Exhibit 10.1
 
AGREEMENT AND RELEASE
 
This AGREEMENT AND RELEASE, dated as of November 16, 2011 (this “Agreement”), is
entered into by and among Conmed Healthcare Management, Inc., a Delaware
corporation (the “Company”), Ayelet Investments LLC, a Delaware limited
liability company (“Parent”), Ayelet Merger Subsidiary, Inc., a Delaware
corporation (“Merger Subsidiary”), and James H. Desnick, M.D. (the “Guarantor”).
Each of the foregoing are collectively referred to herein as the “Parties” and
each individually as a “Party”. Capitalized terms used but not defined in this
Agreement shall have the respective meanings given to them in the Merger
Agreement (as defined below).
 
RECITALS
 
A. On July 11, 2011, Parent, Merger Subsidiary, and the Company executed an
Agreement and Plan of Merger (the “Original Merger Agreement”), pursuant to
which Merger Subsidiary would merge with and into the Company, with the Company
surviving such merger
 
B. On October 24, 2011, Parent, Merger Subsidiary and the Company amended the
Original Merger Agreement (the “Amendment”, and together with the Original
Merger Agreement, the “Merger Agreement”).
 
C. On the date hereof, the Company has terminated the Merger Agreement.
 
NOW THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the Parties hereto hereby
agree as follows:
 
AGREEMENT
 
1. Acknowledgment of Termination of Merger Agreement.  The Parties hereby
acknowledge and agree that the Merger Agreement has been terminated effective as
of the date hereof, and none of the provisions of the Merger Agreement shall be
of any further force or effect as of such time, including, without limitation,
provisions of the Merger Agreement which by their terms would otherwise have
survived the termination of the Merger Agreement.
 
2. Termination of Other Transaction Documents. The Parties acknowledge that the
Equity Financing Commitments, the Commitment Letters, dated as of July 11, 2011,
between Parent and India Investment Company, a Delaware corporation, and Edward
Heil, George Anthony and Donald Sanders (collectively, the “Investor
Commitments”) and the Voting Agreements shall be automatically terminated
effective as of the date hereof without further action on the part of the
parties to the Equity Financing Commitments, the Investor Commitments and the
Voting Agreements. The Parties further acknowledge that none of the provisions
of the Equity Financing Commitments, the Investor Commitments and the Voting
Agreements shall be of any further force or effect as of such time, including,
without limitation, provisions of the Equity Financing Commitments, the Investor
Commitments and the Voting Agreements, as the case may be, that by their terms
would otherwise have survived the termination of the Equity Financing
Commitments and the Voting Agreements, as the case may be.
 
 
 

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3. Parent Termination Fee; Termination of Limited Guarantee.
 
(a) Parent Termination Fee. Promptly following the execution of this Agreement
(and in any event no later than 3:00 p.m. EST on the first Business Day after
the date hereof), Parent shall pay, or cause to be paid, to the Company
$2,290,650 (the “Parent Termination Fee”) by wire transfer of immediately
available funds to the account specified in Exhibit A hereto.
 
(b) Limited Guarantee. Effective immediately, the Parent Termination Fee shall
be deemed to be the Guaranteed Obligation (as such term is defined in the
Limited Guarantee). Effective immediately upon receipt of the Parent Termination
Fee by the Company, the Limited Guarantee will automatically terminate (without
further action on the part of the parties to the Limited Guarantee) and none of
the provisions of the Limited Guarantee shall be of any further force or effect
as of such time, including, without limitation, provisions of the Limited
Guarantee that by their terms would otherwise have survived the termination of
the Limited Guarantee.
 
