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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 24, 1998
(SEPTEMBER 14, 1998)
COMPREHENSIVE CARE CORPORATION
(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-5751 95-2594724
- ---------------------------- ------------------------ -------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
4200 WEST CYPRESS STREET
SUITE 300
TAMPA, FLORIDA 33607
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 813-876-5036
----------------------------
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ITEM 5. OTHER EVENTS.
-------------
MR. CHRISS W. STREET
--------------------
On September 14, 1998 Comprehensive Care Corporation (the "Company")
entered into a new employment agreement with Mr. Chriss W. Street, the President
and Chief Executive Officer of the Company. The agreement has a term expiring on
November 30, 2001. Mr. Street's employment agreement provides for a salary at
the rate of $300,000 per annum and an annual bonus based on the performance of
the Company as follows: to the extent that the net pre-tax earnings to the
Company at the end of each fiscal year is equal to or greater than $500,000 then
Mr. Street shall receive a bonus equal to 3% of the net pre-tax earnings of the
Company for such fiscal year provided, however, that such bonus shall not exceed
50% of Mr. Street's salary in any fiscal year.
Pursuant to the terms of the agreement, Mr. Street was granted options
to purchase up to an aggregate of 100,000 shares of common stock of the Company
at an exercise price equal to $6 per share which price is approximately 150% of
the closing price of the common stock of the Company as reported on the New York
Stock Exchange on September 14, 1998. In the event that the Company's net
pre-tax earnings are equal to or greater than $1 million, 37,500 of such options
shall vest on May 31, 1999. In addition, 37,500 of such options shall vest in
three equal annual installments based upon increases of at least 12.5% in the
Company's market capitalization in each fiscal year during the term of the
agreement. The remaining 25,000 options shall vest on the first anniversary of
the grant date. In addition, Mr. Street is provided with health insurance and
other benefits and a life insurance policy. He also receives an automobile
allowance of $600 per month and reimbursement for expenses incurred on behalf of
the Company and in connection with the performance of his duties.
The agreement obligates the Company to use its best efforts to cause Mr.
Street to continue to be elected as a Class II director and as Chairman of its
Board of Directors. The agreement also provides that the Company procure
Directors and Officers Liability Insurance in an amount not less than $1.0
million. Mr. Street's employment agreement provides that in the event of a
change of control of the Company as defined therein, Mr. Street will be paid a
severance benefit equal to the greater of (i) the balance of his base salary for
the remainder of the unexpired term of his agreement or (ii) two times the sum
of Mr. Street's then prevailing base salary.
MR. ROBERT J. LANDIS
--------------------
On September 14, 1998, the Company entered into an employment agreement
with Robert J. Landis, the Executive Vice President and Chief Financial Officer
and Treasurer of the Company and Chief Financial Officer of the Company's
principal subsidiary, Comprehensive Behavioral Care, Inc. The agreement has a
term expiring on January 2, 2000. Mr. Landis' employment agreement provides for
a salary at the rate of $150,000 per annum and a bonus of up to an amount not
exceeding $50,000.
Pursuant to the terms of the agreement, Mr. Landis was granted options
to purchase 87,500 shares of common stock of the Company at an exercisable price
equal to $10 per share. Such options shall fully vest on January 2, 1999 and
expire on July 2, 2008. In addition, subject to Mr. Landis being employed by the
Company, Mr. Landis shall be granted options annually to purchase 25,000 shares
of common stock of the Company at an exercisable price equal to the closing
price of the common stock of the Company on the New York Stock Exchange on the
date of grant. Such option shall vest at the rate of 50% on the first
anniversary date of the grant and 50% on the second anniversary date of the
grant. In addition, Mr. Landis is provided with health insurance and other
benefits and a life insurance policy. Mr. Landis' employment agreement provides
that in the event of a change in control of the Company as defined, Mr. Landis
will be paid a severance benefit equal to the greater of (i) the balance of his
base salary for the remainder of the unexpired term of his agreement or (ii)
twelve (12) months base salary, together with his incentive bonus.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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Exhibit 10.1 - Employment Agreement dated September 14, 1998 by and between
Comprehensive Care Corporation and Chriss W. Street.
Exhibit 10.2 - Employment Agreement dated September 14, 1998 by and between
Comprehensive Care Corporation and Robert J. Landis.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned hereunto duly authorized.
