Exhibit 2.5
February 3, 1994
Xx. Xxxx X. Xxxxxxxxx
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Xxxx:
This letter agreement ("Agreement") is in response to your recent
proposal to the Board of Directors of Green Spring Health Services, Inc.
("Green Spring") to alter your role at Green Spring from an employee position
as the President and Chief Executive Officer of Green Spring (and of Green
Spring's subsidiary, Green Spring Mental Health Services of New Jersey, Inc.
("GSNJ")) to a consultant position to the Board of Directors and management
of Green Spring, GSNJ and any other existing subsidiaries or divisions of
Green Spring (sometimes collectively referred to as, the "Company"). More
specifically, you have requested that the Company agree to an arrangement
under which you devote less than full time to the business and affairs of the
Company and modify the restrictive covenants (including, but not limited to,
non-competition and non-solicitation covenants) contained in the Employment
Agreement dated as of April 28, 1993 between you and the Company (the
"Employment Agreement"), in order that you may pursue additional personal
opportunities. Subject to the provisions of Section 15, this Agreement shall
supersede the Employment Agreement and terminate the duties and obligations
of both parties under the Employment Agreement. The Board of Directors of the
Company is willing to accept your decision and agrees that it would be
mutually beneficial for you to continue your relationship with the Company as
a consultant, subject to the terms and conditions regarding your continuing
relationship with the Company set forth in this letter.
Your transition from an employee, as well as the President and
Chief Executive Officer of the Company, to a consultant position with the
Company is subject to the following terms and conditions:
1. POSITION:
Effective as of February 3, 1994, you will assume a consulting
position with the Company (the "Consultancy"), with the title "Vice
Chairman" and only with such powers and duties as from time to time
may be assigned to you by
Xx. Xxxx X. Xxxxxxxxx
February 3, 1994
Page 2
the Chairman or the Board of Directors of Green Spring in
accordance with the terms and conditions of this Agreement, thereby
resigning your position as an employee, officer and President and
Chief Executive Officer of each of Green Spring and GSNJ.
2. DUTIES:
From February 3, 1994 until written notice of termination of the
Consultancy is given by either party to the other party, you hereby
agree to:
(a) upon the direction of the President and the Board of
Directors, provide assistance to the Company with respect to
matters that you were responsible for or otherwise involved
with during your employment with the Company, as a consultant
to the Company, including but not limited to, the following
areas, (i) account relations and marketing and sales support,
(ii) management recruitment and employee relations, and (iii)
Board of Directors and management consultation and support, and
(b) take such reasonable steps as are requested by the
Company and apply yourself to facilitate the above endeavors.
3. COMPENSATION:
In connection with your relationship with the Company as a
consultant and in consideration of your covenants and agreements
set forth in this Agreement and subject to the terms and conditions
of this Agreement, Green Spring agrees as follows: commencing
February 3, 1994, to pay you at the rate of Four Thousand One
Hundred Sixty-seven and 00/100 Dollars ($4,167.00) per month (the
"Monthly Payments"), payable in accordance with Green Spring's
normal payroll practices until termination, by either party, of the
Consultancy hereunder.
The Company is currently developing a long term incentive
compensation plan (the "Long Term Plan") for its employees. In the
event that such Long Term Plan is adopted and arrangements can be
made to include you as a participant in the Long Term Plan,
notwithstanding that you will not be an employee of the Company,
the Company will do so. The terms of your participation shall be
determined by the Company's Board of Directors in their sole
reasonable discretion.
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February 3, 1994
Page 3
4. EXPENSES.
For the duration of the Consultancy, the company shall reimburse you for
all reasonable and necessary business expenses incurred by you in the
performance of your consulting services hereunder, consistent with the
Company's expense reimbursement policies as in effect from time to time.
