EXHIBIT10.29**DEPARTURE AGREEMENT AND GENERAL RELEASE****(PLEASE READ CAREFULLY. THIS DEPARTURE AGREEMENT AND GENERAL RELEASE HAS IMPORTANT LEGALCONSEQUENCES.)**     This Departure Agreement and General Release (this “***Agreement***”) is between National MedicalHealth Card Systems, Inc. (“***Company***”) and James F. Smith (“***Employee***”) and is a complete, final andbinding settlement of all claims and potential claims, if any, with respect to their employmentrelationship. Employee and the Company may sometimes be referred to collectively as the “***Parties***.”     WHEREAS, the Company and Employee are parties to an Employment Agreement dated on or aboutAugust 30, 2004 (the “***Employment Agreement***”); and     WHEREAS, the Company and Employee have agreed on certain terms and conditions regarding thetermination of employment under the Employment Agreement,NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, be itagreed as follows:     1. As of May 21, 2007 (the “***Termination Date***”), Employee’s employment relationship with theCompany and under the Employment Agreement terminated and Employee ceased to be an officer ormanager with the Company (including any and all subsidiaries or affiliated entities). Effectiveimmediately upon his execution of this Agreement, Employee resigns as a member of the Board ofDirectors of the Company (the “***Board***”).     2. In consideration for the covenants and promises set forth herein, following the executionof the Agreement by Employee ( the “***Execution Date***”):     (a) Company will pay Employee’s present salary for a period not to exceed two yearsfrom the Termination Date (such period to be referred to as the “***Severance Period***”), butonly so long as Employee has not breached and does not breach the provisions of paragraphs 6through 11 of the Employment Agreement, for a total sum not to exceed $750,000, plus apayment in the amount of $600.00 per month in respect of Employee’s former car payment (the“***Total Severance Amount***”), payable as follows: (i) Employee shall receive an amount, in onelump sum payment within fourteen (14) days after the Execution Date, equal to the portion ofthe Total Severance Amount that would have accrued during the period commencing on theTermination Date and ending on the Execution Date had the Company been obligated to payEmployee severance payments from and after the Termination Date; and (ii) the remainingportion of the Total Severance Amount shall be paid in accordance with the Company’s generalpayroll practices in bi-weekly payments of $14,423.08 each (plus the $600.00 per monthpayment described above) following the Execution Date, in each case less applicable federal,state, and local legally required deductions and less any deductions authorized by Employeeto pay his portion to continue group health coverage (such lump sum and
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installment payments to become payable only when Employee has executed, and has notrevoked, this Agreement as provided herein).     (b) Employee received all accrued salary through the Termination Date in accordancewith the Company’s general payroll practices, less applicable federal, state, and locallegally required deductions.     (c) For the period for which Employee is eligible to continue benefits under theConsolidated Omnibus Budget Reconciliation Act (“***COBRA***”), Company will pay the Company’sportion of the premiums for Employee’s medical, dental, and prescription coverage from theTermination Date through the end of such period of eligibility but not to exceed the end ofthe Severance Period, subject to Employee’s strict compliance with paragraphs 6 through 11of the Employment Agreement and the terms and provisions of this Agreement.     (d) In addition, and in lieu of any remaining benefits for health, dental, andpharmaceutical coverage for the remainder of the Severance Period for which COBRA is notavailable, the Company will pay Employee a one-time payment of $19,750, within fourteen (14)days of the execution of this Agreement.     (e) Employee received all reimbursable expenses pursuant to the Company’s Travel &Entertainment policy incurred through the Termination Date and submitted within thirty (30)days after the Termination Date.     (f) Employee received all accrued vacation pay to which Employee is entitled throughand including the Termination Date, which amount is $11,893.63.     (g) The Company will reimburse Employee for attorney’s fees reasonably incurred in thereview and execution of this Agreement, not to exceed $5,000. Such request forreimbursement must be submitted no later than thirty (30) days after the execution of thisAgreement and will be paid within thirty (30) days after Employee presents a summary invoicefor such services.     (h) Employee acknowledges and agrees that he is not entitled to any additional wages,bonus payments, benefits or other compensation from the Company except as set forth herein.     3. For purposes of the National Medical Health Card Systems, Inc. 1999 Stock Option Plan, asamended (the ***“Stock Option Plan”***), and the National Medical Health Card Systems, Inc. Amended andRestated 2000 Restricted Stock Grant Plan (the ***“Restricted Stock Plan”***), the termination ofEmployee’s employment will be considered as an involuntary termination without cause. Accordingly,under the terms of the Stock Option Plan, Employee will have 90 days following the Termination Dateto exercise any of his *vested*options. The Parties acknowledge that, on the Termination Date,Employee will forfeit and have no further right, title or interest in or with respect to, any andall *non-vested*options, shares of restricted stock and restricted stock unit awards held byEmployee under the Stock Option Plan and/or the Company’s Restricted Stock Plan. Employee affirmsthe provision of any Restricted Stock
