Document:

Ex-10.9

 

Exhibit
10.9

 

BFS REALTY, LLC,

as Sublessor

and

NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.,

as Sublessee

 

HEALTH CARD SUBLEASE AGREEMENT

 

DATED AS OF December 1, 2004

 

	 	 	 	 	 
	 

	 	ADDRESS:
	 	 26 Harbor Park Drive
	 

	 	TOWN:
	 	North Hempstead
	 

	 	COUNTY:
	 	Nassau
	 

	 	STATE:
	 	New York
	 

	 	SECTION:
	 	 6
	 

	 	BLOCK:
	 	 89
	 

	 	LOT:
	 	 10

 

Record and Return to:

Phillips Lytle LLP

1100 Franklin Avenue

Garden City, New York 11530

Attention: Milan K. Tyler, Esq.

 

 

HEALTH CARE SUBLEASE AGREEMENT

     THIS HEALTH CARE SUBLEASE AGREEMENT, dated as of December 2004 (this “Sublease
Agreement”), by and between BFS REALTY, LLC, a limited liability company organized
and existing under the laws of the State of New York and authorized to do business in
the State of New York, having its principal office at 26 Harbor Park Drive, port
Washington, New York 11050 (the “Sublessor” or the “Company”), and NATIONAL MEDICAL
HEALTH CARD SYSTEMS, INC., a corporation organized and existing under the laws of the
State of Delaware and authorized to do business in the State of New York, having its
principal office at 26 Harbor Park Drive, Port Washington, New York 11050 (the
“Sublessee” or “Health Card”).

W I T N E S S E T H:

     WHEREAS, the New York State Industrial Development Agency Act, constituting Title 1 of Article
18-A of the General Municipal Law, Chapter 24 of the Consolidated Laws of New York, as amended (the
“Enabling Act”) authorizes and provides for the creation of industrial development agencies in the
several counties, cities, villages and towns in the State of New York
and empowers such agencies, among
other things, to acquire, construct, reconstruct, lease, improve, maintain, equip and furnish land,
any building or other improvement, and all real and personal
properties, including but not limited
to machinery and equipment, deemed necessary in connection therewith, whether or not now in
existence or under construction, which shall be suitable for manufacturing, warehousing, research,
commercial, industrial or civic purposes, to the end that such agencies may be able to promote,
develop, encourage, assist and advance the job opportunities, health, general prosperity and
economic welfare of the people of the State of New York and to improve their prosperity and
standard of living; and

     WHEREAS, pursuant to and in accordance with the provisions of the Enabling Act, the Nassau
County Industrial Development Agency (the “Agency”) was established by Chapter 674 of the 1975
Laws of New York, as amended (together with the Enabling Act, the
“Act”) for the benefit of the
County of Nassau and the inhabitants thereof; and

     WHEREAS, to accomplish its stated purposes, the Agency is authorized and empowered under the
Act to acquire, construct, reconstruct and install one or more “projects” (as defined in the Act),
or to cause said projects to be acquired, constructed, reconstructed and installed and to convey
said projects or to lease said projects with the obligation to purchase; and

     WHEREAS, to accomplish the purposes of the Act, the Agency has entered into negotiations
with the Sublessor for a “project” within the meaning of the Act (as described in the recitals
hereto) within the territorial boundaries of the County of Nassau; and

     WHEREAS, the project will involve the Company, as Applicant, together with Sandata
Technologies, Inc. (“Sandata”) and Health Card (each an “Applicant” and, collectively, the
“Applicants”), and the Applicants have each presented an application (as amended) (each an
“Application” and, collectively, the “Applications”) to the Agency, requesting that the Agency
consider undertaking certain projects (“the
“Projects”) consisting of the following: (A)(1) the

 

 

acquisition of an interest in an approximately 6.34 acre parcel of land located at 26 Harbor Park
Drive, Port Washington, Town of North Hempstead, County of Nassau, New York (the “Land”), together
with an existing approximately 73,445 square foot building containing office space, a data center
and warehouse space and related improvements located on the Land, (2) the renovation and expansion
of the existing building to provide additional office space, data center space and warehouse space
(the “Building”), together with certain fixtures, machinery, equipment and furniture for use in
connection with the Building (the “Equipment”), and (3) the acquisition and installation and/or
vendor lease and installation of furniture, machinery, computer, data processing,
telecommunications and office systems and equipment for the benefit of Sandata and/or Health Card
(the “Project Equipment”), all of the foregoing to constitute an office/data/warehouse facility
(collectively, but excluding the Project Equipment, the “Project Facility”); (B) the granting of
certain “financial assistance” (within the meaning of Section 854(14) of the Act) with respect to
the foregoing, including potential exemptions or partial exemptions from sales and use taxes,
mortgage recording taxes, real property taxes, real property transfer taxes and recording fees and
charges for the Project (collectively, the “Financial Assistance”); (C) the lease (with an
obligations to purchase) or sale of all or part of the portion of the Project Facility consisting
of the Land and Building to the Company; (D) the sublease of all or part of the portion of the
Project Facility consisting of the Land and Building by Company to Sandata and Health Card and one
or more third parties satisfactory to the Agency designated by an Applicant and agreed upon by the
Agency; and (E) the lease (with an obligation to purchase) and/or sublease of a leasehold interest
and/or vendee leasehold interest in the Project Equipment to Sandata
and Health Card; and

     WHEREAS, the Company, in its Application, has designated Sandata with respect to the Sandata
Portion of the Project Facility, Health Card with respect to the
Health Card Portion of the Project Facility, Medical Arts Office Services, Inc. (“MAOS”) with respect to the MAOS Portion of
the Project Facility, PW Capital, LLC (“PW”) with respect to the PW Portion of the Project
Facility, Northeast Equity Management, LLC (“Northeast”) with respect to the Northeast Portion of
the Project Facility and Identification, Data & Imagining, LLC (“IDI”) with respect to the IDI
Portion of the Project Facility, all as the sublessees of the Realty pursuant to, respectively,
the Sandata Sublease Agreement, the Health Card Sublease Agreement, the MAOS Sublease Agreement,
the PW Sublease Agreement, the Northeast Sublease Agreement and the IDI Sublease Agreement
(collectively, the “Sublease Agreements”) (as all such capitalized terms not defined herein shall
have the meanings ascribed thereto in the Lease Agreement referenced below in these recitals); and

     WHEREAS, in connection with the Project Equipment, the Agency contemplates entering into a
separate lease thereof with Sandata (the “Sandata Equipment Lease”) with respect to the
portion of the Project Equipment to be leased to and used by Sandata (the “Sandata
Equipment”); and

     WHEREAS, in connection with the Project Equipment, the Agency also contemplates entering
into a separate lease thereof with Health Card (the “Health Card Equipment Lease”) with
respect to the portion of the Project Equipment to be leased to and used by Health Card
(the “Health Card Equipment”); and

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     WHEREAS, pursuant to the authorization contained in that certain resolution adopted by the
members of the Agency on February 11, 2004 (the “Public Hearing Resolution”), the Executive
Director of the Agency (A) caused notice of a public hearing of the Agency pursuant to Section
859-a of the Act (the “Public Hearing”) to hear all persons interested in the Project and the
Financial Assistance being contemplated by the Agency with respect to the Project, to be mailed on
April 23, 2004 to the chief executive officer of Nassau County and of each other affected tax
jurisdiction within which the Project Facility is to be located, (B) caused notice of the Public
Hearing to be published on April 23, 2004 in Newsday, a newspaper of general circulation
available to residents of the Town of North Hempstead, New York, (C) conducted the Public Hearing
on June 4, 2004 at 10:00 a.m., local time at North Hempstead Town Hall, 220 Plandome Road,
Manhasset, Town of North Hempstead, Nassau County, New York, and (D) prepared a report of the
Public Hearing (the “Report”) which fairly summarized the views presented at the Public Hearing
and distributed same to the members of the Agency; and

     WHEREAS, pursuant to the authorization contained in the Public Hearing Resolution, the
Executive Director of the Agency (A) caused notice of a meeting of the Agency (the “IDA Meeting”)
with respect to the proposed deviation from the Agency’s uniform tax exemption policy and
guidelines to be mailed on April 23, 2004 to the chief executive officer of each affected tax
jurisdiction, and (B) conducted the IDA Meeting on June 9, 2004 and reviewed and responded to any
comments or correspondence received from the affected tax jurisdictions at or before the IDA
Meeting regarding the proposed deviation from the Agency’s uniform tax exemption policy; and

     WHEREAS, pursuant to Article 8 of the Environmental Conservation Law, Chapter 43-B of the
Consolidated Laws of New York, as amended (the “SEQR Act”) and the regulations adopted pursuant
thereto by the Department of Environmental Conservation of the State of New York (the
“Regulations” and collectively with the SEQR Act, “SEQRA”), the Agency, by resolution dated
October 19, 2004, designated itself “lead agency” under SEQRA with respect to the Project,
determined that the Project will not have a significant adverse impact on the environment and
issued and filed a “negative declaration” for purposes of SEQRA; and

     WHEREAS, by resolution adopted by the members of the Agency on December 7, 2004 (the
“Inducement Resolution”), the Agency, following a review of the Report, made a determination to
proceed with the Project and to grant the Financial Assistance; and