COMPREHENSIVE CARE CORPORATION
By: /s/ Chriss W. Street
---------------------------------------
Chriss W. Street
Chairman, President, and Chief
Executive Officer
Date: September 24, 1998
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT made this 14th day of September, 1998, as of September 1,
1998, ("Employment Agreement") by and between CHRISS W. STREET, residing at 2235
Pacific Drive, Corona Del Mar, California 92625 (hereinafter referred to as the
"Executive") and COMPREHENSIVE CARE CORPORATION, a Delaware corporation with
principal offices located at 4200 W. Cypress Street, Suite 300, Tampa, Florida
33607, (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 business of providing treatment programs for
psychiatric disorders and chemical and drug dependence and providing various
managed behavioral health care services through various contract service
agreements;
WHEREAS, the Company desires to continue to benefit from the executive
talent and ability of Executive, and to continue to engage Executive as its
President and Chief Executive Officer;
WHEREAS, Executive and the Company previously entered into an Employment
Agreement dated December 21, 1994 (the "1994 Employment Agreement"); and
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WHEREAS, Executive and the Company intend this Employment Agreement to
supercede the 1994 Employment Agreement.
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 continued employment in his capacity as
President and Chief Executive Officer of the Company, with the title of
Chairman, President and Chief Executive Officer. Executive shall report to the
Board of Directors of the Company. Executive shall also serve as President of
the Company's principal operating subsidiary, Comprehensive Behavioral Care,
Inc. ("CBC").
ARTICLE II
----------
ELECTION OF EXECUTIVE AS A DIRECTOR;
DIRECTORS LIABILITY INSURANCE AND INDEMNIFICATION
-------------------------------------------------
(A) Election of Executive as a Director
of the Company
Upon the execution of this Agreement and for the full term hereof, the
Company shall cause Executive to continue to be elected as a Class II Director
of the Company, and to be
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further elected as Chairman of its Board of Directors. The Company shall, during
the full term of this Agreement, utilize its best efforts to cause Executive to
be re-elected to such positions. Such best efforts shall, in the case of the
Company, include but not be limited to including Executive as part of
managements slate of Directors to be elected by shareholders, endorsing the
election of Executive as a director, and soliciting proxies for the election of
Executive.
(B) Procurement of Directors Liability Insurance
So long as Executive shall serve as an officer and Director of the
Company, the Company shall procure and obtain, and continue in full force and
effect, at its sole cost and expense, an officers and Directors liability
insurance policy in an amount of not less than $1 million. Such policy of
insurance shall insure against claims and liability while acting in the capacity
of an officer or director of the Company or any subsidiary thereof, shall
provide for the defense of all such claims and shall be subject to fraud
exclusions and other usual and customary exclusions contained in such policies
as offered and written in the City of Tampa, Florida. Such policy shall be
obtained from a reputable insurance carrier rated A+ or better by Best.
(C) Indemnification
During the term of employment, and subsequent thereto with respect to
any claim arising out of or in connection with his employment with the Company
or any subsidiary of the Company during the term of this Agreement, the Company
shall indemnify and hold Executive harmless from all claims and liability, loss
or damage (including but not limited to judgments, fines and amounts paid in
settlement), asserted against Executive or incurred by Executive, including
reasonable attorneys fees and costs of investigation (the "Indemnification").
The Indemnification
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provided for herein shall be in addition to and not in substitution or
diminution of any and all rights to indemnification which Executive may be
entitled to under the laws of the State of Delaware or the Certificate of
Incorporation or By-Laws of the Company.
In furtherance of the Indemnification, the Company shall indemnify
Executive from any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including any action
by or in the right of the Company, by reason of the fact that Executive is or
was an officer or director of the Company or any subsidiary of the Company.
All expenses, including reasonable attorneys fees, incurred by Executive
in defending any civil, criminal, administrative or investigative action, suit
or proceeding, shall, upon request by Executive, be paid and advanced by the
Company in advance of the final disposition of such action, suit, or proceeding;
provided, however, that Executive shall repay to the Company all amounts so
advanced if it shall be ultimately and finally determined that Executive is not
entitled to be indemnified under the laws of the State of Delaware. All advances
shall be made by the Company within 10 days after the request therefor by
Executive accompanied by a statement by Executive's counsel that the amount of
advance requested is fair and reasonable.
