Document:

exv10w7

Exhibit 10.7

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of January
31, 2011, by and between Acadia Management Company, Inc., a Delaware corporation (the
“Company”), and Joey A. Jacobs (“Executive”).

          In consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     1. Employment; Employment Period. The Company shall employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the date hereof and ending on the date on which Executive’s
employment is terminated pursuant to Section 4 hereof (the “Employment Period”).
The place of employment of Executive shall be the principal executive offices and corporate
headquarters of the Company and Holdings, which, during the Employment Period, shall be located in
Davidson County or Williamson County, Tennessee upon the relocation of such headquarters from
Atlanta, Georgia as soon as reasonably practical after the date hereof.

     2. Position and Duties.

          (a) Position; Responsibilities. During the Employment Period, Executive shall serve as
the Chief Executive Officer of the Company and shall have the normal duties, responsibilities,
functions and authority of a chief executive officer, subject to the power and authority of the
board of managers (the “Board”) of Acadia Healthcare Holdings, LLC, a Delaware limited
liability company (“Holdings”), to expand or limit such duties, responsibilities, functions
and authority within the scope of duties, responsibilities, functions and authority associated with
the position of chief executive officer and to overrule actions of officers of the Company. During
the Employment Period, Executive shall be Chairman of the Board.

          (b) Reporting; Performance of Duties. Executive shall report to the Board and devote
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 Holdings and the Subsidiaries. So
long as Executive is employed by the Company, Executive shall not, without the prior written
consent or approval of the Board, perform other services for compensation. Notwithstanding the
foregoing, nothing herein shall preclude Executive from (i) serving, with the prior written consent
of the Board, as a member of the boards of directors or advisory boards (or their equivalents in
the case of a non-corporate entity) of for-profit companies or businesses which are not directly
competitive with the Company or any Subsidiary (provided that the prior written consent of
the Board shall not be required for Executive to serve as a member of the boards of directors or
advisory boards (or their equivalents) of the companies listed on Schedule 2(b)), (ii)
engaging in charitable activities and community affairs (including serving as a member of the
boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity)
of not-for-profit, charitable or community organizations which are not directly competitive with
the Company or any Subsidiary); provided, however, the activities set out in
clauses (i) and (ii) above shall be limited by Executive so as not to materially interfere,
individually or in the aggregate, with the performance of his duties and responsibilities
hereunder. For the avoidance of doubt, so long as Executive is employed by the Company, Executive
shall not provide any services to any company or business that is directly competitive with
Holdings or the Subsidiaries (whether for-profit or not-for-profit) without the prior written
consent of the Board.

 

 

     3. Compensation and Benefits.

          (a) Base Salary. During the Employment Period, Executive’s base salary shall be
$240,000 per annum, subject to increase by the Board in its sole discretion on an annual basis (as
adjusted from time to time, the “Base Salary”), which salary shall be payable by the
Company in regular installments in accordance with the Company’s general payroll practices (as in
effect from time to time). The Base Salary for any partial year during the Employment Period will
be based upon the actual number of days elapsed in such year.

          (b) Business Expenses. During the Employment Period, the Company shall reimburse
Executive in the calendar year in which they are incurred for all reasonable out-of-pocket business
expenses incurred by him in the course of performing his duties and responsibilities under this
Agreement which are consistent with the Company’s policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to the Company’s requirements with
respect to reporting and documentation of such expenses. The Company also will reimburse Executive
promptly following the date hereof (and in any event prior to December 31, 2011) for all reasonable
out-of-pocket business expenses incurred by him prior to the date of this Agreement in connection
with Executive’s meetings with various principals of and investors in Holdings and the Subsidiaries
subject to the Company’s requirements with respect to reporting and documentation of such expenses.
The Company’s aggregate reimbursement obligations under the immediately preceding sentence, and
the corresponding provisions of the employment agreements entered into simultaneously herewith,
shall not exceed $10,000, and, to the extent that Executive submits expenses which, when aggregated
with the others’, exceed $10,000, then Executive and such others shall determine among themselves
the apportionment of such $10,000, and, notwithstanding any such apportionment, the Company shall
have no further obligation or liability to Executive.

          (c) Bonus. In addition to the Base Salary, during each calendar year during the
Employment Period beginning with the year ending December 31, 2011, Executive will be eligible to
earn a target annual bonus of up to 100% of his Base Salary for such year, if and only if
Executive, Holdings and the Subsidiaries achieve the performance criteria specified by the Board or
the Compensation Committee (if there is one) for such year, as determined by the Board or such
Compensation Committee (if there is one) in its sole discretion. Schedule 3(c) sets forth
the performance criteria and relative weight of each for the calendar year (and only for the
calendar year) ending December 31, 2011. Unless otherwise agreed to by Executive, any such bonus
amount for any year shall be earned (if awarded) on the last day of such year and paid by the
Company no later than the earlier of (x) the date that is ten (10) business days after the
Company’s receipt of its audited financial statements for the calendar year with respect to which
such bonus has been earned and (y) December 31 of the calendar year following such year with
respect to which such bonus has been earned.

          (d) Benefits. In addition to (but without duplication of) the Base Salary and any
bonuses payable to Executive pursuant to this Section 3, Executive shall be entitled to
participate at his sole discretion in all of the Company’s employee benefit programs for which
senior executive employees of the Company are generally eligible even though Executive may receive
certain health and welfare benefits through November 15, 2013 as a result of Executive’s service
with his prior employer.

     4. Termination.

          (a) Termination. The Employment Period shall terminate automatically and immediately
upon Executive’s resignation for any reason (whether with Good Reason or without Good Reason and
including in connection with a No-Fault Termination), Executive’s death or becoming Disabled, or
upon the termination of Executive’s employment by the Company (through action by the

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Board) for any reason (whether for Cause or without Cause and including in connection with a
No-Fault Termination). The date on which Executive ceases to be employed by the Company is referred
to herein as the “Termination Date.”

          (b) Termination without Cause or with Good Reason. If the Employment Period is
terminated by the Company without Cause (other than in connection with a No-Fault Termination) or
by Executive with Good Reason, then Executive shall be entitled to receive:

          (i) Executive’s unpaid Base Salary through the Termination Date (payable in accordance
with Section 3(a));

          (ii) any bonus amounts under Section 3(c) to which Executive is entitled
determined by reference to the calendar year that ended on or prior to the Termination Date
(payable at the same time it would have been paid pursuant to Section 3(c));

          (iii) the greater of (A) the maximum bonus amount to which Executive would be entitled
under Section 3(c) with respect to the calendar year in which the Termination Date
occurs, determined as if Executive, Holdings and the Subsidiaries have exceeded all of the
performance objectives specified in Executive’s bonus plan for such year, whether or not
such objectives actually have been achieved as of the Termination Date, which amounts shall
be prorated based on the actual number of days elapsed in such year prior to the Termination
Date, and (B) if Executive’s bonus plan has not been determined for the calendar year in
which the Termination Date occurs, the maximum bonus amount to which Executive would be
entitled under Section 3(c) with respect to the calendar year that ended prior to the
Termination Date, determined as if Executive, Holdings and the Subsidiaries have exceeded
all of the performance objectives specified in Executive’s bonus plan for such year, whether
or not such objectives actually have been achieved as of the Termination Date, which amount
shall be prorated based on the actual number of days elapsed in such year prior to the
Termination Date (in either case, payable at the same time it would have been paid pursuant
to Section 3(c));

          (iv) an amount equal to twenty-four (24) months of Executive’s Base Salary as in effect
on the Termination Date (such 24-month period, the “Severance Period”), which shall
be payable pro rata over the Severance Period in regular installments in accordance with the
Company’s general payroll practices as in effect on the Termination Date, but in no event
less frequently than monthly;

          (v) payment in respect of any unused paid time off and sick pay of Executive in such
amounts as have accrued as of the Termination Date in accordance with the Company’s policies
with respect thereto as in effect during the Employment Period, and reimbursement of any
business expenses incurred by Executive but not reimbursed prior to the Termination Date in
accordance with and reimbursable under the terms of the Company’s policies with respect
thereto as in effect on the Termination Date (in each case, payable in a lump sum within ten
(10) business days after the Termination Date); and

          (vi) an amount equal to the cost of the premiums for continued health and dental
insurance for Executive and/or Executive’s dependents in accordance with the Consolidated
Budget Reconciliation Act of 1985 (“COBRA”) for the period commencing on the
Termination Date and ending on the date on which the Severance Period expires (payable in
monthly installments during and concurrently with Executive’s COBRA period);
provided that if Executive’s COBRA period is terminated or expires prior to
expiration of the Severance Period, then Executive shall be entitled to continue to receive
an amount equal to the cost of the

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premiums for continued health and dental insurance for Executive and/or Executive’s
dependents in accordance with COBRA (assuming such continued insurance coverage remained
available at the same monthly cost) for the period commencing on the date of such
termination or expiration and ending on the date on which the Severance Period expires.

Notwithstanding the foregoing, Executive shall be entitled to receive such payments only so long as
Executive has not breached any of the provisions of Sections 5, 6 and 7
hereof.

Notwithstanding any other payment schedule provided herein to the contrary, if Executive is deemed
on the Termination Date to be a “specified employee” within the meaning of that term under Code
Section 409A(a)(2)(B), then any payment that is considered deferred compensation under Code Section
409A payable on account of a “separation from service” shall be made on the date which is the
earlier of (i) the expiration of the six (6)-month period measured from the date of such
“separation from service” of Executive and (ii) the date of Executive’s death (the “Delay
Period”) to the extent required under Code Section 409A. Upon the expiration of the Delay
Period, all payments delayed pursuant to the immediately preceding sentence (whether they otherwise
would have been payable in a single sum or in installments in the absence of such delay) shall be
paid to Executive in a lump sum, and all remaining payments due under this Agreement shall be paid
or provided in accordance with the normal payment dates specified for them herein. In addition, if
Executive is a “specified employee,” to the extent that welfare benefits to be provided to
Executive pursuant to this Agreement are not “disability pay,” “death benefit” plans or non-taxable
medical benefits within the meaning of Treasury Regulation Section 1.409A-1(a)(5) or other benefits
not considered nonqualified deferred compensation within the meaning of that regulation, such
provision of benefits shall be delayed until the end of the Delay Period. Notwithstanding the
foregoing, to the extent that the previous sentence applies to the provision of any ongoing health
or welfare benefits that would not be required to be delayed if the premiums were paid by
Executive, Executive shall pay the full cost of the premiums for such benefits during the Delay
Period and the Company shall pay Executive an amount equal to the amount of such premiums paid by
Executive during the Delay Period within ten (10) days after the end of Delay Period.

          (c) Termination by Death or Disability. If the Employment Period is terminated due to
Executive’s death or becoming Disabled, then Executive (or his estate or beneficiary) shall be
entitled to receive:

          (i) Executive’s unpaid Base Salary through the Termination Date (payable in accordance
with Section 3(a));

          (ii) any bonus amounts under Section 3(c) to which Executive is entitled
determined by reference to the calendar year that ended on or prior to the Termination Date
(payable at the same time it would have been paid pursuant to Section 3(c));

          (iii) the greater of (A) the maximum bonus amount to which Executive would be entitled
under Section 3(c) with respect to the calendar year in which the Termination Date
occurs, determined as if Executive, Holdings and the Subsidiaries have exceeded all of the
performance objectives specified in Executive’s bonus plan for such year, whether or not
such objectives actually have been achieved as of the Termination Date, which amounts shall
be prorated based on the actual number of days elapsed in such year prior to the Termination
Date, and (B) if Executive’s bonus plan has not been determined for the calendar year in
which the Termination Date occurs, the maximum bonus amount to which Executive would be
entitled under Section 3(c) with respect to the calendar year that ended prior to
the Termination Date, determined as if Executive, Holdings and the Subsidiaries have
exceeded all of the performance objectives specified in Executive’s bonus plan for such
year, whether or not such objectives

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actually have been achieved as of the Termination Date, which amount shall be prorated
based on the actual number of days elapsed in such year prior to the Termination Date (in
either case, payable at the same time it would have been paid pursuant to Section
3(c));

          (iv) payment in respect of any unused paid time off and sick pay of Executive in such
amounts as have accrued as of the Termination Date in accordance with the Company’s policies
with respect thereto as in effect during the Employment Period, and reimbursement of any
business expenses incurred by Executive but not reimbursed prior to the Termination Date in
accordance with and reimbursable under the terms of the Company’s policies with respect
thereto as in effect on the Termination Date (in each case, payable in a lump sum within ten
(10) business days after the Termination Date); and

          (v) an amount equal to the cost of the premiums for continued health and dental
insurance for Executive and/or Executive’s dependents in accordance with COBRA for the
period commencing on the Termination Date and ending on the earliest of (A) the date on
which Executive’s COBRA period terminates or expires, (B) the date on which the Disability
Severance Period expires, and (C) the date on which benefits have commenced under the
Company’s long-term disability program, if any (payable in monthly installments during and
concurrently with Executive’s COBRA period); provided that if Executive’s COBRA
period is terminated prior to expiration of the Disability Severance Period, then Executive
shall be entitled to continue to receive an amount equal to the cost of the premiums for
continued health and dental insurance for Executive and/or Executive’s dependents in
accordance with COBRA (assuming such continued insurance coverage remained available at the
same monthly cost) payable in monthly installments during the period commencing on the date
of such termination or expiration and ending on the date on which the Disability Severance
Period expires.

In addition, if the Employment Period is terminated due to Executive’s becoming Disabled (but, for
the avoidance of doubt, not due to his death), then Executive (or his estate or beneficiary) shall
be entitled to receive, during the period commencing on the Termination Date and ending on the
earlier of (A) the date on which Executive becomes eligible for long-term disability benefits under
any long-term disability program sponsored by the Company, and (B) six (6) months after the
Termination Date (such period, the “Disability Severance Period”), continued installment
payments of Executive’s Base Salary as in effect on the Termination Date, which shall be payable
over the Disability Severance Period in regular installments in accordance with the Company’s
general payroll practices as in effect on the Termination Date, but in no event less frequently
than monthly.

