March 2, 2000
Via Federal Express
Mr. James J. Jones
2715 Laurel Lane
Oak Harbor, WA 98277
Re: MIM Corporation/MIMRx.com
Dear J.J.:
MIM Corporation, a Delaware corporation ("MIM"), is pleased to offer
you employment as the President and Chief Operating Officer of its Continental
Managed Pharmacy Services, Inc., d/b/a MIMRx.com (the "Company") subsidiary, on
the terms and subject to the conditions set forth below. The terms and
conditions of your employment, upon your execution and delivery of this letter
to us, would be as follows:
1. POSITION AND DUTIES:
-------------------
President and Chief Operating Officer of the Company, with overall
responsibility for the business and operations of the Company and its
subsidiaries and affiliates including, but not limited to:
(i) Overall responsibility for sales and marketing plans of the Company's and
its subsidiaries' products and services;
(ii) Subject to MIM's senior management, responsibility for the conversion and
implementation of the conversion of the Company's business and operations
to MIMRx.com, Inc. and the relocation of the Company's operations from
Cleveland, Ohio to Columbus, Ohio; and
(iii)the hiring and termination of personnel in support of the Company, subject
to the approval of MIM's Chief Executive Officer and Chief Operating
Officer.
In such capacity, you shall report to, and shall have such further duties as
shall be assigned to you by, MIM's Chief Executive Officer, Richard H. Friedman.
2. TERM:
----
Subject to the execution and delivery of this letter and the Restrictive
Covenants attached hereto as Exhibit A, your employment shall commence and shall
continue until terminated by you or the Company. The first year of your
employment shall terminate on December 31, 2000. Each year of your employment
thereafter shall coincide with the calendar year.
Mr. James J. Jones
March 2, 2000
Page 2
3. BASE COMPENSATION:
-----------------
Your base salary shall be at the rate of $200,000.00 per calendar year, payable
bi-weekly, or at such other times as other employees of the Company are paid
generally. Your performance and compensation shall be reviewed twelve (12)
months after the commencement of your employment and every twelve (12) months
thereafter. However, any increase in your compensation shall be in the Company's
sole and absolute discretion.
4. BONUS COMPENSATION:
------------------
During your employment, you shall be eligible to receive bonus compensation
under the Company's executive bonus program (the "Bonus Program") established
for the benefit of senior executives of the MIM and its subsidiaries or any
subsequent plan established generally for senior management of the Company.
During your first year of employment ending December 31, 2000, you will only be
entitled to receive the cash component of the Bonus Program pro-rata based on
the number of days you were employed by the Company during the first year of
your employment bears to a full calendar year.
Eligibility for the aforementioned bonuses will be premised upon your continuing
employment through the end of the calendar year to which the bonus in any year
of your employment relates, and will be subject to the terms and conditions of
the Bonus Program. The Bonus Program was created to provide senior executives of
the Company with cash and equity incentives upon reaching certain predetermined
revenue, earnings and share performance goals. The terms and conditions of the
Bonus Program shall be subject to the completion of definitive documentation
with respect thereto and approval of MIM's compensation committee of its Board
of Directors. If there shall exist any conflict between this Agreement
(including Exhibit A) and the definitive documentation governing the Bonus
Program, the definitive documentation (and not this Agreement) shall control.
All base, bonus or other compensation received shall be subject to applicable
federal, state and local withholding and other taxes.
Mr. James J. Jones
March 2, 2000
Page 3
5. TRANSPORTATION ALLOWANCE:
-------------------------
During your employment, the Company will provide you with a monthly allowance of
$500 for the use of an automobile.
6. RELOCATION ALLOWANCE:
--------------------
The Company will provide you with up to a $35,000 relocation allowance for
reimbursement of actual expenses incurred by you with respect to your relocation
to the Company's chief executive offices located in Elmsford, NY, You will
receive your relocation allowance upon the later to occur of the following: (i)
the completion of the move to your new primary residence in the Elmsford, NY
vicinity, and seven days from and after your first day of employment with the
Company. In either case, you would be required to present appropriate invoices
evidencing payment or other appropriate documentation in support of such
expenses.
