Document:

Exhibit 10.2

 

EXECUTION COPY

 

SETTLEMENT AND SEPARATION AGREEMENT

 

This Agreement (“Agreement”) is entered into as of this 22nd day of March
2006, between Thomas Axmacher (the “Executive”) and
Curative Health Services, Inc., a Minnesota corporation (“Curative”), on its own behalf and on behalf of its parents,
subsidiaries and affiliates, and their respective predecessors, successors and
assigns (collectively, with Curative, referred to herein as the “Company”).

 

WHEREAS, Curative and Executive entered into an
Employment Agreement dated March 13, 2002 (as amended from time to time,
the “Employment Agreement”); and

 

WHEREAS, the Executive’s
employment with the Company was necessary and essential in connection with the
Company’s negotiations with the ad hoc committee of senior noteholders and his
employment continues to be necessary and essential through April 30, 2006
to lead the Company’s effort to prepare for the Company’s Annual Report on Form 10-K
and to assist the Company in the early stages of its impending chapter 11
cases;

 

WHEREAS, the Executive’s employment with the
Company will terminate on April 30, 2006, and the Company and the
Executive have agreed upon certain arrangements relating to such termination
from employment.

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained herein
and other good and valuable consideration, the Executive and the Company (the “Parties”) agree as follows:

 

Employment Termination, Payments and Benefits

 

1.                                   The Executive shall remain in the active
employ of the Company as Executive Vice President—Finance and Chief Financial
Officer until April 30, 2006, subject to the direction of the Chief
Executive Officer, and in connection therewith, shall perform such duties as he
shall reasonably be directed by the Chief Executive Officer to perform. Executive
shall perform his duties and carry out his responsibilities hereunder in a
diligent manner, shall devote his exclusive and full working time to the
performance of his duties, shall use his best efforts to promote the interests
of the Company and shall be just and faithful in the performance of his duties
and in carrying out his responsibilities. Without limiting the generality of
the foregoing, prior to his termination of employment, the Executive shall have
properly prepared, duly certified and filed the Company’s Annual Report on Form 10-K
for the 2005 fiscal year (the “10-K Report”) on or before April 15, 2006;
in addition, the Executive shall assist to the best of his abilities in the
audit activities of the Company’s finance department. The parties acknowledge
that if the Company is unable to file the 10-K Report by April 15, 2006
for reasons wholly unrelated to the performance of the Executive, the
requirement in the foregoing sentence to file such report by that date shall be
waived.

 

2.                                   The Executive’s employment with the
Company will be terminated on April 30, 2006 (the “Termination
Date”), unless sooner
terminated by reason of the Executive’s death, voluntary resignation or
involuntary termination for Cause (as defined in the Employment Agreement).

 

3.                                   The Employment Agreement (and the
rights and obligations of the Parties thereunder) will terminate on the date of
this Agreement, provided,  however,
that Section 5 (Employment

 

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Covenants)
shall survive for the applicable periods specified therein. For the avoidance
of doubt, until his termination of employment with the Company, the Executive
will continue to receive his current bi-weekly salary (reduced by any and all
applicable payroll deductions including, but not limited to, federal, state and
local tax withholdings) and applicable employment benefits on the same basis as
he is receiving them (or entitled to receive them) on the date hereof.

 

4.                                   If the Executive remains in the
continuous employ of the Company until the Termination Date, or if the Company
terminates Executive’s employment prior to the Termination Date without Cause,
the Company shall deposit with Ruskin Moscou Faltischek P.C. (the “Escrow Agent”), pursuant to the terms of the escrow
agreement attached hereto as Exhibit A, a settlement payment in a cash
lump-sum equal to $300,000 plus accrued vacation (collectively, the “Settlement Payment”) on May 1, 2006.  The Settlement Payment shall be reduced by
any and all applicable payroll deductions including, but not limited to,
federal, state and local tax withholdings. Upon payment to the Escrow Agent,
the Settlement Payment shall thereafter be referred to as the “Escrow  Funds.”  The Escrow Agent shall not release the Escrow
Funds to the Executive if Executive has not signed and delivered a waiver and
release in the form attached as Exhibit B (“Waiver and
Release”) on the Termination Date (or, if earlier, the date the
Company terminates the Executive’s employment.  
Provided that the Executive has signed and delivered the Waiver and
Release, the Escrow Agent shall be directed to release the Escrow Funds to the
Executive on the effective date of the Waiver and Release unless
the Company shall have sent to the Escrow Agent a notice that payment of the
Escrow Funds is in dispute (the “Notice of Dispute”).
Upon receipt of Notice of Dispute, the Escrow Agent shall not disburse the
Escrow Funds until notice is received from both parties indicating that the
dispute has been resolved, which notice shall confirm the amount of the Escrow
Funds, if any, to be disbursed to the Executive. Payments made under this
Agreement (including any escrow agreement)] are in place of, and not in
addition to, any payments, rights or benefits the Executive would be entitled
to under the Employment Agreement, the side letter related to the stay bonus,
dated May 19, 2005, or any other agreement, policy or practice of the
Company. The Company covenants to obtain a letter of credit in favor of the
foregoing Escrow Agent in the amount of the Settlement Payment pursuant to
which the Escrow Agent may draw down payment in the event the Company fails to
make the Settlement Payment in accordance with the terms of this Agreement. In the event
that the Settlement Payment is not paid pursuant to this Agreement or, if the
Executive is required to return some or all of the Settlement Payment
after his receipt thereof (for the avoidance of doubt, in either case, for a reason
other  than
as contemplated by this Agreement), then the Executive shall have a claim for
any and all amounts due pursuant to the Employment Agreement notwithstanding
the waiver and release in lieu of any claim for the Settlement Payment and the
Company shall maintain any and all defenses and counterclaims with respect
thereto.