     WHEREAS,
by further resolution adopted by the members of the Agency on December 7, 2004 (the
“Authorizing Resolution”), the Agency determined to enter into the “straight lease transaction”
(as such quoted term is defined in the Act) contemplated by the Lease Agreement (hereinafter
defined) and the other Transaction Documents and, in addition, the Sandata Equipment Lease and the
Health Card Equipment Lease; and

     WHEREAS, to facilitate the Project, in addition to the transactions contemplated by the
Sandata Equipment Lease and the Health Card Equipment Lease with respect to the Project Equipment,
the Agency and the Sublessor have entered into negotiations to enter into a “straight lease
transaction” within the meaning of the Act in which the Agency will acquire fee simple title to the
Land and the improvements thereon and the Agency will lease its interest in the Project Facility to
the Sublessor pursuant to a Lease Agreement (Realty) of even date herewith (the “Lease

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Agreement”), and, in furtherance of such purposes, the Agency adopted the Inducement Resolution
and the Authorizing Resolution authorizing the undertaking of the Project, the acquisition,
renovation, installation and equipping of the Project Facility by the Agency and the lease of the
Project Facility by the Agency to the Sublessor pursuant to the Lease Agreement for sublease to
the Sublessees pursuant to the Sublease Agreements; and

     WHEREAS, the provision by the Agency of financial assistance to the Sublessor and the
Sublessees has been determined to be necessary to enable the Company to proceed with the Project
in Nassau County; and

     WHEREAS, immediately prior to the execution and delivery of the Lease Agreement, the
Sublessor will execute and deliver or cause to be executed and delivered to the Agency (A) a
certain deed dated as of the date hereof (the “Deed to the Agency”) from the Sublessor to the
Agency, which conveys to the Agency all right, title and interest of the Sublessor in and to the
Premises, and (B) a bill of sale dated as of the date hereof (the “Bill of Sale to Agency”), which
conveys to the Agency all right, title and interest of the Sublessor in and to the Equipment
(excluding the Project Equipment referenced above, which is to be conveyed to the Agency pursuant
to separate bills of sale from Sandata and Health Card and/or in which the Agency shall acquire a
vendee leasehold interest therein); and

     WHEREAS, pursuant to the Lease Agreement, the Agency will lease the Project Facility to the
Company, and pursuant to the Sublease Agreements referenced above, of even date herewith between
the Company and the Sublessees, the Company will sublease the Project Facility in whole to the
Sublessees; and

     WHEREAS, pursuant to a certain Payment in Lieu of Taxes Agreement of even date herewith among
the Company, Sandata, Health Card, IDI, PW, Northeast and MAOS and the Agency, the Company,
Sandata, Health Card, IDI, PW, Northeast and MAOS each has agreed to make certain payments in lieu
of real estate taxes with respect to the Land and the improvements thereon, and such obligation is
to be secured pursuant to a Mortgage of even date herewith (the “PILOT Mortgage”) from the
Company, Sandata, Health Card, IDI, PW, Northeast and MAOS and the Agency, as mortgagors, to the
County of Nassau (the “County”), as mortgagee, pursuant to which the Agency, the Company, Sandata,
Health Card, IDI, PW, Northeast and MAOS will grant a first mortgage lien on the Land and the
improvements thereon; and

     WHEREAS, in order to finance a portion of the costs of the Project, HSBC Bank USA, National
Association (the “Bank”) has agreed to lend $9,400,000 in the aggregate to the Company (the “Bank
Mortgage Loan”); and

     WHEREAS, in order to evidence its obligation to repay the Bank Mortgage Loan, the Company
will issue to the Bank a promissory note (the “Bank Mortgage Note”) in the principal amount of the
Bank Mortgage Loan dated the Closing Date; and

     WHEREAS, in order to secure its obligations to the Bank under the Bank Mortgage Note, the
Company will, joined in by the Agency for the sole purpose of subjecting to the lien thereof the
Agency’s interest in the Project Facility, grant a mortgage in the Project Facility and the

4

 

leasehold interest created by the Lease to the Bank, to be entitled “Fee and Leasehold Mortgage
with Security Agreement and Assignment of Rents”, and dated the Closing Date (the “Bank Mortgage”)
from the Company and the Agency to the Bank; and

     WHEREAS, to provide Financial Assistance in connection with the Project Equipment, the Agency
(i) will enter into the Sandata Equipment Lease with Sandata with respect to the Sandata Equipment
and (ii) will enter into the Health Card Equipment Lease with Health Card with respect to the
Health Card Equipment; and

     WHEREAS, in connection with the foregoing, to effect a sublease of the Health Card Portion of
the Project Facility from the Company, as sublessor, to Health Card, as sublessee, the Company has
entered into this Sublease Agreement with Health Card; and

     WHEREAS, this Sublease Agreement is authorized pursuant to Section 5.6 and Section 9.3 of the
Lease Agreement,

     NOW, THEREFORE, in consideration of the premises and the respective representations and
agreements hereinafter contained, the parties hereto agree as follows:

     Section 1. Definitions. Any term not defined herein shall have the meaning set forth
for such term in the Lease Agreement (Realty) or in Appendix A attached hereto and made a
part hereof.

     Section 2. Construction. In this Sublease Agreement, unless the context otherwise
requires:

     (a) The terms “hereby”, “hereof, “hereto”, “herein”, “hereunder” and any similar terms, as
used in this Sublease Agreement, refer to this Sublease Agreement, and the term “hereafter” shall
mean after, and the term “heretofore” shall mean before, the date of the execution and delivery of
this Sublease Agreement.

     (b) Words of the masculine gender shall mean and include correlative words of the feminine and
neuter genders and words importing the singular number shall mean and include the plural number and
vice versa.

     (c) Words importing persons shall include firms, associations, partnerships (including limited
partnerships), trusts, corporations, limited liability companies and other legal entities,
including public bodies, as well as natural persons.

     (d) Any headings preceding the texts of the several Sections of this Sublease Agreement, and
any table of contents appended to copies hereof, shall be solely for convenience of reference and
shall not constitute a part of this Sublease Agreement, nor shall they affect its meaning,
construction or effect.

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     (e) References to documents, instruments, or agreements shall mean such documents,
instruments and agreements as they may be amended, modified, renewed, replaced or restated from
time to time.

     Section 3.
Representations and Warranties by Sublessee. The Sublessee makes the
following representations, warranties and covenants to the Agency and the Sublessor:

     (a) The Sublessee is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and is authorized to do business in the State of New York, is not
in violation of any provision of its certificate of incorporation or by-laws, has the corporate
power and authority to own its property and assets, to carry on its business as now being conducted
by it and to execute, deliver and perform this Sublease Agreement and each other Transaction
Document to which it is or shall be a party.

     (b) The execution, delivery and performance of this Sublease Agreement and each other
Transaction Document to which it is or shall be a party and the consummation of the transactions
herein and therein contemplated have been duly authorized by all requisite corporate action on its
part and will not violate any provision of law, any order of any court or agency of government, or
its certificate of incorporation or by-laws, or any indenture, agreement or other instrument to
which it is a party or by which it or any of its property is subject to or bound, or be in conflict
with or result in a breach of or constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or other instrument or result in the imposition of any lien, charge
or encumbrance of any nature whatsoever on the Project Facility other than Permitted Encumbrances.

     (c) Sublessee has no knowledge of any action or proceeding pending or threatened by or against
it by or before any court or administrative agency that would adversely affect its ability to
perform its obligations under this Sublease Agreement and each other Transaction Document to which
it shall be a party and all authorizations, consents and approvals of governmental bodies or
agencies required to be obtained by it as of the date hereof in connection with the execution and
delivery of this Sublease Agreement and each other Transaction Document to which it shall be a
party or in connection with the performance of its obligations hereunder and under each of the
Transaction Documents have been obtained.

     (d) The Project Facility will constitute a “project” under the Act, and it intends to operate
the Sandata Portion of the Project Facility, or cause the Sandata Portion of the Project Facility
to be operated, in accordance with this Sublease Agreement and as a facility to be used for the
purposes set forth in the recitals hereto and as a qualified “project” in accordance with and as
defined under the Act.

     (e) The financial assistance (within the meaning of the Act) provided by the Agency to the
Sublessor and the Sublessee through the straight-lease transaction (within the meaning of the Act)
as contemplated by this Sublease Agreement is reasonably necessary to induce it to proceed with the
Project.

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     (f) Subject to Sections 7.1 and 7.2 of the Lease Agreement, no Equipment shall be located at
any site other than the Project Facility.

     (g) The Project is reasonably necessary to discourage it from removing its operations from
within the State to a location outside the State and to preserve its competitive position in its
industry.

     (h) The transactions contemplated by this Sublease Agreement shall not result in the removal
of any facility or plant of it or any other occupant or user of the Project Facility from one area
of the State (but outside of the County) to within the County or in the abandonment of one or more
of the facilities or plants of it or of any other occupant or user of the Project Facility located
within the State (but outside of the County).

     (i) The transactions contemplated by this Sublease Agreement shall not provide financial
assistance in respect of any project where facilities or property that are primarily used in
making retail sales (within the meaning of the Act) of goods or services to customers who
personally visit such facilities constitute more than one-third of the total project costs and
undertaking the Project will serve the public purposes of the Act by preserving permanent, private
sector jobs or increasing the overall number of permanent, private sector jobs in the State.