5. INDEPENDENT CONTRACTOR; TERMINATION
Notwithstanding any title you may have, you expressly understand and agree
that, for the duration of the Consultancy, (i) you are an independent
contractor, (ii) you are not an officer, director, agent for, or an
employee of, the company, and (iii) you have no authority to bind the
Company. You further acknowledge and agree that either party to this
Agreement can terminate the Consultancy established under this Agreement
at any time, with or without cause, upon fourteen (14) days written notice
to the other at the address set forth in Section 16 of this Agreement;
provided however, that termination of the Consultancy shall not constitute
termination of Sections 6-10, 12-13 and 17-23 inclusive of this Agreement
which shall continue to apply and remain in full force and effect as set
forth therein.
6. CONFIDENTIALITY; NON-DISCLOSURE
Except as otherwise authorized by the company, its officers, directors,
employees or agents, or except as required by law or judicial process, you
agree not to reveal either directly or indirectly any proprietary
information of the Company. For purposes of this Agreement, "proprietary
information" shall mean any information relating to the Company's Business
(as defined in Section 7) that has not previously been publicly released
by duly authorized representatives of the Company and shall include (but
shall not be limited to) information encompassed in all designs, plans,
proposals, marketing and sales plans, financial information, costs,
pricing information, customer information, and all methods, concepts or
ideas in or reasonably related to the Company's Business (as defined in
Section 7). You further agree to regard and preserve as confidential all
proprietary information pertaining to the Company's Business (as defined
in Section 7) that was obtained by you in the course of your employment
with the Company or during the period of the Consultancy, whether you have
such information in your memory or in writing or
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February 3, 1994
Page 4
other physical form. You will not, for the duration of the Consultancy,
without authority from the company to do so, and, after termination of
the consultancy, without written authority from the Company to do so,
use for your benefit or purposes, except as reasonably required for the
discharge of your duties as set forth in this Agreement, nor disclose to
others, either during the term of this Agreement or thereafter, except as
permitted hereunder, any proprietary information connected with the
Company's Business (as defined in Section 7), or plans or developments
of the Company. This provision shall not apply after the proprietary
information has been voluntarily disclosed to the public, independently
developed and disclosed by others, or otherwise enters the public
domain. Further, in the event that the company expands its business
beyond the scope of the Company's Business (as defined in Section 7),
and you provide consulting services to the Company in relation to such
expanded business and the Company shares proprietary information regarding
such expanded business with you, you hereby agree to keep such proprietary
information confidential in accordance with the terms of the Section 6.
7. NON-COMPETITION
For the duration of the Consultancy, and for a period of three (3) years
following the termination of the Consultancy by either party, you agree
that you will not in any way, directly or indirectly, manage, operate,
control or accept employment or a consulting position with or otherwise
advise or assist or be connected with, or own, or have any other interest
in or right with respect to (other than through ownership of not more
than five percent (5%) of the outstanding shares of a corporation's stock
which is listed on a national securities exchange) any enterprise which
competes (or is deemed to compete by fulfilling the conditions stated in
the following sentence) with the Company or a subsidiary or affiliate of
the Company in the business engaged in by the Company, which, for purposes
of this Section 7, shall be deemed to be limited to mental health and
substance abuse, utilization review of inpatient and outpatient care,
mental health and/or substance abuse network management, mental health
and/or substance abuse managed care programs, EAP services, mental health
and substance abuse treatment, mental health and/or substance abuse
review guidelines licensure and training, facility site survey or
certification for mental health and/or substance abuse treatment
facilities, mental health
Xx. Xxxx X. Xxxxxxxxx
February 3, 1996
Page 5
and/or substance abuse care management services, mental health and/or
substance abuse benefit utilization and cost analysis or a mental health
and/or substance abuse managed care network (the "Company's Business"), in
any state or territory, including the District of Columbia. For purposes of
this Section 7, an enterprise shall be deemed to be competing with the
Company's Business notwithstanding the fact that it does not within the
three (3) year period following the termination of the Consultancy
actually compete with the Company if (i) within the three (3) year
period following the termination of the Consultancy the enterprise is
actively developing the capability to compete with the Company (such as by
developing mental health criteria), (ii) you have knowledge of such efforts
and (iii) within six (6) months of developing such capability but in no
event later than six (6) months following three (3) years from the date of
termination of the Consultancy the enterprise actively competes with the
Company. Nothwithstanding any provision of this Agreement to the contrary,
nothing in this Agreement shall be interpreted to restrict you from working
for the Patuxent Medical Group, Incorporated or Columbia Medical Plan,
Incorporated or their subsidiaries or the successors or assigns thereof
after the termination of the Consultancy hereunder or treating clinical
patients during or after the term of this Agreement; provided, however,
that except for treating clincal patients, you shall not provide any
services to Patuxent Medical Group, Incorporated or Columbia Medical Plan,
Incorporated or their subsidiaries, or the successors or assigns thereof
which compete with the Company's Business.
