February 8, 1999
VIA FEDERAL EXPRESS
Mr. Recie Bomar
196 Old River Road, #612
Lincoln, Rhode Island 02865
RE: MIM CORPORATION
Dear Recie:
MIM Corporation, a Delaware corporation (the "Company"), is pleased to
offer you employment as the Vice President - Sales and Marketing of the Company,
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, will be as follows:
1. POSITION AND DUTIES: Vice President - Sales and Marketing of
the Company, with overall responsibility
for sales and marketing areas of the
Company and its subsidiaries and
affiliates including, but not limited
to:
(i) Preparation of, and primary
responsibility for sales and marketing
plans of the Company's and its
subsidiaries' products and services;
(ii) implementing sales and marketing plans
and overall responsibility for sales and
marketing personnel and the generation
of sales related revenues; and
(iii) the hiring and termination of personnel
in support of the sales and marketing
group, with the prior approval of Chief
Executive Officer.
In such capacity, you shall report to,
and shall have such further duties as
shall be assigned to you by, the
Company's Chief Executive Officer,
Richard H. Friedman.
2. TERM: Subject to the execution and
delivery of this letter, a Non-Qualified
Stock Option Agreement substantially in
the form attached hereto as Exhibit A
(the "Option Agreement") and the
Restrictive Covenants attached hereto as
Exhibit B, 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, 1999. Each
year of your employment thereafter shall
coincide with the calendar year.
Mr. Recie Bomar
February 8, 1999
Page 2
3. BASE COMPENSATION: Your base salary shall be at the rate of
$180,000.00 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
1998 executive bonus program (the "Bonus Program")
established for the benefit of senior executives
of the Company. During your first year of
employment ending December 31, 1999, 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. Attached hereto as Exhibit C is
an outline of the Bonus Program and your
entitlements thereunder as well as an example of
the way in which the Bonus Program would affect
your grants thereunder. The terms and conditions
of the Bonus Program shall be subject to the
completion of definitive documentation with
respect thereto. If there shall exist any conflict
between this Agreement (including Exhibit B) 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. Recie Bomar
February 8, 1999
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 a $25,000
relocation allowance in connection with 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 (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.
7. SIGNING BONUS: The Company will pay you, within seven days from
and after your first date of employment, $25,000,
net of applicable withholding.
You agree that you will repay to the Company all
amounts paid to you or on your behalf under
Sections 6 and 7 hereof if you terminate your
employment with the Company on or before March 1,
2000. In such event, all such amounts will be
repaid by you on or before the last day of your
employment.
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 shall also be entitled to receive $3,000.00
toward life insurance premiums, grossed up for
federal and state taxes. You will be entitled to
three weeks of vacation in 1999 and four weeks of
vacation thereafter. All such benefits may be
amended or modified from time to time or
terminated by the Company in its sole and absolute
discretion.
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
Mr. Recie Bomar
February 8, 1999
Page 4
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:
(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
Mr. Recie Bomar
February 8, 1999
Page 5
(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).
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 B, 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. Recie Bomar
February 8, 1999
Page 6
13. ENTIRE AGREEMENT: This agreement supersedes all prior agreements
and, together with the Option Agreement, the
Confidentiality Agreement and the Non-Competition
Agreement, 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. Recie Bomar
February 8, 1999
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/ BARRY A. POSNER
------------------------------------
Name: Barry A. Posner
Title: Vice President and General Counsel
AGREED TO AND ACCEPTED BY:
/S/ RECIE BOMAR
- ------------------------
Name: Mr. Recie Bomar
3
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EXHIBIT B
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 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 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
1
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.
(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
2
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):
(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/ Recie Bomar
- -----------------------------
Recie Bomar
EXHIBIT C
ANNUAL CASH BONUS Target: Up to 40% of annual $72,000
salary (At plan:1/2on
corporate financial results;
1/2 on individual results)
GRANTS OF LONG-TERM
INCENTIVES: Deferred compensation 15,000 units
performance units
(Target value: $25 in 2002)
Performance shares 25,000 shares
(Target share price for early
vesting: $25-$30)
Subject to the terms and conditions of a 75,000 shares
stock option agreement options to
purchase the common stock, par value
$0.0001 per share of the Company. 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
GENERAL DESCRIPTION
OF LONG-TERM INCENTIVES:
UNITS: By 2001 net after-tax earnings are targeted to grow to $27 million. At
that level, each performance unit granted ("performance Unit") would be worth
$25. Below net after-tax earnings of $21.6 million, Performance Units would be
worth $0. At net after-tax earnings of $21.6 million to $27 million, the
Performance Units would grow at a predetermined amount from a threshold value of
$10. Above $27 million, units can grow in value from $25 to $40 at $32 million
of net after-tax earnings.
PERFORMANCE SHARES: Restricted shares that would vest at end of 2006. IF EPS
target or $1.08 is achieved in 2001, vesting will occur in early 2002, with
similar provisions in subsequent years ($1.25 EPS in 2002, full vesting in early
2003, etc.).
NOTE: Vesting of "Performance Units", "Performance Shares' and options will
accelerate upon "change in control", as defined in the Bonus Program
documentation. Performance Units, Performance Shares and unvested options
forfeited upon termination of employment, with vested options exercised within
thirty (30) days following termination (or in the case of death, within a year
from death.