<PAGE>
 
                                                                   Exhibit 10.14


                    EMPLOYMENT AND NON-COMPETITION AGREEMENT
                    ----------------------------------------


     THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (this "Agreement"), is
entered into as of August 10, 1998 by and between JOHN B. BOURKE, an Illinois
resident ("Employee"), and EVEREST HEALTHCARE SERVICES CORPORATION, a Delaware
corporation (the "Company").

     WHEREAS, the Company provides dialysis and other services to patients and
other clients through its subsidiaries, and provides management, operational and
other services to its subsidiaries and various other entities; and

     WHEREAS, the Company desires to employ Employee, and Employee desires to be
so employed, in accordance with the terms hereof.

     NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Company and the
Employee hereby agree as follows:

1.   Employment.
     ---------- 

     1.1  Engagement of Employee.  The Company agrees to employ Employee as
Chief Financial Officer of the Company, and Employee accepts such employment by
the Company, during the period beginning the date hereof and ending on the fifth
anniversary of the Effective Date (the "Expiration Date"), unless sooner
terminated pursuant to Section 3 hereof (the "Employment Period").  Employee's
employment by the Company commenced on February 1, 1996 (the "Effective Date").

     1.2  Duties and Powers.  During the Employment Period, Employee will serve
as Chief Financial Officer of the Company, and will have such responsibilities,
duties and authorities as outlined on Exhibit A hereto and rendering such other
services of an executive and administrative character to the Company, its
subsidiaries and its affiliates, as the chief executive officer of the Company
or Board of Directors of the Company (the "Board") may from time to time direct.
Employee will devote his best efforts and his full business time and attention
(except for permitted vacation periods and reasonable periods of illness or
other incapacity) to the business and affairs of the Company, and shall perform
the duties and carry out the responsibilities assigned to him, to the best of
his ability, in a diligent, businesslike and efficient manner, and in a manner
which does not violate any fiduciary duties Employee owes the Company under
common or statutory law, for the purpose of advancing the Company. Employee
acknowledges that his duties and responsibilities will require his full-time
business efforts and agrees that during the Employment Period he will not engage
in any other business activity or have any business pursuits or interests except
insignificant activities or interests which do not conflict or compete with the
business of the Company and its subsidiaries or interfere with the performance
of Employee's duties hereunder.
<PAGE>
 
2.   Compensation.
     ------------ 

     2.1  Base Salary.  During the Employment Period, the Company will pay
Employee a base salary at the rate of $13,500 per month, or a greater amount as
determined by the Board in its sole discretion (the base salary in effect from
time to time is hereinafter referred to as the "Base Salary"), payable in
regular installments in accordance with the Company's general payroll practices
for salaried officers.  Employee shall be reviewed annually and may receive, but
the Company is not obligated to provide, increases in base salary depending on
the Employee's performance.

     2.2  Bonus Plan.  Employee shall be eligible to receive bonus compensation,
in the sole discretion of the Board, after each fiscal year of the Company
ending during the Employment Period based on the Company's performance during
such fiscal year and Employee's contributions to such performance and in an
amount equal to up to forty-five percent (45%) of his annual Base Salary during
such fiscal year.  Bonuses in excess of forty-five percent (45%) of Base Salary
may be paid at the Company's sole discretion for performance that exceeds
targeted objectives.

     2.3  Benefits.  In addition to the compensation payable to Employee
hereunder, Employee will be entitled to the following benefits during the
Employment Period, which benefits are provided to officers of the Company
generally as of the date hereof and shall only be modified to the extent
required to provide Comparable Benefits (as defined below):

          (a) participation in any plan, arrangement or policy of the Company
     relating to profit sharing, pensions, life insurance, disability, health
     care coverage or education, that the Company has adopted for the benefit of
     its officers generally, as such benefits may be changed by the Company from
     time to time during the term of this Agreement;

          (b) paid vacation each year with salary, consistent with Company
     policy for all salaried officers, but in no event less than four weeks paid
     vacation and five company holidays each year;

          (c) reimbursement for reasonable out-of-pocket business expenses
     incurred by Employee in the ordinary course of his duties, subject to the
     Company's policies in effect from time to time with respect to travel,
     entertainment and other expenses, including, without limitation,
     requirements with respect to reporting and documentation of such expenses;
     and

          (d) a personal expense account, funded at the employee's discretion
     from a designated portion of the Employee's salary, to be used for
     legitimate business expenses, provided all monies not used in the account
     at each year end will be returned to the Employee or his salary.