4. Mutual Release; Covenant Not to Sue.
 
(a) Parent, Merger Subsidiary and the Guarantor, for and on behalf of themselves
and the Ayelet Related Parties (as defined below), do hereby unequivocally
release and discharge, and hold harmless, the Company and any of its former and
current subsidiaries, equity holders, controlling persons, directors, officers,
employees, agents, Affiliates, members, managers, general or limited partners or
assignees or any former or current stockholder, controlling person, director,
managing director, officer, employee, general or limited partner, member,
manager, family member, spouse, heir, trust, trustee, executor, estate,
administrator, beneficiary, foundation, fiduciary, partnership, joint venture,
member firm, limited liability company, corporation, parent, division,
associated entity, principal, predecessor, predecessor-in-interest, successor,
successor-in-interest, advisor, consultant, banker, entity providing any
fairness opinion, underwriter, broker, dealer, lender, attorney, representative,
accountant, insurer, co-insurer, reinsurer, associate agent or assignee of any
of the foregoing (collectively, the “Company Related Parties”), from any and all
past, present, direct, indirect, individual, class, representative, and
derivative liabilities, actions, potential actions, causes of action, rights,
losses, obligations, duties, costs, expenses, interest, penalties, sanctions,
decrees, matters, cases, claims, suits, debts, dues, sums of money, attorney’s
fees, accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, injuries, harms,
damages, judgments, remedies, extents, executions, demands, liens and damages of
every kind and nature, in law, equity or otherwise, asserted or that could have
been asserted, under federal, state, local, foreign, regulatory, statutory, or
common law or rule (including but not limited to any claims under federal
securities laws or state disclosure law or any claims that could be asserted
derivatively on behalf of the Company), known or unknown, suspected or
unsuspected, foreseen or unforeseen, anticipated or unanticipated, disclosed or
undisclosed, accrued or unaccrued, apparent or not apparent, foreseen or
unforeseen, matured or not matured, liquidated or not liquidated, fixed or
contingent, whether or not concealed or hidden, from the beginning of time until
the date of execution of this Agreement (collectively, “Actions”), that in any
way arises from or out of, are based upon, or are in connection with or relate
in any way to or involve, directly or indirectly, any of the actions,
transactions, occurrences, statements, representations, misrepresentations,
omissions, allegations, facts, practices, events, claims or any other matters,
things or causes whatsoever, or any series thereof, that were, could have been,
or in the future can or might be alleged, asserted, set forth, claimed,
embraced, involved, or referred to in, or related to, directly or indirectly:
(i) the Merger Agreement, the Equity Financing Commitments, the Investor
Commitments, the Voting Agreements and the Limited Guarantee and the other
agreements and documents contemplated hereby or thereby (collectively, the
“Transaction Documents”), (ii) any breach, non-performance, action or failure to
act under the Transaction Documents, (iii) the proposed Merger, including the
events leading to the abandonment of the Merger and the termination of the
Merger Agreement or any other Transaction Documents, (iv) any deliberations or
negotiations in connection with the proposed Merger, (v) the consideration
received by the Company’s stockholders in connection with the proposed Merger,
and (vi) any SEC filings, public filings, periodic reports, press releases,
proxy statements or other statements issued, made available or filed relating,
directly or indirectly, to the proposed Merger, including, without limitation,
claims under any and all federal securities laws (including those within the
exclusive jurisdiction of the federal courts) (collectively, the “Company
Released Claims”); provided, however, that (A) no Party shall be released from
any breach, non-performance, action or failure to act under this Agreement; (B)
the parties to the Limited Guarantee shall not be released from any breach,
non-performance, action or failure to act under the Limited Guarantee until the
Limited Guarantee is terminated in accordance with Section 3(b) above; and (C)
in any Action between any Ayelet Related Party (as defined below) and any
financing sources of any Ayelet Related Party in which any Company Related Party
is a party, the release in this Section 4(a) shall not apply to claims for
contribution that Ayelet may have against any Company Related Party solely to
the extent Ayelet incurs liability in connection with such Action.
 