          (d) No-Fault Termination. If the Employment Period is terminated in connection with a
No-Fault Termination, then (i) the Company shall pay Executive (A) Executive’s unpaid Base Salary
through the Termination Date (payable in accordance with Section 3(a)) and (B) any bonus
amount under Section 3(c) to which Executive is entitled determined by reference to the
calendar year that ended on or prior to the Termination Date (payable at the same time it would
have been paid pursuant to Section 3(c)), and (ii) Section 7 shall terminate and
have no further force or effect; provided that such termination will not relieve Executive
of any liability for breach of Section 7 prior to such termination.

          (e) Other Termination. If the Employment Period is terminated (i) by the Company for
Cause, or (ii) by Executive’s resignation without Good Reason, then the Company shall pay Executive
(A) Executive’s unpaid Base Salary through the Termination Date (payable in accordance with
Section 3(a)) and (B) any bonus amount under Section 3(c) to which Executive is
entitled determined by reference to the calendar year that ended on or prior to the Termination
Date (payable at the same time it would have been paid pursuant to Section 3(c)).

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          (f) Interest. Without limiting the rights of Executive at law or in equity, if the
Company fails to make any payment required to be made hereunder on a timely basis, the Company will
pay interest on the amount thereof at an annualized rate of interest equal to the so-called
composite “prime rate” as quoted from time to time during the relevant period in The Wall
Street Journal. Such interest will be payable as it accrues on demand. Any change in such prime
rate will be effective on and as of the date of such change.

          (g) No Other Benefits. Except as otherwise expressly provided herein, Executive shall
not be entitled to any other salary, bonuses, employee benefits or compensation from Holdings or
the Subsidiaries from and after the Termination Date, and all of Executive’s rights to salary,
bonuses, employee benefits and other compensation hereunder which would have accrued or become
payable from and after the Termination Date (other than vested retirement benefits accrued on or
prior to the Termination Date, accrued life and disability insurance benefits or other amounts
owing hereunder as of the Termination Date that have not yet been paid) shall cease upon the
Termination Date, other than those expressly required under applicable law (such as COBRA).

          (h) No Mitigation. Executive is under no obligation to mitigate damages or the amount
of any payment provided for under this Section 4 by seeking other employment or otherwise.

          (i) Right of Offset. The Company may offset any bona fide obligations that Executive
owes Holdings or any of the Subsidiaries (which for the avoidance of doubt shall not include any
unliquidated obligations or obligations to the extent Executive disputes in good faith the nature
or amount thereof) against any amounts the Company or any of the Subsidiaries owes Executive
hereunder; provided that, notwithstanding the foregoing or any other provision of this
Agreement to the contrary, in no event shall any payment under this Agreement that constitutes
“deferred compensation” for purposes of Code Section 409A be subject to offset, counterclaim or
recoupment by any other amount unless otherwise permitted by Code Section 409A.

          (j) Section 409A Compliance.

          (i) The intent of the parties is that payments and benefits under this Agreement comply
with Internal Revenue Code Section 409A and the regulations and guidance promulgated
thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum
extent permitted, this Agreement shall be interpreted to be in compliance therewith. In no
event whatsoever shall Holdings or any of the Subsidiaries be liable for any additional tax,
interest or penalty that may be imposed on Executive by Code Section 409A or damages for
failing to comply with Code Section 409A.

          (ii) A termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or benefits upon or
following a termination of employment unless such termination is also a “separation from
service” within the meaning of Code Section 409A and, for purposes of any such provision of
this Agreement, references to a “termination,” “termination of employment,” “termination of
the Employment Period” or like terms shall mean “separation from service.”

          (iii) All expenses or other reimbursements under this Agreement shall be made on or
prior to the last day of the taxable year following the taxable year in which such expenses
were incurred by Executive (provided that if any such reimbursements constitute taxable
income to Executive, such reimbursements shall be paid no later than March 15th of the
calendar year following the calendar year in which the expenses to be reimbursed were
incurred),

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and no such reimbursement or expenses eligible for reimbursement in any taxable year
shall in any way affect the expenses eligible for reimbursement in any other taxable year.

          (iv) For purposes of Code Section 409A, Executive’s right to receive any installment
payment pursuant to this Agreement shall be treated as a right to receive a series of
separate and distinct payments.

          (v) Whenever a payment under this Agreement specifies a payment period with reference
to a number of days (e.g., “payment shall be made within fifteen (15) days following
the Termination Date”), the actual date of payment within the specified period shall be
within the sole discretion of the Company.

     5. Confidential Information.

          (a) Protection of Confidential Information. Executive acknowledges that the continued
success of Holdings and the Subsidiaries depends upon the use and protection of a large body of
confidential and proprietary information. All of such confidential and proprietary information now
existing or to be developed in the future will be referred to in this Agreement as
“Confidential Information.” Confidential Information will be interpreted broadly to
include, without limitation, all information that is (i) related to Holdings’ or the Subsidiaries’
(including any of their predecessors’ prior to being acquired by the Company) current or potential
business and (ii) is not generally or publicly known (including, without specific limitation, the
information, observations and data concerning (A) acquisition opportunities in or reasonably
related to Holdings’ or the Subsidiaries’ business or industry, (B) identities and requirements of,
contractual arrangements with and other information regarding Holdings’ or the Subsidiaries’
employees (including personnel files and other information), suppliers, distributors, customers,
independent contractors, third-party payors, providers or other business relations and their
confidential information, including, without limitation, patient records, medical histories and
other information concerning patients (including, without limitation, all “Protected Health
Information” within the meaning of the Health Insurance Portability and Accountability Act), and
(C) internal business information and intellectual property of every kind and description of
Holdings and the Subsidiaries). Executive agrees that during the Employment Period and for five (5)
years thereafter, he shall not disclose to any unauthorized person or use for his own account any
of such Confidential Information, whether or not developed by Executive, without the Board’s prior
written consent, unless and to the extent that any Confidential Information (i) was known to
Executive prior to the negotiation of this Agreement or the Employment Period from a source (other
than Holdings, the Subsidiaries or any of their respective agents) that, to the knowledge of
Executive, was not prohibited from disclosing such information by a legal, contractual or fiduciary
obligation to Holdings or any of the Subsidiaries, (ii) becomes generally known to and available
for use by the public other than as a result of Executive’s acts or omissions to act or (iii) is
required to be disclosed pursuant to any applicable law or court order.

          (b) Use of Others’ Confidential Information. During the Employment Period, Executive
shall not use or disclose any confidential information or trade secrets, if any, of any former
employers or any other Person to whom Executive has an obligation of confidentiality. If at any
time during his employment with the Company, Executive believes he is being asked to engage in work
that will, or will be likely to, jeopardize any confidentiality or other obligations Executive may
have to former employers, then Executive shall immediately advise the Board so that Executive’s
duties can be modified appropriately.

          (c) Third-Party Information. Executive understands that Holdings and the Subsidiaries
will receive from third parties confidential or proprietary information (“Third-Party
Information”) subject to a duty on Holdings’ and the Subsidiaries’ part to maintain the
confidentiality of

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such information and to use it only for certain limited purposes. During the Employment Period
and thereafter, and without in any way limiting the provisions of Section 5(a) above,
Executive will hold Third-Party Information in the strictest confidence and will not disclose to
anyone (other than personnel of Holdings or the Subsidiaries who need to know such information in
connection with their work for Holdings or the Subsidiaries) or use, except in connection with his
work for Holdings or the Subsidiaries, Third-Party Information unless expressly authorized by the
Board in writing.

     6. Ownership of Intellectual Property, Inventions and Patents. Executive acknowledges
that all discoveries, concepts, ideas, inventions, innovations, improvements, developments,
methods, processes, programs, designs, analyses, drawings, reports, patent applications,
copyrightable work and mask work (whether or not including any confidential information) and all
registrations or applications related thereto, all other proprietary information and all similar or
related information (whether or not patentable) which relate to Holdings’ or the Subsidiaries’
actual or anticipated business, research and development or existing or future products or services
and which are conceived, developed, contributed to, made or reduced to practice by Executive
(whether alone or jointly with others) while employed by Holdings or the Subsidiaries after the
date of this Agreement, including any of the foregoing that constitutes any proprietary information
or records (“Work Product”), belong to Holdings or such Subsidiary. Any copyrightable work
prepared in whole or in part by Executive in the course of his work for any of the foregoing
entities shall be deemed a “work made for hire” to the maximum extent permitted under copyright
laws, and Holdings or such Subsidiary shall own all rights therein. To the extent any such
copyrightable work is not a “work made for hire,” Executive hereby assigns and agrees to assign to
Holdings or such Subsidiary all right, title and interest, including, without limitation,
copyright, in and to such copyrightable work. Executive shall promptly disclose such Work Product
to the Board and, at the Company’s expense, perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such ownership by Holdings
or such Subsidiary (including, without limitation, execution and delivery of assignments, consents,
powers of attorney and other instruments).

     7. Non-Compete; Non-Solicit.

          (a) Non-Compete. In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that during the course of his employment with the Company he has
and shall become familiar with Holdings’ and the Subsidiaries’ trade secrets and with other
Confidential Information concerning Holdings and the Subsidiaries and that his services have been
and shall be of special, unique and extraordinary value to Holdings and the Subsidiaries, and,
therefore, Executive agrees that, during the Employment Period and for a period thereafter of
twenty-four (24) months (the “Noncompete Period”), he shall not (i) directly or indirectly
own any interest in, manage, control, participate in, consult with, render services for, or in any
manner engage in any business that derives at least 25% of its gross revenue from the business of
providing behavioral healthcare and/or related services or (ii) directly or indirectly manage,
control, participate in, consult with or render services specifically with respect to any unit,
division, segment or subsidiary of any other business that engages in or otherwise competes with
(or was organized for the purpose of engaging in or competing with) the business of providing
behavioral healthcare and/or related services (provided that, this clause (ii) shall not be
construed to prohibit Executive from directly or indirectly owning any interest in, managing,
controlling, participating in, consulting with, rendering services for, or in any manner engaging
in any business activities with or for such business generally and, for the avoidance of doubt, not
specifically with respect to such unit, division, segment or subsidiary), in each case, within any
geographical area in which Holdings and the Subsidiaries engage in such businesses;
provided that Executive shall not be subject to the restrictions set forth in this
Section 7(a) if the Employment Period is terminated by the Company without Cause or by
Executive with Good Reason and for so long as the Company is in breach of its obligations under
Section 4(b) and such breach is not the subject of a good faith dispute between the

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Company and Executive. For purposes of this Agreement, the term “participate in” shall
include, without limitation, having any direct or indirect interest in any Person, whether as a
sole proprietor, owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering
any direct or indirect service or assistance to any individual, corporation, partnership, joint
venture and other business entity (whether as a director, officer, manager, supervisor, employee,
agent, consultant or otherwise). Nothing herein shall prohibit Executive from being a passive owner
of not more than 2% of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of such corporation.

          (b) Non-Solicit. During the Employment Period and for a period thereafter of
twenty-four (24) months (the “Nonsolicit Period”), Executive shall not directly or
indirectly through another Person (other than on behalf of Holdings and the Subsidiaries) (i)
induce or attempt to induce any employee or independent contractor of Holdings or the Subsidiaries
to leave the employ or services of Holdings or the Subsidiaries, or in any way interfere with the
relationship between Holdings and the Subsidiaries and any employee or independent contractor
thereof, (ii) hire or seek any business affiliation with any person who was an employee or
independent contractor of Holdings or the Subsidiaries at any time during the twelve (12) months
prior to the Termination Date or (iii) induce or attempt to induce any customer, supplier,
licensee, licensor or other business relation of Holdings or any Subsidiary to cease doing business
with Holdings or such Subsidiary or interfere with the relationship between any such customer,
supplier, licensor or other business relation and Holdings or any Subsidiary; provided that
Executive shall not be subject to the restrictions set forth in this Section 7(b) if the
Employment Period is terminated by the Company without Cause or by Executive with Good Reason and
for so long as the Company is in breach of its obligations under Section 4(b) and such
breach is not the subject of a good faith dispute between the Company and Executive.

          (c) Non-Disparagement. Without limiting any other obligation of Executive pursuant to
this Agreement, Executive hereby covenants and agrees that, except as may be required by applicable
law, Executive shall not make any statement, written or verbal, in any forum or media, or take any
other action in disparagement of Holdings or any of the Subsidiaries, during the Employment Period
and for a period of five (5) years thereafter (the “Non-Disparagement Period”). Without
limiting any other obligation of the Company and/or Holdings pursuant to this Agreement, the
Company and Holdings hereby covenant and agree that, except as may be required by applicable law,
the Company and Holdings shall cause their executive officers and members of their boards of
directors or boards of managers, as applicable, and each of Reeve B. Waud and Charles E. Edwards
not to make any statement, written or verbal, in any forum or media, or take any other action in
disparagement of Executive, during the Employment Period and the Non-Disparagement Period.

          (d) Blue-Pencil. If, at the time of enforcement of Section 5 or 6 or
this Section 7, a court shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the parties agree that the maximum
duration, scope or area reasonable under such circumstances shall be substituted for the stated
duration, scope or area and that the court shall be allowed to revise the restrictions contained
herein to cover the maximum duration, scope and area permitted by law. Executive hereby
acknowledges and represents that he has either consulted with independent legal counsel regarding
his rights and obligations under this Agreement or knowingly and voluntarily waived the opportunity
to do so and that he fully understands the terms and conditions contained herein.