                                       2
<PAGE>
 
     2.4  Peak Participation.

          (a) Employee shall be entitled, as provided herein, to a .5% share of
     the Peak Value (as hereinafter defined) in excess of $120,000,000 (the
     "Peak Participation").

          (b) The Peak Participation is an obligation of Peak Liquidating LLC
     and will be paid to Employee by Peak Liquidating LLC when and as Peak
     Liquidating LLC makes a final liquidating distribution to its members (the
     "Distribution Date).  Peak Liquidating LLC may pay the Peak Participation
     in cash or securities or any combination of the two as it determines.

          (c) The "Peak Value" equals the value at the Distribution Date of Peak
     Liquidating LLC, plus the value of all assets previously distributed to the
     members of either Peak Healthcare LLC or Peak Liquidating LLC.  For these
     purposes, the value of any notes distributed to the members shall be valued
     at their face amount at the time of distribution, unless events
     subsequently occurred which would require the value of the notes to be
     discounted, and the value of any marketable securities that were or will be
     distributed shall equal their quoted bid prices on the date of
     distribution, or in the case of the Company's initial public offering the
     gross price of the Company's common stock paid by the underwriters.

     2.5  Stock Options.  As an executive officer of the Company, Employee shall
be eligible to receive, but the Company is not obligated to grant, the right and
option to purchase shares of the Company's common stock (the "Option").  The
grant of the Option, number of shares, price and any other term or condition
regarding any Option shall be determined solely by the Compensation Committee of
the Company.

     2.6  Success Bonus.  In the event (i) the Company enters into a definitive
binding agreement for the sale of the Company (whether pursuant to a merger, a
sale of substantially all of the assets or all the common stock, or otherwise)
to a third party pursuant to which the shareholders of the Company receive cash
or marketable securities in exchange for the Company's stock (a "Sale") prior to
December 31, 2000, (ii) such Sale closes, and (iii) Employee is employed by the
Company at the time of the closing, the Company will pay to Employee an
additional bonus of $400,000 no later than 30 days following the closing of the
Sale.

3.   Termination.
     ----------- 

     3.1  Termination By Employee or the Company.  The Employment Period (i)
shall automatically terminate immediately upon Employee's resignation or death,
or (ii) may be terminated by the Company upon written notice delivered to
Employee or by reason of Employee's Permanent Disability.

     "Permanent Disability" shall mean, with respect to the Employee (i) the
suffering of any mental or physical illness, disability or incapacity to the
extent that the Employee shall be

                                       3
<PAGE>
 
unable to perform his duties for a period of three months during any six-month
period, or (ii) the absence of the Employee from his employment by reason of any
mental or physical illness, disability or incapacity for a period of three
months during any six-month period; provided, however, in either case, that such
illness, disability or incapacity shall be determined to be of a permanent
nature by a licensed physician selected by the Board and reasonably acceptable
to the Employee.  The Employment Period shall end in the case of clause (i) and
(ii) on the last day of such three-month period.  Notwithstanding the foregoing,
a condition shall not be a Permanent Disability if it is the result of (i) a
willfully self-inflicted injury or willfully self-inflicted sickness or (ii) an
injury or disease contracted, suffered, or incurred while participating in a
criminal offense.  "Affiliated Entity" shall mean any entity which, directly or
indirectly controls, is controlled by or is under common control with, the
Company.

     3.2  Compensation After Termination or Expiration.

          (a) If the Employment Period is terminated, Employee (or his
     designated beneficiary) shall be entitled to receive (A) as severance pay
     payments equal to 130% of the Base Salary for one year from the date of
     such termination, in regular installments in accordance with the Company's
     regular payroll practices for salaried officers as of the date hereof, (B)
     reimbursement for the cost of outplacement services up to a maximum of
     $30,000, and (C) health and life insurance for up to 12 months from the
     date of termination on the same basis as provided to Employee prior to
     termination.