     (j) No funds of the Agency shall be used in connection with the transactions contemplated by
this Sublease Agreement for the purpose of preventing the establishment of an industrial or
manufacturing plant or for the purpose of advertising or promoting materials which depict elected
or appointed government officials in either print or electronic media, nor shall any funds of the
Agency be given hereunder to any group or organization which is attempting to prevent the
establishment of an industrial or manufacturing plant within the State.

     (k) This Sublease Agreement and the other Transaction Documents constitute the legal, valid
and binding obligations of it enforceable against it in accordance with their respective terms.

     (1) To the best of Sublessee’s knowledge, the Sublessor and the Sublessee are in compliance,
and will continue to comply, with all Federal, State and local laws or ordinances (including rules
and regulations) relating to zoning, building, safety and environmental quality applicable to the
Project and the operation of the Project Facility.

     (m) No Person other than the Sublessor and the Sublessee is or will be in use, occupancy or
possession of any portion of the Health Card Portion of the Project Facility.

     (n) The Project will be designed, and the operation of the Health Card Portion of the Project
Facility will be, in compliance with all applicable Federal, State and local laws or ordinances
(including rules and regulations) relating to safety and environmental quality.

     (o) The Sublessor and the Sublessee are affiliates of one another and share common ownership
and/or control.

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     (p) The moneys available to the Sublessor and the Sublessee are sufficient to pay all costs
in connection with the completion of the Project that pertains to the Project Facility.

     (q) The representations, warrants, and covenants made by the Company as set forth in Section
2.2 of the Lease Agreement are adopted and incorporated into this Sublease Agreement as the
representations, warrants and covenants of the Sublessee as though fully set forth herein and
given by the Sublessee under this Section 3.

     (r) The Sublessees shall maintain at all times during the term of this Sublease Agreement and
the Health Card Equipment Lease their current level of employment at the Project Facility in the
State of New York as set forth in the Application, which current level of employment consists of
two hundred twelve (212) full time equivalent, private sector jobs. The Sublessees shall also (i)
create at least twenty-four (24) new, full-time equivalent, private sector jobs in the State of
New York within one (1) year after the Scheduled Completion Date and maintain such jobs
throughout the term of this Sublease Agreement and the Health Card Equipment Lease, (ii) create at
least forty-eight (48) new, full-time equivalent, private sector jobs in the State of New York
within two (2) years after the Scheduled Completion Date and maintain such jobs throughout the
term of this Sublease and the Health Card Equipment Lease, and (iii) create at least seventy-one
(71) new, full-time equivalent, private sector jobs in the State of New York within three (3)
years after the Scheduled Completion Date and maintain such jobs throughout the term of this
Sublease Agreement and the Health Card Equipment Lease, all of which jobs shall, at all times
during the term of this Sublease Agreement and the Health Card Equipment Lease, be located at the
Health Card Portion of the Project Facility pursuant to the terms and provisions of the Lease
Agreement, this Sublease Agreement and the Health Card Equipment Lease.

     Section 4.
Incorporation of Lease Agreement and Prior Sublease.

     (a) The Sublessee acknowledges receipt of a true and complete copy of the Lease Agreement and
consents to the terms thereof. All of the terms, conditions and covenants of the Lease Agreement
(including, without limitation, Section 1.3 thereof) are deemed incorporated by reference in this
Sublease Agreement, with the same force and effect as if each and every provision thereof were more
fully and at length set forth herein, provided, however, that only the Sublessor can exercise the
option to purchase the Project Facility as set forth in Article XI of the Lease Agreement and only
the Sublessor can function as the “agent” of the Agency under Section 4.1 of the Lease Agreement.
The Sublessee covenants and agrees to comply with every requirement and obligation imposed upon it
pursuant to the terms and provisions of the Lease Agreement or as may be required or permitted of
it at the insistence of the Sublessor in accordance with the terms and provisions of the Lease
Agreement.

     (b) The parties hereto are parties to a Lease Agreement dated August 1, 2001 and amended on
October 23, 2003 and April 26, 2004 (the “Prior Sublease”), a copy of which is attached hereto as
Exhibit C. This Sublease Agreement is in replacement and restatement of the Prior
Sublease. To the extent not inconsistent with the terms hereof, the other terms, conditions and
covenants of the Prior Sublease are deemed incorporated by reference in this Sublease Agreement,
with the same force and effect as if each and every provision thereof were more fully and at length
set forth herein.

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     Section 5.
Sublease of Facility. (a) The Sublessor hereby subleases to the
Sublessee and the Sublessee hereby subleases from the Sublessor the Health Card Portion of the
Project Facility for and during the term herein provided and upon and subject to the terms and
conditions herein set forth. The Health Card Portion of the Project Facility is more fully
described in Exhibit B hereto and is located on the Land more fully described in
Exhibit A hereto. The Sublessee shall at all times during the term of this Sublease
Agreement occupy, use and operate the Health Card Portion of the Project Facility as a facility to
be used for the purposes set forth in the recitals hereto and as a qualified “project” in
accordance with the provisions of the Act.

     The term of this Sublease Agreement shall commence on the date of the execution and delivery
of this Sublease Agreement and shall expire on December 31, 2015 or upon such earlier or later date
as may be provided in accordance with the terms of the Lease Agreement (or upon such earlier
termination of the Lease Agreement as provided therein) but in no event earlier than one day prior
to the termination of the Lease Agreement. This Sublease Agreement shall survive the transfer of
the Project Facility to the Sublessor in the manner and to the extent provided in Section 11.2(D)
of the Lease Agreement.

     (b) During the term of this Sublease Agreement, the Sublessee agrees to pay sublease rentals
to the Sublessor in accordance with the Prior Sublease. To the extent not inconsistent with this
Sublease Agreement, all of the terms, provisions, conditions and covenants of the Prior Sublease
are deemed incorporated by reference in this Sublease Agreement, with the same force and effect as
if each and every provision thereof were more fully and at length set forth herein.

The Sublessor agrees that any sublease rentals payable pursuant to the preceding sentence of this
paragraph (b) attributable to the Rental Payments under the Lease Agreement shall be paid directly
or for the account of the Agency as provided in the Lease Agreement (and hereby directs the
Sublessee and the Sublessee agrees to make such payments), except that if the Lease Agreement or
the Agency requires Rental Payments to be paid otherwise, such sublease rentals shall be paid in
the same manner as so required. Any sublease rentals payable to Sublessor pursuant to this
paragraph in excess of the Rental Payment and other payments then due under the Lease Agreement may
be retained by Sublessor for its own purposes subject to the obligations of Sublessor to the Bank,
except under the following circumstances: (i) an Event of Default under the Lease Agreement has
occurred and is continuing uncured, (ii) a recapture of Agency benefits pursuant to Section 11.4 of
the Lease Agreement is pending due to the occurrence of a “Recapture Event” (as defined in Section
11.4 of the Lease Agreement) and the payment obligation resulting from the occurrence of the
Recapture Event remains unpaid and unsatisfied, or (iii) payments are presently owed and unpaid to
the Agency, including pursuant to any right of indemnification extended to the Agency and others
under the terms of the Lease Agreement.

     (c) Subject to the provisions of Section 1.3 of the Lease Agreement and as set forth in
Section 4 of this Sublease Agreement, the Sublessee hereby agrees to be bound by each and every
obligation, term, covenant, condition and agreement of the Lease Agreement by which the Sublessor
as Lessee thereunder is bound and hereby assumes all of the Sublessor’s obligations under the
Lease Agreement as if the Sublessee was the named Lessee under the Lease Agreement and agrees to
keep and perform all of the obligations, terms, covenants, conditions and agreements of the

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Lease Agreement and to pay all sums due under the Lease Agreement on the part of the Sublessor
thereunder to be kept and performed and paid and further assumes all obligations as specifically
relate to the Sublessee as are contained in the Lease Agreement. Those obligations of the
Sublessor in the Lease Agreement which are set forth as surviving the termination of the Lease
Agreement shall similarly survive as obligations of the Sublessee and survive the termination of
this Sublease Agreement.

     Section 6. Nature of Sublessee’s Obligations Unconditional. The Sublessee’s
obligations under this Sublease Agreement to pay sublease rentals and to pay other amounts
required to be paid hereunder shall be absolute, unconditional and general obligations, and
irrespective of any defense or any rights of set-off, recoupment or counterclaim or deduction and
without any rights of suspension, deferment, diminution or reduction either might otherwise have
against the Sublessor, the Agency or any other Person and the obligation of the Sublessee shall
arise whether or not the Project has been completed as provided in the Lease Agreement. The
Sublessee will not suspend or discontinue payment of any sublease rental or other amounts due and
payable hereunder or performance or observance of any covenant or agreement required on the part
of the Sublessee hereunder for any cause whatsoever, and the Sublessee waives all rights now or
hereafter conferred by statute or otherwise to any abatement, suspension, deferment, diminution
or reduction in the sublease rentals due or to become due hereunder.

     Section 7. Dissolution or Merger of Sublessee; Restrictions on Sublessee. The
Sublessee covenants and agrees that at all times during the term of this Sublease Agreement, it
will maintain its existence as a corporation as in effect on the date hereof and will not
dissolve or otherwise dispose of all or substantially all of its assets, will not consolidate
with or merge into another corporation or other Person, or permit one or more corporations or
other Persons to consolidate with or merge into it, without giving prior notice to the Agency and
obtaining the consent of the Agency. The Sublessee agrees that it will not change its name or its
state of organization without giving prior written notice to the Agency and obtaining the consent
of the Agency, which consent shall not be unreasonably withheld or delayed.