          (e) Additional Acknowledgments. Executive acknowledges that the provisions of
Sections 5 and 6 and this Section 7 are in consideration of Executive’s
employment with the Company and other good and valuable consideration as set forth in this
Agreement. In addition, Executive agrees and acknowledges that the restrictions contained in
Sections 5 and 6 and this Section 7 do not preclude

- 9 -

 

Executive from earning a livelihood, nor do they unreasonably impose limitations on
Executive’s ability to earn a living. In addition, Executive acknowledges (x) that the business of
Holdings and the Subsidiaries will be conducted throughout the United States and its territories
and beyond, (y) notwithstanding the state of organization or principal office of Holdings or any of
the Subsidiaries or facilities, or any of their respective executives or employees (including
Executive), it is expected that Holdings and the Subsidiaries will have business activities and
have valuable business relationships within its industry throughout the United States and its
territories and beyond, and (z) as part of Executive’s responsibilities, Executive will be
traveling throughout the United States and other jurisdictions where Holdings and the Subsidiaries
conduct business during the Employment Period in furtherance of the Company’s business
relationships. Executive agrees and acknowledges that the potential harm to Holdings and the
Subsidiaries of the non-enforcement of any provision of Sections 5 and 6 and this
Section 7 outweighs any potential harm to Executive of its enforcement by injunction or
otherwise. Executive acknowledges that he has carefully read this Agreement and either consulted
with legal counsel of Executive’s choosing regarding its contents or knowingly and voluntarily
waived the opportunity to do so, has given careful consideration to the restraints imposed upon
Executive by this Agreement and is in full accord as to their necessity for the reasonable and
proper protection of confidential and proprietary information of Holdings and the Subsidiaries now
existing or to be developed in the future. Executive expressly acknowledges and agrees that each
and every restraint imposed by this Agreement is reasonable with respect to subject matter,
duration and geographical area.

          (f) Specific Performance. In the event of the breach or a threatened breach by
Executive of any of the provisions of Section 5 or 6 or this Section 7,
Holdings and the Subsidiaries would suffer irreparable harm and that money damages would not be a
sufficient remedy and, in addition and supplementary to other rights and remedies existing in its
favor whether under this Agreement or under any other agreement, the Company shall be entitled to
specific performance and/or injunctive or other equitable relief from a court of competent
jurisdiction in order to enforce or prevent any violations of the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged breach or violation by
Executive of this Section 7, the Noncompete Period, the Nonsolicit Period or the
Non-Disparagement Period, as applicable, shall be tolled until such breach or violation has been
duly cured.

     8. Executive’s Representations. Executive hereby represents and warrants to the
Company that (a) the execution, delivery and performance of this Agreement by Executive do not and
shall not conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Executive is a party or by which he is bound, (b)
except as previously disclosed to the Company in writing (a copy of each such agreement having been
provided to the Company prior to the date hereof or being publicly available on EDGAR as of the
date hereof), Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity, (c) except as previously
disclosed to the Company in writing, Executive took nothing with him which belonged to any former
employer when Executive left his prior position and Executive has nothing that contains any
information which belongs to any former employer, in either case which would reasonably be likely
to result in any liability to Holdings or any Subsidiary, and (d) upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents
that he has either consulted with independent legal counsel regarding his rights and obligations
under this Agreement or knowingly and voluntarily waived the opportunity to do so and that he fully
understands the terms and conditions contained herein.

     9. Definitions. For purposes of this Agreement, the following terms shall have the
meanings set forth below:

- 10 -

 

          “Cause” shall mean with respect to Executive one or more of the following: (i) the
conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude or
the conviction of any crime involving misappropriation, embezzlement or fraud with respect to
Holdings or any of the Subsidiaries or any of their customers, suppliers or other business
relations, (ii) conduct outside the scope of Executive’s duties and responsibilities under this
Agreement that causes Holdings or any of the Subsidiaries substantial public disgrace or disrepute
or economic harm, (iii) repeated failure to perform duties consistent with this Agreement as
reasonably directed by the Board, (iv) any act or knowing omission aiding or abetting a competitor,
supplier or customer of Holdings or any of the Subsidiaries to the disadvantage or detriment of
Holdings and the Subsidiaries, (v) breach of fiduciary duty, gross negligence or willful misconduct
with respect to Holdings or any of the Subsidiaries, (vi) an administrative or other proceeding
results in the suspension or debarment of Executive from participation in any contracts with, or
programs of, the United States or any of the fifty states or any agency or department thereof, or
(vii) any other material breach by Executive of this Agreement or any other agreement between
Executive and Holdings or any of the Subsidiaries, which is not cured to the Board’s reasonable
satisfaction within thirty (30) days after written notice thereof to Executive.

          “Disabled” shall mean with respect to Executive that, as a result of his incapacity
due to physical or mental illness, Executive is considered disabled under the Company’s long-term
disability insurance plans or, in the absence of such plans, Executive is unable to perform the
essential duties, responsibilities and functions of his position with the Company as a result of
any mental or physical disability or incapacity even with reasonable accommodations of such
disability or incapacity provided by Holdings and the Subsidiaries or if providing such
accommodations would be unreasonable, all as determined by the Board in its good faith judgment.
Executive shall cooperate in all respects with the Company if a question arises as to whether he
has become Disabled (including, without limitation, submitting to an examination by a medical
doctor or other health care specialists selected by the Company and authorizing such medical doctor
or such other health care specialist to discuss Executive’s condition with the Company).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Good Reason” shall mean if Executive resigns his employment with the Company (a) as a
result of one or more of the following actions (in each case taken without Executive’s written
consent): (i) a reduction in Executive’s Base Salary (other than as part of an across-the-board
reduction that (A) results in a 10% or less reduction of Executive’s Base Salary as in effect on
the date of any such reduction or (B) is approved by the Chief Executive Officer of the Company),
(ii) a material diminution of Executive’s job duties or responsibilities inconsistent with
Executive’s position, which shall include, without limitation, Executive’s removal from the
position specified in Section 2(a) or the Company’s hiring an individual at an equivalent
or senior level to Executive to perform substantially the same duties and responsibilities set
forth in Section 2(a)); (iii) any other material breach by the Company or Holdings (or
their successors) of this Agreement; or (iv) a relocation of the Company’s and Holdings’ principal
executive offices and corporate headquarters outside of a thirty (30) mile radius of Nashville,
Tennessee following relocation thereto in accordance with Section 1; provided
that, none of the events described in clauses (i) through (iv) above shall constitute Good
Reason unless Executive shall have notified the Company and/or Holdings in writing describing the
event which constitutes Good Reason within ninety (90) days after the occurrence of such event and
then only if the Company and/or Holdings and the Subsidiaries shall have failed to cure such event
within thirty (30) days after the Company’s and/or Holdings’ receipt of such written notice and
Executive elects to terminate his employment as a result at the end of such thirty (30) day period,
or (b) for any reason within 180 days following a Sale of the LLC (as defined in the LLC
Agreement).

- 11 -

 

          “LLC Agreement” means that certain Amended and Restated Limited Liability Company
Agreement of Acadia Healthcare Holdings, LLC, dated as of August 31, 2009, as amended, modified or
waived from time to time.

          “No-Fault Termination” means any termination of Executive’s employment by the Company
(other than a termination for Cause) or Executive (other than resignation for Good Reason) prior to
the Initial Closing (as defined in that certain Executive Purchase Agreement, dated as of the date
hereof, by and between Holdings and Executive) and after the No-Fault Termination Date.

          “No-Fault Termination Date” means (i) if Holdings or any Subsidiary has entered into a
Qualified Acquisition Agreement on or prior to March 31, 2011, the date on which such Qualified
Acquisition Agreement is terminated in accordance with its terms prior to consummation of the
transactions contemplated thereby, and (ii) March 31, 2011, if neither Holdings nor any Subsidiary
has entered into a Qualified Acquisition Agreement on or prior to such date.

          “Person” shall mean an individual, a partnership, a corporation (whether or not for
profit), a limited liability company, an association, a joint stock company, a trust, a joint
venture, or other business entity, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

          “Qualified Acquisition” means the acquisition of a target company providing behavioral
healthcare and/or related services that has EBITDA of at least $20,000,000 during the full 12
calendar months immediately preceding such acquisition, or any other acquisition deemed by the
Board to be a “Qualified Acquisition.”

          “Qualified Acquisition Agreement” means the definitive purchase agreement with respect
to a Qualified Acquisition.

          “Subsidiary” shall mean any corporation or other entity of which the securities or
other ownership interests having the voting power to elect a majority of the board of directors or
other governing body are, at the time of determination, owned by Holdings or of which Holdings
serves as the managing member or in a similar capacity or of which Holdings holds a majority of the
partnership or limited liability company or similar interests or is otherwise entitled to receive a
majority of distributions made by it, in each case directly or through one or more Subsidiaries.

     10. Survival. Except as otherwise provided in Section 4(d), Sections 4
through 27 (other than Section 22) shall survive and continue in full force in
accordance with their terms notwithstanding the expiration or termination of the Employment Period.

     11. Notices. Any notice provided for in this Agreement shall be in writing and shall
be personally delivered, sent by facsimile (with hard copy to follow), sent by reputable overnight
courier service, or mailed by first class mail, return receipt requested, to the recipient at the
address below indicated:

Notices to Executive:

Joey A. Jacobs

[REDACTED]

- 12 -

 

with copies (which shall not constitute notice) to:

Waller Lansden Dortch & Davis, LLP

511 Union Street, Suite 2700

Nashville, Tennessee 37219

Attention: Matthew R. Burnstein

Facsimile: (615) 244-6804

Notices to the Company:

Acadia Healthcare Holdings, LLC

2849 Paces Ferry Road, Suite 750

Atlanta, Georgia 30339

Attention: Board of Managers

Facsimile: (678) 384-5703

with copies (which shall not constitute notice) to:

c/o Waud Capital Partners, L.L.C.

300 North LaSalle Street, Ste. 4900

Chicago, Illinois 60654

Attention: Reeve B. Waud

Charles E. Edwards

Facsimile: (312) 676-8444

Kirkland & Ellis LLP

300 North LaSalle Street

Chicago, Illinois 60654

Attention: Richard W. Porter, P.C.

Facsimile: (312) 862-2200

or such other address or to the attention of such other Person as the recipient party shall have
specified by prior written notice to the sending party. Any notice under this Agreement shall be
deemed to have been given when so delivered or sent by facsimile (subject to automatic proof of
transmission), one day after being sent by overnight courier or three days after being mailed by
first class mail, return receipt requested, as applicable.

     12. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement or any action in any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

     13. Complete Agreement. This Agreement and those documents expressly referred to
herein embody the complete agreement and understanding among the parties with respect to, and
supersede and preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to, the subject matter hereof in any way,
including, without limitation, any prior employment agreement, by and between Executive and
Holdings or any of the Subsidiaries.

- 13 -

 

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

     15. Counterparts. This Agreement may be executed in separate counterparts (including
by means of facsimile or by electronic transmission in portable document format (pdf) or comparable
electronic transmission), each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.

     16. Successors and Assigns. This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement
or any rights or obligations hereunder; provided that (i) this Agreement will inure to the
benefit of and be enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees (but otherwise will not otherwise be
assignable, transferable or delegable by Executive), and (ii) this Agreement will be assignable,
transferable or delegable by the Company, without the consent of Executive, to Holdings or any of
the Subsidiaries or to any successor (whether direct or indirect, in whatever form of transaction)
to all or substantially all of the business or assets of the Company or Holdings or the
Subsidiaries (none of which shall constitute a termination of Executive’s employment hereunder).

     17. Choice of Law and Forum. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto
shall be governed by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to any choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. The parties agree that any dispute arising out of or
relating to this Agreement, exclusively shall be brought in the state courts located in Williamson
County, Tennessee or the United States District Court for the Middle District of Tennessee. Each
party hereby waives any objection to the personal or subject matter jurisdiction and venue of such
courts.

     18. Amendment and Waiver. The provisions of this Agreement may be amended or waived
only with the prior written consent of the Company (as approved by the Board) and Executive, and no
course of conduct or course of dealing or failure or delay by any party hereto in enforcing or
exercising any of the provisions of this Agreement (including, without limitation, the Company’s
right to terminate the Employment Period for Cause) shall affect the validity, binding effect or
enforceability of this Agreement or be deemed to be an implied waiver of any provision of this
Agreement.

     19. Insurance. The Company may, at its discretion, apply for and procure in its own
name and for its own benefit life and/or disability insurance on Executive in any amount or amounts
considered advisable. Executive agrees to cooperate in any medical or other examination, supply any
information and execute and deliver any applications or other instruments in writing as may be
reasonably necessary to obtain and constitute such insurance.

     20. Indemnification and Reimbursement of Payments on Behalf of Executive. Holdings and
the Subsidiaries shall be entitled to deduct or withhold from any amounts owing from Holdings or
any of the Subsidiaries to Executive any federal, state, local or foreign withholding taxes, excise
tax, or employment taxes (“Taxes”) imposed with respect to Executive’s compensation or
other payments from Holdings or any of the Subsidiaries or Executive’s ownership interest in
Holdings or any of the Subsidiaries (including, without limitation, wages, bonuses, dividends, the
receipt or exercise of equity options and/or the receipt or vesting of restricted equity), as may
be required to be deducted or withheld by any applicable law or regulation. In the event Holdings
or any of the Subsidiaries does not make such

- 14 -

 

deductions or withholdings, Executive shall indemnify Holdings and the Subsidiaries for any
amounts paid with respect to any such Taxes, together (if such failure to withhold was at the
written direction of Executive or if Executive was informed in writing by Holdings or such
Subsidiary that such deductions or withholdings were not made) with any interest, penalties and
related expenses thereto.

     21. Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE
PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL),
EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING
TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

     22. Corporate Opportunity. During the Employment Period, Executive shall submit to the
Board all investment or business opportunities of which he becomes aware and which are within the
scope and investment objectives of Holdings or any of the Subsidiaries.