          (b) The Employee hereby agrees that the Company may dismiss him
     without any liability except for the payments required to be made by this
     Section 3.2 and except as otherwise set forth in Section 3.3(d), and
     without regard to any general or specific policies (whether written or
     oral) of the Company relating to the employment or termination of its
     employees.  The Company and the Employee acknowledge that it would be
     impractical or extremely difficult to fix the Employee's actual damages in
     the case of any such termination.  Therefore, the Company and Employee
     agree that the payments to be paid as provided for in this Section 3.2 and
     Section 3.3(d) shall constitute liquidated damages; provided, however, that
     the Employee shall be under no duty to mitigate such liquidated damages.
     In return for tendering payment of such liquidated damages, regardless of
     whether after tender of such payment Employee accepts it, Employee for
     himself and his heirs, executors, administrators and assigns (collectively,
     the "Releasors") does hereby remise, release, and forever discharge as to
     the Company and any of its Affiliated Entities and their respective agents,
     officers, directors and employees, heirs, successors, assigns
     (collectively, the "Releasees"), all manners of action, cause and causes of
     action, suits, debts, dues, accounts, liabilities, covenants, contracts,
     agreements, claims, obligations, damages, injuries and demands
     (collectively, the "Actions") whatsoever of any kind and nature, whether
     foreseen or unforeseen, contingent or actual, liquidated or unliquidated,
     in law or in equity, which any Releasor has or may have against any
     Releasee except for claims for breaches by the Company of express
     provisions of Section 3.2 or Section 3.3(d) of this Agreement. The Employee
     hereby covenants not to sue any Releasee relating to any Action.

                                       4
<PAGE>
 
          (c) Notwithstanding any provision hereof other than Section 3.3(d),
     after termination or expiration of the Employment Period (i) the Company
     shall continue to have all of its rights hereunder (including, without
     limitation, all rights under Section 4 hereof at law or in equity), and
     (ii) Employee shall continue to have all of his rights under Sections 3.2
     and 3.3 hereof.

     3.3  Obligations On Termination.

          (a) Upon the expiration or termination of the Employment Period for
     any reason, Employee shall be deemed to have resigned from all offices,
     directorships, trusteeships, or other positions he may then hold with the
     Company or an Affiliated Entity.  Such resignation shall be deemed
     effective immediately thereupon, without the requirement that a written
     resignation be delivered.

          (b) Employee agrees that following the expiration or termination of
     the Employment Period for any reason, he will provide any service which the
     Company may reasonably require to discharge its continuing obligations to
     its clients with respect to services performed by Employee for a period not
     to exceed 60 days (and so long as such services do not interfere with any
     new position or employment of Employee), and in such events Employee will
     be entitled to compensation on a per diem basis at his then customary rate
     for such services in addition to all other payments due the Employee by the
     Company in accordance with the terms hereof.  Such rate shall be negotiated
     between the parties in good faith, or if they are unable to agree shall be
     200% of Employee's Base Salary divided by 365.

          (c) The Employee hereby acknowledges and agrees that all personal
     property and equipment furnished to or prepared by the Employee in the
     course of or incident to his employment belong to the Company and shall be
     promptly returned to the Company upon termination of the Employment Period.
     "Personal property" includes, without limitation, all books, manuals,
     records, reports, notes, contracts, lists, blueprints, and other documents,
     or materials, or copies thereof, and all other proprietary information
     relating to the business of the Company; provided, however, that nothing
     shall preclude the Employee from retaining or removing (i) his personal
     rolodex, calendars, personal files of business processes, personal
     education and general business materials ("Personal Files"); (ii)
     information not containing Confidential Information (as hereinafter defined
     in Section 4.5) or a trade secret obtained while in the employ of the
     Company; or (iii) the Employee's personal computer provided all
     Confidential Information is deleted.  The Employee cannot retain or remove
     personal property that is or contains Confidential Information or a trade
     secret obtained while in the employ of the Company.  Prior to retaining or
     removing any personal property other than his Personal Files, the Employee
     will inform the Company of what personal property he intends to retain or
     remove. If a dispute arises between the Company and the Employee regarding
     the right of Employee to remove any such personal property, the parties
     shall arbitrate such dispute in a manner mutually agreeable to them.
     Following termination, the Employee will not retain any written or other
     tangible

                                       5
<PAGE>
 
     material containing any Confidential Information or trade secrets, except
     as described above.