 
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(b) The Company, for and on behalf of itself and the Company Related Parties,
does hereby unequivocally release and discharge, and hold harmless, Parent,
Merger Subsidiary and the Guarantor and any of their respective subsidiaries,
former and current equity holders, controlling persons, directors, officers,
employees, agents, Affiliates, members, managers, managing directors, general or
limited partners or assignees or Financing Sources of the Guarantor (other than
with respect to any counterclaim any Company Related Party may have against any
Financing Sources of the Guarantor in any action not initiated by any Company
Related Party), or any former or current stockholder, controlling person,
director, officer, employee, general or limited partner, member, manager, family
member, spouse, heir, trust, trustee, executor, estate, administrator,
beneficiary, foundation, fiduciary, partnership, joint venture, member firm,
limited liability company, corporation, parent, subsidiary, division, associated
entity, principal, predecessor, predecessor-in-interest, successor,
successor-in-interest, advisor, consultant, banker, entity providing any
fairness opinion, underwriter, broker, dealer, lender, attorney, representative,
accountant, insurer, co-insurer, reinsurer, associate, agent or assignee of any
of the foregoing (collectively, the “Ayelet Related Parties” and together with
the Company Related Parties, the “Related Parties”), from any and all past,
present, direct, indirect, individual, class, representative, and derivative
Actions, that in any way arises from or out of, are based upon, or are in
connection with or relate to (i) the Transaction Documents and the Debt
Financing Commitment, (ii) any breach, non-performance, action or failure to act
under the Transaction Documents and the Debt Financing Commitment, (iii) the
proposed Merger, including the events leading to the abandonment of the Merger
and the termination of the Merger Agreement, any other Transaction Documents or
the Debt Financing Commitment, (iv) any deliberations or negotiations in
connection with the proposed Merger, (v) the consideration received by the
Company’s stockholders in connection with the proposed Merger, and (vi) any SEC
filings, public filings, periodic reports, press releases, proxy statements or
other statements issued, made available or filed relating, directly or
indirectly, to the proposed Merger, including, without limitation, claims under
any and all federal securities laws (including those within the exclusive
jurisdiction of the federal courts)  (collectively, the “Ayelet Released Claims”
and together with the Company Released Claims, the “Released Claims”); provided,
however, that (A) no Party shall be released from any breach, non-performance,
action or failure to act under this Agreement; (B) the parties to the Limited
Guarantee shall not be released from any breach, non-performance, action or
failure to act under the Limited Guarantee until the Limited Guarantee is
terminated in accordance with Section 3(b) above; and (C) in any Action between
any Ayelet Related Party and any financing sources of any Ayelet Related Party
which any Company Related Party does not initiate but is made a party to, the
release in this Section 4(b) shall not apply to claims for contribution that any
Company Related Party may have against any Ayelet Related Party solely to the
extent the Company Related Party incurs liability in connection with such
Action.
 
 
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(c) It is understood and agreed that, except as provided in the provisos to
Section 4(a) and Section 4(b), the preceding paragraphs are a full and final
release covering all known as well as unknown or unanticipated debts, claims or
damages of each of the Parties and their respective Related Parties relating to
or arising out of the Transaction Documents. Therefore, each of the Parties
expressly waives any rights it may have under any statute or common law
principle under which a general release does not extend to claims which such
Party does not know or suspect to exist in its favor at the time of executing
the release, which if known by such Party must have affected such Party’s
settlement with the other.  In connection with such waiver and relinquishment,
the Parties acknowledge that they or their attorneys or agents may hereafter
discover claims or facts in addition to or different from those which they now
know or believe to exist with respect to the Released Claims, but that it is
their intention hereby fully, finally and forever to settle and release all of
the Released Claims. In furtherance of this intention, the releases herein given
shall be and remain in effect as full and complete mutual releases with regard
to the Released Claims notwithstanding the discovery or existence of any such
additional or different claim or fact.
 
(d) Except as provided in the proviso to Section 4(a) and Section 4(b), each
Party, on behalf of itself and its respective Related Parties, hereby covenants
to each other Party and their respective Related Parties not to, with respect to
any Released Claim, directly or indirectly encourage or solicit or voluntarily
assist or participate in any way in the filing, reporting or prosecution by such
Party or its Related Parties or any third party of a suit, arbitration,
mediation, or claim (including a third party or derivative claim) against any
other Party and/or its Related Parties relating to any Released Claim. The
covenants contained in this Section 4 shall survive this Agreement indefinitely
regardless of any statute of limitations.
 
 
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5. Publicity and Disclosure. Any general notices, releases, statements or
communications by any Party to the general public or the press relating to
Transaction Documents, the participation or involvement of the Parties in the
transactions contemplated by the Transaction Documents or the reasons for or any
of the events or circumstances surrounding the termination of the transactions
contemplated by the Merger Agreement shall be made only at such times and in
such manner as may be mutually agreed upon by the Parties, except as otherwise
required by law, rule or regulation (including, without limitation, any
regulation of any self regulatory agency) (and in such case only after a
reasonable attempt has been made to consult with the other Parties to this
Agreement). Notwithstanding the foregoing, each of the Parties may disclose or
respond to inquiries regarding the termination of the Transaction Documents in a
manner that is fully consistent with, and does not go beyond the scope of, the
content of the press release attached as Exhibit B hereto.
 
6. Non-Disparagement. Except as required by applicable law or the rules or
regulations of any governmental authority, any self regulatory authority or by
the order of any court of competent jurisdiction, each Party agrees that such
Party shall not, directly or indirectly (through such Party’s Related Parties or
otherwise), make, publish or cause to be made or published any statement or
remark concerning the subject matter of the Transaction Documents, the
participation or involvement of the Parties in the transactions contemplated by
the Transaction Documents or the reasons for or any of the events or
circumstances surrounding the termination of the transactions contemplated by
the Merger Agreement that could reasonably be understood as disparaging the
business or conduct of the other Parties or their respective Related Parties or
as intended to harm the business or reputation of the other Parties or their
respective Related Parties.
 
