1
EXHIBIT 99.1
COMPREHENSIVE CARE CORPORATION
------------------------------
EMPLOYMENT AGREEMENT
AGREEMENT made this 8th day of July, 1999, effective the 2nd day of
July, 1999, by and between XxxxXxxx Xxxxxxx, residing at 5825 Puerta Del Sol,
Building 12, Unit 466, St. Petersburg, Florida (hereinafter referred to as the
"Executive") and Comprehensive Care Corporation, a Delaware corporation with
principal offices located at 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx
(hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, the Company, through its wholly-owned subsidiary corporations,
is currently engaged in the principal business of (i) providing treatment
programs for psychiatric disorders and chemical and drug dependence through
freestanding and leased facilities and through provider networks and (ii)
providing various managed behavioral health care services on a fee for service
or through contract capitation agreements; and
WHEREAS, the Executive is offered employment by the Company in the
capacity as Executive Vice President; and
WHEREAS, the Company and Executive desire to provide for the future
continued employment of Executive upon the terms and conditions provided for
herein;
- 1 -
2
COMPREHENSIVE CARE CORPORATION
------------------------------
NOW, THEREFORE, it is mutually agreed by and between the parties hereto
as follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the
Company hereby employs and agrees to continue the employment of the Executive,
and the Executive hereby accepts such employment in her capacity as Executive
Vice President and Chief Operating Officer of the Company and Chief Executive
Officer of the Company's principal subsidiary, Comprehensive Behavioral Care,
Inc. ("CBC"). Executive shall report to the Chairman and Chief Executive Officer
of the Company.
ARTICLE II
DUTIES
(A) Executive shall, during the term of her employment with the
Company, and subject to the reasonable and good faith direction and control of
the Company's Board of Directors, perform such duties and functions for the
Company as she may be called upon to perform by the Board of Directors of the
Company and of CBC during the term of this Agreement consistent with the
position of Executive Vice President of the Company and Chief Executive Officer
of CBC.
(B) The Executive agrees to devote her best efforts to the performance
of her duties for the Company and to render such services for any subsidiary
corporations of the Company.
- 2 -
3
COMPREHENSIVE CARE CORPORATION
------------------------------
(C) The Executive shall perform, in conjunction with the Company's
senior management, to the best of her ability the following services and duties
for the Company and its subsidiary corporations (by way of example, and not by
way of limitation):
(i) Those duties attendant to the position with the Company
and of CBC for which she is hired;
(ii) Supervision of the clinical operations of the Company and
of operations of CBC;
(iii) Strategic planning to preserve and enhance the Company's
business;
(iv) Promotion of the relationships of the Company and its
subsidiary corporation with their respective employees, customers,
suppliers and others in the business and investment community.
ARTICLE III
STOCK OPTIONS
Commencing in periodic reviews and subject to Executive being in the
employ of the Company, Executive shall be granted annually options (the "Annual
Stock Options") to purchase additional shares of the Company's Common Stock. The
exercise price of the Annual Stock Options shall be equal to the Fair Market
Value of the Common Stock on the date of grant. The Annual Stock Options shall
be designated as non-incentive stock options to the extent eligible by law with
- 3 -
4
COMPREHENSIVE CARE CORPORATION
------------------------------
the balance designated as non-qualified stock options. The Annual Stock Options
shall be exercisable in accordance with the standard terms and conditions of the
Company's stock option grants; provided, however, that such Annual Stock Options
shall vest at the rate of 50% on the 6th month anniversary date of the grant and
50% on the first year anniversary date of the grant; and provided further,
however, that the vesting of such Annual Stock Options shall accelerate upon the
occurrence of a change in control as defined in subsection B(v) of Article IX.
In the event that during the twelve (12) months following the grant of Annual
Stock Options, Executive voluntarily terminates her employment with the Company
or is terminated for cause as defined in subsection B(iii) of Article IX, then
such Annual Stock Options shall be cancelled.
ARTICLE IV
PRINCIPAL BUSINESS LOCATION OF EXECUTIVE
Executive shall be based at the Company's corporate headquarters
located in Tampa, Florida and shall undertake such travel as directed within or
without the United States as is or may be reasonably necessary in the interests
of the Company and its operating subsidiaries and the performance of her duties
hereunder.
- 4 -
5
COMPREHENSIVE CARE CORPORATION
------------------------------
ARTICLE V
COMPENSATION
(A) Commencing the effective date of this Agreement and during the full
term of this Agreement, Executive shall receive a base salary (the "Base
Salary") at the rate of $175,000 per annum payable in equal bi-weekly increments
or such other regular pay periods of the Company, with annual reviews by the
Chairman and Board of Directors.