You agree that you will repay to the Company all amounts paid to you or on your
behalf under Section 6 hereof if you terminate your employment with the Company
on or before November 1, 2001. In such event, all such amounts will be repaid by
you on or before the last day of your employment.
7. CONDITIONS TO EMPLOYMENT:
------------------------
Your employment shall be conditioned upon completion by the Company of reference
checks with prior employers and others, satisfactory to the Company and MIM in
its sole discretion. You agree that the Company has the right to make such
inquiries and you acknowledge and agree that the Company may make such
inquiries.
8. PARTICIPATION IN HEALTH
-----------------------
BENEFIT PLANS; VACATION:
-----------------------
During your employment with the Company, you shall be permitted, if and to the
extent eligible, to participate in all employee health and other related benefit
plans, policies and practices now or hereafter maintained by or on behalf of the
Company, commensurate with your position with the Company. Nothing in this
agreement shall preclude the Company from terminating or amending any such plans
or coverage so as to eliminate, reduce or otherwise change any benefit payable
thereunder. You will be entitled to four weeks of vacation. All such benefits
may be amended or modified from time to time or terminated by the Company in its
sole and absolute discretion.
Mr. James J. Jones
March 2, 2000
Page 4
9. EXPENSES:
--------
Subject to such policies as may from time to time be established by the
Company's Board of Directors, the Company will pay or reimburse you for all
reasonable and necessary expenses actually incurred or paid by you during the
term of your employment in the performance of your duties under this agreement,
upon submission and approval of expense statements, vouchers or other reasonable
supporting information in accordance with the then customary practices of the
Company.
10. SEVERENCE; CHANGE OF CONTROL:
-----------------------------
If, within the three-month period following a "Change of Control" (as defined
below), you are terminated by the Company or a successor entity or you elect to
terminate your employment after the Company or such successor entity materially
reduces your duties and responsibilities, or assigns you duties materially
inconsistent with your position prior to such Change of Control, then you shall
be entitled to receive six (6) months salary and other benefits earned and
accrued prior to the effective date of the termination of your employment (and
reimbursement for expenses incurred prior thereto).
In addition, all outstanding unvested options held by you shall vest and become
immediately exercisable and shall otherwise be exercisable in accordance with
their terms. In such event, you shall also 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. Thereafter you shall have no further rights to any
other compensation or benefits hereunder on or after the termination of
employment or other triggering event, or any other rights hereunder.
For purposes of this Agreement, "Change of Control" means the occurrence of one
of the following:
Mr. James J. Jones
March 2, 2000
Page 5
(i) a "person" or "group" within the meaning of sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act") becomes the
"beneficial owner" (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company (including options, warrants, rights and
convertible and exchangeable securities) representing 50% or more of the
combined voting power of the Company's then outstanding securities in any
one or more transactions; provided, however, that purchases by employee
benefits 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
(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 at
that time own a majority of the Company's outstanding common stock (the
"Common Stock")), 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 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), and in each case, such merger, consolidation or transaction is
not approved by a 2/3 of the Board of Directors of the Company and the MIM.
11. RESTRICTIVE COVENANTS:
---------------------
Contemporaneously with the commencement of your employment, you shall execute
and deliver the Restrictive Covenants substantially in the form attached hereto
as Exhibit A, whereby, among other things, you will agree to not compete with
the "Business" of the Company (as defined) during the term of your employment
and for a period of one year following such termination and to not disclose to
any third party any trade secrets or proprietary information relating to the
Company, now or hereafter acquired by you.
12. ASSIGNABILITY; BINDING
----------------------
NATURE:
-------
This agreement is binding upon, and will inure to the benefit of the parties
hereto and their respective successors, heirs, administrators, executors and
assigns. None of your rights or obligations under this agreement may be
transferred by will or operation of law. The rights and obligation of the
Company under this agreement may be assigned or transferred by operation of law
in the event of a merger or consolidation in which the Company is not the
continuing entity, or the sale or liquidation of all or substantially all of the
assets of the Company.
Mr. James J. Jones
March 2, 2000
Page 6
13. ENTIRE AGREEMENT:
----------------
This agreement supersedes all prior agreements, together with the Restrictive
Covenants attached hereto as Exhibit A, contains the entire agreement between
the parties concerning the subject matter hereof.