 

5.                                   If the Executive remains in the
continuous employ of the Company until the Termination Date, or if the Company terminates
Executive’s employment prior to the Termination Date without Cause, upon
Executive’s election of COBRA the Company will pay premiums thereunder until
the earlier of one year from the Termination
Date or the date Executive is eligible for replacement coverage, provided that on the Termination Date (or, if earlier, the
date the Company terminates the Executive’s employment) the Executive signs and
delivers a Waiver

 

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and
Release that is effective. The Executive will promptly notify the Company when
he is eligible for replacement coverage.

 

6.                                   The Executive expressly understands and
agrees that, except as otherwise specifically provided in this Agreement, the
payments and benefits received by him pursuant to this Agreement shall be in lieu of any and all other amounts to which he might be,
is now or may become entitled from the Company. Without limiting the generality
of the foregoing, and except as otherwise specifically provided in this
Agreement (including, for the avoidance of doubt, in Section 3 of this
Agreement), the Executive hereby expressly waives any right or claim that he
may have or assert to payment for back pay, front pay, interest, bonuses,
damages, accrued vacation, accrued sick leave, medical, dental, optical or
hospitalization benefits, pension plan contributions, 401(k) plan
contributions, life insurance and disability benefits, compensatory time,
severance pay and/or attorneys’ fees.

 

7.                                   By entering into this Agreement, the
Company does not admit and specifically denies, any liability, wrongdoing or
violation of any law, statute, regulation or policy, and it is expressly
understood and agreed that this Agreement is being entered into solely for the
purpose of amicably resolving all matters of any kind whatsoever between the
Executive and the Company.

 

8.                                   The Executive hereby represents that he
has not filed any action, complaint, charge, grievance or arbitration against
the Company, and covenants andagrees not to file any action, complaint, charge,
grievance or arbitration or commence any other proceedings, administrative or
judicial, against the Company in any court of law or equity or before any
administrative agency with respect to events occurring prior to the date hereof,
unless the claim relates to the Company’s breach of its obligations under Section 3
of this Agreement or relates to the circumstances provided under Section 4
of this Agreement.

 

Waiver and Release

 

9.                                   The Executive acknowledges and agrees
that, in consideration of the Company entering into this Agreement and for
other good and valuable consideration, the Executive, on behalf of himself and
his heirs, executors, administrators, successors and assigns, hereby knowingly
and voluntarily waives, releases, and discharges the Company, its
representatives, officers, directors, agents and employees (the “Company Released Parties”) from whatever rights, claims,
charges, actions, and causes of action (“Claims”) he may
have against the Company Released Parties, whether known or unknown, from the
beginning of time through the date hereof based upon any matter, cause or thing
whatsoever, with the sole exception of claims to enforce, or redress a breach
of, this Agreement.

 

10.                            The foregoing waiver, release and
discharge includes but is not limited to any Claims under United States
federal, state or local law and the national or local law of any foreign
country (statutory or decisional), for wrongful or abusive discharge, for
breach of any contract, for impairment of economic opportunity, for defamation,
for intentional infliction of emotional distress, or for discrimination based
upon race, color, ethnicity, sex, age, national origin, religion, disability,
sexual orientation, or any other unlawful criterion or circumstance. Such
released claims include, but are not limited to, rights or claims under the Age
Discrimination in Employment Act of 1967, the Older Workers Benefit Protection
Act of 1990, Title VII of the Civil

 

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Rights Act
of 1964, the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Fair
Labor Standards Act, the Employee Retirement Income Security Act, the Americans
with Disabilities Act, the Family and Medical Leave Act of 1993, the New York
State Labor Law, the New York State Human Rights Law and the New York City
Human Rights Law.

 

11.                            The Executive acknowledges
that he has been advised to consult with, and has consulted with, an attorney
of his choice concerning the terms and conditions of this Agreement.

 

Protection of Company’s Interests

 

12.                            Section 5 (Employment Covenants) of
the Employment Agreement shall survive termination of the Employment Agreement
and shall remain in full force and effect for the periods specified therein.
All references to “Company” in Section 5 of the Employment Agreement shall
be deemed to mean references to the Company as defined in this Agreement.