     23. Executive’s Cooperation. During the Employment Period and for a period of six (6)
months thereafter, Executive shall cooperate with Holdings and the Subsidiaries in any internal
investigation or administrative, regulatory or judicial investigation or proceeding or any dispute
with any third party as reasonably requested by Holdings or the Subsidiaries (including, without
limitation, Executive being available to Holdings and the Subsidiaries upon reasonable notice for
interviews and factual investigations, appearing at Holdings’ or any of the Subsidiaries’ request
to give testimony without requiring service of a subpoena or other legal process, volunteering
Holdings and the Subsidiaries all pertinent information and turning over to Holdings and the
Subsidiaries all relevant documents which are or may come into Executive’s possession, all at times
and on schedules that are reasonably consistent with Executive’s other permitted activities and
commitments), all at Holdings’ or the Subsidiaries’ sole cost and expense. After such six (6) month
period, if Executive is requested to engage or participate in any of the foregoing, then Executive
will do so and Holdings or the Subsidiaries shall compensate Executive for his time at an hourly
rate of $250/hour.

     24. Delivery by Facsimile or PDF. This Agreement, the agreements referred to herein,
and each other agreement or instrument entered into in connection herewith or therewith or
contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine or electronic transmission in pdf, shall be treated in
all manner and respects as an original agreement or instrument and shall be considered to have the
same binding legal effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each other party hereto or
thereto shall re-execute original forms thereof and deliver them to all other parties. No party
hereto or to any such agreement or instrument shall raise the use of a facsimile machine or
electronic transmission in pdf to deliver a signature or the fact that any signature or agreement
or instrument was transmitted or communicated through the use of a facsimile machine or electronic
transmission in pdf as a defense to the formation or enforceability of a contract and each such
party forever waives any such defense.

     25. Indemnification and Directors and Officers Insurance.

          (a) During the Employment Period and for a period of six (6) years thereafter, the Company
shall, to the fullest extent permitted under applicable law, indemnify and hold harmless Executive
against all costs and expenses (including attorneys’ fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim, action, suit,
proceeding or investigation (whether arising before or after the date hereof), whether civil,
criminal, administrative or investigative, arising out of or pertaining to any action or omission
in their capacity as an officer, director,

- 15 -

 

employee, fiduciary or agent of the Company (or Holdings or any Subsidiary). In the event of
any such claim, action, suit, proceeding or investigation, (i) the Company shall pay the reasonable
fees and expenses of counsel selected by Executive promptly after statements therefor are received,
(ii) neither the Company, Holdings nor any Subsidiary shall settle, compromise or consent to the
entry of any judgment in any pending or threatened action to which Executive is a party (and in
respect of which indemnification could be sought by Executive hereunder), unless such settlement,
compromise or consent includes an unconditional release of Executive from all liability arising out
of such action, or Executive otherwise consents (which consent shall not be unreasonably withheld,
conditioned or delayed), and (iii) the Company, Holdings and the applicable Subsidiaries shall
cooperate in the defense of any such matter. In the event that any claim for indemnification is
asserted or made within the Employment Period or the six (6) year period thereafter, all rights of
Executive to indemnification in respect of such claim shall continue until the final disposition of
such claim. The rights of Executive under this Section 25(a) shall be in addition to any
rights Executive may have under the organizational documents of the Company, Holdings or any
Subsidiary, under any law, or under any agreement of Executive with the Company, Holdings or any
Subsidiary.

          (b) During the Employment Period and for a period of six (6) years thereafter, the Company, or
any successor to the Company, shall purchase and maintain, at its own expense, directors and
officers liability insurance providing coverage for Executive in the same or greater amount as for
members of the Board.

     26. Legal Fees and Expenses.

          (a) The Company shall pay or reimburse all fees, expenses and disbursements of Executive and
his agents, representatives, accountants, and counsel incurred in connection with the preparation,
negotiation, execution and delivery of this Agreement and any other agreement or instrument to be
executed and delivered by Executive in connection with Executive’s investment in Holdings;
provided, however, the aggregate amount payable or reimbursable by the Company
pursuant to (i) this Section 26(a), and (ii) the Company’s employment agreements entered
into simultaneously herewith shall not exceed $50,000.

          (b) In the event any litigation or other court action, arbitration or similar adjudicatory
proceeding (a “Proceeding”) is commenced or threatened by any party hereto (the
“Claiming Party”) to enforce its rights under this Agreement against any other party hereto
(the “Defending Party”), if the Defending Party is the prevailing party in such Proceeding,
all fees, costs and expenses, including, without limitation, reasonable attorneys fees and court
costs, incurred by the Defending Party in such Proceeding, will be reimbursed by the Claiming
Party, and, if the Claiming Party is the prevailing party in such Proceeding, all fees, costs and
expenses, including, without limitation, reasonable attorneys fees and court costs, incurred by the
Claiming Party in such Proceeding, will be reimbursed by the Defending Party; provided that
if the Defending Party prevails in part, and loses in part, in such Proceeding, the court,
arbitrator or other adjudicator presiding over such Proceeding shall award a reimbursement of the
fees, costs and expenses incurred by the Claiming Party and the Defending Party on an equitable
basis. For purposes of this Section 26(b), and without limiting the generality of the
foregoing, the Defending Party will be deemed to have prevailed in any Proceeding if the Claiming
Party commences or threatens such Proceeding and (i) the underlying claim(s) in such Proceeding are
subsequently dropped or dismissed, or (ii) the Defending Party defeats any such claim(s).

     27. Holdings Guarantee. Holdings unconditionally guarantees and promises to pay and
perform, upon Executive’s demand following a default by the Company, any and all obligations of the
Company from time to time owed to Executive under this Agreement, subject to any applicable cure
period. Holdings further agrees that if the Company shall fail to fulfill any of its obligations
under this

- 16 -

 

Agreement, Holdings will perform the same on demand as a principal obligor, and not as a
surety. This is a continuing guarantee of the obligations and may not be revoked and shall not
otherwise terminate unless and until the obligations of the Company have been paid and performed in
full. Holdings represents and warrants that it will receive a substantial benefit from Company’s
employment of Executive, which employment gives rise to the obligations of the Company under this
Agreement. Holdings acknowledges that Executive would not execute this Agreement if it did not
receive this guarantee. The obligations of Holdings under this Section 27 will terminate
automatically upon a Sale of the LLC (as defined in the LLC Agreement).

* * * * *

- 17 -

 

     IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date
first written above.

	 	 	 	 	 	 	 

	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	ACADIA MANAGEMENT COMPANY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Joey A. Jacobs	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Joey A. Jacobs	 	 
	 	 	Its: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Joey A. Jacobs	 	 
	 	 	 	 	 
	 	 	Name: Joey A. Jacobs	 	 

	 	 	 	 	 

	ACKNOWLEDGED AND AGREED:	 	 
	 
	 	 	 	 
	HOLDINGS:	 	 
	 
	 	 	 	 
	ACADIA HEALTHCARE HOLDINGS, LLC,
solely with respect to Section 7(c) and Section 27
of the Agreement	 	 
	 
	 	 	 	 
	By:

	 	/s/ Joey A. Jacobs	 	 
	 

	 	 	 	 
	Name: Joey A. Jacobs	 	 
	Its: Chief Executive Officer	 	 

 

 

Schedule 2(b)

Other Activities

	1.	 	Mental Health Management, Inc.

Po Box 712260

Salt Lake City, UT 84171
	 
	2.	 	Cumberland Pharmaceuticals, Inc.

2525 West End Avenue

Suite 950

Nashville, TN 37203
	 
	3.	 	Cleartrack Information Network, Inc.

5301 Virginia Way, Suite 110

Brentwood, TN 37027
	 
	4.	 	Vantage Oncology, Inc.

1500 Rosecrans Avenue, Suite 400

Manhattan Beach, CA 90266

 

 

Schedule 3(c)

2011 Bonus Plan

Executive’s maximum bonus for the calendar year ending December 31, 2011, shall be one hundred
percent (100%) of Base Salary. Executive’s bonus for the calendar year ending December 31, 2011
will be based on the achievement of the following criteria as determined by the Board or such
Compensation Committee (if there is one) in its sole discretion:

	 	1.	 	80% of bonus will be based on actual EBITDA of Holdings versus budgeted EBITDA
(the “EBITDA Portion”). Eligibility for the EBITDA Portion will begin upon
achievement of 95% of budgeted EBITDA, with (i) 40% of Base Salary earned at 95% of
budgeted EBITDA, (ii) 80% of Base Salary earned at 110% of budgeted EBITDA and higher
and (iii) the percentage of Base Salary being proportionately applied between 95% of
budgeted EBITDA and 110% of budgeted EBITDA. Budgeted EBITDA will be established by the
Board not later than March 31. Budgeted EBITDA will be adjusted by the Board, in its
sole but reasonable discretion, to reflect any acquisitions and dispositions during the
year.
	 
	 	2.	 	20% of bonus will be based on Executive’s satisfaction of other criteria for
performance established by the Board.exv10w8

Exhibit 10.8

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of January
31, 2011, by and between Acadia Management Company, Inc., a Delaware corporation (the
“Company”), and Jack E. Polson (“Executive”).

          In consideration of the mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

     1. Employment; Employment Period. The Company shall employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and conditions set forth in this
Agreement for the period beginning on the date hereof and ending on the date on which Executive’s
employment is terminated pursuant to Section 4 hereof (the “Employment Period”).
The place of employment of Executive shall be the principal executive offices and corporate
headquarters of the Company and Holdings, which, during the Employment Period, shall be located in
Davidson County or Williamson County, Tennessee upon the relocation of such headquarters from
Atlanta, Georgia as soon as reasonably practical after the date hereof.

     2. Position and Duties.

          (a) Position; Responsibilities. During the Employment Period, Executive shall serve as
the Executive Vice President and Chief Financial Officer of the Company and shall have the normal
duties, responsibilities, functions and authority of an Executive Vice President and Chief
Financial Officer, subject to the power and authority of the board of managers (the
“Board”) of Acadia Healthcare Holdings, LLC, a Delaware limited liability company
(“Holdings”), to expand or limit such duties, responsibilities, functions and authority
within the scope of duties, responsibilities, functions and authority associated with the position
of Executive Vice President and Chief Financial Officer and to overrule actions of officers of the
Company.

          (b) Reporting; Performance of Duties. Executive shall report to the Board and devote
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 Holdings and the Subsidiaries. So
long as Executive is employed by the Company, Executive shall not, without the prior written
consent or approval of the Board, perform other services for compensation. Notwithstanding the
foregoing, nothing herein shall preclude Executive from (i) serving, with the prior written consent
of the Board, as a member of the boards of directors or advisory boards (or their equivalents in
the case of a non-corporate entity) of for-profit companies or businesses which are not directly
competitive with the Company or any Subsidiary (provided that the prior written consent of
the Board shall not be required for Executive to serve as a member of the boards of directors or
advisory boards (or their equivalents) of the companies listed on Schedule 2(b)), (ii)
engaging in charitable activities and community affairs (including serving as a member of the
boards of directors or advisory boards (or their equivalents in the case of a non-corporate entity)
of not-for-profit, charitable or community organizations which are not directly competitive with
the Company or any Subsidiary); provided, however, the activities set out in
clauses (i) and (ii) above shall be limited by Executive so as not to materially interfere,
individually or in the aggregate, with the performance of his duties and responsibilities
hereunder. For the avoidance of doubt, so long as Executive is employed by the Company, Executive
shall not provide any services to any company or business that is directly

 

 

competitive with Holdings or the Subsidiaries (whether for-profit or not-for-profit) without
the prior written consent of the Board.

     3. Compensation and Benefits.

          (a) Base Salary. During the Employment Period, Executive’s base salary shall be
$240,000 per annum, subject to increase by the Board in its sole discretion on an annual basis (as
adjusted from time to time, the “Base Salary”), which salary shall be payable by the
Company in regular installments in accordance with the Company’s general payroll practices (as in
effect from time to time). The Base Salary for any partial year during the Employment Period will
be based upon the actual number of days elapsed in such year.

          (b) Business Expenses. During the Employment Period, the Company shall reimburse
Executive in the calendar year in which they are incurred for all reasonable out-of-pocket business
expenses incurred by him in the course of performing his duties and responsibilities under this
Agreement which are consistent with the Company’s policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to the Company’s requirements with
respect to reporting and documentation of such expenses. The Company also will reimburse Executive
promptly following the date hereof (and in any event prior to December 31, 2011) for all reasonable
out-of-pocket business expenses incurred by him prior to the date of this Agreement in connection
with Executive’s meetings with various principals of and investors in Holdings and the Subsidiaries
subject to the Company’s requirements with respect to reporting and documentation of such expenses.
The Company’s aggregate reimbursement obligations under the immediately preceding sentence, and the
corresponding provisions of the employment agreements entered into simultaneously herewith, shall
not exceed $10,000, and, to the extent that Executive submits expenses which, when aggregated with
the others’, exceed $10,000, then Executive and such others shall determine among themselves the
apportionment of such $10,000, and, notwithstanding any such apportionment, the Company shall have
no further obligation or liability to Executive.

          (c) Bonus. In addition to the Base Salary, during each calendar year during the
Employment Period beginning with the year ending December 31, 2011, Executive will be eligible to
earn a target annual bonus of up to 100% of his Base Salary for such year, if and only if
Executive, Holdings and the Subsidiaries achieve the performance criteria specified by the Board or
the Compensation Committee (if there is one) for such year, as determined by the Board or such
Compensation Committee (if there is one) in its sole discretion. Schedule 3(c) sets forth
the performance criteria and relative weight of each for the calendar year (and only for the
calendar year) ending December 31, 2011. Unless otherwise agreed to by Executive, any such bonus
amount for any year shall be earned (if awarded) on the last day of such year and paid by the
Company no later than the earlier of (x) the date that is ten (10) business days after the
Company’s receipt of its audited financial statements for the calendar year with respect to which
such bonus has been earned and (y) December 31 of the calendar year following such year with
respect to which such bonus has been earned.