     The Sublessee further represents, covenants and agrees that it is and throughout the
term of this Sublease Agreement will (y) continue to be owned or controlled by the same individuals
or entities as shall own or control the beneficial ownership in the Sublessor, and (z) continue to
be. duly qualified to do business in the State and that any legal entity succeeding to its
rights under this Sublease Agreement shall be and continue to be duly qualified to do business in
the State.

     Section 8. Events of Default. Any one or more of the following events shall
constitute an “Event of Default” hereunder:

     (a) Failure of the Sublessee to pay any rental under Section 5(b) hereof that has become
due and payable by the terms hereof which results in the occurrence of an Event of Default under
the Lease Agreement;

     (b) (i) Failure of the Sublessee to pay any amount (except the obligation to pay rent under
Section 5(b) hereof) that has become due and payable or to observe and perform any covenant,
condition or agreement on its part to be performed under Section 6 or 7 hereunder or with

10

 

respect to
Sections 6.2, 6.6, 8.4, 8.9, 8.12, 9.1, 9.3, 10.4 and 11.4 of the Lease Agreement or
with respect to the indemnification provisions set forth in
Sections 2.2(G), 3.1, 3.3, 6.1, 8.2 and
12.9(C) of the Lease Agreement and continuance of such failure for a period of fifteen (15) days
after receipt by the Sublessee of written notice specifying the nature of such default from the
Agency;

     (ii) Failure of the Sublessee to pay any amount (except the obligation to pay rent under
Section 5(b) hereof) that has become due and payable or to observe and perform any covenant,
condition or agreement on its part to be performed with respect to Section 6.3 of the Lease
Agreement and continuance of such failure for a period of fifteen (15) days after receipt by the
Sublessee of written notice specifying the nature of such default from the Agency;

     (c) Failure of the Sublessee to observe and perform any covenant, condition or agreement
hereunder on its part to be performed (except as set forth in Section 8(a) or (b) above) and (1)
continuance of such failure for a period of fifteen (15) days after receipt by the Sublessee of
written notice specifying the nature of such default from the Agency, or (2) if by reason of the
nature of such default the same can be remedied, but not within the said fifteen (15) days, the
Sublessee fails to proceed with reasonable diligence after receipt of said notice to cure the same
or fails to continue with reasonable diligence its efforts to cure the same;

     (d) The Sublessee, the Sublessor or any Guarantor shall (i) apply for or consent to the
appointment of or the taking of possession by a receiver, liquidator, custodian or trustee of
itself or of all or a substantial part of its property, (ii) admit in writing its inability, or be
generally unable, to pay its debts as such debts generally become due, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a voluntary case under the Federal
Bankruptcy Code (as now or hereafter in effect), (v) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or
adjustment of debts, (vi) fail to controvert in a timely or appropriate manner, or acquiesce in
writing to, any petition filed against itself in an involuntary case under the Federal Bankruptcy
Code (as now or hereafter in effect), (vii) take any action for the purpose of effecting any of
the foregoing, or (viii) be adjudicated a bankrupt or insolvent by any court;

     (e) A proceeding or case shall be commenced, without the application or consent of the
Sublessee, the Sublessor or any Guarantor, in any court of competent jurisdiction, seeking, (i)
liquidation, reorganization, dissolution, winding-up or composition or adjustment of debts, (ii)
the appointment of a trustee, receiver, liquidator, custodian or the like of the Sublessee, the
Sublessor or any Guarantor, or of all or any substantial part of its respective assets, or (iii)
similar relief under any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an
order, judgment or decree approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) days, or any order for relief against the
Sublessee, the Sublessor or any Guarantor shall be entered in an involuntary case under such
Bankruptcy Code; the terms “dissolution” or “liquidation” of the Sublessee, the Sublessor or any
Guarantor as used above shall not be construed to prohibit any action otherwise permitted by
Section 7 hereof, Section 8.4 of the Lease Agreement, or Section 3.7 of the Guaranty Agreement;

11

 

     (f) Any representation or warranty made by the Sublessee, the Sublessor or any Guarantor in
(i) the application and related materials submitted to the Agency for approval of the Project or
the transactions contemplated by this Sublease Agreement, (ii) herein or in any other Transaction
Document, or (iii) any report, certificate, financial statement or other instrument furnished
pursuant hereto or any of the foregoing, shall prove to be false, misleading or incorrect in any
material respect as of the date made; or

     (g) An “Event of Default” under the Guaranty or the Lease Agreement or the Sandata Equipment
Lease or any other Transaction Document shall occur and be continuing.

     Whenever any Event of Default shall have occurred and be continuing, the Agency may take any
of the same remedial steps with respect to the Sublessee under this Sublease Agreement as are set
forth in the Lease Agreement with respect to the Lessee or the Sublessee in connection with an
Event of Default thereunder.

     Section 9. Sublease Agreement for Benefit of the Agency. It is understood and agreed
by the parties hereto that this Sublease Agreement is entered into for the benefit of the Agency,
and the payments, obligations, covenants and agreements of the parties hereto may be enforced by
the Agency as if it were a party to this Sublease Agreement.

     Section 10. Recording. This Sublease Agreement or a memorandum hereof shall be
recorded by the Sublessee subsequent to the recordation of the Lease Agreement in the appropriate
office of the County Clerk of Nassau County, or in such other office as may at the time be
provided by law as the proper place for the recordation thereof.

     Section 11. Miscellaneous. This Sublease Agreement shall inure to the benefit of the
Sublessor, the Sublessee and the Agency, and shall be binding upon the Sublessor and the Sublessee
and their respective successors and assigns.

     This Sublease Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York.

     The Sublessor and the Sublessee agree that this Sublease Agreement is subject to and is
expressly subordinated to the PILOT Agreement, the PILOT Mortgage, and the Lease Agreement and all
extensions, modifications, amendments and renewals thereof. This Sublease Agreement, except for the
corresponding obligations of the Sublessee under the Sublease Agreement with respect to the PILOT
Agreement, the Agency’s rights under Section 11.4 of the Lease Agreement, obligations owed to the
Agency resulting from the Agency’s Unassigned Rights under the Lease Agreement and the PILOT
Mortgage, is subordinate to the mortgage and the terms and conditions of the Bank Mortgage and the
Ancillary Documents, including all amounts advanced thereunder and all renewals, replacements and
modifications thereto. The Bank Mortgage and the Ancillary Documents (including all amounts
advanced thereunder and all renewals, replacements and modifications thereto) shall be subject and
subordinate to the corresponding obligations of the Sublessee under this Sublease Agreement with
respect to the PILOT Agreement, the Agency’s rights under Section 11.4 of the Lease Agreement,
obligations owed to the Agency resulting from the Agency’s Unassigned Rights under the Lease
Agreement and the PILOT Mortgage.

12

 

     This Sublease Agreement shall not be assigned, modified, amended, rescinded, terminated,
repealed or cancelled without the prior written consent of the Agency in each instance.

     The Sublessee shall not seek to recover from the Agency any moneys paid to the Agency
pursuant to this Sublease Agreement, whether by reason of set-off, counterclaim or deduction or
for any reason whatsoever. The Sublessee covenants and agrees (w) that whenever the consent or
approval of the Sublessor is required or permitted under this Sublease Agreement, the written
consent or approval of the Agency shall first be obtained before taking any action or omitting to
take any action for which such consent or permission is needed by the Sublessor; (x)
simultaneously to give to the Agency copies of all notices and communications by the Sublessee
under this Sublease Agreement; (y) that the Agency shall not be obligated by reason of the
assignment of this Sublease Agreement or otherwise to perform or be responsible for the
performance of any duties or obligations of the Sublessor hereunder; and (z) not to make any
prepayments of rents or other sums due hereunder to the Sublessor unless such prepayments shall
also be simultaneously applied as a prepayment of Rental Payments or other sums due or to become
due under the Lease Agreement.

     Any obligations that may be imposed upon the Agency by virtue of operation of this Sublease
Agreement shall be subject to the non-recourse provisions of Section 12.9 of the Lease Agreement
as though such non-recourse provisions were fully set forth herein.

     The Sublessee hereby waives the provisions of Section 227 of the New York Real Property Law
or any law of like import now or hereafter in effect.

     All notices, certificates or other communications hereunder shall be sufficient if sent by
registered or certified United States mail, postage prepaid, addressed, if to the Sublessor, to
BFS Realty LLC, 26 Harbor Park Drive, Port Washington, New York 11050, Attention: Bert E. Brodsky,
Manager, with a copy to Kenneth D. Faltischek, Esq., 26 Harbor Park Drive, Port Washington, New
York 11050, and Ruskin Moscou Faltischek, P.C., East Tower, 15th Floor, 190 EAB Plaza,
Uniondale, New York 11556, Attention: Edward Ambrosino, Esq., and if to the Sublessee, National
Medical Health Card Systems, Inc., 26 Harbor Park Drive, Port Washington, New York 11050,
Attention: Bert E. Brodsky, Chairman of the Board, with a copy to Kenneth D. Faltischek, Esq., 26
Harbor Park Drive, Port Washington, New York 11050, and Ruskin Moscou Faltischek, P.C., East
Tower, 15th Floor, 190 EAB Plaza, Uniondale, New York 11556, Attention: Edward
Ambrosino, Esq. Copies of any notices delivered to the Sublessor or to the Sublessee shall also be
sent to the Agency at 400 County Seat Drive, Mineola, New York 11501, Attention: Executive
Director, with a copy to Phillips Lytle LLP, 1100 Franklin Avenue, Suite 400, Garden City, New
York 11530, Attention: Milan K. Tyler.

