-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J+0wZGsvqCo51vmw13SBQ4FZm4jhPlbs+9dz6EecHhX06XTJSbK4K549ZbhrVbER USWOWXeCglZFNJuzMFMLSQ== 0000892569-98-002645.txt : 19980925 0000892569-98-002645.hdr.sgml : 19980925 ACCESSION NUMBER: 0000892569-98-002645 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980924 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980924 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMPREHENSIVE CARE CORP CENTRAL INDEX KEY: 0000022872 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HOSPITALS [8060] IRS NUMBER: 952594724 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09927 FILM NUMBER: 98714423 BUSINESS ADDRESS: STREET 1: 4200 WEST CYPRESS STREET 2: SUITE 300 CITY: TAMPA STATE: FL ZIP: 33607 BUSINESS PHONE: 7147199797 MAIL ADDRESS: STREET 1: 4200 WEST CYPRESS STREET 2: SUITE 300 CITY: TAMPA STATE: FL ZIP: 33607 FORMER COMPANY: FORMER CONFORMED NAME: NEURO PSYCHIATRIC & HEALTH SERVICES DATE OF NAME CHANGE: 19730501 FORMER COMPANY: FORMER CONFORMED NAME: JADE OIL CO DATE OF NAME CHANGE: 19700402 FORMER COMPANY: FORMER CONFORMED NAME: NEURO PSYCHIATRIC & HEALTH SERVICES INC DATE OF NAME CHANGE: 19700402 8-K 1 FORM 8-K 1 ================================================================================ 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 ---------------------------- ================================================================================ 2 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. -2- 3 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. -------------------------------------------------------------------- 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. -3- 4 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 -4- EX-10.1 2 EMPLYMNT AGRMNT 9/14/98 BY & BETWEEN CCC & CSTREET 1 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 2 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 -2- 3 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 -3- 4 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. -4- 5 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 -5- 6 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 -6- 7 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 -7- 8 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 ---------------------- -8- 9 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 -9- 10 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. -10- 11 (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. -11- 12 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. -12- 13 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. -13- 14 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. -14- 15 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 -15- 16 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 -16- 17 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. -17- 18 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. -18- 19 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 ------ -19- 20 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. -20- 21 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) -21- EX-10.2 3 EMPLMNT AGRMT 9/14/98 BY & BETWEEN CCC & R.LANDIS 1 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 : --------------------- 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 --------- 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 his capacity as Executive Vice President and Chief Financial Officer of the Company and Chief Financial Officer of the Company's principal subsidiary, Comprehensive 2 Behavioral Care, Inc. ("CBC"). Executive shall report to the Chairperson, President and Chief Executive Officer. ARTICLE II ---------- 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 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; -2- 3 (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 ------------- (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 -3- 4 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 ---------- 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 his duties hereunder. -4- 5 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 $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. -5- 6 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. (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 -6- 7 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. -7- 8 ARTICLE VII ----------- 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, 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 ------------ 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 (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 -8- 9 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 ---------- TERM AND TERMINATION -------------------- (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. -9- 10 (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 -10- 11 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 --------- 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 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 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 ----------- 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. -12- 13 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. ARTICLE XVI ----------- 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: -------------------------------- Name: Chriss W. Street Title: Chairman, President and Chief Executive Officer ------------------------------------ ROBERT J. LANDIS (Executive) -13- -----END PRIVACY-ENHANCED MESSAGE-----