14. AMENDMENTS AND WAIVERS:
----------------------
This agreement may not be modified, amended, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought.
15. NOTICES:
-------
Any notice given hereunder must be in writing and will be deemed received when
delivered personally or by courier, or five (5) days after being mailed,
certified or registered mail, return receipt requested and duly addressed to the
party concerned at the address indicated above or at such other address as such
party may subsequently provide in writing.
16. GOVERNING LAW :
--------------
The agreement will be governed by, and construed and interpreted in accordance
with the laws of the State of New York.
Mr. James J. Jones
March 2, 2000
Page 7
If you are in agreement with the terms and conditions of your
employment pursuant to this letter agreement, kindly execute this letter
agreement in the space provided below and return it to the undersigned.
Sincerely yours,
MIM Corporation
By: /s/ Richard H. Friedman
------------------------
Name:
Title:
AGREED TO AND ACCEPTED BY:
/s/ James J. Jones
- ----------------------------------------
Name: Mr. James J. Jones
Exhibit A
RESTRICTIVE COVENANTS
Covenant Against Competition; Other Covenants. The Executive acknowledges
that (i) the principal business of the Company is the provision of a broad range
of mail order and internet based sales of pharmaceutical products, including
health and beauty aids, prescription drugs, vitamins, nutrients, over the
counter drugs and other goods and products typically found in drug stores and
other e-commerce pharmacy web (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 referred to as the "Business"); provided, however, that Business
shall not include any areas of business and/or services that the Company is not
engaged in at such time that the Company is sold, merged, consolidated or any
other event that would constitute a "Change of Control" (as defined in Section 9
of the Agreement), regardless of whether the successor or acquiring entity is
then engaged in such other areas of business and/or services; (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 the confidential
affairs and proprietary information of the Company; (v) the covenants and
agreements of the Executive contained in these Restrictive Covenants are
essential to the business and goodwill of the Company; and (vi) the Company
would not have entered into the Agreement (as defined below) but for the
covenants and agreements set forth herein. Accordingly, the Executive covenants
and agrees that:
(a) At any time during his employment with the Company and ending one year
following (i) termination of the Executive's employment with the Company
(irrespective of the reason for such termination) or (ii) payment of any
severance, 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 (i) the Business and (ii) 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.
(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 and its affiliates, all confidential matters
relating to the Company's Business and the business of any of its affiliates and
to the Company and any of its affiliates, learned by the Executive heretofore or
hereafter directly or indirectly from the Company or any of its affiliates (the
"Confidential Company Information"), including, without limitation, information
with respect to (i) the strategic plans, budgets, forecasts, intended expansions
of product, service, or geographic markets of the Company and its affiliates,
(ii) sales figures, contracts, agreements, and undertakings with or with respect
to customers, (iii) profit or loss figures, and (iv) customers, clients,
suppliers, 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
these Restrictive Covenants or the Agreement. Notwithstanding the foregoing,
this section (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.
1
(c) During the period commencing on the date hereof and ending two years
following the date upon which the Executive shall cease to be an employee of the
Company or its affiliates, the Executive shall not, without the Company's prior
written consent, directly or indirectly, (i) solicit or encourage to leave the
employment or other service of the Company or any of its affiliates, any
employee or independent contractor thereof or hire (on behalf of the Executive
or any other person or entity) any employee or independent contractor who has
left the employment or other service of the Company or any of its affiliates
within one year of the termination of such employee's or independent
contractor's employment or other service with the Company and its affiliates, or
(ii) solicit, contact, market to, work for, or assist others in soliciting any
customer or client of the Company with whom the Company was in contact with or
was providing goods and services to at the time of the Executive's termination
of employment with the Company. During such period, the Executive will not,
whether for his own account or for the account of any other person, firm,
corporation or other business organization, intentionally interfere with the
Company's or any of its affiliates' relationship with, or endeavor to entice
away from the Company or any of its affiliates, any person who during the Term
is or was a customer or client of the Company or any of its affiliates.
(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 and its affiliates shall be the Company's property and shall be
delivered to the Company at any time on request.
Rights and Remedies upon Breach of Restrictive Covenants.
