EMPLOYMENT AND CONSULTING AGREEMENT
This Employment and Consulting Agreement (this "Agreement") is made and entered
into this 14th day of July, 1997 by and between CMG Health, Inc., a Maryland
corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇▇").
WHEREAS, the Company desires to engage ▇▇▇▇▇▇▇▇▇▇ to provide services pursuant
to the terms of this Agreement;
WHEREAS, ▇▇▇▇▇▇▇▇▇▇ desires to provide such services to the Company pursuant to
this Agreement; and
WHEREAS, both parties hereto acknowledge that the services to be performed by
▇▇▇▇▇▇▇▇▇▇ under this Agreement shall require a high degree of diligence,
creativity and responsiveness appropriate to the Company's business intentions.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:
SECTION 1. SELECTED DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the following
meanings:
"Affiliate" shall mean a subsidiary of MBC or the Company and any other business
entity controlled by, controlling, or under common control with, from time to
time.
"Board" shall mean the Board of Directors of the Company.
"Business" shall mean the business of the Company and its Affiliates, including,
without limitation, the business of providing and arranging for the provision of
behavioral health (including mental health and substance abuse) managed care
programs, behavioral health care delivery services and employee assistance
programs.
"Code" shall mean the Internal Revenue Code of 1987, as amended.
"Compensation" shall have the meaning specified in Section 7.1 hereof.
"Confidential Information" shall have the meaning specified in Section 8.1
hereof.
"Consulting Period" shall have the meaning specified in Section 6.1 hereof.
"Developments" shall have the meaning specified in Section 8.2 hereof.
"Disability Termination Right" shall have the meaning specified in Section 4.3
hereof.
"Effective Date" shall have the meaning specified in Section 9.9.
"Effective Time" shall have the meaning specified in the Merger Agreement.
"Employment Period" shall have the meaning specified in Section 4.1 hereof.
"Existing Employment Agreement" shall have the meaning specified in Section 2
hereof.
"MBC" means Merit Behavioral Care Corporation, a Delaware corporation.
"Merger" shall have the meaning specified in the Merger Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger dated as of
July 14, 1997 among MBC, Merit Merger Corp. and the Company.
"Non-Competition Period" shall have the meaning specified in Section 8.3 hereof.
"Termination for Cause" shall have the meaning specified in Section 4.2 hereof.
"Territory" means the United States of America, its territories and possessions
(including Puerto Rico).
SECTION 2. WAIVER OF RIGHTS
Effective as of the Effective Date, ▇▇▇▇▇▇▇▇▇▇ hereby waives, releases and
relinquishes any and all rights under that certain Employment Agreement (the
"Existing Employment Agreement") dated as of January 1, 1994 between ▇▇▇▇▇▇▇▇▇▇
and the Company other than the right to receive unpaid salary as of the
Effective Date, and ▇▇▇▇▇▇▇▇▇▇ and the Company agree that the Existing
Employment Agreement is terminated effective at the close of business on the
date immediately preceding the Effective Date. Without limiting the generality
of the foregoing, ▇▇▇▇▇▇▇▇▇▇ acknowledges and agrees that ▇▇▇▇▇▇▇▇▇▇ is not and
shall not be entitled to receive any liquidated damages pursuant to Section 7.D.
(including Section 7.D (iv) or 7.E) of the Existing Employment Agreement. In
addition, on the date hereof, ▇▇▇▇▇▇▇▇▇▇ also shall execute the Release attached
hereto.
SECTION 3. EMPLOYMENT
3.1 Title; Duties. The Company agrees to employ ▇▇▇▇▇▇▇▇▇▇ as President and
Chief Executive Officer of the Company for the Employment Period (as defined
below), and ▇▇▇▇▇▇▇▇▇▇ hereby accepts such employment.
3.2 Performance of Duties During the Employment Period. During the Employment
Period, ▇▇▇▇▇▇▇▇▇▇ agrees to devote his exclusive and full professional time and
attention to his duties as an employee of the Company and to perform such duties
in an efficient, trustworthy and businesslike manner. In addition, ▇▇▇▇▇▇▇▇▇▇
agrees that he will not render to others any service of any kind or engage in
any other business activity (including, without limitation, any involvement in
any business in which ▇▇▇▇▇▇▇▇▇▇ has any administrative or operating
responsibility) which conflicts with the performance of his duties under this
Agreement (except as to any other activities which are approved in writing by
the Board).