The Indemnification provided in this Article II shall enure to the
benefit of Executive, his heirs, executors and administrators. The Company shall
enter into a separate Indemnification Agreement with Executive which shall
incorporate the provisions of this Article II.
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ARTICLE III
-----------
DUTIES
------
(A) Executive shall, during the term of his 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
and CBC as he may be called upon to perform by the Company's Board of Directors
during the term of this Agreement consistent with the position of President and
Chief Executive Officer of the Company and President of CBC.
(B) The Executive agrees to devote his best efforts to the performance
of his duties for the Company and to render such services for any subsidiary
corporations of the Company.
(C) The Executive shall perform, in conjunction with the Company's
Senior Management, to the best of his ability the following services and duties
for the Company and its subsidiary corporations (by way of example, and not by
way of limitation):
1. Those duties attendant to the position with the Company for which
he is hired;
2. Financial and strategic planning to preserve and enhance the
Company's business;
3. Promotion of the relationships of the Company and its subsidiary
corporations with their respective employees, customers, suppliers and
others in the business and investment community.
(D) The Company acknowledges that Executive has substantial business and
financial background and experience, and has acted and continues to act in an
advisory capacity to
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various businesses as well as engaging in investment and merchant banking
through affiliated entities (the "Non-Competitive Activities"). The Company
consents to Executive continuing to engage in the Non-Competitive Activities for
his own pecuniary benefit. The Company further consents to Executive devoting
less than his full business time to the performance of his duties hereunder,
having due regard to the fact that it is Executive's normal practice to work
extended business hours.
ARTICLE IV
----------
PRINCIPAL BUSINESS LOCATION OF EXECUTIVE;
ESTABLISHMENT OF CALIFORNIA OFFICE
----------------------------------
(A) Executive shall be based in the Newport Beach/Corona del Mar,
California Area, and shall undertake such occasional travel, within or without
the United States as is or may be reasonably necessary in the interests of the
Company. Executive shall be in attendance at the Company's principal business
facilities in Tampa, Florida at such occasional and incidental times as may be
reasonably necessary to the performance of his duties hereunder, having due
regard to the ability of Executive to adequately interact with the Company's
Tampa, Florida facility by telephone, telefax and computer, and having further
regard to the contemplated objective of implementing the Company's intended
business plans and programs which may not necessarily require extended presence
in Florida.
(B) To facilitate the performance of his duties hereunder and during the
full term hereof, the Company shall provide, maintain, equip (with usual and
customary office equipment, computer hardware and software) and staff an office
of not less than 2,000 square feet, in Newport
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Beach/Corona del Mar, California (the "California Office"). The site of the
California Office shall be selected by Executive, provided that the payments
under the lease relating to the California Office shall be reasonable and
competitive with lease payments required for other comparable office space in
the Newport Beach/Corona del Mar area. In addition, the Company shall hire and
employ an assistant and an executive assistant selected by Executive to assist
Executive with his duties (the "California Office Employees"). The Company shall
pay the California Office Employees salaries competitive with the salaries paid
to employees holding similar positions in companies similar to the Company.
ARTICLE V
---------
COMPENSATION
------------
(A) Commencing the date hereof and during the full term of this
Agreement, Executive shall receive a base salary (the "Base Salary") at the rate
of $300,000 per annum payable in equal weekly increments.
(B) In addition to the Base Salary, Executive shall be eligible to earn
an annual performance bonus (the "Performance Bonus") of up to an amount not
exceeding $150,000 (50% of Base Salary). Such Performance Bonus shall be
calculated as follows: to the extent that the net pre-tax earnings of the
Company at the end of each fiscal year commencing fiscal year ending May 31,
1999 is equal to or greater than $500,000, then Executive shall receive a
Performance Bonus equal to 3% of the net pre-tax earnings of the Company for
such fiscal year, provided, however that such Performance Bonus shall not exceed
$150,000 for any fiscal year. In the event
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that the Company's net pre-tax earnings in any fiscal year is less than
$500,000, then Executive shall receive no Performance Bonus in such fiscal year.
For the last six months of the employment term the Performance Bonus shall be
pro rated. The Performance Bonus as herein provided shall be computed by the
Company's auditors and shall be paid to Executive within ninety (90) days
following the end of the Company's fiscal year. Such computation by the
Company's auditors shall be final and binding.
(C) 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.