     This Sublease Agreement, together with the Prior Sublease shall completely and fully
supersede all other prior understandings or agreements, both written and oral, between the
Sublessor and the Sublessee relating to the Project Facility.

     If any clause, provision or section of this Sublease Agreement be ruled invalid by any court
of competent jurisdiction, the invalidity of such clause, provision or section shall not affect any
of the remaining provisions hereof.

13

 

     The Sublessee will permit the Agency, or its duly authorized agent, at all reasonable times
and upon reasonable notice, to enter the Project Facility but solely for the purpose of assuring
that the Sublessee is operating the Project Facility, or is causing the Project Facility to be
operated, as a facility to be used for the purposes set forth in the recitals hereto and a
qualified “project” within the meaning of the Act consistent with the purposes set forth in the
recitals to this Sublease Agreement and with the public purposes of the Agency, and not for any
purpose of assuring the proper maintenance or repair of the Project Facility as such latter
obligation is and shall remain solely the obligation of the Sublessee.

     This Sublease Agreement shall become effective upon its delivery. It may be simultaneously
executed in several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

     It is the intention of the parties hereto that this Sublease Agreement be a “net lease” and
that the portion of the rent set forth in Section 5(b) of the Sublease Agreement be available for
Rental Payments under the Lease Agreement, and this Sublease Agreement shall be construed to
effect such intent.

     THE PARTIES HERETO DO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EACH
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS SUBLEASE AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION WITH THIS SUBLEASE AGREEMENT.

     The provision of this Sublease Agreement relating to waiver of a jury trial and the right of
re-entry or re-possession shall survive the termination or expiration of this Sublease Agreement.

     The Sublessee shall not make, or suffer to be made, any leases (other than the Lease Agreement
and this Sublease Agreement and subleases made in accordance with Section 9.3 of the Lease
Agreement) or cancel or modify any leases or further assign the whole or any part of the rents
without the prior written consent of the Agency. No lease (other than the Lease Agreement and this
Sublease Agreement) covering all or any part of the Project Facility shall be valid or effective
without the prior written approval of the Agency. In respect of any lease, the Sublessee will (i)
fulfill or perform each and every provision thereof on its part to be fulfilled or performed; (ii)
promptly send copies of all notices of default which it shall send or receive thereunder to the
Agency, and (iii) enforce, short of termination thereof, the performance or observance of the
provisions thereof. Nothing contained in this Sublease Agreement shall be deemed to impose on the
Agency any of the obligations of the lessor under the leases.

     The date of this Sublease Agreement shall be for reference purposes only and shall not be
construed to imply that this Sublease Agreement was executed on the date first above written. This
Sublease Agreement was executed and delivered on the Closing Date.

14

 

[THIS PAGE IS INTENTIONALLY BLANK]

15

 

     IN WITNESS WHEREOF, the Sublessor and the Sublessee have authorized the execution of this
Sublease Agreement and the Agency has executed its consent thereto, all being done as of the year
and day first above written.

	 	 	 	 	 	 	 
	 	 	BFS REALTY, LLC,	 	 
	 

	 	 	 	as Sublessor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Bert E. Brodsky
 

Name: Bert E. Brodsky
	 	 
	 

	 	 	 	Title: Manager	 	 
	 
	 	 	 	 	 	 
	 	 	NATIONAL MEDICAL HEALTH CARD
SYSTEMS, INC.,	 	 
	 

	 	 	 	as Sublessee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Stuart Fleischer	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Stuart Fleischer	 	 
	 

	 	 	 	Title: Chief Financial Officer	 	 

16

 

	 	 	 
	STATE OF NEW YORK

	 	) 
	 

	 	) ss.:
	COUNTY OF NASSAU

	 	) 

     On the 14th day of December, in the year two thousand four, before me the undersigned, a
Notary Public in and for said State, personally appeared BERT E. BRODSKY personally known to me
or proved to me on the basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he executed the same in his
capacity, and that by his signature on the instrument, the individual executed the instrument.

	 	 	 	 	 
	 
	 	/s/ Mary Farruggio

 

Notary Public
	 	 
	 	 	 	 	 
	 
	 	(STAMP)	 	 

17

 

	 	 	 
	STATE OF NEW YORK

	 	) 
	 

	 	) ss.:
	COUNTY OF NASSAU

	 	) 

     On the 14th day of December, in the year two thousand four, before me the undersigned, a
Notary Public in and for said State, personally appeared STUART FLEISCHER personally known to me
or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed
to the within instrument and acknowledged to me that he executed the same in his capacity, and that
by his signature on the instrument, the individual executed the instrument.

	 	 	 	 	 
	 
	 	/s/ Mary Farruggio

 

Notary Public
	 	 
	 	 	 	 	 
	 
	 	(STAMP)	 	 

18

 

EXHIBIT A

DESCRIPTION OF LAND

     ALL THAT CERTAIN plot, piece or parcel of land, situate, lying and being at Port Washington,
Town of North Hempstead, County of Nassau and State of New York, known and designated as Block 89,
Lot 10, on the map of Hempstead Harbor Industrial Park, Section No. 4, filed in the Office of the
Nassau County Clerk on February 19, 1980 as Case No. 8815, which is bounded and described as
follows:

     BEGINNING at a point on the westerly side of Harbor Park Drive distant 2263.29 feet
northwesterly, westerly and southerly when measured along the northeasterly, northerly and
westerly side of Harbor Park Drive from the extreme northwesterly end of the curve which connects
the northeasterly side of Harbor Park Drive with the westerly side of Roslyn West Shore Drive,
said point of beginning is also where the division line between Lot 9 and 10 in Block 89 on the
aforesaid map intersect the westerly side of Harbor Park Drive;

     RUNNING THENCE southerly along the westerly side of Harbor Park Drive the following two
courses and distances;

     (1) along the arc of a curve bearing to the left having a radius of 354.90 feet a distance of
114.82 feet;

     (2) south 19 degrees 59 minutes 44 seconds east, 157.61 feet;

     THENCE south 70 degrees 00 minutes 16 seconds west, 505.90 feet;

     THENCE north 12 degrees 14 minutes 15 seconds west, 38.96 feet;

     THENCE south 76 degrees 45 minutes 46 seconds west, 100.02 feet;

     THENCE north 12 degrees 14 minutes 15 seconds west, 200.03 feet;

     THENCE south 76 degrees 45 minutes 45 seconds west, 265.34 feet;

     THENCE north 14 degrees 51 minutes 26 seconds west, 270.25 feet;

     THENCE north 88 degrees 32 minutes 28 seconds east, 876.11 feet to the westerly side of Harbor
Park Drive, the point or place of BEGINNING.

18

 

EXHIBIT B

SUBLEASED PORTIONS OF THE PROJECT FACILITY

19

 

 

 

 

 

EXHIBIT C

PRIOR SUBLEASE

20

 

SECOND
AMENDMENT TO LEASE AGREEMENT

     This Second Amendment, dated as of April 26 , 2004, is by and among BFS Realty, LLC (“Owner”)
and National Medical Health Card Systems, Inc. (“NMHC”). All defined terms used, but not otherwise
defined herein, shall have their meanings set forth in the Lease Agreement between NMHC and Owner,
dated as of August 1, 2001, as amended by an Amendment (the “Amendment”) dated as of October 23,
2003, together with any and all attachments thereto (the “Lease Agreement”).

     WHEREAS, NMHC and Owner have entered into the Lease Agreement pursuant to which NMHC leases
approximately 34,270 square feet in the building known as 26 Harbor Park Drive, Port Washington,
NY 11050 (the “Building”) from Owner;

     WHEREAS, the amount of square footage to be occupied by NMHC (34,270 square feet) pursuant
to the Amendment is inaccurate and the correct square footage to be occupied by NMHC is 37,108
square feet;

     WHEREAS,
the parties desire to amend the terms of the Lease Agreement to reflect the correct square footage to be occupied by NMHC from 34,270 square feet to 37,108 square feet and to
make such other changes and modifications as hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and covenants and agreements contained
herein, the parties agree as follows:

     1.      The Lease Agreement is hereby amended as follows:

          a.      The first sentence of the second paragraph of the Lease Agreement shall be deleted in
its entirety and replaced with the following:

          “Witnesseth: Owner hereby leases to Tenant and Tenant hires from Owner approximately
37,108 square feet (as described in Schedule A) in the building known as 26 Harbor Park Drive,
Port Washington, New York 11050 (the “Building”) in the County of Nassau for the term as
defined herein or until such term shall sooner cease and expire as hereinafter provided, at an
annual rate set forth as provided in Rider B attached hereto and made a part hereof.”

          b.      The attached Schedule A shall be added to and made a part of the Lease Agreement.

          c.      Rider B of the Lease Agreement shall be deleted in its entirety and replaced with the
Rider B attached hereto and made a part of the Lease Agreement.