          (d) In the event the Employment Period expires or is terminated (other
     than due to the resignation or termination by Employee for the failure of
     the Company to (i) pay his Base Salary in accordance with Section 2.1 or
     bonus in accordance with Section 2.2, or (ii) pay or make available
     Comparable Benefits (as defined below) (the failures included in clauses
     (i) and (ii) are hereinafter collectively referred to as the "Termination
     Events")), the Company's sole liability to Employee shall be limited to,
     and Employee shall only be entitled to sue the Company for, the
     compensation due to him in accordance with Section 3.2.  In the event the
     Employment Period is terminated due to the resignation by Employee for the
     occurrence of any Termination Event, Employee shall have the right to
     exercise any rights he has in law or equity, including the right to sue for
     damages and to render this Agreement of no further force or effect.
     "Comparable Benefits" means, for purposes of this Agreement, all employee
     benefits including, but not limited to, vacation, disability, death
     benefits, healthcare, pension and 401K plans, those benefits provided in
     Section 2.3, and other fringe benefits provided to other similarly situated
     Company executives ("Company Benefits") with respect to both the financial
     effect of such benefits to Employee and the terms and provisions of such
     benefits (which benefits must be within a range of no less than 90% of the
     Company Benefits).

4.   Covenant Not to Compete.
     ----------------------- 

     4.1  Employee's Knowledge.  Employee acknowledges and agrees that he has
occupied and will continue to occupy a position of trust and confidence with the
Company and has and will become familiar with the Company's trade secrets and
other proprietary and confidential information concerning the Company.  Employee
acknowledges and agrees that his services are of a special, unique and
extraordinary value to the Company and that the Company would be irreparably
damaged if Employee were to provide similar services to any person or entity in
violation of the provisions of this Agreement.  Employee further acknowledges
that the Company's relationships with its clients and other business partners
are among its most valuable assets which in many cases have been created over a
long period of time and, if lost, could not be replaced.

     4.2  Non-Compete.  As consideration for the Company entering into this
Agreement, and in recognition of the Company's proprietary interest in its
business, Employee agrees that he shall not, during the Restricted Period (as
defined below), directly or indirectly, as employee, agent, consultant,
stockholder, director, co-partner or in any other individual or representative
capacity, own, operate, manage, control, engage in, invest in or participate in
any manner in, act as a consultant or adviser to, render services for (alone or
in association with any person, firm, corporation or entity), or otherwise
assist, any person that engages in or owns, invests in, operates, manages or
controls any venture or enterprise engaging or proposing to engage in the
Business (as defined below) anywhere in the Territory (as defined below).
"Business" shall mean the performance of activities related to:

                                       6
<PAGE>
 
        (i) the provision of dialysis treatments or services utilized in 
            connection with any dialysis treatment;

       (ii) the purchase, sale or establishment of dialysis operations and 
            facilities;

      (iii) practice management for any physician or entity practice which 
            provides nephrology or renal dialysis services; or

       (iv) extracorporeal blood handling as provided by the Company or any 
            Affiliated Entity as of the date hereof.

Notwithstanding the foregoing to the contrary, the Employee may engage in
activities related to (x) practice management under clause (iii) for any
practice management company or managed care company other than any company the
principal business of which is providing management services for nephrology or
renal dialysis practices and (y) the sale of products used in dialysis
treatments or extracorporeal blood handling.  "Restricted Period" shall mean the
period commencing on the Effective Date hereof and ending on the date which is
the second anniversary of the first to occur of the Expiration Date and the date
Employee's employment with the Company is terminated for any reason.