During the term of the Employment Period, ▇▇▇▇▇▇▇▇▇▇ agrees to use his best
efforts to manage the operations of the Company and its subsidiaries, to
maximize the Company's results of operations and profits, to satisfy the
directions of the Board, and to otherwise fulfill the agreements and covenants
set forth in this Agreement. ▇▇▇▇▇▇▇▇▇▇ acknowledges that the failure to satisfy
any covenant set forth in this Agreement may cause the Company irreparable harm
and shall have deprived the Company of a substantial and valuable asset.
3.3 Board Observer. For a period commencing on the Effective Date and ending on
the latest to occur of (x) the payment of the CHAMPUS Earn-Out Payment (as
defined in Section 3.7(a)(i) of the Merger Agreement), or final determination
that no such CHAMPUS Earn-Out Payment is payable; (y) the issuance of the
CHAMPUS Condition Shares (as defined in the Merger Agreement) or the
determination in good faith by the Board of Directors of MBC that the CHAMPUS
2/5 Condition (as defined in the Merger Agreement) will not be satisfied; or (z)
the payment of the State Earn-Out Payment (as defined in the Merger Agreement)
or final determination that no such State Earn-Out Payment is payable,
▇▇▇▇▇▇▇▇▇▇ shall be entitled to attend all meetings of the Board of Directors of
MBC as an observer. ▇▇▇▇▇▇▇▇▇▇'▇ right to attend such meetings as an observer
during the period described in the preceding sentence shall continue
notwithstanding the termination, prior to the end of such period, of the
Employment Period or the Consulting Period; provided, that such observer right
shall terminate immediately upon termination of ▇▇▇▇▇▇▇▇▇▇'▇ employment pursuant
to Section 4.2(a), (b), (c) or (h) hereof or termination of ▇▇▇▇▇▇▇▇▇▇'▇
consultancy pursuant to Section 6.2 hereof upon the occurrence of any of the
events described in Section 4.2(a), (b), (c) or (h) hereof. The Company shall
cause notice of such meetings, as well as other correspondence and
communications sent by MBC to members of its Board of Directors in connection
with such meetings, to be given to ▇▇▇▇▇▇▇▇▇▇ in the same manner and at the same
times as to members of the Board of Directors of MBC. ▇▇▇▇▇▇▇▇▇▇ hereby agrees,
in the manner and to the extent set forth in Section 8.1 hereof with respect to
the Company, to keep all information relating to MBC confidential and not to use
such information in any way that is detrimental to MBC.
SECTION 4. EMPLOYMENT PERIOD; TERMINATION OF EMPLOYMENT PERIOD
4.1 Employment Period. Subject at all times to Section 4.5 hereof, ▇▇▇▇▇▇▇▇▇▇'▇
employment under Section 3 of this Agreement shall continue until terminated by
the earliest of (a) the Company's discharge of ▇▇▇▇▇▇▇▇▇▇ and termination of
this Agreement pursuant to Sections 4.2, 4.3 or 4.5 hereof; (b) ▇▇▇▇▇▇▇▇▇▇'▇
death; or (c) December 31, 1997. The period during which ▇▇▇▇▇▇▇▇▇▇ is employed
by the Company under Sections 3 and 4 hereof is referred to herein as the
"Employment Period".