7. Confidentiality. Subject to Section 5, the Parties agree that, for a period
of one year from the date hereof, the Parties shall not, at any time, disclose,
or permit the disclosure by it or its Affiliates of, any information (written or
oral and regardless of when furnished to or received by such Party) relating to
the Transaction Documents, the participation or involvement of the Parties in
the transactions contemplated by the Transaction Documents or the reasons for or
any of the events or circumstances surrounding the termination of the
transactions contemplated by the Merger Agreement (the “Confidential
Information”); provided, however, that the restriction contained in this
Section 7 shall not apply to (a) any information in the public domain other than
by reason of unauthorized disclosure by the Party hereto agreeing to maintain
such information in confidence, (b) any information that was received on a
non-confidential basis from any third-party source, provided that such source is
not known to the disclosing Party to be subject to a contractual, legal,
fiduciary or other obligation of confidentiality with respect to such
information or (c) any information that has been independently acquired or
developed by the applicable Party without use of or reference to any
confidential information. Notwithstanding the foregoing, each Party may disclose
Confidential Information (i) if authorized to do so by the other Parties, which
authorization shall not be unreasonably withheld, conditioned or delayed, (ii)
if authorized or required to do so pursuant to Applicable Law, by a court of
competent jurisdiction, by the rules of any stock exchange or other self
regulatory organization or by another governmental authority and (iii) to its
affiliates, stockholders, partners, members, directors, officers, employees,
agents or advisers (collectively, “Representatives”) who needed or need to know
such Confidential Information in connection with the involvement of the
disclosing Party in the transactions contemplated by the Transaction Documents
or their termination; provided that the disclosing Party shall be responsible
for any actions taken by its Representatives that would be deemed a breach of
this Agreement if the disclosing Party had taken such actions.
 
 
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8. Representations of the Parties. Each Party, on behalf of itself and its
Related Parties, represents and warrants to the other Parties as follows:
 
(a) This Agreement constitutes a valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms, subject to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or other
equitable remedies.
 
(b) The execution and delivery of this Agreement by such Party do not, and the
performance by such Party of the transactions contemplated by this Agreement do
not: (i) conflict with, or result in a violation or breach of, any provision of
its charter or bylaws (or equivalent organizational documents), (ii) conflict
with, or result in any violation or breach of, or constitute (with our without
notice of lapse of time, or both) a default under or require a consent or waiver
under, any of the terms, conditions or provisions of any contractual restriction
binding on such Party or affecting such Party or any of their assets; or
(iii) conflict with or violate any order or judgment of any court or other
agency of government applicable to such Party or any of its assets.
 
9. Notices.  All notices, requests and other communications to any Party
hereunder shall be in writing (including facsimile transmission and electronic
mail (“e-mail”) transmission, so long as a receipt of such e-mail is requested
and received) and shall be given,
 

 
if to Parent, Merger Subsidiary or the Guarantor, to:
     
c/o Medical Equity Dynamics, LLC
 
370 Ravine Drive
 
Highland Park, Illinois 60035
 
Attention: James H. Desnick, M.D.
 
Facsimile No.: (847) 433-8307
 
E-mail: jimd@mma40.com
       
with a copy to (which does not constitute notice):
     
Winston & Strawn LLP
 
35 West Wacker Drive
 
Chicago, Illinois  60601
 
Attention:
Robert F. Wall
   
Brian M. Schafer
 
Facsimile No.: (312) 558-5700
 
E-mail:
rwall@winston.com
   
bschafer@winston.com

 
 
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if to the Company, to:
     
Conmed Healthcare Management, Inc.
 
7250 Parkway Drive, Suite 400
 
Hanover, Maryland 21076
 
Attention: Chief Executive Officer
 
Facsimile No.: (410) 712-4760
 
E-mail: RTurner@conmed-inc.com
       
with a copy to (which does not constitute notice):
     
Kramer Levin Naftalis & Frankel LLP
 
1177 Avenue of the Americas
 
New York, New York  10036
 
Attention:  James A. Grayer, Esq.
 
Facsimile No.: (212) 715-8000
 
E-mail: jgrayer@kramerlevin.com

or to such other address or facsimile number as such Party may hereafter specify
for the purpose by notice to the other Parties hereto.  All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5:00 p.m. on a Business
Day in the place of receipt.  Otherwise, any such notice, request or
communication shall be deemed to have been received on the next succeeding
Business Day in the place of receipt.
 
