports, manuals, and other documents (and all copies thereof)
relating to the Company's business which he may then possess or have under his
control. For purposes of this Agreement, "Confidential Information" means all
information relating to the terms and conditions of this Agreement, the Asset
Purchase Agreements, the Merger Agreement, the Stock Purchase Agreement and the
transactions contemplated thereby and all information belonging to, used by, or
which is in the possession of the Company relating to the Company's business,
products, services, strategies, pricing, customers, representatives, suppliers,
distributors, technology, programs, finances, costs, employee compensation,
marketing plans, developmental plans, computer software (including all
operating system and systems application software), inventions, developments,
or trade secrets, all to the extent such information is not intended by the
Company to be disseminated to the public or to other participants in its trade
or business or is otherwise not generally known to Competitors of the Company.
Employee acknowledges that all of the Confidential Information is and shall
continue to be the exclusive proprietary property of the Company, whether or
not prepared in whole or in part by Employee and whether or not disclosed to or
entrusted to the custody of Employee.
3.3 NON-INTERFERENCE. Employee agrees that he shall not at any time
during the term of this Agreement and for two (2) years thereafter induce,
attempt to induce, or assist others in inducing or attempting to induce any
employee, agent, customer, or supplier of the Company or any other person or
entity associated or doing business with the Company (or proposing to become
associated or to do business with the Company) to terminate his or its
relationship with the Company (or to refrain from becoming associated or doing
business with the Company) or in any other manner to interfere with the
relationship between the Company and any such person or entity.
3.4 NEW DEVELOPMENTS. Employee agrees that he will disclose promptly to
the Company any and all improvements,
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inventions, developments, discoveries, innovations, systems, techniques, ideas,
processes, programs, and other things, whether patentable or unpatentable,
related in any way to the Company's business at the time, that are made or
conceived by him alone or with others, in whole or in part, during his
employment and which were made or conceived in whole or in part with the
Company's resources or during Company time (collectively referred to as the
"New Developments"). Employee further agrees that all such New Developments
made or conceived in whole or in part with Company resources or during Company
time shall be and remain the sole and exclusive property of the Company and
that Employee shall, upon the request of the Company, and without further
compensation, do all lawful things reasonably necessary to ensure the Company's
ownership of any New Development, including the execution of any necessary
documents assigning and transferring to the Company all of Employee's right,
title and interest in and to any New Development, and the execution of all
necessary documents required to enable the Company to file and obtain patents
and copyrights in the United States and foreign countries on any New
Development.
3.5 REMEDIES. If Employee commits or threatens to commit a breach of any
of the provisions of this Section 3, the Company shall have the right to have
the provisions of this Agreement specifically enforced by any court having
jurisdiction, it being acknowledged by Employee and agreed by the parties that
any such breach or threatened breach will cause injury to the Company for which
money damages along will not provide an adequate remedy. The rights and
remedies enumerated above shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company at law or in equity.
3.6 REFORMATION OF AGREEMENT. In the event that any of the covenants
contained in this Section 3, or any portion thereof, shall be found by a court
of competent jurisdiction to be invalid or unenforceable as against public
policy or for any other reason, such court shall exercise its discretion to
reform such covenant to the end that Employee shall be subject to
non-disclosure, non-interference and non-competition covenants that are
reasonable under the circumstances and are enforceable by the Company. In any
event, if any provision of this Agreement is found unenforceable for any
reason, such provision shall remain in force and effect to the maximum extent
allowable and all non-affected provisions shall remain fully valid and
enforceable.
3.7 EXPENSES OF ENFORCEMENT OF COVENANTS. In the event that any action,
suit, or other proceeding at law or in equity is brought to enforce any of the
covenants contained in this Section 3, or to obtain money damages for the
breach thereof, the party prevailing in any such action, suit or other
proceeding shall be entitled upon demand to reimbursement from the other party
for all expenses (including, without limitation, reasonable attorneys' fees and
disbursements) incurred in connection therewith.
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4. TERM.