8. NON-SOLICITATION.
You further agree that for the duration of the Consultancy, and for a period
of three (3) years following the termination of the Consultancy by either
party, you will refrain from, directly or indirectly: (i) interfering with
the employment of any other employee of the Company or a subsidiary of the
Company; (ii) urging, soliciting or inducing any employee of the Company to
leave the employ of the Company; (iii) hiring or attempting to hire any
employee of the Company; and (iv) soliciting the trade of, trading with, or
contracting with customers of the Company (including subsidiaries,
affiliates or organizations related to such customers) for any purpose that
competes with the Company's Business (as defined in Section 7).
Xx Xxxx X. Xxxxxxxxx
February 3, 1994
Page 6
9. RETURN OF MATERIALS
Upon termination of the Consultancy as provided in Section 5
hereof, you agree to return immediately any and all of the
Company's files and documents (including all copies thereof) and
other Company property and Company issued credit cards in your
possession.
10. MUTUAL GENERAL RELEASE
In connection with your transition from an employee and officer to
of the Company to a consultant to the Company and the payments
and other consideration provided for in this Agreement, you
hereby release and forever discharge the Company, its
stockholders, directors, officers, employees, agents and
representatives, successors and assigns, and the Company, its
successors and assigns, hereby release and forever discharge you,
your heirs, executors, administrators, agents, and
representatives, (hereinafter collectively the ""Released
Parties''), except for any non-vicarious gross negligence or
wilful misconduct by you (excluding any non-vicarious gross
negligence or willful misconduct arising from any act or event
about which any member of the Board of Directors of the Company
has any knowledge as of the date of this Agreement), from any and
all obligations arising from all prior agreements, whether written
or oral, between the Company and you, including, but not limited
to, the Employment Agreement and the Letter Agreement dated
November 9, 1993 between the Company and you (as provided in
paragraph 4 of such letter agreement). Additionally, you hereby
release and forever discharge the Company, its stockholders,
directors, officer, employees, agents and representative,
successors and assigns (hereinafter collectively the "Persons")
from any claim you or your heirs, executors or administrators may
now have, or will have, against the Persons in connection with
your prior employment or termination from employment with the
Company and the Company, its successors and assigns, hereby
release and forever discharge the Released Parties, except for any
non-vicarious gross negligence or willful misconduct arising from
any act or event about which any member of the Board of Directors
of the Company has any knowledge as of the date of this
Agreement), from any claim the Company, its successors and
assigns, may now have, or will have, against you in connection
with your prior employment or termination of your employment with
the Company, including, as set forth in the preceding sentence,
any
Xx. Xxxx X. Xxxxxxxxx
February 3, 1994
Page 7
claims arising from the Employment Agreement. You hereby confirm and agree
that it is your intention by this general release to release the Persons from
any and all claims, demands, damages, actions, suits of any and every nature,
known or unknown, from the beginning of the world to the date of this
release, including, but not limited to, claims arising under federal or state
statutes, including claims brought under the Age Discrimination in Employment
Act, 29 U.S.C. sections 621-634, or at common law, for wrongful discharge,
breach of contract, or any other claims growing out of any legal restriction
on the Company's right to terminate its employees and further including,
without limitation any claim for incentive compensation, bonuses
[(excluding bonuses accrued through December 31, 1993)], vacation or
severance pay. The Company on behalf of itself, its successors and assigns
hereby confirms and agrees that it is the Company's intention by this general