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Agreement that the Company shall have the right to instruct the Company’s transfer agent totransfer any unvested restricted stock to the Company.     4. Release Provisions.     (a) As a material inducement to the Employee to enter this Agreement, and inconsideration for the Company’s payments to Employee as set forth in this Agreement, and forother good and valuable consideration, as and for Employee’s complete release of allstatutory, contract, tort and all other claims against the Company and each of its currentand former owners (including, without limitation, New Mountain Capital, L.L.C., New MountainPartners, L.P., New Mountain Affiliated Investors, L.P., and their respective affiliates),predecessors, assigns, employees, representatives, attorneys, benefit plans, insurers,parent companies, divisions, subsidiaries, affiliates, directors, managers, partners,members, and officers, including any and all persons acting by, through, or under or inconcert with any of them (collectively “***Releasees***”), Employee hereby releases and foreverdischarges the Releasees from any all actions, causes of action, suits, dues, sums of money,reckonings, covenants, contracts, bonuses, controversies, agreements, claims, promises,charges, obligations, complaints and demands whatsoever in law or equity, which Employee(and Employee’s heirs, executors, administrators, successors and/or assigns) may now have orhereafter can, shall, may, or may have had for, upon, or by reason of any matter, cause oractual or alleged act, omission, transaction, practice, conduct, occurrence, or other matterup to and including the execution of this Agreement by the Employee, including withoutlimitation, any claim arising out of or relating to the Employee’s employment by the Companyor service on the Board or any similar governing body of the Company and each of itssubsidiaries and affiliated entities, any and all obligations and liabilities of the Companyunder the Employment Agreement or any other agreement between the Employee and any of theReleasees, and the ownership, acquisition, offer or sale of, or rights to any equityinterest, or any option to purchase or acquire any equity interest in the Company, exceptingonly the rights and obligations (i) created by this Agreement; (ii) that may exist under anydefense or indemnification agreement or the Company’s Certificate of Incorporation andBylaws, as amended, to indemnify Employee; (iii) created by contracts of liabilityinsurance; (iv) Employee’s rights under state worker’s compensation laws (for occupationalillness or injury only); (v) Employee’s vested rights under the Company’s health, dental,pharmacy and 401(k) benefit plans; and (vi) any rights, whenever arising, Employee may havein his capacity as a shareholder of the Company and not arising from his capacity asofficer, director, employee or agent of the Company; provided, however, thatEmployee shall neither (A) initiate any claim based in whole or in part upon Employee’sstatus as a shareholder of the Company nor (B) directly or indirectly counsel or encourageanother person or entity to initiate, or voluntarily provide assistance in respect of, anyclaims based in whole or in part upon any person’s or entity’s status as a shareholder ofthe Company; provided, further, that nothing herein is intended to nor shallit preclude Employee from providing truthful testimony if under legal compulsion as awitness regarding any such claim.     (b) Without limiting the generality of the foregoing, this Agreement is intended to andshall release Releasees from any and all claims, whether known or
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unknown, which Employee ever had, has, or may have against any Releasee with respect toEmployee’s employment, the terms, benefits, and conditions of that employment, and/or thetermination thereof, including without limitation those arising under the Civil Rights Actof 1866, 42 U.S.C.A. Section 1981, the Civil Rights Act of 1964, as amended, 42 U.S.C.A.Section 2000e, et seq., the Age Discrimination in Employment Act of 1967, as amended, 29U.S.C.A. Section 621 et seq., the National Labor Relations Act, 29 U.S.C.A. Section 151 etseq., the Fair Labor Standards Act, 29 U.S.C.A. Section 201 et seq., the Labor ManagementReporting and Disclosure Act of 1959, as amended, 29 U.S.C.A. Section 401 et seq., theAmericans with Disabilities Act, 42 U.S.C.A. Section 12101, et. Seq., the Constitution andthe laws of the United States and the State of New York, including specifically, New York’sHuman Rights Law, Executive Law Section 290 et seq., or any other federal, state, or localhuman rights, civil rights, wage-hour, pension, or labor