10. Entire Agreement.  This Agreement constitutes the entire agreement between
the Parties with respect to the subject matter of this Agreement and supersedes
all prior agreements and understandings, both oral and written, between the
Parties with respect to the subject matter of this Agreement.
 
11. Amendments and Waiver. Except for the provisions of Section 4, any provision
of this Agreement may be amended or waived if such amendment or waiver is in
writing and is signed, in the case of an amendment, by each Party to this
Agreement or, in the case of a waiver, by each Party against whom the waiver is
to be effective.  No failure or delay by any Party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.  The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Applicable Law.
 
12. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other Governmental
Authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any Party.  Upon such a
determination, the Parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
 
 
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13. Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law rules of such state.
 
14. Jurisdiction.  Each of the Parties hereto (a) agrees that any suit, action
or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby (whether brought by any Party or any of its Affiliates or
against any Party or any of its Affiliates) shall be brought in the Delaware
Chancery Court or, if such court shall not have jurisdiction, any federal court
located in the State of Delaware or other Delaware state court, (b) irrevocably
consents to the jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum, (c) agrees that it will
not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than the courts of the State
of Delaware, as described above, and (d) agrees that service of process on such
party as provided herein shall be deemed effective service of process on such
party.
 
15. WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
16. No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any Party hereto without the
prior written consent of the other Parties hereto and any attempt to do so shall
be void, except for assignments and transfers by operation of any laws. Subject
to the preceding sentence and Section 17 hereof, this Agreement is binding upon,
inures to the benefit of and is enforceable by the Parties and their respective
successors and assigns.
 
17. Third Party Beneficiaries. Each Party acknowledges and agrees that the
Company Related Parties and the Ayelet Related Parties are express third party
beneficiaries of the releases of such Related Parties and covenants not to sue
such Related Parties contained in Section 4 of this Agreement and are entitled
to enforce rights under such section to the same extent that such Related
Parties could enforce such rights if they were a party to this Agreement. Except
as provided in the preceding sentence, there are no third party beneficiaries to
this Agreement.
 
18. Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
 
19. Injunctive Relief. The Parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement was not performed in
accordance with its specified terms or was otherwise breached and that money
damages would not be an adequate remedy for any breach of this Agreement. It is
accordingly agreed that in any proceeding seeking specific performance each of
the Parties shall waive the defense of adequacy of a remedy at law. Each of the
Parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
 
 
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20. Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.  This Agreement
shall become effective when each Party hereto shall have received a counterpart
hereof signed by all of the other Parties hereto.  Until and unless each Party
has received a counterpart hereof signed by the other Party hereto, this
Agreement shall have no effect and no Party shall have any right or obligation
hereunder (whether by virtue of any other oral or written agreement or other
communication).  Signatures to this Agreement transmitted by facsimile
transmission, by electronic mail in PDF form, or by any other electronic means
designed to preserve the original graphic and pictorial appearance of a
document, will be deemed to have the same effect as physical delivery of the
paper document bearing the original signatures.
 
[signature page follows]
 
 
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly
executed and delivered as of the date first above written.
 

 
CONMED HEALTHCARE MANAGEMENT,
INC.
     
By:
 /s/ Richard W. Turner
   
Name: Richard W. Turner
   
Title:   Chief Executive Officer
       
AYELET INVESTMENTS LLC
     
By:
 /s/ James H. Desnick
   
Name: James H. Desnick, M.D.
   
Title:  Chief Executive Officer
       
AYELET MERGER SUBSIDIARY, INC.
     
By:
 /s/ James H. Desnick
   
Name: James H. Desnick, M.D.
   
Title:  Chief Executive Officer
   
    
 
 
 
By:
/s/ James H. Desnick
   
Name: James H. Desnick, M.D.

  
 
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  Exhibit A
 
Company Wire Instructions
 
 
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  Exhibit B
 
Form of Press Release
 

 
Conmed Healthcare Management, Inc. Terminates Merger Agreement with Ayelet
Investments LLC

Hanover, Md. -- (BUSINESS WIRE) — November 16, 2011 -- Conmed Healthcare
Management, Inc. (NYSE Amex: CONM - News), a leading full service provider of
correctional facility healthcare services to county and municipal detention
centers (“Conmed”), announced today that it has entered into an Agreement and
Release with Ayelet Investments LLC, Ayelet Merger Subsidiary, Inc. and James H.
Desnick, (collectively, the “Purchasers”) which terminates the Merger Agreement
entered into between the Company and the Purchasers on July 11, 2011, as the
same was subsequently amended, and the related Limited Guarantee.