 

Non-Disparagement

 

13.                            The Executive agrees that he will not
wilfully, intentionally or recklessly make any public statement or instigate,
assist or participate in the making of any public statement, which would libel,
slander, or disparage (whether or not such disparagement legally constitutes
libel or slander) the Company or its past or present officers, directors and
employees. Nothing in this Section is intended to interfere with Executive’s
good faith response to any official investigation by government authorities,
lawful subpoena or discovery request, including without limitation lawful
subpoenas or discovery requests related to the Company’s Chapter 11
proceedings, and the Company agrees that any cooperation that the Executive is
requested to provide with respect to the foregoing will not be in violation of
this Section 13 or any other provision of this Agreement.

 

Consultation

 

14.                            The Executive agrees to make himself
reasonably available to the Company to respond to reasonable requests by the
Company for information concerning any litigation, regulatory inquiry or
investigation, involving facts or events relating to the Company that may be
within his knowledge. The Executive will provide a reasonable degree of
cooperation with the Company in connection with any or all future litigation or
regulatory proceedings brought by or against the Company to the extent the
Company reasonably deems the Executive’s cooperation necessary. In addition,
the Executive agrees to make himself reasonably available to the Company to
respond to reasonable requests by the Company for information related to, in
connection with or arising under the impending chapter 11 cases of the Company.
The Company agrees to reimburse the Executive for reasonable expenses incurred
in connection with Executive’s performance under this Section 14,
including without limitation travel expenses and reasonable attorneys’ fees (provided, however, that the
Executive shall be represented by one or more attorney(s) selected by the
Company unless prevented by a conflict of interest between the Company and the
Executive prohibiting such representation).

 

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Breach of Agreement

 

15.                            The Executive agrees that, without
limiting the Company’s remedies, should he fail to perform his duties and
obligations under this Agreement (including for the avoidance of doubt the
specific obligations set forth in Section 1 of this Agreement), commence,
continue, join in, or in any other manner attempt to assert any claim released
in connection herewith, or otherwise engage in a material violation (individually
or in the aggregate) of any term of this Agreement, the Company shall have no
obligation to make the Settlement Payment and shall be entitled to suspend any
further payments or benefits under this Agreement. In addition, to the maximum
extent permitted by law, the Company shall have the right to recover the
Settlement Payment (including interest thereon), together with all damages, reasonable
attorneys’ fees and costs the Company incurs in connection therewith. The
Executive further agrees that the Company shall, to the maximum extent
permitted by law, be entitled to the repayment and recovery of damages
described above without waiver of or prejudice to the release granted by him in
connection with this Agreement, and that his material violation or breach (individually
or in the aggregate) of any provision of this Agreement shall forever release
and discharge the Company from the performance of its obligations arising from
the Agreement. The parties agree that the Executive shall be given written
notice of any failure to perform, violation or breach of this Agreement and, if
curable, a reasonable opportunity to cure such breach within five (5) business
days after receipt of such notice. However, if
such failure to perform, violation or breach continues or recurs after the
first notice and, if applicable, opportunity for cure has been given, the
Company shall not be required to provide any additional notices or opportunities
to cure.

 

Entire Agreement

 

16.                            This Agreement contains the entire
agreement between the Parties concerning the subject matter hereof and, except
for the survival of Section 5 (Employment Covenants) of the Employment
Agreement for the period specified therein, supersedes all prior agreements,
understandings, discussions, negotiations, and undertakings, whether written or
oral, between the Parties or their representatives with respect thereto. This
Agreement may not be modified or amended except by a writing signed by the
Parties.

 

Indemnification

 

17.                            For the absence of doubt, the parties
acknowledge that the Executive shall be entitled to indemnification for
performance of his duties as a director and/or officer of the Company as
provided in the respective charter, bylaws and insurance policies of the
Company applicable to all other directors and officers of the Company. Executive
does not waive his rights to such indemnification by signing this Agreement.

 

Severability

 

18.                            In the event that any provision or
portion of this Agreement shall be determined to be invalid or unenforceable
for any reason, the remaining provisions or portions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

 

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Governing Law

 

19.                            This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of New York
without reference to the principles of conflicts of law.

 

Headings

 

20.                            The headings of Sections contained in
this Agreement are for convenience only and shall not be deemed to control or
affect the meaning or construction of any provision of this Agreement.

 

Counterparts

 

21.                            This Agreement may be executed in one
or more counterparts.

 

 

[Remainder of page intentionally
left blank]

 

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IN WITNESS
WHEREOF, the undersigned have executed this Agreement on the date first written
above.

 

 

	
  THOMAS
  AXMACHER

  
	
   

  
	
   

  
	
   

  	
   

  

 

 

Notarized
By:                                                      ,
this             
day of March, 2006 in city of                                 ,
county of                               ,
state of                               .

 

 

	
  CURATIVE HEALTH SERVICES,
  INC.