4.2 Termination by the Company for "Cause." The Company shall have the right to
discharge ▇▇▇▇▇▇▇▇▇▇ and terminate this Agreement, by written notice provided to
▇▇▇▇▇▇▇▇▇▇ not less than thirty (30) days prior to the intended date of
discharge and termination (or such shorter period as the Company reasonably may
elect (but not less than 15 days)), for any or all of the following "causes,"
which "causes" have not been cured by ▇▇▇▇▇▇▇▇▇▇ in their entirety prior to the
Company's intended date of termination and discharge (a "Termination for
Cause"):
(a) conviction of ▇▇▇▇▇▇▇▇▇▇ for, or entry of a plea of guilty or nolo
contendere by ▇▇▇▇▇▇▇▇▇▇ with respect to, any felony or any crime involving an
act of moral turpitude or misuse or misappropriation of money or other property
of the Company or any Affiliate;
(b) commission by ▇▇▇▇▇▇▇▇▇▇ of any act of fraud with respect to his duties
under this Agreement;
(c) conduct by ▇▇▇▇▇▇▇▇▇▇ which is intentionally and materially detrimental to
the Company or any Affiliate;
(d) ▇▇▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ or habitual neglect of his duties or ▇▇▇▇▇▇▇▇▇▇'▇ failure
to perform his duties or ▇▇▇▇▇▇▇▇▇▇'▇ misconduct in discharging his duties;
(e) ▇▇▇▇▇▇▇▇▇▇'▇ absence from his duties without the consent of the Board;
(f) ▇▇▇▇▇▇▇▇▇▇'▇ failure or refusal to comply with the direction of the Board,
or with the policies, standards and regulations of the Company as may from time
to time be made known to ▇▇▇▇▇▇▇▇▇▇;
(g) ▇▇▇▇▇▇▇▇▇▇'▇ failure to disclose to the Company any information known to
▇▇▇▇▇▇▇▇▇▇ that could have a material adverse effect on the Company or any
Affiliate or ▇▇▇▇▇▇▇▇▇▇'▇ providing to the Company or any Affiliate any false,
misleading or materially inaccurate information (including financial
information); or
(h) ▇▇▇▇▇▇▇▇▇▇'▇ breach of his obligations set forth in Sections 8.2 or 8.3
hereof.
4.3 Termination by the Company due to Disability of ▇▇▇▇▇▇▇▇▇▇. The Company
shall have the right to discharge ▇▇▇▇▇▇▇▇▇▇ and terminate this Agreement, by
written notice provided to ▇▇▇▇▇▇▇▇▇▇ not less than thirty (30) days prior to
the intended date of discharge and termination, upon the determination by the
Board in good faith and in its discretion that ▇▇▇▇▇▇▇▇▇▇ is unable to engage in
activities required by his employment (or reasonable substitute employment) by
reason of any medically determined physical or mental impairment (referred to
herein as the "Disability Termination Right").
4.4 Death. The Employment Period shall terminate forthwith upon the death of
▇▇▇▇▇▇▇▇▇▇.
4.5 Termination by the Company other than for Cause. The Company shall have the
right to discharge ▇▇▇▇▇▇▇▇▇▇ and terminate this Agreement, by written notice
provided to ▇▇▇▇▇▇▇▇▇▇ not less than thirty (30) days prior to the intended date
of discharge and termination, upon the determination by the Board, in its sole
discretion, that the employment of ▇▇▇▇▇▇▇▇▇▇ by the Company is no longer
necessary, desirable or in the best interests of the Company.
4.6 Survival. In all events, the post-termination provisions of Section 8 hereof
shall survive termination of the Employment Period and this Agreement.
SECTION 5. CONSULTING
5.1 Title; Duties During the Consulting Period. Upon termination of the
Employment Period for any reason other than for Cause, the Company agrees to
retain and engage ▇▇▇▇▇▇▇▇▇▇ as a consultant with the title of Chairman Emeritus
for the Consulting Period (as defined below), and ▇▇▇▇▇▇▇▇▇▇ hereby accepts such
retention and engagement as a consultant and agrees to render advisory,
consulting and professional services to the Company with respect to matters
pertaining to the Business conducted by the Company as shall be reasonably
requested from time to time by Company's Chief Executive Officer and/or such
other officer(s) as the Board shall designate to have principal responsibility
for the operation of the Business conducted by the Company. During the
Consulting Period, ▇▇▇▇▇▇▇▇▇▇ agrees to make himself available to provide
consulting services not more than five working days each month at his residence
or other mutually agreeable locations, reasonably scheduled in advance, unless
otherwise offered by ▇▇▇▇▇▇▇▇▇▇.
SECTION 6. CONSULTING PERIOD; TERMINATION OF CONSULTING SERVICES
6.1 Consulting Period. Subject at all times to Section 6.2 hereof, this
Agreement and ▇▇▇▇▇▇▇▇▇▇'▇ engagement as a consultant pursuant to Section 5
hereof shall continue until terminated by the earliest of (a) the Company's
discharge of ▇▇▇▇▇▇▇▇▇▇ and termination of this Agreement for any reason set
forth in Section 4.2, 4.3 or 4.5 hereof; (b) ▇▇▇▇▇▇▇▇▇▇'▇ death; or (c) the
third anniversary of the Effective Time. The period during which ▇▇▇▇▇▇▇▇▇▇ is
retained by the Company under this Section 6.1 and under Section 5 hereof is
referred to herein as the "Consulting Period."