ARTICLE VI
----------
SPECIAL SEVERANCE BENEFIT
UPON CHANGE IN CONTROL
----------------------
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In the event of a Change in Control of the Company, as defined herein,
Executive, in his sole discretion, may elect to terminate his employment at any
time within one (1) year following a change in control. Upon the election of the
Executive to terminate his employment, the Company shall pay to Executive a
special severance benefit equal to the greater of (i) Executive's Base Salary
for the unexpired portion of the term of this Agreement or (ii) two times the
sum of Executive's prevailing Base Salary (the "Severance Benefit"). In the
event that Executive does not elect to terminate his employment within one year
following a Change in Control and during such one year period or at any time
thereafter during the unexpired term of this Agreement and (i) his employment is
terminated by the Company within three years of the date of such Change in
Control or (ii) though not terminated by the Company, within three years from
the date of the Change in Control, Executive's duties and responsibilities are
materially curtailed or diminished from those prevailing immediately preceding
the time of the Change in Control, and following such material curtailment or
diminution, Executive elects to terminate his employment irrespective of whether
or not the term of this Agreement shall have expired, then the Company shall pay
to the Executive the Severance Benefit.
As used herein, a Change in Control of the Company shall mean (i) the
acquisition by any person or group as defined in Rule 13D(3) under the General
Rules and Regulations under the Securities Exchange Act of 1934 (other than a
corporation or employee benefit plan sponsored by the corporation) of the
beneficial ownership of right to vote 20% or more of the total number of votes
of the Company's voting securities eligible to vote in the election of Directors
of the Company or (ii) the election of a majority in number of Directors of the
Company not proposed by (a) the
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existing Directors of the Company or (b) Directors appointed by existing
Directors to fill vacancies on the Board..
ARTICLE VII
-----------
BENEFITS
--------
(A) During the term hereof, (i) the Company shall reimburse Executive
for the premium cost of health and major medical insurance for Executive and
Executive's dependents as generally available to other senior executives 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 travel and
reimbursement policies; (iii) the Company shall pay to Executive an automobile
allowance of $600 per month, which shall be for the purpose of partially
reimbursing Executive for the use by Executive of his personal automobile. In
addition, the Company shall pay directly or reimburse Executive, upon
presentation of vouchers therefor, for the full cost of Executive's automobile
insurance, repairs, maintenance, gasoline charges, monthly garage cost and
mobile telephone.
(B) The Company will obtain and maintain during the full term hereof and
at its sole cost and expense a policy of term life insurance on the life of
Executive in the amount of $900,000 (3 times Executive's Base Salary) payable to
a beneficiary named and designated by Executive.
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(C) For each year of the term hereof, Executive shall be entitled to
paid vacation consistent with prevailing Company vacation policy for the
Company's senior management. At Executive's option, accrued but unused vacation
shall be payable in cash.
(D) The Company shall obtain a long term disability insurance policy for
Executive's benefit. Executive shall be provided with such disability benefit
equal to 100% of Executive's average net take home of his prevailing Base Salary
at a premium cost at the sole cost and expense of the Company.
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ARTICLE VIII
------------
NON-DISCLOSURE
--------------
The Executive shall not, at any time during or after the termination of
his 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, psychiatric
and dependency 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 him solely as a consequence of his 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 information relating
to the sales and marketing of the Company.
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ARTICLE IX
----------
RESTRICTIVE COVENANT
--------------------
(A) In the event of the voluntary termination of employment with the
Company by Executive, Executive agrees that he will not, for a period of one
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 psychiatric care or drug or alcohol dependency
rehabilitation or treatment, or providing or marketing managed 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 IX.
(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.
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ARTICLE X
---------
TERM
----
This Agreement shall be for a term of three years and six months
commencing June 1, 1998 and terminating on November 30, 2001. The Company agrees
to notify Executive in writing of its intent to negotiate a renewal of this
Agreement six months prior to the expiration of the term hereof. If the Company
elects not to seek to renegotiate a renewal, or if the Company fails to reach
agreement with Executive as to the terms of renewal, then the Company agrees to
pay to Executive, upon the expiration of this Agreement without renewal, a
severance benefit equal to 50% of the aggregate amount of Executive's then
prevailing annual Base Salary.