  
	
   

  
	
   

  
	
  By

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

7

 

Exhibit A – Form of Escrow
Agreement

 

8

 

ESCROW
AGREEMENT

 

ESCROW AGREEMENT (this “Escrow
Agreement”) is made this        day of March ,
2006, by and among Thomas Axmacher (“Axmacher”), Curative Health Services, Inc.,
a Minnesota corporation (“Curative”) on its own behalf and on behalf of its
parents, subsidiaries and affiliates, and their respective predecessors,
successors and assigns (collectively, Axmacher and Curative are the “Parties”),
and Ruskin Moscou Faltischek, P.C., a New York professional corporation (the
“Escrow Agent”).

 

W I T N E S S
E T H:

 

WHEREAS, Axmacher and Curative
are entering into that certain Settlement and Separation Agreement of even date
herewith (the “Settlement Agreement”) pursuant to which Axmacher shall continue
to perform services for Curative through and including April 30, 2006, and
Curative will pay to Axmacher the amount of $300,000;

 

WHEREAS, pursuant to the
Settlement Agreement, Curative shall obtain an irrevocable letter of credit
(“Letter of Credit”) in favor of the Escrow Agent in the amount of the
Settlement Payment.

 

WHEREAS, the execution and delivery
of this Escrow Agreement is a condition to the execution and delivery of the
Settlement Agreement;

 

WHEREAS, Curative intends to
file for protection under chapter 11 of title 11 of the United States Code with
the United States Bankruptcy Court for the Southern District of New York (the
“Bankruptcy Court”);

 

WHEREAS, capitalized terms not
otherwise defined herein shall have the meaning ascribed to them in the
Settlement Agreement; and

 

NOW, THEREFORE, in
consideration of the premises and mutual covenants herein contained, the
parties hereto hereby agree as follows:

 

1.                                 Establishment of the Escrow Account.  The Parties may establish a non-interest
bearing escrow account (the “Escrow Account”) with the Escrow Agent, bearing
the designation “Thomas Axmacher Escrow Account.”

 

2.                                 Deposits in the Escrow Account.

 

2.1                        On May 1, 2006, if permitted by the Bankruptcy Court, Curative
may wire the Settlement Payment to the Thomas Axmacher Escrow Account.  If Curative does not wire the Settlement
Payment by May 1, 2006, the Escrow Agent may draw upon the Letter of
Credit.

 

2.2                        All amounts paid by Curative or drawn under the Letter of Credit and
received by the Escrow Agent (the “Escrow Fund”) may be deposited into the
Escrow Account.  All wire transfers to
the Escrow Agent hereunder shall be in accordance with the wire transfer

 

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instructions attached hereto as “Schedule A”.  All checks deposited into the Escrow Account
shall be made payable to the order of Ruskin Moscou Faltischek, P.C. as “Escrow
Agent”.  Any check payable other than as
required hereby may be returned, and may be deemed to have not been delivered
to the Escrow Agent pursuant to the Escrow Agreement.

 

3.                                 Disbursement from the Escrow Account.

 

3.1                        The Escrow Agent may disburse the Escrow Fund to Axmacher on or
after May 8, 2006 unless Curative shall have delivered to the Escrow Agent
a notice that payment of the Escrow Fund is in dispute (the “Notice of
Dispute”).

 

3.2                        Upon receipt by the Escrow Agent of a Notice of Dispute, the Escrow
Agent shall not disburse the Escrow Fund until receipt of written notice
executed by both Curative and Axmacher indicating that the dispute is resolved
or an Order from a court having jurisdiction over the matter (the “Resolution
Notice”) after which the Escrow Agent may distribute the Escrow Fund only in
accordance with the terms set forth in the Resolution Notice.

 

3.3                        Upon disbursement of the Escrow Fund pursuant to the terms of this Section 3,
the Escrow Agent shall be relieved of all further obligations and released from
all liability under this Escrow Agreement. 
It is expressly agreed and understood that in no event may the aggregate
amount of payments made by the Escrow Agent exceed the amount of the Escrow
Fund.

 

4.                                 Rights, Duties and Responsibilities of Escrow Agent.  It is understood and agreed
that the duties of the Escrow Agent are purely ministerial in nature, and that:

 

4.1                        If there is any discrepancy between the amount set forth in any
deposit or transfer information and the amount delivered to the Escrow Agent
therewith, such amount need not be accepted by the Escrow Agent for deposit in
the Escrow Account until such discrepancy has been resolved.

 

4.2                        The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder.

 

4.3                        The Escrow Agent shall be entitled to rely upon the accuracy of, act
in reliance upon the contents of, and assume the genuineness of, any notice,
instruction, certificate, signature, instrument, or other document which is
given to the Escrow Agent without verifying the truth or accuracy thereof.  The Escrow Agent shall not be obligated to
make any inquiry as to the authority, capacity, existence, or identity of any
person purporting to give any such notice or instructions, or as to the
execution of any such certificate, instrument or other document.