As previously disclosed, the Purchasers had informed the Company that they no
longer in good faith believed that they would be able to complete a financing
substantially in accordance with their previously executed financing commitment
letters. The Purchasers were unable to secure such necessary financing, and, as
a result thereof, the Merger Agreement has been terminated.

As a result of the termination of the Merger Agreement, and in accordance with
the terms of the Merger Agreement, the Purchasers have agreed to promptly pay
the Company a termination fee equal to $2,290,650 and the Merger Agreement and
all related transaction documents will terminate as provided in the Agreement
and Release.
 
“As a full-service provider of correctional healthcare services to county and
municipal detention centers in 40 counties across eight states, Conmed is a
solid company that benefits from the leadership and experience of our cohesive
management team,” said Richard Turner, Chairman and Chief Executive Officer.
 
“As we conclude this year and look forward to 2012, we believe that there are
many opportunities to expand our footprint and to continue to execute on our
growth strategy, while remaining focused on and building upon our mission of
providing cost-efficient healthcare services to our clients.  We will also
remain committed to building value for our shareholders,” Dr. Turner concluded.
 
About Conmed
Conmed has provided correctional healthcare services since 1984, beginning in
the State of Maryland, and currently serves county and municipal correctional
facilities in eight states, including Arizona, Kansas, Maryland, New Jersey,
Oregon, Tennessee, Virginia and Washington. For more information, visit us at
www.conmedinc.com.
 
Forward Looking Statements

This press release may contain, among other things, certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, (i) statements with respect to the
Company's plans, objectives, expectations and intentions; and (ii) other
statements that are not historical facts including statements which may be
identified by words such as "may," "could," "would," "should," "believes,"
"expects," "anticipates," "estimates," "intends," "plans," "projects,"
"potentially," or similar expressions. These statements are based upon the
current beliefs and expectations of the Company's management and are subject to
significant risks and uncertainties. Actual results may differ from those set
forth in the forward-looking statements.
 
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These forward-looking statements involve certain risks and uncertainties that
are subject to change based on various factors (many of which are beyond the
Company's control) including, without limitation: potential adverse reactions or
changes to business relationships resulting from the announcement or completion
of the proposed Ayelet transaction; unexpected costs or expenses resulting from
the proposed Ayelet transaction; litigation or adverse judgments relating to the
proposed Ayelet transaction; risks relating to the consummation of the
contemplated Ayelet transaction, including the risk that the required
stockholder approval might not be obtained in a timely manner or at all, or that
other closing conditions will not be satisfied; other factors not currently
anticipated by management which may materially and adversely affect the closing
of the Ayelet transaction; the Company's ability to increase revenue and to
continue to obtain new contracts, contract renewals and extensions; inflation
exceeding the Company’s projection of the inflation rate of cost of services
under multi-year contracts; the ability to obtain bonds; decreases in occupancy
levels or disturbances at detention centers; malpractice litigation; the ability
to utilize third-party administrators for out-of-facility care; compliance with
laws and government regulations, including those relating to healthcare;
investigation and auditing of our contracts by government agencies; competition;
termination of contracts due to lack of government appropriations; material
adverse changes in economic and industry conditions in the healthcare market;
negative publicity regarding the provision of correctional healthcare services;
dependence on key personnel and the ability to hire skilled personnel; influence
of certain stockholders; increases in healthcare costs; insurance; completion
and integration of future acquisitions; public company obligations; limited
liability of directors and officers; the Company’s ability to meet the NYSE Amex
continued listing standards; and stock price volatility. More detailed
information about the Company and the risk factors that may affect the
realization of forward-looking statements is set forth in the Company’s filings
with the U.S. Securities and Exchange Commission, including the Company’s Annual
Report on Form 10-K, as amended, for the year ended December 31, 2010. Investors
and security holders are urged to read this document free of charge on the SEC's
web site at www.sec.gov. The Company does not undertake to publicly update or
revise its forward-looking statements as a result of new information, future
events or otherwise.

Contact:
Conmed Healthcare Management, Inc.
Thomas W. Fry, 410-567-5529
Chief Financial Officer
tfry@conmed-inc.com

or
In-Site Communications, Inc.
Lisa Wilson, 212-452-2793
lwilson@insitecony.com
 
 
 
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