ARTICLE XI
----------
DISABILITY DURING TERM
----------------------
In the event that the Executive becomes totally disabled so that he is
unable or prevented from performing any one or all of his usual duties
hereunder, the Company shall nevertheless continue to compensate him, and he
shall continue to receive his Base Salary as provided under Article V of this
Agreement for the remainder of the unexpired term. The obligation of the Company
to make the aforesaid payments shall be modified and reduced and the Company
shall receive a credit for all disability insurance payments which Executive may
receive or to which he may become entitled; provided, however, that the premiums
for such disability insurance had been paid by the Company or had been
reimbursed to Executive by the Company.
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ARTICLE XII
-----------
TERMINATION
-----------
(A) Notwithstanding anything herein contained, if on or after the date
hereof and prior to the end of the employment term, Executive is terminated "For
Cause" (as defined below) then the Company shall have the right to give notice
of termination of Employee's services hereunder as of a date to be specified in
such notice, and this Agreement shall terminate on the date so specified. For
purposes of this Agreement, termination "For Cause" shall mean the commission by
Executive of any criminal act against the Company involving theft, embezzlement,
misappropriation of property or criminal fraud. In the event that Executive is
terminated For Cause, Executive shall be entitled to receive only the unpaid
portion of his base salary to the date on which such termination shall take
effect.
(B) In the event that Executive shall die, then this Agreement shall
terminate on the date of Executive's death. Within 30 days following such
termination, the Company shall pay the full amount of the Executive's then
prevailing Base Salary for the full remaining unexpired term.
(C) In the event that this Agreement is terminated "For Cause" pursuant
to Article XII, paragraph A, then Executive shall be only be entitled to receive
the pro rata portion of the Base Salary accrued as of the date on which
termination shall take effect. In addition, in the event of termination "For
Cause," Executive shall not be eligible for a Performance Bonus.
(D) In the event that the Company terminates Executive "Without Cause,"
(as defined below) then the Company shall be obligated to pay to Executive an
amount equal to the
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greater of (i) the balance of the Base Salary for the remainder of the
employment term or (ii) an amount equal to two years Base Salary. For purpose of
this Agreement, termination Without Cause shall mean (i) termination for any
reason other than as provided under paragraph A or B of this Article XII, (ii) a
Change in Control, or (iii) a change in the title of the Executive or a material
curtailment or diminution of the Executive's duties and responsibilities.
ARTICLE XIII
------------
STOCK OPTIONS
-------------
(A) Upon execution of this Agreement, Executive shall be granted stock
options (the "Options") to purchase up to an aggregate of 100,000 shares of
Company common stock, par value $0.01 per share (the "Common Stock" ), at an
exercise price equal to $6 per share, which price is approximately 150% of the
closing price of the Common Stock as reported on the New York Stock Exchange at
the close of business on September 14, 1998 (the "Grant Date"). The Options
shall be exercisable in accordance with the standard terms and conditions of the
Company's stock option grants. Provided that the Executive remains employed by
the Company, the Options shall vest as follows:
1. Annual Options: Twenty-five thousand (25,000) Options shall vest
on the first anniversary of the Grant Date.
2. Performance Options: Thirty-seven thousand, five hundred (37,500)
Options shall vest as follows: in the event that the Company's net pre-tax
earnings for the fiscal
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year ended May 31, 1999 is equal to or greater than $1 million, such Options
shall vest on May 31, 1999.
3. Market Capitalization-Based Options. The remaining thirty-seven
thousand, five hundred (37,500) Options shall vest based upon increases of at
least 12.5% in the Company's market capitalization (computed as set forth below)
(the "Market Options"). The Market Options shall vest as follows: (a) Market
Options with respect to 12,500 shares shall vest on May 31, 1999, in the event
that the Company increases its market capitalization from that of September 14,
1998 to the fiscal year ended May 31,1999 by 12.5%; (b) Market Options with
respect to 12,500 shares shall vest on May 31, 2000 in the event that the
Company increases its market capitalization from the fiscal year ended May
31,1999 to May 31, 2000 by 12.5%; and (c) Market Options with respect to 12,500
shares shall vest on May 31, 2001, in the event that the Company increases its
market capitalization from the fiscal year ended May 31, 2000 to May 31, 2001 by
12.5%. In addition to the foregoing, in the event that the Company increases its
market capitalization in any fiscal year by more than 12.5%, then Executive
shall be entitled to a pro rata number of additional Market Options. For
purposes of this Agreement, the Company's market capitalization for any given
fiscal year shall be calculated by multiplying the number of shares of Common
Stock outstanding as of the effective date of this employment agreement by the
closing price of the Common Stock as reported on the New York Stock Exchange on
May 31 of each year in questions.