6.2 Termination by the Company. The Company shall have the right to discharge
▇▇▇▇▇▇▇▇▇▇ at any time during the Consulting Period upon the occurrence of any
of the events set forth in Section 4.2, 4.3 or 4.4 hereof or pursuant to the
terms of Section 4.5 hereof.
SECTION 7. COMPENSATION
7.1 Annual Compensation. The Company shall pay to ▇▇▇▇▇▇▇▇▇▇ during the
Employment Period and the Consulting Period compensation at the rate of $252,350
per year ("Compensation"), payable in equal installments pursuant to the
Company's customary payroll and personnel policies in force at the time of
payment (but not less frequently than monthly), less required deductions or
withholdings. The Company and ▇▇▇▇▇▇▇▇▇▇ acknowledge and agree that, as the
Merger Agreement contains no covenants binding upon the stockholders of the
Company after the Effective Time, not less than one-third (1/3) of the
Compensation paid to ▇▇▇▇▇▇▇▇▇▇ during the Employment Period and the Consulting
Period shall be attributable to ▇▇▇▇▇▇▇▇▇▇'▇ covenants contained in Sections 8.3
and 8.4.
7.2 No Incentives. ▇▇▇▇▇▇▇▇▇▇ shall not be entitled to participate in any of the
Company's bonus or incentive plans, stock option plans, stock purchase
arrangements or any other similar plans offered by the Company or its Affiliates
to their respective employees.
7.3 Benefits.
(a) ▇▇▇▇▇▇▇▇▇▇ shall be entitled, during the Employment Period and the
Consulting Period, to participate in and to receive benefits under all of MBC's
employee benefits plans or arrangements (including but not limited to life
insurance plans, all surgical, medical, dental and hospital expense benefit
plans, long-term disability plans and retirement income plans) offered to other
executives of MBC. During the Employment Period, ▇▇▇▇▇▇▇▇▇▇ shall be entitled to
three weeks paid vacation leave, including the week of August 11, 1997.
(b) Provided that ▇▇▇▇▇▇▇▇▇▇'▇ employment or consultancy is not Terminated for
Cause under Sections 4.2(a), (b), (c) or (h) hereto, MBC shall take such actions
as are necessary to assure ▇▇▇▇▇▇▇▇▇▇'▇ continued eligibility to participate in
MBC's surgical, medical, dental and hospital plans, long-term disability plans
or equivalent plans through the third anniversary of the Effective Time.
7.4 Reimbursement of Expenses. During the term of this Agreement, the Company
will reimburse ▇▇▇▇▇▇▇▇▇▇ for all ordinary and necessary business expenses
incurred by ▇▇▇▇▇▇▇▇▇▇ in connection with rendering services hereunder and
pursuant to and in accordance with Company policies at such time. Reimbursement
of such expenses shall be paid monthly, upon submission by ▇▇▇▇▇▇▇▇▇▇ of
vouchers itemizing such expenses in a form satisfactory to the Company, properly
identifying the nature and business purpose of any expenditures.
7.5 Effect of Termination during Employment Period or Consulting Period.
(a) In the event of termination of ▇▇▇▇▇▇▇▇▇▇'▇ employment by the Company
pursuant to Section 4.2(a), (b), (c) or (h) hereof or termination of
▇▇▇▇▇▇▇▇▇▇'▇ consultancy pursuant to Section 6.2 hereof upon the occurrence of
any of the events described in Sections 4.2(a), (b), (c) or (h) hereof,
▇▇▇▇▇▇▇▇▇▇ (or, if applicable, his estate) shall be entitled to receive,
notwithstanding Section 7.1, only payment of his earned and unpaid Compensation
and benefits through the effective date of such termination, and no more.
Nothing in this subsection or in Section 4.2 shall apply or give rise to
▇▇▇▇▇▇▇▇▇▇'▇ Termination for Cause (whether during the Employment Period or the
Consulting Period) in respect of any action or conduct by ▇▇▇▇▇▇▇▇▇▇ in the
course of his performance as ACR Representative (as defined in the Merger
Agreement).