          (d) Benefits. In addition to (but without duplication of) the Base Salary and any
bonuses payable to Executive pursuant to this Section 3, Executive shall be entitled to
participate at his sole discretion in all of the Company’s employee benefit programs for which
senior executive employees of the Company are generally eligible even though Executive may receive
certain health and welfare benefits through November 15, 2012 as a result of Executive’s service
with his prior employer.

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     4. Termination.

          (a) Termination. The Employment Period shall terminate automatically and immediately
upon Executive’s resignation for any reason (whether with Good Reason or without Good Reason and
including in connection with a No-Fault Termination), Executive’s death or becoming Disabled, or
upon the termination of Executive’s employment by the Company (through action by the Board) for any
reason (whether for Cause or without Cause and including in connection with a No-Fault
Termination). The date on which Executive ceases to be employed by the Company is referred to
herein as the “Termination Date.”

          (b) Termination without Cause or with Good Reason. If the Employment Period is
terminated by the Company without Cause (other than in connection with a No-Fault Termination) or
by Executive with Good Reason, then Executive shall be entitled to receive:

          (i) a lump sum payment within fifteen (15) calendar days after the Termination Date in
an amount equal to the sum of:

          (A) Executive’s unpaid Base Salary through the Termination Date; plus

          (B) any bonus amounts under Section 3(c) to which Executive is entitled
determined by reference to the calendar year that ended on or prior to the
Termination Date; plus

          (C) any unused paid time off and sick pay of Executive in such amounts as have
accrued as of the Termination Date in accordance with the Company’s policies with
respect thereto as in effect during the Employment Period, and the amount of any
business expenses incurred by Executive but not reimbursed prior to the Termination
Date in accordance with and reimbursable under the terms of the Company’s policies
with respect thereto as in effect on the Termination Date; and

          (ii) a lump sum payment (the “Severance Payment”) within fifteen (15) calendar
days after the Release Effective Date in an amount equal to the sum of:

          (A) the greater of (A) the maximum bonus amount to which Executive would be
entitled under Section 3(c) with respect to the calendar year in which the
Termination Date occurs, determined as if Executive, Holdings and the Subsidiaries
have exceeded all of the performance objectives specified in Executive’s bonus plan
for such year, whether or not such objectives actually have been achieved as of the
Termination Date, which amounts shall be prorated based on the actual number of days
elapsed in such year prior to the Termination Date, and (B) if Executive’s bonus
plan has not been determined for the calendar year in which the Termination Date
occurs, the maximum bonus amount to which Executive would be entitled under
Section 3(c) with respect to the calendar year that ended prior to the
Termination Date, determined as if Executive, Holdings and the Subsidiaries have
exceeded all of the performance objectives specified in Executive’s bonus plan for
such year, whether or not such objectives actually have been achieved as of the
Termination Date, which amount shall be prorated based on the actual number of days
elapsed in such year prior to the Termination Date); plus

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          (B) an amount equal to twelve (12) months of Executive’s Base Salary as in
effect on the Termination Date (such 12-month period, the “Severance
Period”); and

          (iii) an amount equal to the cost of the premiums for continued health and dental
insurance for Executive and/or Executive’s dependents in accordance with the Consolidated
Budget Reconciliation Act of 1985 (“COBRA”) for the period commencing on the
Termination Date and ending on the earlier of (A) the date on which Executive’s COBRA period
terminates or expires and (B) the date on which the Severance Period expires (payable in
monthly installments during and concurrently with Executive’s COBRA period);
provided that if Executive’s COBRA period is terminated prior to expiration of the
Severance Period, then Executive shall be entitled to receive a lump sum payment within
fifteen (15) calendar days after written notice of such termination or expiration from
Executive to the Board in an amount equal to the cost of the premiums for continued health
and dental insurance for Executive and/or Executive’s dependents in accordance with COBRA
(assuming such continued insurance coverage remained available at the same monthly cost) for
the period commencing on the date of such termination or expiration and ending on the date
on which the Severance Period expires.

Notwithstanding the foregoing, Executive shall not be entitled to receive the Severance Payment or
any payments pursuant to Section 4(b)(iii) (and Executive shall forfeit all rights to such
payments) unless Executive has executed and delivered to the Company a general release
substantially in form and substance as attached hereto as Exhibit A (the “General
Release”), and such General Release remains in full force and effect, has not been revoked and
is no longer subject to revocation, within sixty (60) days of the Termination Date, and Executive
shall be entitled to receive the Severance Payment and such payments pursuant to Section
4(b)(iii) only so long as Executive has not breached any of the provisions of the General
Release or Sections 5, 6 and 7 hereof (a “Fundamental Breach”). If
the General Release is executed and delivered and no longer subject to revocation as provided in
the preceding sentence, then the following shall apply:

          (A) To the extent any such cash payment to be provided is not “deferred
compensation” for purposes of Code Section 409A, then such payment shall commence
upon the first scheduled payment date immediately after the date the General Release
is executed and no longer subject to revocation (the “Release Effective
Date”). The first such cash payment shall include payment of all amounts that
otherwise would have been due prior to the Release Effective Date under the terms of
this Agreement applied as though such payments commenced immediately upon
Executive’s termination of employment, and any payments made after the Release
Effective Date shall continue as provided herein. The delayed payments shall in any
event expire at the time such payments or benefits would have expired had such
payments commenced immediately following Executive’s termination of employment.

          (B) To the extent any such cash payment to be provided is “deferred
compensation” for purposes of Code Section 409A, then such payment shall be made or
commence upon the sixtieth (60th) day following Executive’s termination of
employment. The first such cash payment shall include payment of all amounts that
otherwise would have been due prior thereto under the terms of this Agreement had
such payments commenced immediately upon Executive’s

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termination of employment, and any payments made after the sixtieth (60th) day
following Executive’s termination of employment shall continue as provided herein.
The delayed payments shall in any event expire at the time such payments or benefits
would have expired had such payments commenced immediately following Executive’s
termination of employment.

Notwithstanding any other payment schedule provided herein to the contrary, if Executive is deemed
on the Termination Date to be a “specified employee” within the meaning of that term under Code
Section 409A(a)(2)(B), then any payment that is considered deferred compensation under Code Section
409A payable on account of a “separation from service” shall be made on the date which is the
earlier of (i) the expiration of the six (6)-month period measured from the date of such
“separation from service” of Executive and (ii) the date of Executive’s death (the “Delay
Period”) to the extent required under Code Section 409A. Upon the expiration of the Delay
Period, all payments delayed pursuant to the immediately preceding sentence (whether they otherwise
would have been payable in a single sum or in installments in the absence of such delay) shall be
paid to Executive in a lump sum, and all remaining payments due under this Agreement shall be paid
or provided in accordance with the normal payment dates specified for them herein. In addition, if
Executive is a “specified employee,” to the extent that welfare benefits to be provided to
Executive pursuant to this Agreement are not “disability pay,” “death benefit” plans or non-taxable
medical benefits within the meaning of Treasury Regulation Section 1.409A-1(a)(5) or other benefits
not considered nonqualified deferred compensation within the meaning of that regulation, such
provision of benefits shall be delayed until the end of the Delay Period. Notwithstanding the
foregoing, to the extent that the previous sentence applies to the provision of any ongoing health
or welfare benefits that would not be required to be delayed if the premiums were paid by
Executive, Executive shall pay the full cost of the premiums for such benefits during the Delay
Period and the Company shall pay Executive an amount equal to the amount of such premiums paid by
Executive during the Delay Period within ten (10) days after the end of Delay Period.

          (c) Termination by Death or Disability. If the Employment Period is terminated due to
Executive’s death or becoming Disabled, then Executive (or his estate or beneficiary) shall be
entitled to receive:

          (i) Executive’s unpaid Base Salary through the Termination Date (payable in accordance
with Section 3(a));

          (ii) any bonus amounts under Section 3(c) to which Executive is entitled
determined by reference to the calendar year that ended on or prior to the Termination Date
(payable at the same time it would have been paid pursuant to Section 3(c));

          (iii) the greater of (A) the maximum bonus amount to which Executive would be entitled
under Section 3(c) with respect to the calendar year in which the Termination Date
occurs, determined as if Executive, Holdings and the Subsidiaries have exceeded all of the
performance objectives specified in Executive’s bonus plan for such year, whether or not
such objectives actually have been achieved as of the Termination Date, which amounts shall
be prorated based on the actual number of days elapsed in such year prior to the Termination
Date, and (B) if Executive’s bonus plan has not been determined for the calendar year in
which the Termination Date occurs, the maximum bonus amount to which Executive would be
entitled under Section 3(c) with respect to the calendar year that ended prior to the
Termination Date, determined as if Executive, Holdings and the

- 5 -

 

Subsidiaries have exceeded all of the performance objectives specified in Executive’s
bonus plan for such year, whether or not such objectives actually have been achieved as of
the Termination Date, which amount shall be prorated based on the actual number of days
elapsed in such year prior to the Termination Date (in either case, payable at the same time
it would have been paid pursuant to Section 3(c));

          (iv) payment in respect of any unused paid time off and sick pay of Executive in such
amounts as have accrued as of the Termination Date in accordance with the Company’s policies
with respect thereto as in effect during the Employment Period, and reimbursement of any
business expenses incurred by Executive but not reimbursed prior to the Termination Date in
accordance with and reimbursable under the terms of the Company’s policies with respect
thereto as in effect on the Termination Date (in each case, payable in a lump sum within ten
(10) business days after the Termination Date); and

          (v) an amount equal to the cost of the premiums for continued health and dental
insurance for Executive and/or Executive’s dependents in accordance with COBRA for the
period commencing on the Termination Date and ending on the earliest of (A) the date on
which Executive’s COBRA period terminates or expires, (B) the date on which the Disability
Severance Period expires, and (C) the date on which benefits have commenced under the
Company’s long-term disability program, if any (payable in monthly installments during and
concurrently with Executive’s COBRA period); provided that if Executive’s COBRA
period is terminated prior to expiration of the Disability Severance Period, then Executive
shall be entitled to receive a lump sum payment within fifteen (15) calendar days after
written notice of such termination or expiration from Executive to the Board in an amount
equal to the cost of the premiums for continued health and dental insurance for Executive
and/or Executive’s dependents in accordance with COBRA (assuming such continued insurance
coverage remained available at the same monthly cost) for the period commencing on the date
of such termination or expiration and ending on the date on which the Disability Severance
Period expires.

In addition, if the Employment Period is terminated due to Executive’s becoming Disabled (but, for
the avoidance of doubt, not due to his death), then Executive (or his estate or beneficiary) shall
be entitled to receive, during the period commencing on the Termination Date and ending on the
earlier of (A) the date on which Executive becomes eligible for long-term disability benefits under
any long-term disability program sponsored by the Company, and (B) six (6) months after the
Termination Date (such period, the “Disability Severance Period”), continued installment
payments of Executive’s Base Salary as in effect on the Termination Date, which shall be payable
over the Disability Severance Period in regular installments in accordance with the Company’s
general payroll practices as in effect on the Termination Date, but in no event less frequently
than monthly.

          (d) No-Fault Termination. If the Employment Period is terminated in connection with a
No-Fault Termination, then (i) the Company shall pay Executive (A) Executive’s unpaid Base Salary
through the Termination Date (payable in accordance with Section 3(a)) and (B) any bonus
amount under Section 3(c) to which Executive is entitled determined by reference to the
calendar year that ended on or prior to the Termination Date (payable at the same time it would
have been paid pursuant to Section 3(c)), and (ii) Section 7 shall terminate and
have no further force or effect; provided that such termination will not relieve Executive
of any liability for breach of Section 7 prior to such termination.

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          (e) Other Termination. If the Employment Period is terminated (i) by the Company for
Cause, or (ii) by Executive’s resignation without Good Reason, then the Company shall pay Executive
(A) Executive’s unpaid Base Salary through the Termination Date (payable in accordance with
Section 3(a)) and (B) any bonus amount under Section 3(c) to which Executive is
entitled determined by reference to the calendar year that ended on or prior to the Termination
Date (payable at the same time it would have been paid pursuant to Section 3(c)).

          (f) Interest. Without limiting the rights of Executive at law or in equity, if the
Company fails to make any payment required to be made hereunder on a timely basis, the Company will
pay interest on the amount thereof at an annualized rate of interest equal to the so-called
composite “prime rate” as quoted from time to time during the relevant period in The Wall
Street Journal. Such interest will be payable as it accrues on demand. Any change in such prime
rate will be effective on and as of the date of such change.

          (g) No Other Benefits. Except as otherwise expressly provided herein, Executive shall
not be entitled to any other salary, bonuses, employee benefits or compensation from Holdings or
the Subsidiaries from and after the Termination Date, and all of Executive’s rights to salary,
bonuses, employee benefits and other compensation hereunder which would have accrued or become
payable from and after the Termination Date (other than vested retirement benefits accrued on or
prior to the Termination Date, accrued life and disability insurance benefits or other amounts
owing hereunder as of the Termination Date that have not yet been paid) shall cease upon the
Termination Date, other than those expressly required under applicable law (such as COBRA).

          (h) No Mitigation. Executive is under no obligation to mitigate damages or the amount
of any payment provided for under this Section 4 by seeking other employment or otherwise.

          (i) Right of Offset. The Company may offset any bona fide obligations that Executive
owes Holdings or any of the Subsidiaries (which for the avoidance of doubt shall not include any
unliquidated obligations or obligations to the extent Executive disputes in good faith the nature
or amount thereof) against any amounts the Company or any of the Subsidiaries owes Executive
hereunder; provided that, notwithstanding the foregoing or any other provision of this
Agreement to the contrary, in no event shall any payment under this Agreement that constitutes
“deferred compensation” for purposes of Code Section 409A be subject to offset, counterclaim or
recoupment by any other amount unless otherwise permitted by Code Section 409A.

          (j) Section 409A Compliance.