laws, rules and/or regulation,public policy, contract or tort law; and any and all claims arising out of the ownership,acquisition, offer or sale of, or rights to any equity interest, or relating to any optionto purchase or acquire any equity interest in the Company, that Employee has held at anytime in the Company or any of its predecessors or affiliates, including any claims, arisingunder the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, asamended, any federal, state or local securities law, the rules or regulations promulgatedunder any of them, or any doctrine of common law or equity applicable to the ownership,acquisition or sale of securities or the solicitation of proxies with respect thereto; andany and all claims for attorneys’ fees, costs, disbursements, or any action similar thereto.EMPLOYEE SPECIFICALLY ACKNOWLEDGES AND AGREES THAT BY EXECUTING THISAGREEMENT, HE IS WAIVING ALL RIGHTS OR CLAIMS, IF ANY, THAT HE HASOR MAY HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, ASAMENDED. EMPLOYEE FURTHER ACKNOWLEDGES AND AGREES THAT HIS WAIVEROF SUCH RIGHTS OR CLAIMS IS KNOWING AND VOLUNTARY.     (c) Employee promises never to initiate, be represented or participate in, submit orfile, or permit to be submitted or filed on or in his behalf, any lawsuit, charge, claim,complaint or other proceeding against any Releasee with any administrative agency, court,arbitrator or other forum, based upon claims that were released pursuant to this Agreement.This covenant not to sue (and the remedies provided in this Agreement, including those inparagraph 4(d)) does not affect Employee’s right to test the knowing and voluntary nature ofhis waiver of rights. Nothing in this Agreement shall be construed to affect the rights andresponsibilities of the Equal Employment Opportunity Commission, or any other state or localagency with similar responsibilities (the “***Commission***”), to enforce any laws pertaining toemployment discrimination or retaliation. Likewise, this waiver will not be used to justifyinterfering with the protected right of any employee to file a charge or participate in aninvestigation or proceeding conducted by the Commission; however, Employee waives the rightto any benefits or recovery arising out of any such proceeding.
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     (d) Subject to paragraph 4(c), if Employee materially breaches any of his promisescontained in this paragraph 4 by filing a lawsuit or administrative charge based on claimsthat he has released, Employee will indemnify the Company and/or any Releasee for any costs,including reasonable attorneys’ fees, that the Company and/or any Releasee may incur as theresult of Employee’s breach. In addition, if Employee materially breaches the promises madein any of this Agreement (other than the promises made in paragraph 6 of this Agreement), hemust repay all benefits previously received in accordance with paragraph 2 of thisAgreement, upon the Company’s reasonable demand, and Company shall cease making furtherpayments, if any, pursuant to paragraph 2 above.     5. Employee acknowledges and agrees that, for the time periods set forth in the EmploymentAgreement, he shall comply with paragraphs 6 through 11 of the Employment Agreement and that suchprovisions shall survive the termination of the Employment Agreement. Employee acknowledges andagrees that the provisions of paragraphs 6 through 11 of the Employment Agreement are fullyenforceable and reasonable to protect the legitimate business interests of the Company.Furthermore, Employee represents and warrants that he has returned to the Company any and allidentification cards, files, books, records, materials, equipment or documents in his possession orunder his control that were provided to or obtained by him in connection his employment. Withoutlimiting Employee’s obligations under any other provisions of this Agreement or paragraphs 6through 11 of the Employment Agreement, for the purposes of paragraph 9 of the EmploymentAgreement, the Company agrees that Employee shall not be deemed to be in breach of the provisionsof paragraph 9 of the Employment Agreement solely by reason of Employee accepting employment withany employer which owns or operates a division or subsidiary providing PBM Services (as defined inthe Employment Agreement), so long as Employee does not directly or indirectly assist with anyaspect of such PBM Services function. At any time following the occurrence of a Change in Controlof the Company, Employee may elect, by delivering written notice to the Company (the “***ElectionNotice***”), to forego and waive any and all rights to receive any further payments under paragraph2(a) of this Agreement that otherwise would be payable in respect of periods after the date theCompany receives the Election Notice. From and after the date of the Company’s receipt of anElection Notice following the occurrence of a Change in Control, Employee shall be deemed releasedfrom any further obligations under paragraph 9 of the Employment Agreement and the Company shall bedeemed released from any further obligations under paragraph 2(a) of this Agreement. As used inthis paragraph, a “***Change in Control***” shall mean:     **•** the transfer, through one transaction or a series of related transactions,either directly or indirectly, or through one or more intermediaries, of beneficialownership (within the meaning of Rule 13d-3 promulgated under the Securities and ExchangeAct of 1934) of 50% or more of either the then outstanding shares of the Company’s commonstock, $0.001 par value per share (the “***Common Stock***”) or the combined voting power of theCompany’s then outstanding voting securities entitled to vote generally in the election ofdirectors, or the last of any series of transfers that results in the transfer of beneficialownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of1934) of 50% or more of either the then outstanding Common Stock or the combined votingpower of the Company’s then outstanding voting securities entitled to vote generally in theelection of directors;