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ARTICLE XIV
-----------
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.
ARTICLE XV
----------
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 Orange County, State of 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.
ARTICLE XVI
-----------
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.
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ARTICLE XVII
------------
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
4200 W. Cypress Street, Suite 300
Tampa, Florida 33607
If to the Executive: Chriss W. Street
1111 Bayside Drive #100
Corona del Mar, California 92625
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 XVIII
-------------
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 XIX
-----------
WAIVER
------
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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 XX
----------
GOVERNING LAW
-------------
This Agreement has been negotiated and executed in the State of
California, and California law shall govern its construction and validity.
ARTICLE XXI
-----------
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.
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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
----------------------------------
Name:
Title:
--------------------------------------
CHRISS W. STREET (Executive)
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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made this 14th day of September, 1998, effective as of July 2,
1998, by and between Robert J. Landis, presently residing in California
(hereinafter referred to as the "Executive") and Comprehensive Care Corporation,
a Delaware corporation with principal offices located at 4200 West Cypress,
Suite 300, Tampa, Florida 33607 (hereinafter referred to as the "Company").
W I T N E S S E T H :
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WHEREAS, the Company, through its wholly-owned subsidiary corporations,
is currently engaged in the principal business of 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 Chief Financial Officer; and
WHEREAS, the Company and Executive desire to provide for the future
continued employment of Executive upon the terms and conditions provided for
herein;
NOW, THEREFORE, it is mutually agreed by and between the parties hereto
as follows:
ARTICLE I
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EMPLOYMENT
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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 his capacity as Executive
Vice President and Chief Financial Officer of the Company and Chief Financial
Officer of the Company's principal subsidiary, Comprehensive
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Behavioral Care, Inc. ("CBC"). Executive shall report to the Chairperson,
President and Chief Executive Officer.
ARTICLE II
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DUTIES
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(A) Executive shall, during the term of his 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 he 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 and Chief Financial Officer.
(B) The Executive agrees to devote his best efforts to the performance
of his duties for the Company and to render such services for any subsidiary
corporations of the Company.
(C) The Executive shall perform, in conjunction with the Company's
senior management, to the best of his 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 he is hired;
(ii) Supervision of the accounting and financial reporting functions
of the Company and of CBC;
(iii) Financial and strategic planning to preserve and enhance the
Company's business;
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(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
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STOCK OPTIONS
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(A) Upon execution of this Agreement, there shall be granted to
Executive options (the "Stock Options") to purchase 87,500 shares of the
Company's common stock, par value $.01 per share (the "Common Stock"). The
exercise price of the Stock Options shall be equal to the Fair Market Value (as
defined below) of the Common Stock on the date of grant. For purposes of this
Agreement "Fair Market Value" shall be deemed to be the closing price of the
Common Stock on the New York Stock Exchange on the date of grant. The Stock
Options shall be designated as non-incentive stock options to the extent
eligible by law and practice with the balance designated as non-qualified stock
options. The Stock Options shall be exercisable in accordance with the standard
terms and conditions of the Company's stock option grants; provided, however,
that such Stock Options shall vest on the six (6) month anniversary date of
Executive's employment; and provided further, however, that the vesting of such
Stock Option shall accelerate upon the occurrence of a change in control as
defined in subsection (B)(v) of Article IX. In the event that prior to the six
(6) month anniversary date of Executive's employment, Executive voluntarily
terminates his employment with the Company or is terminated for cause as defined
in subsection B(iii) of Article IX, then all Stock Options shall terminate and
shall be cancelled.
(B) Commencing in July 1999 and subject to Executive being in the employ
of the Company, Executive shall be granted annually options (the "Annual Stock
Options") to purchase
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25,000 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 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 first anniversary date of the grant and 50% on the second
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 his 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
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PRINCIPAL BUSINESS LOCATION OF EXECUTIVE
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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 his duties
hereunder.
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ARTICLE V
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COMPENSATION
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(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 $150,000 per annum payable in equal bi-weekly increments
or such other regular pay periods of the Company.
(B) 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.
(C) 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.