(b) Subject to Section 7.5(c), in the event of (i) termination of ▇▇▇▇▇▇▇▇▇▇'▇
employment by the Company pursuant to Sections 4.2(d), (e), (f) or (g), 4.3, 4.4
or 4.5 hereof or (ii) termination of ▇▇▇▇▇▇▇▇▇▇'▇ consultancy pursuant to
Section 6.2 hereof upon the occurrence of any of the events described in
Sections 4.2(d), (e), (f) or (g), 4.3 or 4.4 hereof, or pursuant to Section 4.5
hereof, ▇▇▇▇▇▇▇▇▇▇ shall be entitled to receive the Compensation set forth in
Section 7.1, as and when payable in installments as provided in Section 7.1, and
to receive the benefits described in Section 7.3, in each case through the third
anniversary of the Effective Time. All other compensation and benefits will
terminate at the date of termination of the Employment Period or Consulting
Period, as the case may be.
(c) The benefits set forth in Section 7.5(b) shall only be payable if and when
▇▇▇▇▇▇▇▇▇▇ (or, if applicable, his estate) delivers to the Company a full and
complete release of all claims (other than claims arising out of this Agreement,
relating to the Employee Retirement Income Security Act of 1974, as amended
("ERISA") and under the Company's directors and officers indemnification and
liability insurance coverage provided by the Company for periods prior to the
end of the Employment Period) hereunder, or at law or equity, including under
federal equal employment and age discrimination laws, arising out of Employee's
employment or engagement as a consultant or the termination thereof.
SECTION 8. CONFIDENTIAL INFORMATION. DEVELOPMENTS,
NON-COMPETITION/NON-SOLICITATION AND RELATED MATTERS
8.1 Restrictions on Use and Disclosure. ▇▇▇▇▇▇▇▇▇▇ will not disclose or use at
any time, for so long as ▇▇▇▇▇▇▇▇▇▇ is employed by or providing services to the
Company or any Affiliate and for a period of three years after the later of
termination of (i) the Employment Period or (ii) the Consulting Period, any
Confidential Information (as defined below) of which ▇▇▇▇▇▇▇▇▇▇ is or becomes
aware, whether or not such information is developed by him, except to the extent
that such disclosure or use is directly related to and required by ▇▇▇▇▇▇▇▇▇▇'▇
performance of duties, if any, assigned to ▇▇▇▇▇▇▇▇▇▇ by the Board, or such
Confidential Information becomes public other than through action of ▇▇▇▇▇▇▇▇▇▇
or is compelled by legal process. As used in this Agreement, the term
"Confidential Information" means information that is proprietary to the Company
and its Affiliates, that is not generally known to the public and that is used,
developed or obtained by the Company or any Affiliate in connection with its
business, including, but not limited to: (i) products or services, (ii) fees,
costs and pricing structures, (iii) designs, (iv) computer software, including
operating systems, applications and program listings, (v) flow charts, manuals
and documentation, (vi) data bases, (vii) accounting and business methods,
(viii) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (ix)
customers, clients and providers, and customer, client and provider lists, (x)
other copyrightable works, (xi) all technology and trade secrets, and (xii) all
similar and related information in whatever form. Confidential Information will
not include any information that has been published in a form generally
available to the public prior to the date ▇▇▇▇▇▇▇▇▇▇ proposes to disclose or use
such information. ▇▇▇▇▇▇▇▇▇▇ will perform all actions reasonably requested by
the Company (whether during or after the Non-Competition Period) to establish
and confirm the ownership by the Company of any Confidential Information at the
Company's expense (including, without limitation, assignments, consents, powers
of attorney and other instruments).
8.2 Assignment of Developments. All Developments that are at any time made,
conceived or suggested by ▇▇▇▇▇▇▇▇▇▇, whether acting alone or in conjunction
with others, as a result of ▇▇▇▇▇▇▇▇▇▇'▇ employment with or engagement by the
Company or any Affiliate during the Employment Period or the Consulting Period,
shall be the sole and absolute property of the Company, free of any reserved or
other rights of any kind on ▇▇▇▇▇▇▇▇▇▇'▇ part. During ▇▇▇▇▇▇▇▇▇▇'▇ employment or
engagement with the Company and, if such Developments were made, conceived or
suggested by ▇▇▇▇▇▇▇▇▇▇ as a result of ▇▇▇▇▇▇▇▇▇▇'▇ employment or engagement
with the Company or any Affiliate, thereafter, ▇▇▇▇▇▇▇▇▇▇ shall promptly make
full disclosure of any such Developments to the Company and, at the Company's
cost and expense, do all acts and things (including, among others, the execution
and delivery under oath of patent and copyright applications and instruments of
assignment) deemed by the Company to be necessary or desirable at any time in
order to effect the full assignment to the Company of ▇▇▇▇▇▇▇▇▇▇'▇ right and
title, if any, to such Developments. For purposes of this Agreement, the term
"Developments" shall mean all data, discoveries, findings, reports, designs,
inventions, improvements, methods, practices, techniques, developments,
programs, concepts and ideas, whether or not patentable, relating to the present
or planned activities, or future activities of which ▇▇▇▇▇▇▇▇▇▇ is aware, or the
products and services of the Company or any Affiliate.