(B) In addition to the Base Salary, Executive shall be eligible to earn
an annual incentive bonus (the "Incentive Bonus") through Executive's
participation in the Company's Annual Management Bonus Plan ("MBP Plan") with a
target of $75,000 and maximum of $112,500 for achievement of company financial
and non-financial individual objectives. This bonus amount will be based on 25%
of individual performance against agreed upon objectives and on 75% of the
Company's financial performance (based on net earnings). Actual pay-out will be
based on the parameters of the Management Bonus Plan. Pay-out of this bonus will
be as soon as reasonably possible after the closure of the books for the fiscal
year.
(B) The Company shall deduct from Executive's compensation all federal,
state and local taxes which it may now or may hereafter be required to deduct.
(C) Executive may receive such other bonuses or additional compensation
as may be determined from time to time by the Board of Directors in its sole
discretion.
- 5 -
6
COMPREHENSIVE CARE CORPORATION
------------------------------
(E) If the Executive continues as an active employee for the period
through December 31, 2000, the Executive will be eligible to receive at the end
of this period, a Retention Bonus equal to the higher of $150,000, or 85% of the
then current Base Salary, provided that:
(i) the Company maintains financial viability as is evidenced
by the timely filing of 10(k) reports from the present day through and
including the filing date for the 2000 fiscal year, and
(ii) if not in active service throughout the period that such
termination of employment is involuntary and not for cause as defined
in Article IX(B)(iii), and
(iii) in the event of a Change in Control, defined in Article
IX(B)(v), the right to the Retention Bonus will become immediately
vested and will be paid at the end of the year in which the Change in
Control occurred.
ARTICLE VI
BENEFITS
(A) During the term hereof, (i) the Company shall provide Executive
with standard health insurance, life insurance and disability insurance as
generally offered and made available to executive officers of the Company, and
upon the same terms and conditions as provided to other executive officers of
the Company; (ii) Executive shall be reimbursed by the Company, upon
presentation of appropriate vouchers, for all reasonable business expenses
incurred by the Executive on behalf of the Company, consistent with the
Company's expense reimbursement policies.
- 6 -
7
COMPREHENSIVE CARE CORPORATION
------------------------------
(B) Executive shall be entitled to three weeks of paid vacation during
each 12-month period of employment, to be accrued in accordance with the
Company's vacation policies and to be taken at such times as not to interfere
with projects then in process. Additionally, during the term hereof, Executive
shall be accorded such leave and holidays generally made available to other
executive officers of the Company.
ARTICLE VII
NON-DISCLOSURE
The Executive shall not, at any time during or after the termination of
her employment hereunder, except when acting on behalf of and with the
authorization of the Company, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Company's business, finances,
marketing information, managed care business, plans and programs, contract
proposals, psychiatric and dependence operations, and information relating to
any managed care, capitation, sales or marketing programs of the Company
(collectively referred to as the "Proprietary Information"). For the purposes of
this Agreement, trade secrets and confidential information shall mean
information disclosed to the Executive or known by her solely as a consequence
of her employment by the Company, whether or not pursuant to this Agreement, and
not generally known (other than as disclosed by any person in breach of any
obligation of confidentiality to the Company) in the industry, concerning the
business, finances, methods, operations, marketing information, and
- 7 -
8
COMPREHENSIVE CARE CORPORATION
------------------------------
information relating to the sales and marketing of the Company. The foregoing is
intended to be confirmatory of the statutory law and common law of the state of
California relating to trade secrets and confidential information.
ARTICLE VIII
RESTRICTIVE COVENANT
(A) In the event of the voluntary termination of employment with the
Company by Executive, Executive agrees that she will not, for a period of one
(1) year following such termination, directly or indirectly enter into or become
associated with or engage in any other business (whether as a partner, officer,
director, shareholder, employee, consultant, or otherwise), which business is
primarily involved in the business of developing, marketing, owning or operating
facilities providing managed behavioral health care programs on a contract or
capitated basis.
(B) In furtherance of the foregoing, Executive shall not during the
aforesaid period of non-competition, directly or indirectly, in competition with
the Company, solicit any management person who was employed by the Company or
solicit any provider, insurer or group through, from or with which the Company
transacted any managed health care business. The foregoing shall not be deemed
or construed to prevent Executive from soliciting any consultant or advisor to
the Company for any project that Executive may participate in which is not in
violation of this Article VIII.
- 8 -
9
COMPREHENSIVE CARE CORPORATION
------------------------------
(C) If any court shall hold that the duration of non-competition or any
other restriction contained in this paragraph is unenforceable, it is our
intention that same shall not thereby be terminated but shall be deemed amended
to delete therefrom such provision or portion adjudicated to be invalid or
unenforceable or in the alternative such judicially substituted term may be
substituted therefor.