     The Restricted Period shall be automatically extended for a period equal to
any period that Employee is in breach of the restrictive covenants set forth in
this Section 4 (the "Restrictive Covenants").  "Territory" shall mean the area
included within a 20 mile radius of any Medicare certified outpatient renal
dialysis facility or any other facility providing any services or engaging in
any activities of the Business and either (x) owned, operated or managed by the
Company or any Affiliated Entity on the Expiration Date or the date on which the
Employment Period is otherwise terminated or at any time during the 18 months
preceding such date, or (y) for which the Company or any Affiliated Entity
during the nine months preceding the Expiration Date or the date on which the
Employment Period is otherwise terminated, was actively engaged in efforts to
establish, acquire, manage or operate (each such facility is hereinafter
referred to as a "Facility").  With respect to the Territory, Employee
specifically acknowledges that the Company plans to conduct the Business
throughout the United States and to undertake to expand the Business throughout
the United States.  If Employee's employment with the Company is terminated
within the six months following a Change of Control (as defined below), the term
"Facility," as defined for these purposes, shall not include those facilities
which are owned, managed, or operated by an Affiliated Entity which became an
Affiliated Entity as a result of the transaction which also resulted in the
Change of Control.  "Change of Control" shall mean any person or entity, other
than a shareholder of the Company on the date hereof acquiring in excess of
fifty percent (50%) of the assets or issued and outstanding voting stock of the
Company other than as a result of, or after the occurrence of, a sale, in an
underwritten public offering registered under the Securities Act of 1933, as
amended, of shares of the Company's common stock in which the price per share
paid by the public for such securities will be at least $10, reflecting a post-
offering market capitalization for the Company of at least $150 million.

                                       7
<PAGE>
 
     4.3  Non-Solicitation.  Without limiting the generality of the provisions
of Section 4.2 hereof, Employee hereby agrees that, during the Restricted
Period, he will not, directly or indirectly, solicit, or participate as
employee, agent, consultant, stockholder, director, partner or in any other
individual or representative capacity, in any business which solicits business
from any person, firm, corporation or other entity which was a client or other
business partner of the Company during the term of this Agreement or any
referring physician or any owner of facilities operated by the Company or its
Affiliated Entities and, in each instance, who or which is located in the
Territory, or from any successor in interest to any such person, firm,
corporation or other entity who or which is located in the Territory, for the
purpose of securing business relationships or contracts related to the Business;
provided, however, that nothing contained herein shall be construed to prohibit
or restrict Employee from soliciting business from any such parties on behalf of
the Company in performance of his duties as an employee of the Company required
under and as specifically contemplated by Section 1 above.

     4.4  Interference with Relationships.  During the Restricted Period,
Employee shall not, directly or indirectly, as employee, agent, consultant,
stockholder, director, co-partner or in any other individual or representative
capacity:  (i) except on behalf of the Company, employ or engage, recruit or
solicit for employment or engagement, any person who is or becomes employed or
engaged by the Company or its Affiliated Entities during the Restricted Period
or during the eighteen month period preceding the Restricted Period, or
otherwise seek to influence or alter any such person's relationship with the
Company or its Affiliated Entities, or (ii) solicit or encourage any client or
other business partner of the Company or its Affiliated Entities or any
referring physician or any owner of facilities operated or managed by the
Company or its Affiliated Entities to terminate or otherwise alter his
relationship with the Company or its Affiliated Entities.

     4.5  Confidential Information.  The Employee agrees that during the
Employment Period or at all times thereafter, he shall not disclose to any
person or entity not employed by the Company and not engaged to render services
to the Company or otherwise use any Confidential Information obtained while in
the employ of the Company, except on behalf of the Company in accordance with
its policies or as such disclosure may be required by law or a court order.  As
used in this Agreement, "Confidential Information" shall mean any information
relating to the business or affairs of the Company, Peak Healthcare, L.L.C., a
limited liability company formed under the laws of the State of Delaware
("Peak"), any Affiliated Entities, or any of their clients or other business
partners, including but not limited to information relating to financial
statements, client or other business partner identities, potential clients,
employees, information, analyses, or other proprietary information used by the
Company, Peak, or any Affiliated Entities in connection with their businesses;
provided, however, that Confidential Information shall not include any
information which is in the public domain or becomes known in the industry
through no wrongful act on the part of Employee or is approved for disclosure by
the Company.  Employee acknowledges that the Confidential Information is vital,
sensitive, confidential and proprietary to the Company, Peak and the Affiliated
Entities.