 

4.4                        If the Escrow Agent:  (i) shall
be uncertain as to its duties or rights hereunder; or (ii) shall receive
instructions with respect to the Escrow Account or the Escrow Fund which it, in
its sole judgment, deems in conflict either with other instructions received by
it or with any provision of this Escrow Agreement; or (iii) shall receive
a Notice of Dispute, it may be entitled to hold the Escrow Fund, or a portion
thereof, in the Escrow Account pending the resolution of such uncertainty to
the Escrow Agent’s sole satisfaction, by final non-appealable court order of a

 

10

 

court of competent jurisdiction or otherwise,
or the Escrow Agent, at its sole option, may deposit the Escrow Fund (and any
other amounts that thereafter become a part of the Escrow Fund) with the Clerk
of a court of competent jurisdiction in a proceeding to which all parties in interest
are joined.  Upon the deposit by the
Escrow Agent of the Escrow Fund with the Clerk of any court, the Escrow Agent
shall be relieved of all further obligations and released from all liability
hereunder.  Any court order referred to
above shall be accompanied by a legal opinion by counsel for the presenting
party satisfactory to the Escrow Agent to the effect that said court order is
final and non-appealable.

 

4.5                        The Escrow Agent shall not be liable for any action taken or omitted
hereunder, or for the misconduct of any employee, agent, or attorney appointed
by it, except in the case of willful misconduct or gross negligence.  The Escrow Agent shall be entitled to consult
with the counsel of its own choosing and shall not be liable for any action
taken, suffered, or omitted by it in accordance with the advice of such
counsel.

 

4.6                        The Escrow Agent makes no representation as to the validity, value,
genuineness, or collectability of any security or other documents or
instruments held by or delivered to it.

 

4.7                        The Escrow Agent shall have no responsibility at any time to
ascertain whether any security interest exists in the Escrow Fund or any part
thereof, or to file any financing statement under the Uniform Commercial Code
with respect to the Escrow Fund or any part thereof.

 

4.8                        Notwithstanding any provision in this Escrow Agreement to the
contrary, the Escrow Agent shall have no duty or obligation to invest any
amounts received.

 

4.9                        The Escrow Agent shall not be under any duty to give the escrowed
property held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held
hereunder.  Uninvested funds held
hereunder shall not earn or accrue interest.

 

4.10                  This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto.  No implied duties or obligations shall be
read into this Escrow Agreement against the Escrow Agent.

 

4.11                  The Escrow Agent does not have any interest in the escrowed property
deposited hereunder but is serving as escrow holder only.

 

4.12                  The Escrow Agent shall not be called upon to advise any party as to
the wisdom in taking or refraining from any action with respect to any monies
deposited in the Escrow Account.

 

4.13                  Each party to this Escrow Agreement hereby irrevocably agrees that
any legal action or proceeding arising out of or relating to this Escrow
Agreement may be brought in the courts of the State of New York located in New
York City or of the United States of America for the Southern District of New
York including the Bankruptcy Court, and hereby expressly

 

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submits to the personal jurisdiction and
venue of such courts for the purposes thereof and expressly waives any claim of
improper venue and any claim that such courts are an inconvenient forum.  Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts pursuant to a
contractual provision in any such suit, action, or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the
addresses first set forth above, such service to become effective 10 days after
such mailing. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE
WAIVED, EACH PARTY HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM
IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT
OF OR BASED UPON THIS ESCROW AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT
OR OTHERWISE.

 

4.14                  (a)                               It is agreed that the duties and obligations of the Escrow Agent
with respect to the Escrow Fund are only such as are herein specifically
provided and no other.  The Escrow Agent’s
duties are as a depositary only, and the Escrow Agent shall incur no liability
whatsoever, except for its willful misconduct or gross negligence.  The Escrow Agent may consult with counsel of
its choice, and shall not be liable for any action taken, suffered or omitted
by it in accordance with the advice of such counsel.  The Escrow Agent shall not be bound by any modification,
amendment, termination, cancellation, rescission or supersession of this Escrow
Agreement unless the same shall be in writing and signed by or on behalf of
each of the parties and agreed to by the Escrow Agent.  In the event that the Escrow Agent shall be
uncertain as to its duties or rights hereunder or shall receive instructions,
claims or demands which, in its opinion, are in conflict with any of the
provisions of this Escrow Agreement, it shall be entitled to refrain from
taking any action other than to keep safely, all property held in escrow until
it shall jointly be directed otherwise in writing by the parties or by an order
or judgment of a court of competent jurisdiction.