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     **•** approval by the stockholders of the Company of a merger or consolidation, withrespect to which persons who were the stockholders of the Company immediately prior to suchmerger or consolidation do not, immediately thereafter, own more than 50% of the combinedvoting power of the merged or consolidated company’s then outstanding voting securities,entitled to vote generally, in the election of directors or with respect to a liquidation ordissolution of the Company or the sale of all or substantially all of the assets of theCompany;     **•** the transfer, through one transaction or a series of related transactions, ofmore than 50% of the assets of the Company, or the last of any series of transfers thatresults in the transfer of more than 50% of the assets of the Company. For purposes of thisparagraph, the determination of what constitutes more than 50% of the assets of the Companyshall be determined based on the most recent financial statements prepared by the Company’sindependent accountants; or     **•** during any fiscal year, individuals who at the beginning of such yearconstituted the Board and any new director or directors whose election by the Board wasapproved by a vote of a majority of the directors then still in office who either weredirectors at the beginning of the year or whose election or nomination for election waspreviously so approved, cease for any reason to constitute a majority thereof.     6. Employee further agrees never to make any statements or comments, whether oral or writtento any person or entity that would tend to disparage or harm the Company; provided, however, thatthis sentence shall not be construed to constrain Employee from providing truthful testimony whenrequired by law in the course of a legal or administrative proceeding. Without limiting any otherlegal or equitable remedy available to it under this Agreement or otherwise, the Company shall beentitled to offset against amounts otherwise payable to Employee pursuant to paragraphs 2(a) or2(c) above an amount equal to the amount of damages the Company suffers resulting from any suchdisparaging or harmful remark. Employee understands and agrees that violation of this paragraphshall be treated as a material breach of this Agreement.     7. Employee expressly agrees that this Agreement is not and shall not in any way be deemed toconstitute an admission or evidence of any breach of contract, wrongdoing or liability on the partof the Company, nor of any violation of any federal, state or municipal statute, regulation orprinciple of common law or equity.     8. Employee agrees to make himself reasonably available in connection with any information theCompany requires relating to the services Employee had provided to Company, including anylitigation the Company is or may become involved in to which the Employee has knowledge. Companyagrees to provide Employee with reasonable notice in connection with any depositions or courtappearances where his presence is necessary or reasonably desirable. The Company shall payEmployee’s travel expenses in this regard. Employee and Company shall agree on a reasonable perdiem fee for any time the Employee is required to make himself available in person pursuant to thisparagraph.     9. Employee and the Company acknowledge and agree:
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     (a) that each of them has read and understands the contents of this Agreement;     (b) that this Agreement does not waive rights or claims that may arise after the datethat this Agreement is executed;     (c) that Employee waives rights or claims only in exchange for consideration that theEmployee would not be entitled to but for executing this Agreement;     (d) that the Company has informed Employee that Employee should consult with anattorney in connection with this Agreement; and     (e) that Employee’s decision to consult with an attorney or not to consult with anyattorney was made without influence by the Company.     