          d.      The definition of “Term” in Section A-1.16 of Rider A of the Lease Agreement shall be
deleted in its entirety and replaced with the following:

          “Term” is the period from the Lease Commencement Date to the close of
business on the last day of the one-hundred and twentieth (120th)
month following the Effective Time (as defined in the Amendment dated October
23, 2003; such date being hereinafter referred to as the “Expiration Date”) or
such earlier date

 

 

upon which the Term of this Lease shall expire or be cancelled or terminated pursuant
to any of the conditions or covenants of this Lease or pursuant to law.”

          e.      The definition of “Rentable Square Footage” in Section A-l-17 of Rider A shall be deleted
in its entirety and replaced with the following:

               “Rentable Square Footage” shall mean approximately 37,108 square feet; provided, however,
that Tenant shall have the right, upon sixty (60) days prior
written notice to Landlord, to
reduce the Rentable Square Footage by (i) 500 square feet covering the portion of the Premises
designated in Exhibit A as “New Human Resources” and (ii) the amount of square footage utilized
by NMHC for Human Resources purposes prior to the execution of the Amendment (such amount being
included as a portion of the square footage set forth in Exhibit A as “Common Area.”)”

          f.      Section A-l6.04(a) of Rider A is hereby deleted in its entirety and replaced with the
following:

               “(a) Notwithstanding any provision(s) in this Lease to the contrary, the parties acknowledge
and agree that (i) the Premises are demised under this Lease for a minimum aggregate Rent (subject
to such increases and other costs as provided throughout this Lease and Tenant’s Early
Termination right) of $5,801,740 for the Term, payable upon the execution of this Lease, (ii)
the terms of this Lease which provide for the payment of Rent in installments are solely for the
convenience of Tenant, and (iii) upon the default in the payment of Rent in installments as
aforesaid, then the full aggregate Rent hereby reserved for the entire Term then remaining unpaid
shall, at Landlord’s option, become due and payable upon demand.”

          g.      Section A-l8.24 of Rider A is hereby deleted in its entirety and replaced with the
following:

               “A-l8.24 Notwithstanding anything to the contrary contained in this Lease, Tenant shall
have the right to terminate this Lease on, and only on, the last day of the sixtieth
(60 th) month following the Effective Time (“Early Termination”). If Tenant wishes to
exercise its right of Early Termination it shall provide Landlord with sixty (60) days prior
written notice prior to the end of the then effective year of the Term (the “Early Termination
Notice”) of its intent to do so. The failure by Tenant to exercise its right of Early Termination
shall waive Tenant’s right of Early Termination. In consideration for its right of Early
Termination, Tenant hereby agrees to pay to Landlord an amount equal to the Fixed Rent that would
otherwise be payable by Tenant to Landlord for the next succeeding thirty (30) months, plus
twelve thousand five hundred dollars ($12,500) (the “Early Termination Fee”). The Early
Termination Fee shall be payable by Tenant, in whole, at any time following the Early Termination Notice;
provided, however, that in no event shall such Early Termination Fee be paid by Tenant
following the end of the thirty (30) day period after such Early
Termination Notice. Failure
by Tenant to pay the Early Termination Fee during such thirty (30) day period shall cancel
Tenant’s right of Early Termination granted hereunder. Notwithstanding the foregoing, if
Landlord shall lease all of the Premises at any time during the immediate thirty (30)
months following Tenant’s Early Termination, Landlord shall pay
to Tenant (the “Termination Fee Reimbursement”) within 30 days
an amount equal to the difference between (a) the Early Termination Fee, less twelve
thousand five hundred dollars ($12,500) and (b) the product of (i) the monthly Fixed Rent
used to calculate the Early Termination Fee and (ii) the difference between thirty (30)
months and the

 

 

number of months that have passed since Tenant’s Early Termination which number shall be
calculated as of the date in which such new tenant takes possession of the Premises; provided,
however, that if the base rent payable by such new tenant during such period is less than the
Termination Fee Reimbursement, Landlord shall only be obligated to reimburse Tenant the
difference between the Termination Fee Reimbursement and the base rent payable by such new tenant
during such period.”

          h.      Each of Landlord and Tenant acknowledge that Tenant has expended approximately one million
dollars ($1,000,000) of the cost of certain improvements to the demised premises and that
Landlord has paid for the balance of such improvements. Landlord and Tenant agree that Tenant is
the owner of said one million dollars ($1,000,000) of improvements and Landlord is the owner of
the balance of such improvements and as such each party agrees to treat such improvements as such
party’s property for income tax purposes.

          i.      Within thirty (30) days of the date hereof, Tenant shall have the right to
request Landlord, and upon such request Landlord shall, at its sole cost and expense, to
sub-divide the portion of the demised premises designated “training room” on Schedule A attached
hereto by erecting a maximum of three interior walls within said training room. Nothing herein
shall be construed to require Landlord to make any structural, mechanical, plumbing or electrical
modifications to the demised premises or in said training room.

     2.      Except as expressly provided herein; all terms and conditions of the Lease Agreement
shall be unmodified and in full force and effect.

     3.      From and after the execution and delivery of this Amendment, all references to the Lease
Agreement contained in other agreements and instruments executed and delivered pursuant to or in
connection with the Lease Agreement shall hereinafter mean and refer to the Lease Agreement as
amended hereby.

     4.      This Amendment may be executed in counterparts by the parties hereto, all of which shall
constitute one and the same instrument. A facsimile transmission of
this signed Amendment bearing a signature on behalf of a party hereto shall be binding on such party.

     5.      This Amendment shall be governed by the laws of the State of New York.

 

 

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of the day and
year first above written.

	 	 	 	 	 
	 	BFS REALTY, LLC

 	 
	 	By:  	/s/ Bert E. Brodsky
 	 
	 	 	Name:  	Bert E. Brodsky 	 
	 	 	Title:  	Manager 	 
	 
	 	NATIONAL MEDICAL HEALTH CARD
SYSTEMS, INC.
 	 
	 	By:  	/s/ James J. Bigl
 	 
	 	 	Name:  	James J. Bigl 	 
	 	 	Title:  	President & CEO	 
	 

 

 

SCHEDULE A*

Square Footage

Dedicated to NMHC

	 	 	 	 	 
	Work Area/Executive Area
	 	 	19,373	 
	Data Center
	 	 	2,132	 
	Board Room
	 	 	567	 
	Training Room
	 	 	3,285	 
	 
	 	 	 	 
	Shared
Areas
	 	 	 	 
	New Cafeteria
	 	 	1,020	 
	Gym
	 	 	500	 
	New Human Resources
	 	 	500	 
	Loading Area
	 	 	344	 
	Mail Room
	 	 	272	 
	Warehouse
	 	 	3,522	 
	 
	 	 	 	 
	Common Area**:
	 	 	5,713	 
	 
	 	 	 	 
	Total:
	 	 	37,108	 

 

			
	*A Floor Plan is attached hereto as Exhibit A	 	 
	 
	**Includes Bath Rooms, Hallways and Reception	 	 

 

 

EXHIBIT A

FLOOR PLAN

 

 

 

 

 

 

RIDER B

Rent

     Beginning at the Effective Time, Fixed Rent shall be $580,174, payable in advance
in equal monthly installments of $48,347.83, for the 12 month period beginning at the Effective
Time. Fixed Rent during the remainder of the Term shall be increased as follows:

     Commencing on the first anniversary of the Effective Time, and continuing on each annual
anniversary of such day throughout the remainder of the Term (each such day being referred to as
a “Rent Adjustment Date”), the Fixed Rent shall be increased by the Consumer Price Index plus
2.5%; provided however, that in no event shall the Fixed Rent on a Rent Adjustment Date be more
than 3.5% percent greater than the Fixed Rent due for the immediately preceding lease year.

     The term “Consumer Price Index” shall mean the Consumer Price Index for the New
York-Northeastern New Jersey area, which is currently published by the United States Department of
Labor, Bureau of Labor Statistics. If however, this Consumer Price Index is changed so that the
base year is altered from that used as of the commencement of the Effective Time, then the Consumer
Price Index shall be converted in accordance with the conversion factor published by the United
States Department of Labor, Bureau of Labor Statistics, to obtain the same results that would have
been obtained had the base year not been changed. If no conversion factor is available, or if the
Consumer Price Index is otherwise changed, revised or discounted for any reason, there shall be
substituted in lieu thereof, and the term “Consumer Price Index” shall thereafter refer to, the
most nearly comparable official price index of the United States Government to obtain substantially
the same result as would have been obtained had the original Consumer Price Index not been changed,
revised or discontinued, which alternative index shall be selected by Landlord and shall be subject
to Tenant’s reasonable, prior, written approval.

     If Tenant exercises its right to reduce the Rentable Square Footage by 500 square feet as
provided herein, the Fixed Rent shall be reduced pro rata.Ex-10.25

 

EXHIBIT
10.25

CONSULTING AGREEMENT AND

DEPARTURE AGREEMENT AND GENERAL RELEASE

(PLEASE READ CAREFULLY. THIS DEPARTURE AGREEMENT AND GENERAL RELEASE HAS IMPORTANT LEGAL
CONSEQUENCES.)