release to release the Released Parties from any and all claims, demands,
damages, actions, suits of every and any nature, known or unknown, from the
beginning of the world to the date of this release. Notwithstanding any other
provision of this Section 10 to the contrary, this mutual general release
shall not (i) release you or the Company from your or its obligations under
this Agreement, (ii) release you from any non-vicarious gross negligence or
wilful misconduct by you (excluding any non-vicarious gross negligence or
wilful misconduct arising from any act or event about which any member of the
Board of Directors of the Company has any knowledge as of the date of this
Agreement) as described above in this Section 10, (iii) in any way alter,
amend or extinguish any rights that you may have under the Green Spring
Health Services, Inc. Savings Plan, (iv) have any effect with respect to the
parties hereto as it may relate to claims brought by third parties against
either party hereto, or (v) in any way alter, amend or extinguish any right
of indemnification you may have under the Certificate of Incorporation or
By-Laws of the Company, or the General Corporation Law of the State of
Delaware or the Corporation and Associations Article of the Annotated Code of
the State of Maryland.
11. ANNOUNCEMENTS.
The parties agree that, except for employee announcements in the form
attached hereto, no press release or general public communications shall be
issued by any of the parties thereto with respect to your transition from
President and Chief Executive Officer to the Company to a consultant to the
Company; provided that it is not the
Xx. Xxxx X. Xxxxxxxxx
February 3, 1994
Page 8
intention of the parties to create the appearance that you have not
terminated your duties and responsibilities under the Employment Agreement.
12. BREACH
You understand and agree that in the event you breach in any material respect
any of your covenants or agreements hereunder, any and all payments under
this Agreement shall cease immediately; provided, however, you shall continue
to remain bound by all of the provisions of this Agreement (except Sections 1
through 5, 11, 14, 15 and 16 inclusive that pertain to the Consultancy).
Provided, further, notwithstanding any other provision of this Agreement to
the contrary, in the event of any alleged breach of this Agreement by you,
the Company shall provide you with written notice of such breach and you
shall have fourteen (14) days to cure such breach.
13. REMEDIES AND INJUNCTIVE RELIEF
In the event of any breach by you of your obligations under this Agreement,
you shall be liable to the Company for any and all direct (but not
consequential except in the event you breach the non-competition provisions
of Section 7 hereof, which shall be limited for the purposes of the
limitation on consequential damages in this Section 13 to mean working for,
consulting with, or advising competitors of the Company in the mental health,
substance abuse, or EAP service areas) loss, cost or expense, incurred by the
Company because of such breach. The Company shall have any and all remedies
available at law or in equity. It is further understood and agreed by the
parties hereto that the rights and privileges granted to the Company in
Sections 6, 7, 8 and 9 of this Agreement by you hereunder are of a special,
unique, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in any action at law, and that a breach by you of any of the
provisions contained in Sections 5, 7, 8 and 9 of this Agreement will cause
the Company great and irreparable injury and damage. You hereby expressly
agree that the Company shall be entitled to the remedies of injunction,
specific performance and other equitable relief to
Xx. Xxxx X. Xxxxxxxxx
February 3, 1994
Page 9
prevent a breach of Sections 6, 7, 8 and 9 of this Agreement by you.
This provision shall not, however, be construed as a waiver of any
of the rights which the Company may otherwise have for damages.
14. REVIEW AND CONSULTATION
Each party hereto certifies that it has consulted with counsel
regarding the terms and conditions set forth in this Agreement,
that it knows and understands the contents and effects hereof and
that it knowingly, voluntarily and freely executes and delivers this
Agreement.