8.3 Restriction on Competitive Employment. ▇▇▇▇▇▇▇▇▇▇ shall not (as an
individual, principal, agent, employee, consultant or otherwise), directly or
indirectly, during the period commencing on the date hereof and ending on the
third anniversary of the Effective Time (the "Non-Competition Period"), absent
the Company's prior written approval, engage in activities in the Territory for,
on behalf of or relating to, or render services to, or have any equity,
ownership or profit participation interest in (other than as a 5% or less holder
of the equity securities of a public company), any firm or business engaged or
about to become engaged in (i) the Business or (ii) any other business in which
the Company or any Affiliate was engaged during ▇▇▇▇▇▇▇▇▇▇'▇ employment or
engagement with the Company and as to which ▇▇▇▇▇▇▇▇▇▇ had involvement during
such employment or engagement or from which he obtained Confidential
Information; provided, that notwithstanding the foregoing, (x) ▇▇▇▇▇▇▇▇▇▇ shall
be permitted to provide services in a private clinical setting and (y) nothing
in this Agreement shall be construed to (I) prohibit ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Ph.D.,
▇▇▇▇▇▇▇▇▇▇'▇ spouse, from continuing to work in the Business, or (II) deem
▇▇▇▇▇▇▇▇▇▇ to act as an agent for his spouse, or as a principal, agent or
consultant to or for his spouse, as a result of their marital status.
8.4 Restriction on Solicitation. During ▇▇▇▇▇▇▇▇▇▇'▇ employment or engagement
with the Company and until the end of the Non-Competition Period, ▇▇▇▇▇▇▇▇▇▇
shall not, directly or indirectly, (i) solicit or contact for business purposes
any existing customer, provider or patient, or prospective customer, provider or
patient, of the Company or any Affiliate, (ii) induce, or attempt to induce, any
employees, agents, consultants or providers of or to the Company or any
Affiliate to do anything from which ▇▇▇▇▇▇▇▇▇▇ is restricted by reason of
Sections 8.1 through 8.4 hereof, (iii) interfere with existing or proposed
contracts, business agreements or other arrangements, or knowingly interfere
with future contracts, business agreements or other arrangements, between the
Company or any Affiliate and any individual, firm or enterprise including, but
not limited to, third party payors, through disrupting or diverting or
attempting to divert such contracts, business agreements or other arrangements
to any other individual, firm or enterprise (including a competitor of the
Company or any Affiliate), or (iv) offer or aid others to offer employment to
anyone who is an employee, agent or consultant of or to the Company or any
Affiliate.
8.5 Equitable Relief. ▇▇▇▇▇▇▇▇▇▇ acknowledges that a breach of the covenants
contained herein, including without limitation the covenants contained in
Sections 8.1 through 8.4 hereof, may cause irreparable damage to the Company or
one or more of its Affiliates, the exact amount of which will be difficult to
ascertain, and that the remedies at law for any such breach will be inadequate.