          (i) The intent of the parties is that payments and benefits under this Agreement comply
with Internal Revenue Code Section 409A and the regulations and guidance promulgated
thereunder (collectively “Code Section 409A”) and, accordingly, to the maximum
extent permitted, this Agreement shall be interpreted to be in compliance therewith. In no
event whatsoever shall Holdings or any of the Subsidiaries be liable for any additional tax,
interest or penalty that may be imposed on Executive by Code Section 409A or damages for
failing to comply with Code Section 409A.

          (ii) A termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or benefits upon or
following a termination of employment unless such termination is also a “separation from
service” within the meaning of Code Section 409A and, for purposes of any

- 7 -

 

such provision of this Agreement, references to a “termination,” “termination of
employment,” “termination of the Employment Period” or like terms shall mean “separation
from service.”

          (iii) All expenses or other reimbursements under this Agreement shall be made on or
prior to the last day of the taxable year following the taxable year in which such expenses
were incurred by Executive (provided that if any such reimbursements constitute taxable
income to Executive, such reimbursements shall be paid no later than March 15th of the
calendar year following the calendar year in which the expenses to be reimbursed were
incurred), and no such reimbursement or expenses eligible for reimbursement in any taxable
year shall in any way affect the expenses eligible for reimbursement in any other taxable
year.

          (iv) For purposes of Code Section 409A, Executive’s right to receive any installment
payment pursuant to this Agreement shall be treated as a right to receive a series of
separate and distinct payments.

          (v) Whenever a payment under this Agreement specifies a payment period with reference
to a number of days (e.g., “payment shall be made within fifteen (15) days following
the Termination Date”), the actual date of payment within the specified period shall be
within the sole discretion of the Company.

     5. Confidential Information.

          (a) Protection of Confidential Information. Executive acknowledges that the continued
success of Holdings and the Subsidiaries depends upon the use and protection of a large body of
confidential and proprietary information. All of such confidential and proprietary information now
existing or to be developed in the future will be referred to in this Agreement as
“Confidential Information.” Confidential Information will be interpreted broadly to
include, without limitation, all information that is (i) related to Holdings’ or the Subsidiaries’
(including any of their predecessors’ prior to being acquired by the Company) current or potential
business and (ii) is not generally or publicly known (including, without specific limitation, the
information, observations and data concerning (A) acquisition opportunities in or reasonably
related to Holdings’ or the Subsidiaries’ business or industry, (B) identities and requirements of,
contractual arrangements with and other information regarding Holdings’ or the Subsidiaries’
employees (including personnel files and other information), suppliers, distributors, customers,
independent contractors, third-party payors, providers or other business relations and their
confidential information, including, without limitation, patient records, medical histories and
other information concerning patients (including, without limitation, all “Protected Health
Information” within the meaning of the Health Insurance Portability and Accountability Act), and
(C) internal business information and intellectual property of every kind and description of
Holdings and the Subsidiaries). Executive agrees that during the Employment Period and for five (5)
years thereafter, he shall not disclose to any unauthorized person or use for his own account any
of such Confidential Information, whether or not developed by Executive, without the Board’s prior
written consent, unless and to the extent that any Confidential Information (i) was known to
Executive prior to the negotiation of this Agreement or the Employment Period from a source (other
than Holdings, the Subsidiaries or any of their respective agents) that, to the knowledge of
Executive, was not prohibited from disclosing such information by a legal, contractual or fiduciary
obligation to Holdings or any of the Subsidiaries, (ii) becomes

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generally known to and available for use by the public other than as a result of Executive’s
acts or omissions to act or (iii) is required to be disclosed pursuant to any applicable law or
court order.

          (b) Use of Others’ Confidential Information. During the Employment Period, Executive
shall not use or disclose any confidential information or trade secrets, if any, of any former
employers or any other Person to whom Executive has an obligation of confidentiality. If at any
time during his employment with the Company, Executive believes he is being asked to engage in work
that will, or will be likely to, jeopardize any confidentiality or other obligations Executive may
have to former employers, then Executive shall immediately advise the Board so that Executive’s
duties can be modified appropriately.

          (c) Third-Party Information. Executive understands that Holdings and the Subsidiaries
will receive from third parties confidential or proprietary information (“Third-Party
Information”) subject to a duty on Holdings’ and the Subsidiaries’ part to maintain the
confidentiality of such information and to use it only for certain limited purposes. During the
Employment Period and thereafter, and without in any way limiting the provisions of Section
5(a) above, Executive will hold Third-Party Information in the strictest confidence and will
not disclose to anyone (other than personnel of Holdings or the Subsidiaries who need to know such
information in connection with their work for Holdings or the Subsidiaries) or use, except in
connection with his work for Holdings or the Subsidiaries, Third-Party Information unless expressly
authorized by the Board in writing.

     6. Ownership of Intellectual Property, Inventions and Patents. Executive acknowledges
that all discoveries, concepts, ideas, inventions, innovations, improvements, developments,
methods, processes, programs, designs, analyses, drawings, reports, patent applications,
copyrightable work and mask work (whether or not including any confidential information) and all
registrations or applications related thereto, all other proprietary information and all similar or
related information (whether or not patentable) which relate to Holdings’ or the Subsidiaries’
actual or anticipated business, research and development or existing or future products or services
and which are conceived, developed, contributed to, made or reduced to practice by Executive
(whether alone or jointly with others) while employed by Holdings or the Subsidiaries after the
date of this Agreement, including any of the foregoing that constitutes any proprietary information
or records (“Work Product”), belong to Holdings or such Subsidiary. Any copyrightable work
prepared in whole or in part by Executive in the course of his work for any of the foregoing
entities shall be deemed a “work made for hire” to the maximum extent permitted under copyright
laws, and Holdings or such Subsidiary shall own all rights therein. To the extent any such
copyrightable work is not a “work made for hire,” Executive hereby assigns and agrees to assign to
Holdings or such Subsidiary all right, title and interest, including, without limitation,
copyright, in and to such copyrightable work. Executive shall promptly disclose such Work Product
to the Board and, at the Company’s expense, perform all actions reasonably requested by the Board
(whether during or after the Employment Period) to establish and confirm such ownership by Holdings
or such Subsidiary (including, without limitation, execution and delivery of assignments, consents,
powers of attorney and other instruments).

     7. Non-Compete; Non-Solicit.

          (a) Non-Compete. In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that during the course of his employment with the Company he has
and shall become familiar with Holdings’ and the Subsidiaries’ trade secrets and with other
Confidential Information concerning Holdings and the Subsidiaries and that his services

- 9 -

 

have been and shall be of special, unique and extraordinary value to Holdings and the
Subsidiaries, and, therefore, Executive agrees that, during the Employment Period and for a period
thereafter of twelve (12) months (the “Noncompete Period”), he shall not (i) directly or
indirectly own any interest in, manage, control, participate in, consult with, render services for,
or in any manner engage in any business that derives at least 25% of its gross revenue from the
business of providing behavioral healthcare and/or related services or (ii) directly or indirectly
manage, control, participate in, consult with or render services specifically with respect to any
unit, division, segment or subsidiary of any other business that engages in or otherwise competes
with (or was organized for the purpose of engaging in or competing with) the business of providing
behavioral healthcare and/or related services (provided that, this clause (ii) shall not be
construed to prohibit Executive from directly or indirectly owning any interest in, managing,
controlling, participating in, consulting with, rendering services for, or in any manner engaging
in any business activities with or for such business generally and, for the avoidance of doubt, not
specifically with respect to such unit, division, segment or subsidiary), in each case, within any
geographical area in which Holdings and the Subsidiaries engage in such businesses;
provided that Executive shall not be subject to the restrictions set forth in this
Section 7(a) if the Employment Period is terminated by the Company without Cause or by
Executive with Good Reason and for so long as the Company is in breach of its obligations under
Section 4(b) and such breach is not the subject of a good faith dispute between the Company
and Executive. For purposes of this Agreement, the term “participate in” shall include, without
limitation, having any direct or indirect interest in any Person, whether as a sole proprietor,
owner, stockholder, partner, joint venturer, creditor or otherwise, or rendering any direct or
indirect service or assistance to any individual, corporation, partnership, joint venture and other
business entity (whether as a director, officer, manager, supervisor, employee, agent, consultant
or otherwise). Nothing herein shall prohibit Executive from being a passive owner of not more than
2% of the outstanding stock of any class of a corporation which is publicly traded, so long as
Executive has no active participation in the business of such corporation.

          (b) Non-Solicit. During the Employment Period and for a period thereafter of twelve
(12) months (the “Nonsolicit Period”), Executive shall not directly or indirectly through
another Person (other than on behalf of Holdings and the Subsidiaries) (i) induce or attempt to
induce any employee or independent contractor of Holdings or the Subsidiaries to leave the employ
or services of Holdings or the Subsidiaries, or in any way interfere with the relationship between
Holdings and the Subsidiaries and any employee or independent contractor thereof, (ii) hire or seek
any business affiliation with any person who was an employee or independent contractor of Holdings
or the Subsidiaries at any time during the twelve (12) months prior to the Termination Date or
(iii) induce or attempt to induce any customer, supplier, licensee, licensor or other business
relation of Holdings or any Subsidiary to cease doing business with Holdings or such Subsidiary or
interfere with the relationship between any such customer, supplier, licensor or other business
relation and Holdings or any Subsidiary; provided that Executive shall not be subject to
the restrictions set forth in this Section 7(b) if the Employment Period is terminated by
the Company without Cause or by Executive with Good Reason and for so long as the Company is in
breach of its obligations under Section 4(b) and such breach is not the subject of a good
faith dispute between the Company and Executive.

          (c) Non-Disparagement. Without limiting any other obligation of Executive pursuant to
this Agreement, Executive hereby covenants and agrees that, except as may be required by applicable
law, Executive shall not make any statement, written or verbal, in any forum or media, or take any
other action in disparagement of Holdings or any of the Subsidiaries, during the Employment Period
and for a period of five (5) years thereafter (the “Non-Disparagement Period”).

- 10 -

 

Without limiting any other obligation of the Company and/or Holdings pursuant to this
Agreement, the Company and Holdings hereby covenant and agree that, except as may be required by
applicable law, the Company and Holdings shall cause their executive officers and members of their
boards of directors or boards of managers, as applicable, and each of Reeve B. Waud and Charles E.
Edwards not to make any statement, written or verbal, in any forum or media, or take any other
action in disparagement of Executive, during the Employment Period and the Non-Disparagement
Period.

          (d) Blue-Pencil. If, at the time of enforcement of Section 5 or 6 or
this Section 7, a court shall hold that the duration, scope or area restrictions stated
herein are unreasonable under circumstances then existing, the parties agree that the maximum
duration, scope or area reasonable under such circumstances shall be substituted for the stated
duration, scope or area and that the court shall be allowed to revise the restrictions contained
herein to cover the maximum duration, scope and area permitted by law. Executive hereby
acknowledges and represents that he has either consulted with independent legal counsel regarding
his rights and obligations under this Agreement or knowingly and voluntarily waived the opportunity
to do so and that he fully understands the terms and conditions contained herein.

          (e) Additional Acknowledgments. Executive acknowledges that the provisions of
Sections 5 and 6 and this Section 7 are in consideration of Executive’s
employment with the Company and other good and valuable consideration as set forth in this
Agreement. In addition, Executive agrees and acknowledges that the restrictions contained in
Sections 5 and 6 and this Section 7 do not preclude Executive from earning
a livelihood, nor do they unreasonably impose limitations on Executive’s ability to earn a living.
In addition, Executive acknowledges (x) that the business of Holdings and the Subsidiaries will be
conducted throughout the United States and its territories and beyond, (y) notwithstanding the
state of organization or principal office of Holdings or any of the Subsidiaries or facilities, or
any of their respective executives or employees (including Executive), it is expected that Holdings
and the Subsidiaries will have business activities and have valuable business relationships within
its industry throughout the United States and its territories and beyond, and (z) as part of
Executive’s responsibilities, Executive will be traveling throughout the United States and other
jurisdictions where Holdings and the Subsidiaries conduct business during the Employment Period in
furtherance of the Company’s business relationships. Executive agrees and acknowledges that the
potential harm to Holdings and the Subsidiaries of the non-enforcement of any provision of
Sections 5 and 6 and this Section 7 outweighs any potential harm to
Executive of its enforcement by injunction or otherwise. Executive acknowledges that he has
carefully read this Agreement and either consulted with legal counsel of Executive’s choosing
regarding its contents or knowingly and voluntarily waived the opportunity to do so, has given
careful consideration to the restraints imposed upon Executive by this Agreement and is in full
accord as to their necessity for the reasonable and proper protection of confidential and
proprietary information of Holdings and the Subsidiaries now existing or to be developed in the
future. Executive expressly acknowledges and agrees that each and every restraint imposed by this
Agreement is reasonable with respect to subject matter, duration and geographical area.

          (f) Specific Performance. In the event of the breach or a threatened breach by
Executive of any of the provisions of Section 5 or 6 or this Section 7,
Holdings and the Subsidiaries would suffer irreparable harm and that money damages would not be a
sufficient remedy and, in addition and supplementary to other rights and remedies existing in its
favor whether under this Agreement or under any other agreement, the Company shall be entitled to
specific performance and/or injunctive or other equitable relief from a court of competent
jurisdiction in order to enforce or prevent any violations of the provisions hereof (without
posting a bond or other security). In

- 11 -

 

addition, in the event of an alleged breach or violation by Executive of this Section
7, the Noncompete Period, the Nonsolicit Period or the Non-Disparagement Period, as applicable,
shall be tolled until such breach or violation has been duly cured.