10. Both Parties understand that the Employee shall have 45 days to consider this Agreementbefore signing. Both Parties understand that the Employee shall have seven (7) days in which torevoke this Agreement after signing, and that this Agreement shall not become effective orenforceable until the expiration of seven (7) days after signing (the date of such expiration,“***Effective Date***”), and the severance compensation payable hereunder shall not be due and owinguntil after the Effective Date set forth herein. To accept the Agreement, Employee must send asigned copy to Neil Carfagna, National Medical Health Card Systems, Inc., 26 Harbor Park Drive,Port Washington, New York 11050, (516) 605 6802, (516) 626 4632 (facsimile), NCarfagna@nmhc.com**,**such that it is received no later than 45 days after the date that this Agreement has beenpresented to Employee. Any notice of revocation must also be sent such that it is received priorto the end of the seven day revocation period by Neil Carfagna, National Medical Health CardSystems, Inc., 26 Harbor Park Drive, Port Washington, New York 11050, (516) 605 6802, (516) 6264632 (facsimile), NCarfagna@nmhc.com. Employee also acknowledges receipt of the followinginformation:     (a) The group of individuals covered: All employees who hold positions whoseemployment is being terminated on or about May 21, 2007.     (b) Eligibility factors: A severance proposal is being offered to all employees whoseemployment is being terminated on or about May 21, 2007.     (c) Time limits: Each employee who is offered a severance proposal has 45 days toconsider the Agreement and seven (7) days to revoke acceptance after signing.     (d) Employee acknowledges that Employee has received and reviewed the informationcontained in Exhibit “A” to this Agreement. The information in Exhibit “A” includes the jobtitles and ages of all individuals from the group of employees considered for termination onor about May 21, 2007, and whether or not those employees were selected for termination ofemployment or otherwise offered a severance proposal.     11. This Agreement is made in the State of New York. This Agreement is to be interpretedunder the laws of the State of New York without regard to conflict of laws principles. The Partiesagree that the federal and state courts sitting in Nassau County, New York, shall be the exclusivevenue for the resolution of any dispute arising out of or relating to this Agreement.
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     12. Except as provided in this Agreement, this is the entire agreement between the Employeeand the Company and supersedes any and all prior agreements or understandings between the Parties,whether written or oral, pertaining to Employee’s employment with the Company. This Agreement mayonly be amended or modified by a written document signed by both Parties. The Company has made nopromises to Employee other than those in this Agreement. Notwithstanding anything to the contraryin this paragraph 12, except as explicitly provided otherwise in this Agreement, (i) paragraphs 6through 11 of the Employment Agreement, and (ii) any obligation of the Company under anyindemnification agreement or the Company’s Certificate of Incorporation and Bylaws, as amended, toindemnify, hold harmless and advance expenses to Employee shall survive the execution of thisAgreement in accordance with their respective terms and conditions.     13. Should any provision of this Agreement be declared or determined by any court to beillegal, invalid or unenforceable, the validity of the remaining parts, terms and provisions shallnot be effected thereby and any said illegal, invalid or unenforceable part, terms or provisionsshall be deemed stricken and severed from this Agreement.     14. This Agreement may be executed in one or more counterparts, and each effective counterpartshall be effective as a signed original.     15. Company makes no representations to Employee concerning the tax consequences arising outof any payments under this Agreement, including, without limitation, whether any of the paymentshereunder are subject to 26 U.S.C. § 409A. Company urges Employee to obtain his own tax counselwith regard to any tax consequences arising out of or relating to this Agreement.     16. EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS CAREFULLY READ THIS AGREEMENT; THAT EMPLOYEE HASHAD AT LEAST 45 DAYS IN WHICH TO CONSIDER AND RETURN THIS AGREEMENT; THAT EMPLOYEE HAS HAD ANOPPORTUNITY TO CONSULT WITH ANY ATTORNEY OF EMPLOYEE’S CHOICE IN CONNECTION WITH THIS AGREEMENT;THAT EMPLOYEE FULLY UNDERSTANDS THE TERMS, CONDITIONS, AND SIGNIFICANCE AND CONSEQUENCES OF THISAGREEMENT; AND THAT EMPLOYEE HAS EXECUTED THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND OFEMPLOYEE’S OWN FREE WILL.
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**IN WITNESS WHEREOF**, the Parties hereto have executed this Agreement as of the date below.**NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.**     By: /s/ Stuart Diamond                                 , its authorized representative       Date: August 20, 2007    /s/ James F. Smith     James  F. Smith  Date:August 17, 2007
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**Exhibit “A”**               **OFFERED SEVERANCE**               **JOB TITLE**  **AGE** **PROPOSAL OR NOT (Y/N)**Chief Human Resource Officer    51 NChief Clinical Officer    46 NChief Specialty Officer    44 NChief Services Officer    48 YChief Financial Officer    46 NSenior Vice President, Sales    47 NPresident and Chief Executive Officer    58 YChief Marketing Officer    53 YChief Information Officer    56 YChief Legal Officer    37 YVice President Marketing    44 YController    48 Y
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