15. AGE DISCRIMINATION NOTIFICATION.
This Agreement affects certain rights you may have under the Age
Discrimination in Employment Act, as amended, and, therefore, you
should consult with an attorney before executing this Agreement. By
executing this Agreement, you certify that in accordance with 29
U.S.C. Section 626(f), you have carefully read the foregoing
Agreement, you know and understand the contents and effects hereof,
and this Agreement is being executed by you knowingly, voluntarily,
freely and after consultation with counsel. You further certify
that you have had the opportunity to consider this Agreement for
a period of twenty-one (21) days prior to its execution, and
that neither the Company nor any of its officers, directors,
stockholders, employees, agents, representatives, affiliates,
subsidiaries, parent or holding companies, successor or assigns
have made any representations concerning the terms, conditions or
effects of this Agreement other than these contained herein.
Furthermore, the parties acknowledge that this Agreement may be
revoked by you within seven (7) days following the execution
hereof, by sending written notice of revocation 16 below, in which
case the Company shall have no Agreement, the terms contained in
Section 4 of the Employment Agreement shall remain unaltered and
shall continue to apply through December 31, 1996.
16. NOTICES
All notices and other communications which are required or may be
given under this Agreement shall be in writing
Xx. Xxxx X. Xxxxxxxxx:
February 3, 1994
Page 10
and shall be deemed to have been given if delivered personally or sent
by registered or certified mail, return receipt requested postage
prepaid:
If to the Company:
Green Spring Health Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: President
If to you:
Xx. Xxxx X. Xxxxxxxx:
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxx X. Xxxxxxxx, Esquire
Suite 209
0000 Xxxxxx Xxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
or to such other place as either party shall have specified by notice
in writing to the other.
17. ASSIGNMENT.
You understand and agree that you may not assign this Agreement nor
assign or delegate any of your rights or obligations under this
Agreement. The Company may not assign this Agreement or any of its
rights or obligations hereunder except for an assignment in connection
with any reorganization, merger, consolidation, dissolution, or sale of
substantially all of the stock or assets of the Company; provided however,
that, upon such permitted assignment, you shall not be obligated to
perform any services or duties under this Agreement. This Agreement shall
be binding upon and inure to the benefit of any permitted assigns.
18. INVALIDITY; SEVERABILITY
The authorship of this Agreement shall not be relevant to the
interpretation of any provision thereof. If any term or provision of this
Agreement shall to any extent be invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provision or
Xx. Xxxx X. Xxxxxxxxx
February 3, 1994
Page 11
part of a provision of this Agreement, but that this Agreement shall be
reformed and construed as if such invalid or unenforceable provision had
never been contained herein and such provision or part shall be reformed
to that it would be valid and enforceable to the fullest extent permitted
by law.
19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which shall be
deemed to constitute one agreement.
20. ENTIRE AGREEMENT.
This Agreement (inclusive of Exhibit 1 attached hereto and incorporated
herein) constitutes the entire agreement between the Company and you with
respect to the subject matter hereof, it may only be modified in writing
and it supersedes any and all prior agreements between the parties.
21. WAIVER.
The waiver by a party hereto of any breach by the other party of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by a party hereto.
22. AUTHORIZATION.
The Company represents and warrants that its execution and delivery of
this Agreement and its performance of this Agreement have been duly
authorized and ratified by any requisite corporate acts and this
Agreement has been approved by all of the directors of the Company. Each
party hereto represents and warrants that its execution and delivery of
this Agreement and its performance of this Agreement shall not conflict
with, violate, result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which such party is bound or affected.
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February 3, 1994
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23. APPLICABLE LAW.
This Agreement shall be governed by and interpreted under the laws of
the State of Maryland.
If you are in agreement with the foregoing, please sign the enclosed
acknowledgement below, and return it to me, whereupon we both become legally
bound.
Very truly yours,
GREEN SPRING HEALTH SERVICES, INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Xxxx Xxxxxxxxx, Chairman
ACCEPTED AND AGREED TO
INTENDING TO BE LEGALLY BOUND.
THIS 7TH DAY OF Feb., 1994
/s/ Xxxx X. Xxxxxxxxx
----------------------
Xxxx X. Xxxxxxxxx
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