                                       8
<PAGE>
 
     4.6  Blue-Pencil.  If any court of competent jurisdiction shall at any time
deem the term of this Agreement or any particular Restrictive Covenant too
lengthy or the Territory too extensive, the other provisions of this Section 4
shall nevertheless stand, the Restricted Period herein shall be deemed to be the
longest period permissible by law under the circumstances and the Territory
herein shall be deemed to comprise the largest territory permissible by law
under the circumstances.  The court in each case shall reduce the time period
and/or Territory to permissible duration or size.

     4.7  Remedies.

          (a) Employee has carefully considered the nature and extent of the
     restrictions upon him and the rights and remedies conferred upon the
     Company under this Agreement, and Employee hereby acknowledges and agrees
     that such restrictions, rights and remedies are reasonable in time and
     territory, are designed to eliminate competition which otherwise would be
     unfair to the Company, do not stifle the inherent skill and experience of
     Employee, would not operate as a bar to Employee's sole means of support,
     are fully required to protect the legitimate interests of the Company and
     do not confer a benefit upon the Company disproportionate to the detriment
     to Employee.

          (b) Employee acknowledges and agrees that the Restrictive Covenants
     are reasonable and necessary for the protection of the Company's business
     interests, that irreparable injury will result to the Company if Employee
     breaches any of the terms of said Restrictive Covenants, and that in the
     event of Employee's actual or threatened breach of any such Restrictive
     Covenants, the Company will have no adequate remedy at law.  Employee
     accordingly agrees that in the event of any actual or threatened breach by
     him of any of the Restrictive Covenants, the Company shall be entitled,
     upon three days' notice to Employee, to immediate temporary injunctive and
     other equitable relief, without bond and without the necessity of showing
     actual monetary damages, subject to a hearing as soon thereafter as
     possible.  Nothing contained herein shall be construed as prohibiting the
     Company from pursuing any other remedies available to it for such breach or
     threatened breach, including the recovery of any damages which it is able
     to prove.

                                       9
<PAGE>
 
5.   Miscellaneous.
     ------------- 

     5.1  Notices, Consents, etc.  Any notices, consents or other communication
required to be sent or given hereunder by any of the parties shall in every case
be in writing and shall be deemed properly served if (a) delivered personally,
(b) sent by registered or certified mail, in all such cases with first class
postage prepaid, return receipt requested, (c) delivered by a recognized
overnight courier service, or (d) sent by facsimile transmission (along with a
copy sent by first-class mail) to the parties at the addresses as set forth
below or at such other addresses as may be furnished in writing.

          If to Company:   Everest Healthcare Services Corporation
                           101 North Scoville
                           Oak Park, Illinois 60302
                           Attention: Craig W. Moore
                           Fax: 708/386-1711

          With copies to:  Katten Muchin & Zavis
                           525 West Monroe Street, Suite 1600
                           Chicago, Illinois 60661-3693
                           Attention: Alan Berry and
                                      Matthew S. Brown
                           Fax: 312/902-1061

          If to Employee:  John B. Bourke
                           642 N. Arlington Heights Road
                           Arlington Heights, Illinois 60004

Date of service of such notice shall be (w) the date such notice is personally
delivered, (x) three (3) days after the date of mailing if sent by certified or
registered mail, (y) one (1) day after date of delivery to the overnight courier
if sent by overnight courier or (z) the next succeeding business day after
transmission by facsimile.

     5.2  Severability.  The unenforceability or invalidity of any provision of
this Agreement shall not affect the enforceability or validity of any other
provision.

     5.3  Entire Agreement.  This Agreement and those documents expressly
referred to herein embody the complete agreement and understanding among the
parties and supersede and preempt any prior (or contemporaneous) understandings,
agreements or representations by  or among the parties, written or oral, which
may have related to the subject matter hereof in any way, and may not be
contradicted by evidence of any prior or contemporaneous agreement. The parties
further intend that this Agreement shall constitute the complete and exclusive
statement of its terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative, or other legal proceeding involving
this Agreement.