     8. Executive’s Representations. Executive hereby represents and warrants to the
Company that (a) the execution, delivery and performance of this Agreement by Executive do not and
shall not conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Executive is a party or by which he is bound, (b)
except as previously disclosed to the Company in writing (a copy of each such agreement having been
provided to the Company prior to the date hereof or being publicly available on EDGAR as of the
date hereof), Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity, (c) except as previously
disclosed to the Company in writing, Executive took nothing with him which belonged to any former
employer when Executive left his prior position and Executive has nothing that contains any
information which belongs to any former employer, in either case which would reasonably be likely
to result in any liability to Holdings or any Subsidiary, and (d) upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents
that he has either consulted with independent legal counsel regarding his rights and obligations
under this Agreement or knowingly and voluntarily waived the opportunity to do so and that he fully
understands the terms and conditions contained herein.

     9. Definitions. For purposes of this Agreement, the following terms shall have the
meanings set forth below:

          “Cause” shall mean with respect to Executive one or more of the following: (i) the
conviction of or plea of nolo contendere to a felony or other crime involving moral turpitude or
the conviction of any crime involving misappropriation, embezzlement or fraud with respect to
Holdings or any of the Subsidiaries or any of their customers, suppliers or other business
relations, (ii) conduct outside the scope of Executive’s duties and responsibilities under this
Agreement that causes Holdings or any of the Subsidiaries substantial public disgrace or disrepute
or economic harm, (iii) repeated failure to perform duties consistent with this Agreement as
reasonably directed by the Board, (iv) any act or knowing omission aiding or abetting a competitor,
supplier or customer of Holdings or any of the Subsidiaries to the disadvantage or detriment of
Holdings and the Subsidiaries, (v) breach of fiduciary duty, gross negligence or willful misconduct
with respect to Holdings or any of the Subsidiaries, (vi) an administrative or other proceeding
results in the suspension or debarment of Executive from participation in any contracts with, or
programs of, the United States or any of the fifty states or any agency or department thereof, or
(vii) any other material breach by Executive of this Agreement or any other agreement between
Executive and Holdings or any of the Subsidiaries, which is not cured to the Board’s reasonable
satisfaction within thirty (30) days after written notice thereof to Executive.

          “Disabled” shall mean with respect to Executive that, as a result of his incapacity
due to physical or mental illness, Executive is considered disabled under the Company’s long-term
disability insurance plans or, in the absence of such plans, Executive is unable to perform the
essential duties, responsibilities and functions of his position with the Company as a result of
any mental or physical disability or incapacity even with reasonable accommodations of such
disability or incapacity provided by Holdings and the Subsidiaries or if providing such
accommodations would be unreasonable, all as determined by the Board in its good faith judgment.
Executive shall cooperate

- 12 -

 

in all respects with the Company if a question arises as to whether he has become Disabled
(including, without limitation, submitting to an examination by a medical doctor or other health
care specialists selected by the Company and authorizing such medical doctor or such other health
care specialist to discuss Executive’s condition with the Company).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “Good Reason” shall mean if Executive resigns his employment with the Company (a) as a
result of one or more of the following actions (in each case taken without Executive’s written
consent): (i) a reduction in Executive’s Base Salary (other than as part of an across-the-board
reduction that (A) results in a 10% or less reduction of Executive’s Base Salary as in effect on
the date of any such reduction or (B) is approved by the Chief Executive Officer of the Company),
(ii) a material diminution of Executive’s job duties or responsibilities inconsistent with
Executive’s position, which shall include, without limitation, Executive’s removal from the
position specified in Section 2(a) or the Company’s hiring an individual at an equivalent
or senior level to Executive to perform substantially the same duties and responsibilities set
forth in Section 2(a)); (iii) any other material breach by the Company or Holdings (or
their successors) of this Agreement; or (iv) a relocation of the Company’s and Holdings’ principal
executive offices and corporate headquarters outside of a thirty (30) mile radius of Nashville,
Tennessee following relocation thereto in accordance with Section 1; provided
that, none of the events described in clauses (i) through (iv) above shall constitute Good
Reason unless Executive shall have notified the Company and/or Holdings in writing describing the
event which constitutes Good Reason within ninety (90) days after the occurrence of such event and
then only if the Company and/or Holdings and the Subsidiaries shall have failed to cure such event
within thirty (30) days after the Company’s and/or Holdings’ receipt of such written notice and
Executive elects to terminate his employment as a result at the end of such thirty (30) day period,
or (b) for any reason within 180 days following a Sale of the LLC (as defined in the LLC
Agreement).

          “LLC Agreement” means that certain Amended and Restated Limited Liability Company
Agreement of Acadia Healthcare Holdings, LLC, dated as of August 31, 2009, as amended, modified or
waived from time to time.

          “No-Fault Termination” means any termination of Executive’s employment by the Company
(other than a termination for Cause) or Executive (other than resignation for Good Reason) prior to
the Initial Closing (as defined in that certain Executive Purchase Agreement, dated as of the date
hereof, by and between Holdings and Executive) and after the No-Fault Termination Date.

          “No-Fault Termination Date” means (i) if Holdings or any Subsidiary has entered into a
Qualified Acquisition Agreement on or prior to March 31, 2011, the date on which such Qualified
Acquisition Agreement is terminated in accordance with its terms prior to consummation of the
transactions contemplated thereby, and (ii) March 31, 2011, if neither Holdings nor any Subsidiary
has entered into a Qualified Acquisition Agreement on or prior to such date.

          “Person” shall mean an individual, a partnership, a corporation (whether or not for
profit), a limited liability company, an association, a joint stock company, a trust, a joint
venture, or other business entity, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

- 13 -

 

          “Qualified Acquisition” means the acquisition of a target company providing behavioral
healthcare and/or related services that has EBITDA of at least $20,000,000 during the full 12
calendar months immediately preceding such acquisition, or any other acquisition deemed by the
Board to be a “Qualified Acquisition.”

          “Qualified Acquisition Agreement” means the definitive purchase agreement with respect
to a Qualified Acquisition.

          “Subsidiary” shall mean any corporation or other entity of which the securities or
other ownership interests having the voting power to elect a majority of the board of directors or
other governing body are, at the time of determination, owned by Holdings or of which Holdings
serves as the managing member or in a similar capacity or of which Holdings holds a majority of the
partnership or limited liability company or similar interests or is otherwise entitled to receive a
majority of distributions made by it, in each case directly or through one or more Subsidiaries.

     10. Survival. Except as otherwise provided in Section 4(d), Sections 4
through 27 (other than Section 22) shall survive and continue in full force in
accordance with their terms notwithstanding the expiration or termination of the Employment Period.

     11. Notices. Any notice provided for in this Agreement shall be in writing and shall
be personally delivered, sent by facsimile (with hard copy to follow), sent by reputable overnight
courier service, or mailed by first class mail, return receipt requested, to the recipient at the
address below indicated:

Notices to Executive:

Jack E. Polson

[REDACTED]

with copies (which shall not constitute notice) to:

Waller Lansden Dortch & Davis, LLP

511 Union Street, Suite 2700

Nashville, Tennessee 37219

Attention: Matthew R. Burnstein

Facsimile: (615) 244-6804

Notices to the Company:

Acadia Healthcare Holdings, LLC

2849 Paces Ferry Road, Suite 750

Atlanta, Georgia 30339

Attention: Board of Managers

Facsimile: (678) 384-5703

- 14 -

 

with copies (which shall not constitute notice) to:

c/o Waud Capital Partners, L.L.C.

300 North LaSalle Street, Ste. 4900

Chicago, Illinois 60654

Attention: Reeve B. Waud

                 Charles E. Edwards

Facsimile: (312) 676-8444

Kirkland & Ellis LLP

300 North LaSalle Street

Chicago, Illinois 60654

Attention: Richard W. Porter, P.C.

Facsimile: (312) 862-2200

or such other address or to the attention of such other Person as the recipient party shall have
specified by prior written notice to the sending party. Any notice under this Agreement shall be
deemed to have been given when so delivered or sent by facsimile (subject to automatic proof of
transmission), one day after being sent by overnight courier or three days after being mailed by
first class mail, return receipt requested, as applicable.

     12. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement or any action in any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

     13. Complete Agreement. This Agreement and those documents expressly referred to
herein embody the complete agreement and understanding among the parties with respect to, and
supersede and preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to, the subject matter hereof in any way,
including, without limitation, any prior employment agreement, by and between Executive and
Holdings or any of the Subsidiaries.

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

     15. Counterparts. This Agreement may be executed in separate counterparts (including
by means of facsimile or by electronic transmission in portable document format (pdf) or comparable
electronic transmission), each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.

     16. Successors and Assigns. This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other, assign, transfer or delegate this Agreement
or any rights or obligations hereunder; provided that (i) this Agreement will inure to the
benefit of and be enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees (but otherwise will not otherwise be
assignable, transferable or delegable by Executive), and (ii) this Agreement will be assignable,
transferable or delegable by the Company, without the consent of Executive, to Holdings or any of
the Subsidiaries or to any successor (whether direct or indirect, in whatever form of transaction)
to all or substantially

- 15 -

 

all of the business or assets of the Company or Holdings or the Subsidiaries (none of which
shall constitute a termination of Executive’s employment hereunder).

     17. Choice of Law and Forum. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and schedules hereto
shall be governed by, and construed in accordance with, the laws of the State of Delaware, without
giving effect to any choice of law or conflict of law rules or provisions (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. The parties agree that any dispute arising out of or
relating to this Agreement, exclusively shall be brought in the state courts located in Williamson
County, Tennessee or the United States District Court for the Middle District of Tennessee. Each
party hereby waives any objection to the personal or subject matter jurisdiction and venue of such
courts.

     18. Amendment and Waiver. The provisions of this Agreement may be amended or waived
only with the prior written consent of the Company (as approved by the Board) and Executive, and no
course of conduct or course of dealing or failure or delay by any party hereto in enforcing or
exercising any of the provisions of this Agreement (including, without limitation, the Company’s
right to terminate the Employment Period for Cause) shall affect the validity, binding effect or
enforceability of this Agreement or be deemed to be an implied waiver of any provision of this
Agreement.

     19. Insurance. The Company may, at its discretion, apply for and procure in its own
name and for its own benefit life and/or disability insurance on Executive in any amount or amounts
considered advisable. Executive agrees to cooperate in any medical or other examination, supply any
information and execute and deliver any applications or other instruments in writing as may be
reasonably necessary to obtain and constitute such insurance.

     20. Indemnification and Reimbursement of Payments on Behalf of Executive. Holdings and
the Subsidiaries shall be entitled to deduct or withhold from any amounts owing from Holdings or
any of the Subsidiaries to Executive any federal, state, local or foreign withholding taxes, excise
tax, or employment taxes (“Taxes”) imposed with respect to Executive’s compensation or
other payments from Holdings or any of the Subsidiaries or Executive’s ownership interest in
Holdings or any of the Subsidiaries (including, without limitation, wages, bonuses, dividends, the
receipt or exercise of equity options and/or the receipt or vesting of restricted equity), as may
be required to be deducted or withheld by any applicable law or regulation. In the event Holdings
or any of the Subsidiaries does not make such deductions or withholdings, Executive shall indemnify
Holdings and the Subsidiaries for any amounts paid with respect to any such Taxes, together (if
such failure to withhold was at the written direction of Executive or if Executive was informed in
writing by Holdings or such Subsidiary that such deductions or withholdings were not made) with any
interest, penalties and related expenses thereto.

     21. Waiver of Jury Trial. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE
PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL),
EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING
TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

- 16 -

 

     22. Corporate Opportunity. During the Employment Period, Executive shall submit to the
Board all investment or business opportunities of which he becomes aware and which are within the
scope and investment objectives of Holdings or any of the Subsidiaries.

     23. Executive’s Cooperation. During the Employment Period and for a period of six (6)
months thereafter, Executive shall cooperate with Holdings and the Subsidiaries in any internal
investigation or administrative, regulatory or judicial investigation or proceeding or any dispute
with any third party as reasonably requested by Holdings or the Subsidiaries (including, without
limitation, Executive being available to Holdings and the Subsidiaries upon reasonable notice for
interviews and factual investigations, appearing at Holdings’ or any of the Subsidiaries’ request
to give testimony without requiring service of a subpoena or other legal process, volunteering
Holdings and the Subsidiaries all pertinent information and turning over to Holdings and the
Subsidiaries all relevant documents which are or may come into Executive’s possession, all at times
and on schedules that are reasonably consistent with Executive’s other permitted activities and
commitments), all at Holdings’ or the Subsidiaries’ sole cost and expense. After such six (6) month
period, if Executive is requested to engage or participate in any of the foregoing, then Executive
will do so and Holdings or the Subsidiaries shall compensate Executive for his time at an hourly
rate of $250/hour.

     24. Delivery by Facsimile or PDF. This Agreement, the agreements referred to herein,
and each other agreement or instrument entered into in connection herewith or therewith or
contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine or electronic transmission in pdf, shall be treated in
all manner and respects as an original agreement or instrument and shall be considered to have the
same binding legal effect as if it were the original signed version thereof delivered in person. At
the request of any party hereto or to any such agreement or instrument, each other party hereto or
thereto shall re-execute original forms thereof and deliver them to all other parties. No party
hereto or to any such agreement or instrument shall raise the use of a facsimile machine or
electronic transmission in pdf to deliver a signature or the fact that any signature or agreement
or instrument was transmitted or communicated through the use of a facsimile machine or electronic
transmission in pdf as a defense to the formation or enforceability of a contract and each such
party forever waives any such defense.