 

(b)                     Escrow Agent, at any time, deems it necessary or advisable to
relinquish custody of the Escrow Fund, it may do so by delivering the same to
any other escrow agent mutually agreeable to the parties, and if no such Escrow
Agent shall be selected, then the Escrow Agent may do so by delivering the
Escrow Fund (a) to any bank or trust company located in the State of New
York, which is willing to act as escrow agent hereunder in place and instead of
the Escrow Agent or (b) to the clerk or other proper officer of a court of
competent jurisdiction as may be permitted under the terms and conditions of
this Agreement and by law within the State of New York.  The fee of any such bank or trust company or
court officer shall be paid by the Parties, each of which shall be responsible
for one-half (1/2) of said fees..  Upon
such delivery, the Escrow Agent shall be discharged from any and all
responsibility or liability with respect to the Escrow Fund except as herein
provided.

 

5.                                 Indemnification of Escrow Agent.  The parties hereto jointly and severally
agree to indemnify the Escrow Agent and to hold the Escrow Agent harmless from
any loss, liability and expenses incurred without willful misconduct, bad faith
or gross negligence on the part of the Escrow Agent arising out of or in
connection with the acceptance or administration by the Escrow Agent of its
duties hereunder including the legal fees, costs and expenses of defending

 

12

 

itself against
any claims of liability hereunder.

 

6.                                 Fees and Expenses.  The Escrow Agent shall not be entitled to any
fees in consideration for its services hereunder.  The Parties agree to reimburse the Escrow
Agent for all reasonable expenses incurred by the Escrow Agent in connection
with its services hereunder.  Each of the
parties shall be responsible for one-half (1/2) of any reasonable expenses
incurred by the Escrow Agent.

 

7.                                 Governing Law and Assignments.  This Escrow Agreement shall be construed in
accordance with and governed by the laws of the State of New York (without
reference to its rules as to conflicts of laws), and shall be binding upon
the parties hereto and their respective successors and assigns; provided,
however, any assignment or transfer by any party of its rights under this
Escrow Agreement or with respect to the Escrow Fund shall be void as against
the Escrow Agent unless (a) written notice thereof shall be given to the
Escrow Agent, and (b) the Escrow Agent has consented in writing to such
assignment or transfer.

 

8.                                 Escrow Agent as Counsel to Axmacher.  The Parties acknowledge that Escrow Agent has
acted as counsel for Axmacher. The parties further acknowledge and consent that
except as provided for herein, no action taken by Ruskin Moscou Faltischek,
P.C. as Escrow Agent hereunder shall preclude it from acting as counsel for
Axmacher, or related party of
Axmacher in any matter related hereto or otherwise.

 

9.                                 Notices. 
All notices required to be given in connection with this Escrow
Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by regular first
class mail, to the addresses first set forth above or to such other address(es)
as shall be specified by any party by notice given as aforesaid.

 

10.                           Execution in Several Counterparts.  This Escrow Agreement may be executed in
several counterparts or by separate instruments and all of such counterparts
and instruments shall constitute one agreement which is binding on all of the
parties hereto.

 

11.                           Entire Agreement.  This Escrow Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings (written or oral) of the
parties in connection herewith.

 

13

 

IN WITNESS WHEREOF, the
undersigned have executed this Escrow Agreement as of the day and year first
above written.

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Thomas Axmacher

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CURATIVE HEALTH SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RUSKIN MOSCOU FALTISCHEK, P.C.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  ,
  Escrow Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

14

 

Exhibit B
– Form of Waiver and Release

 

This is your RELEASE with Curative Health Services, Inc., a
Minnesota corporation (“Curative”), and
all of its parents, subsidiaries and affiliates, and their respective
predecessors, successors and assigns (collectively, with Curative, referred to
herein as the “Company”).

 

Your Employment Agreement

 

This Release
relates to your Settlement and Separation Agreement dated as of March     ,
2006 (your “Separation Agreement”).

 

Release of Claims

 

(a)                        Released Claims. In consideration of the payments and benefits
described in your Separation Agreement, you release and discharge the Company
and its subsidiaries, affiliates, officers, directors, employees, agents and
their successors and assigns (the “Group Released Parties”)
from any and all rights, claims, charges, actions or causes of action (collectively,
“Claims”) that you may have, whether
known or unknown, from the beginning of time through the Effective Date. Without
limitation, released Claims include Claims under United States federal, state
or local law and the national or local law of any foreign country (statutory or
decisional), for wrongful or abusive discharge, for breach of any contract, for
impairment of economic opportunity, for defamation, for intentional infliction
of emotional distress, or for discrimination based upon race, color, ethnicity,
sex, age, national origin, religion, disability, sexual orientation, or any
other unlawful criterion or circumstance. The released Claims include, but are
not limited to, rights or claims under the Age Discrimination in Employment Act
of 1967, the Older Workers Benefit Protection Act of 1990, Title VII of the
Civil Rights Act of 1964, the Civil Rights Act of 1871, the Civil Rights Act of
1991, the Fair Labor Standards Act, the Employee Retirement Income Security
Act, the Americans with Disabilities Act, the Family and Medical Leave Act of
1993, the New York State Labor Law, the New York State Human Rights Law and the
New York City Human Rights Law.