Accordingly, ▇▇▇▇▇▇▇▇▇▇ agrees that, in addition to any other remedy which may
be available at law or in equity, the Company and any such Affiliate shall be
entitled to specific performance and injunctive relief to prevent any actual,
intended or likely breach. The parties acknowledge that the time, scope,
geographic area and other provisions of Sections 8.1 through 8.4 hereof have
been specifically negotiated by sophisticated commercial parties and agree that
all such provisions are reasonable under the circumstances of the transactions
contemplated by this Agreement, including the compensation to ▇▇▇▇▇▇▇▇▇▇
described in Section 5 hereof. In the event that the agreements in Section 8.1
through 8.4 hereof or any other provision contained in this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of their extending for too great a period of time or over too great a
geographical area or by reason of their being too extensive in any other
respect, such agreements or provisions shall be interpreted to extend only over
the maximum period of time for which they may be enforceable and/or over the
maximum geographical area as to which they may be enforceable and/or to the
maximum extent in all other respects as to which they may be enforceable, all as
determined by such court in such action so as to be enforceable to the extent
consistent with then applicable law. The existence of any claim or cause of
action which ▇▇▇▇▇▇▇▇▇▇ may have against the Company or any such Affiliate, as
the case may be, shall not constitute a defense or bar to the enforcement of any
of the provisions of Sections 8.1 through 8.4 hereof and shall be pursued
through separate court action by ▇▇▇▇▇▇▇▇▇▇.
8.6 Survival. Unless otherwise provided herein, the provisions of Sections 8.1
through 8.5 hereof shall survive the termination of this Agreement.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 Assignment and Successors. The rights and obligations of the Company under
this Agreement may be assigned, and shall inure to the benefit of and be binding
upon the successors and assigns of the Company. ▇▇▇▇▇▇▇▇▇▇'▇ rights or
obligations hereunder may not be assigned to or assumed by any other person. No
other persons shall have any right, benefit or obligation hereunder.
9.2 Notices. Any notice, request, instruction or other document or communication
to be given hereunder shall be in writing and shall be deemed to have been duly
given (i) if mailed, at the time when mailed in any general or branch office of
the United States Postal Service, enclosed in a registered or certified
postage-paid envelope, (ii) if sent by facsimile transmission, when so sent and
receipt acknowledged by an appropriate telephone or facsimile receipt, or (iii)
if sent by other means, when actually received by the party to which such notice
has been directed, in each case at the respective addresses or numbers set forth
below or such other address or number as such party may have fixed by notice:
If to the Company:
CMG Health, Inc.
c/o Merit Behavioral Care Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Executive Vice President and General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇▇▇▇:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Ober, Kaler, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
9.3 Severability. If any provision or portion of this Agreement shall be or
become illegal, invalid or unenforceable in whole or in part for any reason,
such provision shall be ineffective only to the extent of such illegality,
invalidity or unenforceability without invalidating the remainder of such
provision or the remaining provisions of this Agreement. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the agreements contemplated
hereby are fulfilled to the extent possible.
9.4 Amendment. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may be modified,
amended or waived only by a written instrument signed by both parties hereto.
9.5 Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
9.6 Interpretation. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. The language in all parts of this Agreement shall in all cases
be construed according to its fair meaning, and not strictly for or against any
party hereto. In this Agreement, unless the context otherwise requires, the
masculine, feminine and neuter genders and the singular and the plural include
one another.
9.7 Non-Waiver of Rights and Breaches. No failure or delay of any party hereto
in the exercise of any right given to such party hereunder shall constitute a
waiver thereof unless the time specified herein for the exercise of such right
has expired, nor shall any single or partial exercise of any right preclude
other or further exercise thereof or of any other right. The waiver of a party
hereto of any default of any other party shall not be deemed to be a waiver of
any subsequent default or other default by such party, whether similar or
dissimilar in nature.
9.8 Governing Law; Consent to Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE
TO CONTRACTS EXECUTED IN AND TO BE PERFORMED IN THAT STATE. Each party hereby
irrevocably (i) submits to the jurisdiction of any New Jersey state or federal
court sitting in Newark, New Jersey, with respect to matters arising out of or
relating hereto; (ii) agrees that all claims with respect to such action or
proceeding may be heard and determined in such New Jersey state or federal
court; (iii) waives, to the fullest possible extent, the defense of an
inconvenient forum; (iv) consents to service of process upon it by mailing or
delivering such service, in the case of the Company or ▇▇▇▇▇▇▇▇▇▇, as specified
in Section 9.2 hereof; and (v) agrees that a final judgment in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
9.9 Effectiveness. This Agreement will be effective (the "Effective Date") upon
the occurrence of the Effective Time, provided that ▇▇▇▇▇▇▇▇▇▇ has not revoked
the Release attached hereto on or prior to the seventh day after the date
hereof. In the event that the Merger is not consummated as contemplated by the
Merger Agreement, this Agreement will be of no force or effect and neither
▇▇▇▇▇▇▇▇▇▇ nor the Company shall be bound by any of the terms or obligations set
forth herein.