ARTICLE IX
TERM AND TERMINATION
(A) This Agreement shall commence on the date hereof and end as of the
date of termination of employment.
(B) This Agreement may be terminated prior to the expiration of
its term as follows:
(i) upon the mutual agreement of the Company and Executive.
(ii) upon the death or permanent disability of Executive, in
which case Executive shall be entitled to all Base Salary through the
date of termination. For the purposes of the foregoing, permanent
disability shall be the inability of Executive to attend to her usual
duties for a period of two (2) months in any 12 month period of the
term or sixty (60) consecutive calendar days.
(iii) for cause by the Company, in which case Executive shall
only be entitled to her Base Salary through the date of termination.
For the purpose of the foregoing, cause
- 9 -
10
COMPREHENSIVE CARE CORPORATION
------------------------------
shall be (a) a breach or default in the performance by Executive of any
of her material obligations under this Agreement, which breach or
default is not cured within ten (10) business days following written
notice thereof to Executive, or (b) the commission by Executive of any
act resulting in or intending to result in her personal gain or
enrichment at the expense of the Company, or the commission by
Executive of any felony or misdemeanor or act involving moral
turpitude.
(iv) by the Company without cause, in which case Executive
shall be entitled to an amount equal to twelve (12) months of her Base
Salary in effect at the time of termination, payable in salary
continuation or lump sum in accordance with Company practice.
(v) by the Executive if, at any time during the term, as a
result of a change in control of the Company shall have occurred, in
which case Executive shall be entitled to an amount equal to twelve
(12) months of her Base Salary in effect at the time of termination
plus a pro-rata portion of her Incentive Bonus at target for the period
of the beginning of the fiscal year through date of termination,
payable in salary continuation or lump sum in accordance with Company
practice. For the purpose of the foregoing, a change in control shall
occur in the event the Company enters into any agreement involving the
sale of a controlling interest in the Company or the sale by the
Company of all or substantially all of its assets to any other entity,
or the merger of the Company into and with another entity in
- 10 -
11
COMPREHENSIVE CARE CORPORATION
------------------------------
which the Company is not the survivor, or in which the Company is not
the controlling shareholder. In the event of termination by Executive
under this subparagraph, Executive shall be entitled to receive, as a
special severance benefit, all options granted to Executive and which
shall not have heretofore vested, shall immediately vest and become
presently exercisable.
ARTICLE X
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties, whether oral or written,
which are merged herein.
ARTICLE XI
ARBITRATION
Any dispute arising out of the interpretation, application and/or
performance of this Agreement shall be settled through final and binding
arbitration before a single arbitrator in Newport Beach, California in
accordance with the commercial rules of the American Arbitration Association.
The arbitrator shall be selected by the Association and shall be an attorney at
law experienced in the field of corporate law. Any judgment upon any arbitration
award may be entered in any court, federal or state, having competent
jurisdiction of the parties.
- 11 -
12
COMPREHENSIVE CARE CORPORATION
------------------------------
ARTICLE XII
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or unenforceable with respect to
particular circumstances, it shall remain in full force and effect in all other
circumstances.
ARTICLE XIII
NOTICE
All notices required to be given under the terms of this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered to the addressee in person or mailed by certified mail, return receipt
requested, as follows:
If to the Company: Comprehensive Care Corporation
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
Attention: Chairman
If to the Executive: 5825 Puerta Del Sol
Xxxxxxxx 00
Xxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
- 12 -
13
COMPREHENSIVE CARE CORPORATION
------------------------------
or to any such other address as the party to receive the notice shall advise by
due notice given in accordance with this paragraph.
ARTICLE XIV
BENEFIT
This Agreement shall inure to, and shall be binding upon, the parties
hereto, the successors and assigns of the Company, and the heirs and personal
representatives of the Executive.
ARTICLE XV
WAIVER
The waiver by either party of any breach or violation of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.
ARTICLE XVI
GOVERNING LAW
This Agreement has been negotiated and executed in the State of
California, and California law shall govern its construction and validity.
- 13 -
14
COMPREHENSIVE CARE CORPORATION
------------------------------
ARTICLE XVII
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
hereto. No change, addition or amendment shall be made hereto, except by written
agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals the day and year first above written.
(Corporate Seal) COMPREHENSIVE CARE CORPORATION
By: /s/ XXXXXX X. STREET
-----------------------------------------
Name: Xxxxxx X. Street
Title: Chairman, President and
Chief Executive Officer
/s/ XXXXXXXX XXXXXXX
--------------------------------------------
XXXXXXXX XXXXXXX (Executive)
- 14 -