     This Consulting Agreement and Departure Agreement and General Release (this “Agreement”) is
between National Medical Health Card Systems, Inc. (“Company”) and Bill Masters (“Employee”) and is
a complete, final and binding settlement of all claims and potential claims, if any, with respect
to their employment relationship. 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 about
October 4, 2004 (the “Employment Agreement”); and

          WHEREAS, the Company and Employee are parties to a letter dated November 28, 2005 (the
“Severance Letter”); and

          WHEREAS, the Company and Employee have agreed on certain terms and conditions regarding the
termination of Employee’s employment under the Employment Agreement and Severance Letter (without
“Cause” as such term is defined in the Employment Agreement and Severance Letter) but wish to do so
only after a Consulting Period (as hereinafter defined);

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, be it
agreed as follows:

     1. As of May 21, 2007, Employee’s employment relationship as Chief Information Officer
with the Company will terminate (the “Termination Date”), but Employee shall continue to
provide consulting services as set out in paragraph 2 of this Agreement as an employee of
the Company. This Agreement has been presented to Employee on or before the Termination
Date and will become effective seven (7) days (the “Effective Date”) after the execution of
this Agreement by the Employee (the “Execution Date”).

     2. Consulting Period and Payments During the Consulting Period.

     (a) Employee agrees that he shall provide consulting services from the Termination Date
hereof through June 28, 2007 (the “Consulting Period”), as may be reasonably requested by
the Chief Executive Officer of the Company, or his designee. Such consulting services shall
include providing information with regard to the information systems of the Company,
providing information with regard to personnel or legal matters, or such other duties as may
reasonably be directed by the Company.

     (b) Such services shall not exceed an average of ten hours per week, although there may
be some weeks in which more than ten hours may be requested.

1

 

     (c) The Company will pay Employee his regular base salary in the amount of $8,750 per
bi-weekly pay period through the Consulting Period (the “Payments”), less applicable
federal, state, and local legally required deductions and less any deductions authorized by
Employee to pay his portion to continue group health coverage. The Payments will not
commence until this Agreement is executed and the Revocation Period (as defined below)
expires. On the first regular pay date following the expiration of the Revocation Period,
the Company will pay Employee any Payments that accrued during the Review Period (as defined
below) and the Revocation Period. For the period for which Employee is eligible to continue
benefits under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), and so long as
Employee is not employed by another employer offering group health coverage, but not to
exceed the end of the later of the Consulting Period and Severance Period (as defined
below), Company will pay the Company’s portion of the premiums for Employee’s medical,
dental, and prescription coverage.

     (d) In all matters relating to the provisions of this paragraph 2, Employee shall
continue to be an employee of the Company, but his participation and eligibility in any
employee benefit plans sponsored by the Company shall be only in accordance with the terms
of such employee benefit plans.

     (e) During the Consulting Period, Employee shall comply with all provisions contained
in Sections 6 through 11 of the Employment Agreement, but nothing in this Agreement shall
imply any limitation on the time duration of any obligation of Employee in paragraphs 6
through 11 of the Employment Agreement.

     (f) During the Consulting Period, Employee will not make any defamatory or disparaging
remarks regarding the Company, its officers, or its products or services to any person with
whom the Company has business relations, including any vendor, customer, supplier or
employee of the Company.

     (g) During the Consulting Period, Employee may be employed or may pursue other business
opportunities, and the Company will use reasonable efforts to ensure that the consulting
services may be rendered at times that do not conflict with such employment or other
business opportunities. However and notwithstanding the foregoing, during the Consulting
Period, Employee will continue to owe duties of loyalty and confidentiality to the Company,
and Employee will not, for himself or on behalf of another, accept employment, pursue any
business opportunity, render any services for or with any competitor of the Company, or
otherwise engage in any competitive activity against the Company.

     (h) The Company may terminate Employee’s employment as a consultant and the Payments if
Employee (i) refuses to perform consulting services reasonably requested by the Company;
(ii) fails to perform such consulting services to the reasonable satisfaction of the
Company; (iii) breaches any promise contained in this Agreement or Sections 6 through 11 of
the Employment Agreement; or (iv) dies or becomes disabled, with reasonable accommodation,
to perform the essential functions of his consulting

2

 

services. The Consulting Period will not renew upon its expiration and no renewal of
the Consulting Period will be implied by law.

     3. For purposes of the National Medical Health Card Systems, Inc. 1999 Stock Option
Plan, as amended (the “Stock Option Plan”) and the National Medical Health Card Systems,
Inc. Amended and Restated 2000 Restricted Stock Grant Plan (the “Restricted Stock Plan”),
Employee’s credited service will continue until the date of termination or date of
expiration (whichever occurs first) of the Consulting Period (such date to be referred to as
the “Consulting Period Termination Date”). Accordingly, except as otherwise provided by the
Stock Option Plan (with respect to the effect of termination of service by the Company for
“cause” or by the Employee voluntarily or due to Employee’s death or disability), Employee
will have 90 days following the Consulting Period Termination Date to exercise any of his
vested options. The Parties acknowledge that, on the Consulting Period Termination Date,
Employee will forfeit and have no further right, title or interest in or with respect to,
any and all non-vested options, shares of restricted stock and restricted stock unit awards
held by Employee under the Stock Option Plan and/or the Restricted Stock Plan. Employee
affirms the provision of any Restricted Stock Agreement that the Company shall have the
right to instruct the Company’s transfer agent to transfer any unvested restricted stock to
the Company.

     4. Severance Payments.

     (a) Provided that the Employee executes an additional release substantially in the form
attached hereto as Exhibit “B” at the end of the Consulting Period, Company will pay
Employee’s present salary for a period not to exceed one year (such period to be referred to
as the “Severance Period”), beginning on the Consulting Period Termination Date, but only so
long as Executive has not breached and does not breach the provisions of Sections 6 through
11 of the Employment Agreement, for a total sum not to exceed $227,500, payable in
twenty-six installments of $8,750 each, all in accordance with the Company’s general payroll
practices, less applicable federal, state, and local legally required deductions and less
any deductions authorized by Employee to pay his portion to continue group health coverage.
Any payments to which Employee is entitled pursuant to this paragraph 4(a) shall be payable
to Employee’s estate in the event of Employee’s death prior to the end of the Severance
period.

     (b) Employee shall receive all accrued salary through the Termination Date in
accordance with the Company’s general payroll practices, less applicable federal, state, and
local legally required deductions.

     (c) For the period for which Employee is eligible to continue benefits under COBRA,
Company will pay the Company’s portion of the premiums for Employee’s medical, dental, and
prescription coverage from the Termination Date through the end of such period of
eligibility but not to exceed the end of the Severance Period, subject to Employee’s strict
compliance with Sections 6 through 11 of the Employment Agreement and the terms and
provisions of this Agreement.

3

 

     (d) Employee shall receive all reimbursable expenses pursuant to the Company’s Travel &
Entertainment policy incurred through the Consulting Period Termination Date and submitted
within thirty (30) days after the Consulting Period Termination Date.

     (e) Employee shall receive all accrued vacation pay to which Employee is entitled
through and including the Termination Date, which amount is $2,840.47.

     (f) The Company will reimburse Employee for attorney’s fees reasonably incurred in the
review and execution of this Agreement, not to exceed $5,000. Such request for
reimbursement must be submitted no later than July 15, 2007 and will be paid within thirty
(30) days after Employee presents an itemized invoice for such services.

     (g) 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.

     5. Release Provisions.

     (a) As a material inducement to the Employee to enter this Agreement, and in
consideration for the Company’s payments to Employee as set forth in this Agreement, and for
other good and valuable consideration, as and for Employee’s complete release of all
statutory, contract, tort and all other claims against the Company and each of its current
and former owners (including, without limitation, New Mountain Capital, L.L.C., New Mountain
Partners, 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 in
concert with any of them (collectively “Releasees”), Employee hereby releases and forever
discharges 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 or
hereafter can, shall, may, or may have had for, upon, or by reason of any matter, cause or
actual or alleged act, omission, transaction, practice, conduct, occurrence, or other matter
up to and including the execution of this Agreement by the Employee, including without
limitation, any claim arising out of or relating to the Employee’s employment by the Company
and each of its subsidiaries and affiliated entities, and any and all obligations and
liabilities of the Company under the Employment Agreement and Severance Letter or any other
agreement between the Employee and any of the Releasees, and the ownership, acquisition,
offer or sale of, or rights to any equity interest, or any option to purchase or acquire any
equity interest in the Company, excepting only the rights and obligations (i) created by
this Agreement; (ii) that may exist under (A) any indemnification agreement or the Company’s
Certificate of Incorporation and Bylaws, as amended, to indemnify Employee or (B) the
Company’s D&O insurance coverage; (iii) Employee’s rights under state worker’s compensation
laws (for occupational illness or injury only) and (iv)

4

 

Employee’s vested rights under the Company’s health, dental, pharmacy and 401(k)
benefit plans.