(D) 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") as
follows: For the fiscal year ended May 31, 1999, and provided Executive shall be
employed by the Company, the Company shall pay to Executive within ninety (90)
days following the end of the fiscal year, an Incentive Bonus in an amount equal
to the amount earned under the terms of the MBP Plan. For the fiscal year ended
May 31, 1999, Executive shall be eligible to earn an Incentive Bonus up to an
amount not exceeding $50,000; such amount pro-rated based on actual date of
employment; provided, however, that the Company has achieved a profit for such
fiscal year of not less than $1 million on an adjusted EBIT basis. Executive's
Incentive Bonus shall not be less than $25,000 for the fiscal year ended May 31,
1999. For the purpose of computing EBIT, there shall be excluded extraordinary
non-recurring items of earnings.
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ARTICLE VI
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BENEFITS
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(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.
(B) Commencing upon the date of Executive employment through the date
that Executive is eligible to participate in the Company's group health care and
group dental plans, the Company shall reimburse the employee for the gross
premium cost to Executive for coverage continuation for existing medical and
dental care for Executive and Executive's family.
(C) 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.
(D) The Company will reimburse Executive up to an amount not exceeding
$35,000 upon presentation of reasonably itemized expense statements with back up
substantiation for reasonable and necessary expenses incurred in connection with
Executive's relocation from California to Tampa, Florida. Relocation expenses,
which shall be reimbursed by the Company shall include, but not be limited to,
transfer of household goods, temporary housing, closing costs coincident with
the
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purchase of a new residence, travel, and other relocation expenses typically
reimbursed as part of the Company's relocation policy. In the event that
Executive voluntarily terminates his employment with the Company prior to June
30, 1999, Executive hereby agrees to reimburse the Company for all relocation
expenses reimbursed to Executive by the Company. In the event that Executive is
terminated by the Company other than for cause as defined in subsection (B)(iii)
of Article IX, then the Company shall reimburse Executive up to an amount not
exceeding $35,000, for reasonable and necessary expenses actually incurred by
Executive in connection with Executive's relocation to California or any other
state in the United States.
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ARTICLE VII
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NON-DISCLOSURE
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The Executive shall not, at any time during or after the termination of
his 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 him solely as a consequence
of his 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 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
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RESTRICTIVE COVENANT
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(A) In the event of the voluntary termination of employment with the
Company by Executive, Executive agrees that he 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
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psychiatric care or drug or alcohol dependency rehabilitation or treatment, or
providing or marketing managed 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.
(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
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TERM AND TERMINATION
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(A) This Agreement shall be for an initial term of eighteen (18) months
commencing on the date of execution of this Agreement and continuing through a
date which is eighteen months thereafter.
(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.
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(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 his 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 his Base Salary through the date of termination. For the
purpose of the foregoing, cause shall be (a) a breach or default in the
performance by Executive of any of his 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 his 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 his Base Salary for the unexpired term of
this Agreement or twelve (12) months Base Salary, whichever is greater,
and a pro rata amount of the Incentive Bonus that Executive would have
earned had this Agreement not been terminated by the Company.
(v) by Executive if, at any time during the term, a change in
control of the Company shall have occurred and, following such change in
control, Executive's title shall be changed or Executive's duties and
responsibilities, as same were in effect prior to the change in control,
are diminished in any material respect. For the purpose of the
foregoing, a change in control shall occur in the event the Company
enters into any agreement involving
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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 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, the greater of (i) the balance of his Base Salary for
the unexpired portion of the term of this Agreement or (ii) twelve (12)
months Base Salary, together with the Incentive Bonus, as if this
Agreement had not been terminated. In addition, all options granted to
Executive and which shall not have heretofore vested, shall immediately
vest and become presently exercisable.
ARTICLE X
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TERMINATION OF PRIOR AGREEMENTS
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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
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ARBITRATION
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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.
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ARTICLE XII
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SEVERABILITY
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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
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NOTICE
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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
4200 West Cypress, Suite 300
Tampa, Florida 33607
Attention: President
If to the Executive: At such address as Executive shall have
advised the Company in writing
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
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BENEFIT
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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.
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ARTICLE XV
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WAIVER
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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
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GOVERNING LAW
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This Agreement has been negotiated and executed in the State of
California, and California law shall govern its construction and validity.
ARTICLE XVI
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ENTIRE AGREEMENT
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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:
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Name: Chriss W. Street
Title: Chairman, President and
Chief Executive Officer
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ROBERT J. LANDIS (Executive)
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