4.1 MANNER OF TERMINATION. This Agreement may be terminated prior to the
end of the Employment Period, as follows:
(a) BY THE COMPANY FOR DISABILITY. At the option of and by written
notice from the Company if Employee shall become disabled, which, for purposes
of this Agreement, shall be deemed to have occurred if Employee suffers from
any disability or impairment of health which continues for at least 120 days
and which in the opinion of the Board renders the Employee unable to perform
his duties on an active, full-time basis.
(b) BY THE COMPANY FOR GOOD CAUSE. At the option of and by written
notice from the Company if the Board shall find "good cause" for termination,
which, for purposes of this Agreement, shall mean (i) a material breach by
Employee of his obligations under this Agreement or his fiduciary duties to the
Company, (ii) public conduct which in any manner offends against decency or
morality, (iii) repeated absenteeism, (iv) drug use or excessive alcohol
consumption on the part of Employee, or (v) if Employee fails, after notice and
a reasonable chance to cure, to observe the directives of the Board or its
designee to whom Employee reports.
(c) BY EMPLOYEE. By Employee upon not less than 120 days advance written
notice.
(d) DEATH. As of the end of the month in which Employee dies.
4.2 CONSEQUENCES OF TERMINATION.
(a) IN GENERAL. Notwithstanding any provision in this Agreement to the
contrary, upon any termination of this Agreement, the provisions hereof will
survive such termination to the extent required so that (i) the Company may
enforce the obligations of Employee under Section 3, and (ii) Employee and the
Company may each enforce any obligations of the other which accrued hereunder
before, or because of, such termination. All other rights and obligations of
the parties hereunder will expire upon termination of this Agreement.
(b) SALARY CONTINUATION. If Employee's employment with the Company is
terminated by the Company before the fifth anniversary of the date hereof other
than pursuant to Section 4.1(a) or 4.1(b), the Company shall continue to pay to
Employee the Base Salary provided for in Section 2.1 during the remainder of
the Employment Period, and Employee shall continue to be bound by the covenants
contained in Section 3 in accordance with the terms thereof.
5. MISCELLANEOUS.
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5.1 WAIVER. Failure of the Company at any time to enforce any provision
of this Agreement or to require performance by Employee of any provision hereof
shall in no way affect the validity of this Agreement or any part hereof or the
right of the Company thereafter to enforce its rights hereunder; nor shall it
be taken to constitute a condonation or waiver by the Company of that default
or any other or subsequent default or breach.
5.2 NOTICE. Any notice required to be given under the terms of this
Agreement shall be in writing and mailed to the recipient's last known address
or delivered in person. If sent by registered or certified mail such notice
shall be effective when mailed, otherwise, it shall be effective upon delivery.
5.3 ASSIGNMENT. Except as set forth herein, no rights of any kind under
this Agreement shall, without prior written consent of the Company, be
transferable to or assignable by Employee or any other person, or be subject to
alienation, encumbrance, garnishment, attachment, execution or levy of any
kind, voluntary or involuntary. This Agreement shall be binding upon and shall
inure to the benefit of the Company, its successors and assigns.
5.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
5.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
5.6 HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
5.7 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement among the parties hereto concerning the subject
matter hereof. All negotiations among the parties hereto concerning the
subject matter hereof are merged into this Agreement, and there are no
representations, warranties, covenants, understandings or agreements, oral or
otherwise, in relation thereto among the parties hereto other than those
incorporated herein. The parties hereto acknowledge that the Company is a
party to, and this Agreement is made in conjunction with, the Asset Purchase
Agreements, the Merger Agreement and the Stock Purchase Agreement
(collectively, the "Acquisition Agreements"); and it is understood that nothing
in this Agreement is intended to modify the provisions of the Acquisition
Agreements or any other agreement or instrument contemplated therein. Nothing
expressed or implied in this Agreement is intended or shall be construed so as
to grant or confer on any person, firm or corporation other than the parties
hereto any rights or privileges
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hereunder. No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties hereto.
INTENDING TO BE LEGALLY BOUND, the parties or their duly authorized
representatives have signed this Agreement on the date first written above.
NCS HEALTHCARE OF OKLAHOMA, INC.
(the "Company")
By: /s/ Kevin B. Shaw
__________________________________
Title: President
_______________________________
/s/ Willis Smith
________________________________________
WILLIS SMITH ("Employee")
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