     (b) Without limiting the generality of the foregoing, this Agreement is intended to and
shall release Releasees from any and all claims, whether known or unknown, which Employee
ever had, has, or may have against any Releasee with respect to Employee’s employment, the
terms, benefits, and conditions of that employment, and/or the termination thereof,
including without limitation those arising under the Civil Rights Act of 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, 29 U.S.C.A. Section 621 et
seq., the National Labor Relations Act, 29 U.S.C.A. Section 151 et seq., the Fair Labor
Standards Act, 29 U.S.C.A. Section 201 et seq., the Labor Management Reporting and
Disclosure Act of 1959, as amended, 29 U.S.C.A. Section 401 et seq., the Americans with
Disabilities Act, 42 U.S.C.A. Section 12101, et. Seq., the Constitution and the laws of the
United States and the State of New York, including specifically, New York’s Human Rights
Law, Executive Law Section 290 et seq., or any other federal, state, or local human 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 option to purchase or
acquire any equity interest in the Company, that Employee has held at any time in the
Company or any of its predecessors or affiliates, including any claims, arising under the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, any
federal, state or local securities law, the rules or regulations promulgated under 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; and any and all
claims for attorneys’ fees, costs, disbursements, or any action similar thereto.

EMPLOYEE SPECIFICALLY ACKNOWLEDGES AND AGREES THAT BY EXECUTING THIS
AGREEMENT, HE IS WAIVING ALL RIGHTS OR CLAIMS, IF ANY, THAT HE HAS
OR MAY HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS
AMENDED. EMPLOYEE FURTHER ACKNOWLEDGES AND AGREES THAT HIS WAIVER
OF SUCH RIGHTS OR CLAIMS IS KNOWING AND VOLUNTARY.

     (c) Employee promises never to initiate, be represented or participate in, submit or
file, 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 in
paragraph 5(d)) does not affect Employee’s right to test the knowing and voluntary nature of
his waiver of rights. Nothing in this Agreement shall be construed to affect the rights and
responsibilities of the Equal Employment Opportunity Commission, or any other state or local
agency with similar responsibilities (the “Commission”), to enforce any laws pertaining to
employment discrimination or

5

 

retaliation. Likewise, this waiver will not be used to justify interfering with the
protected right of any employee to file a charge or participate in an investigation or
proceeding conducted by the Commission; however, Employee waives the right to any benefits
or recovery arising out of any such proceeding.

     (d) Subject to paragraph 5(d), if Employee materially breaches any of his promises
contained in this paragraph 5 by filing a lawsuit or administrative charge based on claims
that 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 the
result of Employee’s breach. In addition, if Employee materially breaches the promises made
in any provision of this Agreement, he must repay all benefits previously received in
accordance with paragraph 4 of this Agreement, upon the Company’s reasonable demand, and
Company shall cease making further payments, if any, pursuant to paragraph 4 above.

     6. Employee acknowledges and agrees that, for the time periods set forth in the Employment
Agreement, he shall comply with paragraphs 6 through 11 of the Employment Agreement and that such
provisions shall survive the termination of the Employment Agreement. Company acknowledges and
agrees that the provisions of paragraph 9 of the Employment Agreement are not intended to prevent
Employee’s employment or service with (i) companies that supply products and services to the PBM
industry, but do not themselves provide PBM Services, so long as Employee’s services are not the
services prohibited by paragraph 9 of the Employment Agreement; or (ii) subsidiaries, operating
divisions, or other business entities of companies that provide PBM Services, so long as Employee’s
services are not directly for the benefit of the PBM functions of those companies and are not the
services prohibited by paragraph 9 of the Employment Agreement. Employee acknowledges and agrees
that the provisions of paragraphs 6 through 11 of the Employment Agreement are fully enforceable
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 all identification cards,
files, books, records, materials, equipment or documents in his possession or under his control
that were provided to or obtained by him in connection his employment.

     7. Employee further agrees to never to make any statements or comments, whether oral or
written to any person or entity that would tend to disparage or harm the Company; provided,
however, that this sentence shall not be construed to constrain Employee from providing truthful
testimony when required by law in the course of a legal or administrative proceeding. Employee
understands and agrees that violation of this paragraph shall be treated as a material breach of
this Agreement.

     8. Employee expressly agrees that this Agreement is not and shall not in any way be deemed to
constitute an admission or evidence of any breach of contract, wrongdoing or liability on the part
of the Company, nor of any violation of any federal, state or municipal statute, regulation or
principle of common law or equity.

     9. Employee agrees to make himself reasonably available in connection with any information the
Company requires relating to the services Employee had provided to Company, including any
litigation the Company is or may become involved in to which the Employee has

6

 

knowledge. Company agrees to provide Employee with reasonable notice in connection with any
depositions or court appearances where his presence is necessary or reasonably desirable. The
Company shall pay Employee’s travel expenses in this regard. Employee and Company shall agree on a
reasonable per diem fee for any time greater than three full days the Employee is required to make
himself available in person pursuant to this paragraph.

     10. Employee and the Company acknowledge and agree:

     (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 date
that this Agreement is executed;

     (c) that Employee waives rights or claims only in exchange for consideration that the
Employee would not be entitled to but for executing this Agreement;

     (d) that the Company has informed Employee that Employee should consult with an
attorney in connection with this Agreement; and

     (e) that Employee’s decision to consult with an attorney or not to consult with any
attorney was made without influence by the Company.

     11. Both Parties understand that the Employee shall have 45 days (the “Review Period”) to
consider this Agreement before signing. Both Parties understand that the Employee shall have seven
(7) days (the “Revocation Period”) in which to revoke this Agreement after signing, and that this
Agreement shall not become effective or enforceable until the expiration of seven (7) days after
signing, and the Payments under the Consulting Period and the severance compensation payable
hereunder shall not be due and owing until after the Effective Date set forth herein and the
fulfillment of all conditions set forth herein. To accept the Agreement, Employee must send a
signed 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 been
presented to Employee. Any notice of revocation must also be sent such that it is received prior
to the end of the seven day Revocation Period by 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. Employee also acknowledges receipt of the following
information:

     (a) The group of individuals covered: All employees who hold positions whose
employment is being terminated on or about May 21, 2007.

     (b) Eligibility factors: A severance proposal is being offered to all employees whose
employment is being terminated on or about May 21, 2007.

     (c) Time limits: Each employee who is offered a severance proposal has 45 days to
consider the Agreement and seven (7) days to revoke acceptance after signing.

7

 

     (d) Employee acknowledges that Employee has received and reviewed the information
contained in Exhibit “A” to this Agreement. The information in Exhibit “A” includes the job
titles and ages of all individuals from the group of employees considered for termination on
or about May 21, 2007, and whether or not those employees were selected for termination of
employment or otherwise offered a severance proposal.

     12. This Agreement is made in the State of New York. This Agreement is to be interpreted
under the laws of the State of New York without regard to conflict of laws principles. The Parties
agree that the federal and state courts sitting in Nassau County, New York, shall be the exclusive
venue for the resolution of any dispute arising out of or relating to this Agreement.

     13. Except as provided in this Agreement, this is the entire agreement between the Employee
and 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 may
only be amended or modified by a written document signed by both Parties. The Company has made no
promises to Employee other than those in this Agreement. Notwithstanding anything to the contrary
in this paragraph 13, except as explicitly provided otherwise in this Agreement, (i) paragraphs 6
through 11 of the Employment Agreement, and (ii) any obligation of the Company under any
indemnification agreement or the Company’s Certificate of Incorporation and Bylaws, as amended, to
indemnify Employee shall survive the execution of this Agreement in accordance with their
respective terms and conditions.

     14. Should any provision of this Agreement be declared or determined by any court to be
illegal, invalid or unenforceable, the validity of the remaining parts, terms and provisions shall
not be effected thereby and any said illegal, invalid or unenforceable part, terms or provisions
shall be deemed stricken and severed from this Agreement.

     15. This Agreement may be executed in one or more counterparts, and each effective counterpart
shall be effective as a signed original.

     16. Company makes no representations to Employee concerning the tax consequences arising out
of any payments under this Agreement, including, without limitation, whether any of the payments
hereunder are subject to 26 U.S.C. § 409A. Company urges Employee to obtain his own tax counsel
with regard to any tax consequences arising out of or relating to this Agreement.

     17. EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS CAREFULLY READ THIS AGREEMENT; THAT EMPLOYEE HAS
HAD AT LEAST 45 DAYS IN WHICH TO CONSIDER AND RETURN THIS AGREEMENT; THAT EMPLOYEE HAS HAD AN
OPPORTUNITY 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 THIS
AGREEMENT; AND THAT EMPLOYEE HAS EXECUTED THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND OF
EMPLOYEE’S OWN FREE WILL.

8

 

     IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date below.

NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.

By:                                                            

                    , its authorized representative

Date:_____________________________

                                                            

      Bill Masters

Date:_______________________________

9

 

Exhibit “A”

	 	 	 		 	 	 
	 	 	 	 	 	 	OFFERED SEVERANCE PROPOSAL
	   
                 
    JOB TITLE	 	AGE	 	OR NOT (Y/N)
	Chief Human Resource Officer
	 	 	 	51	 	N
	Chief Clinical Officer
	 	 	 	46	 	N
	Chief Specialty Officer
	 	 	 	44	 	N
	Chief Services Officer
	 	 	 	48	 	N
	Chief Financial Officer
	 	 	 	46	 	N
	Senior Vice President, Sales
	 	 	 	47	 	N
	President and Chief Executive Officer
	 	 	 	58	 	Y
	Chief Marketing Officer
	 	 	 	53	 	Y
	Chief Information Officer
	 	 	 	56	 	Y
	Chief Legal Officer
	 	 	 	37	 	Y
	Vice President Marketing
	 	 	 	44	 	Y
	Controller
	 	 	 	48	 	Y

10

 

Exhibit “B”

Form of Release

11

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