 

(b)                       Exceptions. Notwithstanding Section (a) above,
this Release shall not limit in any way your ability to bring an action to
enforce your rights under your Separation Agreement.

 

(c)                        Representations and Warranties. You represent and warrant that you
have not, and as of the Effective Date (as defined below) will not have, filed
any civil action, suit, arbitration, administrative charge, or legal proceeding
against any Group Released Party nor have you assigned, pledged, or
hypothecated as of the Effective Date any Claim to any person and no other
person has an interest in the claims that you are releasing herein.

 

(d)                       No Relief for Released Claims. You agree that should any person or
entity file or cause to be filed any civil action, suit, arbitration or other
legal proceeding seeking equitable or monetary relief concerning any Claim
released by you, you will not seek or accept any personal relief from or as the
result of the action, suit, arbitration or proceeding.

 

15

 

Your Understanding of this Release and Your Rights

 

You acknowledge
and agree that you have read this Release in its entirety and that this Release
releases known and unknown Claims, including, without limitation, to rights and
claims arising under ADEA. You further acknowledge and agree that:

 

(a)                        You are entering into this Release and releasing,
waiving and discharging rights or claims only in exchange for consideration
which you are not already entitled to receive.

 

(b)                       You have been advised, and are being advised by
the terms of the Release, to consult with an attorney before executing this
Release. You also acknowledge that you chose and consulted with the counsel of
your choice concerning your rights and that your counsel negotiated this
Release on your behalf.

 

(c)                        You have been advised, and are being advised by
the terms of this Release, that you have had at least 21 days within which to
consider this Release.

 

Your Ability to Revoke this Release; Effective Date

 

You may revoke
this Release within 7 days of signing (for any reason or no reason) by
complying with the following sentence. To revoke this Release, you must deliver
(or cause to be delivered) written notice of your revocation to the Company at [Address and Contact Person]
no later than 5:00 p.m. E.S.T. on [Date]. If you revoke this Release in accordance with the
preceding sentence, it will become null and void. If you do not, this Release
will become effective at such time (the “Effective Date”).

 

Your Separation Agreement

 

For the avoidance
of doubt, the Company’s rights and your obligations under your Separation
Agreement will continue in full force and effect.

 

Governing Law

 

This Release
shall be governed by and construed in accordance with the laws of the State of
New York.

 

	
  Accepted and Agreed:

  
	
   

  
	
   

  
	
   

  	
   

  
	
   

  
	
  Date:

  

 

16EXHIBIT 10.1

 

 

EMPLOYMENT CONTRACT

 

This Employment Contract
is entered into by and between Westaff Support, Inc. (“Westaff”) and

 

	
  John P. Sanders

  	
  (“you”).

  
	
  (full name of
  Employee)

  	
   

  

 

Westaff hereby agrees to
hire you or continue your employment and you agree to accept employment or
continue your employment with Westaff upon the following terms and conditions:

 

1.                                      Duration.
Your employment shall start or continue as of February 20, 2001 and shall continue
thereafter until terminated by either party. Westaff will give you two weeks’
advance notice of termination, or pay in lieu of notice. However, Westaff will
not be obliged to give you such advance notice or pay if:

 

a.                                       Termination
occurs during the first year of your employment; or

 

b.                                      You
are a part-time employee; or

 

c.                                       You
accept an offer of employment with a business competitive to Westaff; or

 

d.                                      You
are terminated for misconduct, violation of this Contract or violation of
Westaff’s policies or rules as set forth in Westaff’s Employee Handbook or
otherwise made known to you.

 

2.                                      Terminable-At-Will.
You are a “terminable-at-will” employee. You may resign at any time with
or without a reason. Likewise, Westaff may dismiss you at any time with or
without cause. You acknowledge that there are no other express or implied
agreements between you and Westaff for any specific period of employment, or
for continuing or long-term employment.

 

3.                                      Pay.
You will be paid a beginning salary of $140,000.00 per year or wage of $ n/a per
hour. Your pay may be revised without impairing the effectiveness of any
other provisions of this Contract. Your pay will be paid in equal installments
every two weeks. Each pay period is distinct and severable and your employment
for part of a pay period or part of a year will not entitle you to
pay for more than the time you actually worked. In the event your employment
terminates during a pay period, your pay will be prorated to the date of
termination and will include earned vacation pay, if any.

 

4.                                      Confidentiality.
Westaff is a provider of staffing and employment services. You acknowledge that
by virtue of your employment, you will become familiar with or have access to
Westaff’s valuable proprietary information, confidential data and trade secrets
which include, but are not limited to, customers’ and employees’ names,
addresses and telephone numbers, bill and pay rates, employees’ pay and skills,
ordering sources, statistical information, sales techniques, methods of
operation, advertising materials, forms and operating manuals. As the
misappropriation of such information, data or secrets would result in great damage
or loss to Westaff, you agree not to use any of it for your own benefit and not
to disclose it to, or allow the use of it by any person, firm or corporation,
whether during your Westaff employment or thereafter.