                                       10
<PAGE>
 
     5.4  Counterparts.  This Agreement may be executed on separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

     5.5  Assignment.  This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns, but will not be assignable or delegable by any party without the prior
written consent of the other parties, except it will be assignable by the
Company in connection with a sale of the Company's business.  Notwithstanding
anything to the contrary contained herein, Employee may not assign any of his
rights or delegate any of his responsibilities, liabilities or obligations under
this Agreement, without the written consent of the Company.

     5.6  No Strict Construction.  The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party
hereto.

     5.7  Amendment and Waiver.  Any provision of this Agreement may be amended,
or any provision of this Agreement may be waived, provided that any such
amendment or waiver will be binding on Employee or the Company, only if such
amendment or waiver is set forth in a writing executed by Employee or the
Company, respectively.  The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other breach.

     5.8  Construction.  This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Illinois, without giving effect to provisions thereof regarding
conflict of laws.

     5.9  Consent to Jurisdiction and Service of Process.  The Company and
Employee hereby consent to the jurisdiction of any state or federal court
located within the County of Cook, State of Illinois and irrevocably agree that
subject to the Company's election, all actions or proceedings arising out of or
relating to this Agreement shall be litigated in such courts. Employee accepts
for himself and in connection with his properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
waives any defense of forum non conveniens, and irrevocably agrees to be bound
by any judgment rendered thereby in connection with this Agreement.  Service of
all process in any such proceeding in any such court shall be mailed by
registered mail to Employee, except that unless otherwise provided by applicable
law, any failure to mail such copy shall not affect the validity of service of
process. Employee hereby agrees that service upon him by certified mail shall
constitute sufficient notice.  Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of the
Company to bring proceedings against Employee in the courts of any other
jurisdiction.

     5.10  Employee Acknowledgment.  The Employee acknowledges (a) that he has
consulted with or has had the opportunity to consult with independent counsel of
his own

                                       11
<PAGE>
 
choice concerning this Agreement and has been advised to do so by the Company,
and (b) that he has read and understands the Agreement, is fully aware of its
legal effect, and has entered into it freely based on his own judgment.

     5.11  Mediation.  The Company and Employee agree that in the event of any
dispute between the Company and Employee concerning the terms of this Agreement,
unless equitable relief is sought, the parties will submit the matter to
mediation prior to the commencement of legal action.

     5.12  D&O Insurance.  The Company shall maintain insurance which would
cover Employee in connection with any liability asserted against Employee for
performance of his duties hereunder or as a result of being an employee of the
Company, whether the Company would be permitted to indemnify the Employee
against such liability under applicable law to the same extent it maintains such
insurance for other officers of the Company.

     5.13  Successors/Binding Agreement.

          (a) The Company shall require any successor (whether direct or
     indirect, by purchase, merger, consolidation or otherwise) to all or
     substantially all of the business and/or assets of the Company to expressly
     assume and agree to perform this Agreement in the same manner and to the
     same extent that the Company would be required to perform if no such
     succession had taken place.  As used in this Agreement, "Company" shall
     mean the Company as herein before defined and any successor to it's
     business and/or assets as aforesaid which assumes and agrees to perform
     this Agreement by operation of law, or otherwise.

          (b) This Agreement shall inure to the benefit of and be enforceable by
     the Employee and Employee's personal or legal representatives, executors,
     administrators, successors, heirs, distributees, devisees and legatees.  In
     the event of Employee's death, all amounts otherwise payable to Employee
     hereunder shall, unless otherwise provided herein, be paid in accordance
     with the terms of this Agreement to Employee's devisee, legatee or other
     designee or, if there is no such designee, to Employee's estate.

                            [signature page follows]

                                       12
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.


                              THE COMPANY:
                              ----------- 

                              EVEREST HEALTHCARE SERVICES
                               CORPORATION


                              By: /s/ Craig W. Moore
                                 -------------------------------------
                                 Craig W. Moore



                              EMPLOYEE:
                              -------- 


                              /s/ John B. Bourke
                              ----------------------------------------
                                  John B. Bourke

                                       13