S-2 The parties, intending to be legally bound, executed this Agreement as of
the date first above written, whereupon it became effective in accordance with
its terms.
CMG HEALTH, INC.
/s/ ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
By: ______________________________________
SVP & CFO
Title: _____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Ph.D.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Ph.D.
------------------------------------------
RELEASE
For valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the undersigned, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Ph.D.
("▇▇▇▇▇▇▇▇▇▇"), does hereby release and forever discharge CMG HEALTH, INC. (the
"Company") and each of its (as applicable) associates, owners, stockholders,
predecessors, successors, heirs, assigns, agents, directors, officers, partners,
representatives, and lawyers, and all persons acting by, through, under, or in
concert with them, or any of them, of and from any and all manner of action or
actions, cause or causes of action, in law or in equity, suits, debts, liens,
contracts, agreements, promises, liabilities, claims, demands, damages, losses,
costs or expenses, of any nature whatsoever, known or unknown, fixed or
contingent (hereinafter called "Claims"), which ▇▇▇▇▇▇▇▇▇▇ now has or may
hereafter have against the Company or such other persons by reason of any and
all acts, omissions, events or facts occurring or existing prior to the
Effective Time (as defined in that certain Agreement and Plan of Merger dated as
of July 14, 1997 among Merit Behavioral Care Corporation, Merit Merger Corp. and
the Company) arising from ▇▇▇▇▇▇▇▇▇▇'▇ employment by the Company, except as
expressly provided herein. The Claims released hereunder include, without
limitation, any alleged breach of any express or implied employment agreement
between the Company and ▇▇▇▇▇▇▇▇▇▇; any alleged breach of any covenant of good
faith and fair dealing, express or implied; any alleged torts or other alleged
legal restrictions on the Company's right to terminate ▇▇▇▇▇▇▇▇▇▇'▇ employment;
and any alleged violation of any federal, state or local statute or ordinance
including, without limitation, Title VII of the Civil Rights Act of 1964, as
amended, the federal Age Discrimination in Employment Act of 1967, as amended,
and the Americans with Disabilities Act. This Release shall not (x) preclude
▇▇▇▇▇▇▇▇▇▇ from asserting any claims for alleged breach of the Employment and
Consulting Agreement entered into as of July 14, 1997 by and between ▇▇▇▇▇▇▇▇▇▇
and the Company to which this Release is attached, (y) apply to claims under the
Employee Retirement Income Security Act of 1974, as amended or (z) apply to
claims in respect of ▇▇▇▇▇▇▇▇▇▇'▇ directors and officers indemnification and
liability insurance coverage provided by the Company for periods prior to the
Effective Time. The execution and effectiveness of said Employment and
Consulting Agreement is a condition to the effectiveness of this Release.
In accordance with the Older Workers Benefit Protection Act of
1990, ▇▇▇▇▇▇▇▇▇▇ is hereby advised as follows:
(A) ▇▇▇▇▇▇▇▇▇▇ has the right to consult with an attorney before signing this
Release;
(B) ▇▇▇▇▇▇▇▇▇▇ has twenty-one (21) days to consider this Release before signing
it; and
(C) ▇▇▇▇▇▇▇▇▇▇ has seven (7) days after signing this Release to revoke this
Release, and this Release will become effective upon the expiration of that
revocation period.
▇▇▇▇▇▇▇▇▇▇ represents and warrants to the Company that there has been no
assignment or other transfer of any interest in any Claim which he may have
against the Company, and ▇▇▇▇▇▇▇▇▇▇ agrees to indemnify and hold the Company
harmless from any liability, claims, demands, damages, costs, expenses and
attorneys' fees incurred as a result of any person asserting any such assignment
or transfer of any rights or Claims under any such assignment or transfer.
▇▇▇▇▇▇▇▇▇▇ agrees that if he commences, joins in, or in any
manner seeks relief through any suit arising out of, based upon, or relating to
any of the Claims released hereunder or in any manner asserts against the
Company any of the Claims released hereunder, then ▇▇▇▇▇▇▇▇▇▇ will pay to the
Company, in addition to any other damages caused thereby, all attorneys' fees
incurred by the Company in defending or otherwise responding to said suit or
Claim.
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Date:7/14/97
____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Ph.D.