 

5.                                      Non-Diversion.
You agree that you will not, directly or indirectly, either for yourself or for
any other person, firm or corporation solicit or attempt to divert any Westaff
customer or recruit any Westaff employee during your Westaff employment and for
a period of one year thereafter. For purposes of this paragraph, a Westaff
customer is defined as any person, firm or corporation that Westaff has
serviced within one year preceding the termination of your employment and with
whom you have had contact on behalf of Westaff, and a Westaff employee is
defined as any person who has received salary or wages from Westaff within one year
preceding the termination of your employment.

 

 

6.                                      Non-Competition. You agree to devote
your best efforts to the performance of your Westaff duties and to perform no
acts detrimental to Westaff’s best interests. You will not engage in any other
business or work for any other person or entity during your Westaff workday.  While employed by Westaff, you will not engage
in any competitive staffing or employment services business. You further agree
that you will not engage in a competitive staffing or employment services
business, in a same or similar capacity in which you were employed by Westaff,
for yourself or for any other person, firm or corporation, within a radius of
twenty-five miles from the Westaff office(s) where you were working, for a
period of one year after the termination of your Westaff employment.

 

7.                                      Authority.
You shall have no authority to enter into any contract or agreement or
otherwise bind Westaff without the prior consent of an officer of Westaff.

 

8.                                      Property.
Upon termination of your employment, you agree to immediately deliver to
Westaff all equipment, supplies, keys, manuals, monies, overpayments, lists,
records, resumes, diskettes or other material related to the business of
Westaff and all Westaff property of whatever nature in your possession or control
or which you may have entrusted to any other party.

 

9.                                      Violation.
You acknowledge that the obligations and restrictions set forth in this
Contract are reasonably necessary for the protection of Westaff’s business,
goodwill, property, and customer and employee relationships. You recognize that
irreparable damage will result to Westaff in the event of any violation of this
Contract and hereby agree to the issuance of a restraining order and/or an
injunction against you for such a violation, in addition to any other legal or
equitable remedies Westaff may have.

 

10.                               Assignment.
Westaff’s rights and/or duties under this Contract may be assigned or
delegated to any successor of Westaff. However, you may assign none of
your rights and/or duties under this Contract to any other party.

 

11.                               Modification.
The terms of this Contract may be amended, modified or replaced only by a subsequent
written agreement signed by you and an authorized representative of Westaff.

 

12.                               Severability.
Every provision of this Contract is distinct and severable. If any such
provision is held to be illegal, unenforceable or void, it shall not affect the
legality, enforceability or validity of any of the other provisions.

 

13.                               Acknowledgment.
You hereby acknowledge that you have read and understood this Contract. By signing
below, you acknowledge receipt of a copy of this Contract and agree to abide by
its terms and conditions.

 

 

	
  EMPLOYEE:

  	
    /s/ John P.
  Sanders

  	
   

  	
  DATE:

  	
    2/20/01

  
	
   

  	
  (Signature of
  employee)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WESTAFF SUPPORT, INC.:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ Cameron
  Wheeler

  	
   

  	
  LOCATION:

  	
    Walnut Creek,
  CA / 9913 HR

  
	
   

  	
  (Signature of
  Westaff representative)

  	
   

  	
   

  	
  (City, State and
  Westaff Department)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TITLE:

  	
  HR Coordinator

  	
   

  	
   

  	
   

  
								

 

 

ADDENDUM TO EMPLOYMENT CONTRACT

 

This
Addendum to Employment Contract (“this Addendum”) is entered into by and
between Westaff Support, Inc. (“Westaff”) and John P. Sanders (“you”) with
respect to the standard form of “at will” Employment Contract between the
parties dated February 20, 2001 (“the Employment Contract”). The parties
hereby modify the Employment Contract to reflect that your employment will
continue on the following additional terms and conditions:

 

1.               Paragraph 1 entitled “Duration” is modified
to delete the second sentence in its entirety and to

replace that sentence with the following sentence:   “Westaff will give you thirty (30) calendar
days’

advance notice of termination.”

 

2.               Paragraph 1 entitled “Duration” is further
modified to delete subparagraph a in its entirety.

 

3.               In all other respects, the terms and
conditions of the Employment Contract shall remain in full

force and effect as originally stated.

 

4.               You hereby acknowledge that you have read and
understood this Addendum. By signing

below, you acknowledge receipt of a copy of this Addendum and agree to abide by
its terms and

conditions.

 

 

	
   

  	
  EMPLOYEE:

  	
   

  
	
   

  	
   

  
	
   

  	
    /s/
  John P. Sanders

  	
   

  	
  Date:

  	
    1/2/02

  	
   

  
	
   

  	
  John P. Sanders

  	
   

  
	
   

  	
   

  
	
   

  	
  WESTAFF
  SUPPORT, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Dirk A. Sodestrom

  	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
  Dirk A. Sodestrom

  	
   

  	
  and
  Chief Financial Officer

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