--------------------------------------------------------
(a) The Executive acknowledges and agrees that any breach by him of any of
the provisions of sections (a) through (d) above (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 Restrictive Covenants, the Company and its
affiliates 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 and its affiliates under
law or in equity (including, without limitation, the recovery of damages):
2
(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 and its affiliates all compensation, profits, monies,
accruals, increments or other benefits (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 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 these Restrictive Covenants are unreasonable or
otherwise unenforceable. The existence of any claim or cause of action by the
Executive, whether predicated on the Agreement or otherwise, shall not
constitute a defense to the enforcement of the Restrictive Covenants.
Agreed to and accepted by:
/s/ James J. Jones
- -----------------------------
James J. Jones
3
ANNUAL CASH BONUS Target: Up to 40% of annual $______
salary (At plan:1/2on
corporate financial results;
1/2 on individual results)
GRANTS OF LONG-TERM
INCENTIVES: Deferred compensation _______ units
performance units
(Target value: $25 in 2002)
Performance shares _______ shares
(Target share price for early
vesting: $25-$30)
Subject to the terms and
conditions 200,000 shares of a
stock option agreement options
to purchase the common stock,
par value $0.0001 per share of
the Company, subject, however,
to adjustment prior to the
granting thereof, at the good
faith discretion of the
Company's Chief Executive
Officer, based on the revised
capitalization structure of the
Company expected to occur
sometime during the next four
month. The options shall vest in
three equal annual installments
commencing on the first
anniversary date of the
Executive's employment with the
Company, at an exercise price
equal to the average of the bid
and asked on the date the
Executive commences employment
with the Company.
May 9, 2000
By Hand Delivery
Mr. James J. Jones
2715 Laurel Lane
Oak Harbor, WA 98277
Re: MIM Corporation/MIMRx.com
-------------------------
Dear J.J.:
MIM Corporation, a Delaware corporation ("MIM"), would like to amend
the letter of employment between you and MIM, dated as of March 2, 2000 (the
"March 2 Employment Letter"), as follows:
1. Paragraph 3 of the March 2 Employment Letter is deleted and replaced in its
entirety with the following:
"3. BASE COMPENSATION:
-----------------
Your base salary shall be at the rate of $225,000.00 per calendar year, payable
bi-weekly, or at such other times as other employees of the Company are paid
generally. Your performance and compensation shall be reviewed twelve (12)
months after the commencement of your employment and every twelve (12) months
thereafter. However, any increase in your compensation shall be in the Company's
sole and absolute discretion."
Such amendment shall be retroactive to your start date with the Company.
2. A new Paragraph 4 entitled "Options to Purchase Common Stock" shall be
added as follows:
"4. OPTIONS TO PURCHASE
-------------------
COMMON STOCK:
------------
As further compensation hereunder, effective upon the later to occur of the date
you commence your employment with the Company and the date you execute the
Option Agreement, the Company would grant to you 225,000 options ("Options") to
purchase Company common stock ("Common Stock"), subject, however, to adjustment
prior to the granting thereof, at the good faith discretion of the Company's
Chief Executive Officer, based on the revised capitalization structure of the
Company expected to occur sometime during the next four months. In no event
would you receive less Options than other employees at your level (being
President of an MIM subsidiary). Such Options shall vest in equal installments
on the first, second and third anniversary dates of your employment. The grant
and vesting of your options would be subject to the terms and conditions set
forth in the form of Option Agreement. Such options shall be priced on the later
to occur of (i) first day of your employment with the Company, and (ii) the date
that the Company's Board of Directors authorizes and approves the plan as
contemplated above."
Mr. James. J. Jones
Page 2
April 6, 2000
3. Paragraphs 4 - 16 of the March 2 Employment Letter shall be renumbered as
appropriate.
4. All capitalized terms not defined herein shall have the meaning assigned
thereto in the March 2 Employment Letter.
5. This amendment will be governed by, and construed and interpreted in
accordance with the laws of the State of New York.
If you are in agreement with the terms and conditions of your
employment pursuant to this letter agreement, kindly execute this letter
agreement in the space provided below and return it to the undersigned.
Sincerely yours,
MIM Corporation
By: /s/ Richard H. Friedman
------------------------
Name:
Title:
AGREED TO AND ACCEPTED BY:
/s/ James J. Jones
- ----------------------------------------
Name: Mr. James J. Jones