     25. Indemnification and Directors and Officers Insurance.

          (a) During the Employment Period and for a period of six (6) years thereafter, the Company
shall, to the fullest extent permitted under applicable law, indemnify and hold harmless Executive
against all costs and expenses (including attorneys’ fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim, action, suit,
proceeding or investigation (whether arising before or after the date hereof), whether civil,
criminal, administrative or investigative, arising out of or pertaining to any action or omission
in their capacity as an officer, director, employee, fiduciary or agent of the Company (or Holdings
or any Subsidiary). In the event of any such claim, action, suit, proceeding or investigation, (i)
the Company shall pay the reasonable fees and expenses of counsel selected by Executive promptly
after statements therefor are received, (ii) neither the Company, Holdings nor any Subsidiary shall
settle, compromise or consent to the entry of any judgment in any pending or threatened action to
which Executive is a party (and in respect of which indemnification could be sought by Executive
hereunder), unless such settlement, compromise or consent includes an unconditional release of
Executive from all liability arising out of such action, or Executive otherwise consents (which
consent shall not be unreasonably withheld, conditioned or delayed), and (iii) the Company,
Holdings and the applicable Subsidiaries

- 17 -

 

shall cooperate in the defense of any such matter. In the event that any claim for
indemnification is asserted or made within the Employment Period or the six (6) year period
thereafter, all rights of Executive to indemnification in respect of such claim shall continue
until the final disposition of such claim. The rights of Executive under this Section 25(a)
shall be in addition to any rights Executive may have under the organizational documents of the
Company, Holdings or any Subsidiary, under any law, or under any agreement of Executive with the
Company, Holdings or any Subsidiary.

          (b) During the Employment Period and for a period of six (6) years thereafter, the Company, or
any successor to the Company, shall purchase and maintain, at its own expense, directors and
officers liability insurance providing coverage for Executive in the same or greater amount as for
members of the Board.

     26. Legal Fees and Expenses.

          (a) The Company shall pay or reimburse all fees, expenses and disbursements of Executive and
his agents, representatives, accountants, and counsel incurred in connection with the preparation,
negotiation, execution and delivery of this Agreement and any other agreement or instrument to be
executed and delivered by Executive in connection with Executive’s investment in Holdings;
provided, however, the aggregate amount payable or reimbursable by the Company
pursuant to (i) this Section 26(a), and (ii) the Company’s employment agreements entered
into simultaneously herewith shall not exceed $50,000.

          (b) In the event any litigation or other court action, arbitration or similar adjudicatory
proceeding (a “Proceeding”) is commenced or threatened by any party hereto (the
“Claiming Party”) to enforce its rights under this Agreement against any other party hereto
(the “Defending Party”), if the Defending Party is the prevailing party in such Proceeding,
all fees, costs and expenses, including, without limitation, reasonable attorneys fees and court
costs, incurred by the Defending Party in such Proceeding, will be reimbursed by the Claiming
Party, and, if the Claiming Party is the prevailing party in such Proceeding, all fees, costs and
expenses, including, without limitation, reasonable attorneys fees and court costs, incurred by the
Claiming Party in such Proceeding, will be reimbursed by the Defending Party; provided that
if the Defending Party prevails in part, and loses in part, in such Proceeding, the court,
arbitrator or other adjudicator presiding over such Proceeding shall award a reimbursement of the
fees, costs and expenses incurred by the Claiming Party and the Defending Party on an equitable
basis. For purposes of this Section 26(b), and without limiting the generality of the
foregoing, the Defending Party will be deemed to have prevailed in any Proceeding if the Claiming
Party commences or threatens such Proceeding and (i) the underlying claim(s) in such Proceeding are
subsequently dropped or dismissed, or (ii) the Defending Party defeats any such claim(s).

     27. Holdings Guarantee. Holdings unconditionally guarantees and promises to pay and
perform, upon Executive’s demand following a default by the Company, any and all obligations of the
Company from time to time owed to Executive under this Agreement, subject to any applicable cure
period. Holdings further agrees that if the Company shall fail to fulfill any of its obligations
under this Agreement, Holdings will perform the same on demand as a principal obligor, and not as a
surety. This is a continuing guarantee of the obligations and may not be revoked and shall not
otherwise terminate unless and until the obligations of the Company have been paid and performed in
full. Holdings represents and warrants that it will receive a substantial benefit from Company’s
employment of Executive, which employment gives rise to the obligations of the Company under this
Agreement. Holdings acknowledges that Executive would not execute this Agreement if it did not

- 18 -

 

receive this guarantee. The obligations of Holdings under this Section 27 will
terminate automatically upon a Sale of the LLC (as defined in the LLC Agreement).

*  *  *  *  *

- 19 -

 

          IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date
first written above.

	 	 	 	 	 
	 	COMPANY:

ACADIA MANAGEMENT COMPANY, INC.

 	 
	 	By:  	/s/ Joey A. Jacobs
 	 
	 	 	Name:  	Joey A. Jacobs 	 
	 	 	Its: Chief Executive Officer 	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ Jack E. Polson
 	 
	 	Name:  Jack E. Polson 	 
	 	 	 	 
	 

ACKNOWLEDGED AND AGREED:

HOLDINGS:

ACADIA HEALTHCARE HOLDINGS, LLC,

solely with respect to Section 7(c) and Section 27

of the Agreement

	 	 	 	 	 
	By:  	/s/ Joey A. Jacobs
 	 
	 	Name:  	Joey A. Jacobs 	 
	 	Its: Chief Executive Officer 	 
	 

 

 

Schedule 2(b)

Other Activities

None.

 

 

Schedule 3(c)

2011 Bonus Plan

Executive’s maximum bonus for the calendar year ending December 31, 2011, shall be one hundred
percent (100%) of Base Salary. Executive’s bonus for the calendar year ending December 31, 2011
will be based on the achievement of the following criteria as determined by the Board or such
Compensation Committee (if there is one) in its sole but reasonable discretion:

	 	1.	 	80% of bonus will be based on actual EBITDA of Holdings versus budgeted EBITDA
(the “EBITDA Portion”). Eligibility for the EBITDA Portion will begin upon
achievement of 95% of budgeted EBITDA, with (i) 40% of Base Salary earned at 95% of
budgeted EBITDA, (ii) 80% of Base Salary earned at 110% of budgeted EBITDA and higher
and (iii) the percentage of Base Salary being proportionately applied between 95% of
budgeted EBITDA and 110% of budgeted EBITDA. Budgeted EBITDA will be established by the
Board not later than March 31. Budgeted EBITDA will be adjusted by the Board, in its
sole but reasonable discretion, to reflect any acquisitions and dispositions during the
year.

	 	2.	 	20% of bonus will be based on Executive’s satisfaction of other criteria for
performance established by the Board and the Chief Executive Officer.

 

 

EXHIBIT A

GENERAL RELEASE

     I, Jack E. Polson, in consideration of and subject to the performance by Acadia Management
Company, Inc., a Delaware corporation (together with its subsidiaries and affiliates, the
“Company”), of its obligations under the Employment Agreement, dated as of January 31, 2011
(the “Agreement”), do hereby release and forever discharge as of the date hereof the
Company and its affiliates and all present and former directors, officers, agents, representatives,
employees, successors and assigns of the Company and its affiliates and the Company’s direct and
indirect owners (collectively, the “Released Parties”) to the extent provided below.

     1. I understand that any payments or benefits paid or granted to me under Sections 4(b)(ii)
and 4(b)(iii) of the Agreement represent, in part, consideration for signing this General Release
and are not salary, wages or benefits to which I was already entitled. I understand and agree that
I will not receive the payments and benefits specified in Sections 4(b)(ii) and 4(b)(iii) of the
Agreement unless I execute this General Release and do not revoke this General Release within the
time period permitted hereafter or breach this General Release.

     2. Except as provided in paragraph 4 below and except for the provisions of the Agreement
which expressly survive the termination of my employment with the Company, I knowingly and
voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever
discharge the Company and the other Released Parties from any and all claims, suits, controversies,
actions, causes of action, cross-claims, counter-claims, demands, debts, compensatory damages,
liquidated damages, punitive or exemplary damages, other damages, claims for costs and attorneys’
fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through
the date I executed this General Release) and whether known or unknown, suspected, or claimed
against the Company or any of the Released Parties which I, my spouse, or any of my heirs,
executors, administrators or assigns, may have, which arise out of or are connected with my
employment with, or my separation or termination from, the Company (including, but not limited to,
any allegation, claim or violation, arising under: Title VII of the Civil Rights Act of 1964, as
amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended
(including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the
Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker
Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974;
any applicable Executive Orders; the Fair Labor Standards Act; or their state or local
counterparts; or under any other federal, state or local civil or human rights law, or under any
other local, state, or federal law, regulation or ordinance; or under any public policy, contract
or tort, or under common law; or arising under any policies, practices or procedures of the
Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress,
defamation; or any claim for costs, fees, or other expenses, including attorneys’ fees incurred in
these matters) (all of the foregoing collectively referred to herein as the “Claims”);
provided that, this General Release shall not apply to or affect or impair (i) Claims for
vested benefits pursuant to any Company employee benefit plan in which I was a participant prior to
the termination of my employment with the Company; (ii) any Claims for unemployment insurance
benefits or workers’ compensation benefits applicable to the period through the termination of my
employment with the Company; or (iii) any Claims that may arise for my indemnification under any
directors and officers or similar insurance, or under the limited liability company agreement,
certificate of formation and/or other applicable governing documents of the Company, its
subsidiaries and/or affiliates.

- 1 -

 

     3. I represent that I have made no assignment or transfer of any right, claim, demand, cause
of action, or other matter covered by paragraph 2 above.

     4. I agree that this General Release does not waive or release any rights or claims that I may
have under the Age Discrimination in Employment Act of 1967 which arise after the date I execute
this General Release). I acknowledge and agree that my separation from employment with the Company
is in compliance with the terms of the Agreement and company policy and shall not serve as the
basis for any Claim (including, without limitation, any claim under the Age Discrimination in
Employment Act of 1967).

     5. I agree that I am waiving all rights to sue or obtain equitable, remedial or punitive
relief from any or all Released Parties of any kind whatsoever, including, without limitation,
reinstatement, back pay, front pay, attorneys’ fees and any form of injunctive relief.
Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to
waive any right that cannot be waived under applicable law, including the right to file an
administrative charge or participate in an administrative investigation or proceeding; provided,
however, that I disclaim and waive any right to share or participate in any monetary award
resulting from the prosecution of such charge or investigation or proceeding.

     6. In signing this General Release, I acknowledge and intend that it shall be effective as a
bar to each and every one of the Claims hereinabove mentioned. I expressly consent that this
General Release shall be given full force and effect according to each and all of its express terms
and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any
state statute that expressly limits the effectiveness of a general release of unknown, unsuspected
and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove
mentioned. I acknowledge and agree that this waiver is an essential and material term of this
General Release and that without such waiver the Company would not have agreed to the terms of the
Agreement. I further agree that in the event I should bring a Claim seeking damages against the
Company, or in the event I should seek to recover against the Company in any Claim brought by a
governmental agency on my behalf, this General Release shall serve as a complete defense to such
Claims to the maximum extent permitted by applicable law.

     7. I represent that I am not aware of any pending charge or complaint of the type described in
paragraph 2 above as of the execution of this General Release. I represent that I am not aware of
any claim by me other than the claims that are released by this General Release. I acknowledge that
I may hereafter discover claims or facts in addition to or different than those which I now know or
believe to exist with respect to the subject matter of the release set forth in paragraph 2 above
and which, if known or suspected at the time of entering into this General Release, may have
materially affected this General Release and my decision to enter into it. Nevertheless, I hereby
waive any right, claim or cause of action that might arise as a result of such different or
additional claims or facts.

     8. I agree that I will forfeit all amounts payable by the Company pursuant to Sections
4(b)(ii) and 4(b)(iii) of the Agreement if I challenge the validity of this General Release. I also
agree that if I violate this General Release by suing the Company or the other Released Parties, I
will pay all costs and expenses of defending against the suit incurred by the Released Parties,
including reasonable attorneys’ fees, and upon the Company’s request return all payments
theretofore received by me pursuant to Sections 4(b)(ii) and 4(b)(iii) of the Agreement.

- 2 -

 

     9. I agree that this General Release and the Agreement are confidential and agree not to
disclose any information regarding the terms of this General Release or the Agreement, except to my
immediate family and any tax, legal or other counsel I have consulted regarding the meaning or
effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the
same to anyone.

     10. Any non-disclosure provision in this General Release does not prohibit or restrict me (or
my attorney) from responding to any inquiry about this General Release or its underlying facts and
circumstances by the Securities and Exchange Commission (SEC), the National Association of
Securities Dealers, Inc. (NASD), any other self-regulatory organization or governmental entity.

     11. Notwithstanding anything in this General Release to the contrary, this General Release
shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach
by the Company or by any Released Party of the Agreement after the date hereof.

     12. Whenever possible, each provision of this General Release shall be interpreted in, such
manner as to be effective and valid under applicable law, but if any provision of this General
Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality and unenforceability shall not affect any
other provision or its validity and enforceability in any other jurisdiction, but this General
Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal
or unenforceable provision had never been contained herein.

[Signature Page Follows]

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BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

	(a)	 	I HAVE READ IT CAREFULLY;
	 
	(b)	 	I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT
NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED,
TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE
AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED;
	 
	(c)	 	I VOLUNTARILY CONSENT TO EVERYTHING IN IT;
	 
	(d)	 	I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR,
AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;
	 
	(e)	 	I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS GENERAL RELEASE SUBSTANTIALLY
IN ITS FINAL FORM ON _________________ TO CONSIDER IT AND THE CHANGES MADE SINCE THE
_________________ VERSION OF THIS GENERAL RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE
REQUIRED 21-DAY PERIOD;
	 
	(f)	 	THE CHANGES TO THIS GENERAL RELEASE SINCE _________________ EITHER ARE NOT MATERIAL OR WERE
MADE AT MY REQUEST;
	 
	(g)	 	I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS GENERAL RELEASE TO REVOKE IT
AND THAT THIS GENERAL RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION
PERIOD HAS EXPIRED;
	 
	(h)	 	I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY
COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND
	 
	(i)	 	I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR
MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE
COMPANY AND BY ME.

EXECUTIVE:

	 	 	 	 	 	 	 

	Date: 

	  
 
	 	  

Name:
Jack E. Polson
	 	     

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