1
EXHIBIT 10.41
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by
and between MEDCATH INCORPORATED, a North Carolina corporation (the "Company")
and R. XXXXXXX XXXXX, JR. ("Employee") and is effective the 1st day of August,
1999 (the "Effective Date").
RECITALS:
1. Employee has been employed by the Company prior to the date
hereof;
2. Employer and Employee desire to continue Employee's employment
in accordance with the terms of this Employment Agreement which provides to
Employee new and additional consideration which was not previously provided to
Employee by the Company;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Employee and the Company hereby
agree as follows:
1. Employment. Employee shall be employed as the President of the
Hospital Division of the Company. For new and very valuable consideration
described herein, the Company shall continue to employ Employee and Employee
accepts employment upon the terms and conditions hereinafter set forth, with
such employment to commence on the Effective Date.
2. Duties. Employee shall be a full-time employee of the Company
and, accordingly, shall devote a commensurate amount of time and effort in the
performance of Employee's duties hereunder. Employee shall be the President of
the Hospital Division of the Company. Employee shall also have such other duties
as assigned to Employee from time to time by the President and other executive
officers of the Company. Employee shall remain a full-time resident of the
Charlotte, North Carolina metropolitan area.
During the term of employment hereunder, Employee shall not be engaged
in any other business activity whether or not such business activity is pursued
for gain, profit, or other pecuniary advantage.
3. Compensation. For and in consideration of the services to be
rendered by Employee hereunder, the Company shall pay to Employee an annual
salary of Two Hundred Twenty Five Thousand Dollars ($225,000.00) ("Annual Base
Compensation") which shall be paid on a monthly basis unless otherwise agreed to
by the parties hereto. Employee's salary shall be reviewed by either the
President of the Company or other executive officers of the Company as
designated by the President from time to time. Employee shall also be eligible
to participate in an annual bonus compensation plan each year of employment. The
bonus plan will be based on factors relating to the success of the Company and
the Employee's performance. The award
2
of any such bonus shall be subject to the discretion of the Company. Employee
will only be eligible for the bonus award if Employee is employed by the Company
on October 31 following the end of the year for which the bonus applies.
4. Miscellaneous Benefits. During Employee's employment, the
Company shall provide Employee with additional benefits substantially equivalent
to those which are generally provided to other similar employees of the Company.
The Company shall reimburse Employee for reasonable expenses incurred by
Employee in the course of Employee's employment with the Company provided those
expenses are consistent with reasonable policies established from time to time
by the Company.
5. Termination of Employment.
(a) By the Company for Cause. The Company shall have the
right to terminate Employee's employment for cause as provided herein
by giving written notice thereof. "Cause" shall mean that Employee
commits a willful act of fraud, dishonesty or disloyalty toward the
Company; is convicted of criminal conduct resulting in a jail sentence
(whether or not such sentence is suspended); engages in conduct
significantly injurious to the Company monetarily; violates a material
term of this Agreement including, but not limited to, failure to
fulfill the duties assigned to Employee by the Company; becomes
disabled; or submits a notice of resignation to the Company. Employee
shall be deemed disabled if he has been unable, by reason of physical
or mental infirmity to perform on a full-time basis his assigned
responsibilities. The existence of disability shall be reasonably
determined by the Board of Directors of the Company.
(b) By the Company Without Cause. Subject to Section (d)
below, the Company may terminate Employee's employment at any time
without cause by giving Employee written notice thereof.
(c) By Employee. Employee may terminate Employee's
employment upon at least thirty (30) days' written notice either (i)
for Good Reason, or (ii) for any other reason.
For purposes of this Agreement, "Good Reason" shall
mean any of the following (without Employee's express prior written
consent):
(i) A substantial reduction by the Company of
Employee's duties or responsibilities, other than (a) as
approved by the current chief executive officer of the Company
(namely, Xxxxxxx X. Xxxxxxx) and (b) in connection with the
termination of Employee's employment by the Company for Cause,
by Employee without Good Reason or as a result of the
disability or death of Employee;
(ii) A reduction by the Company in Employee's
Annual Base Compensation or an amendment to the terms of the
bonus plan in effect for senior
2
3
executives of the Company in which Employee participates on
the date hereof which would adversely affect the ability of
Employee to receive a bonus (except that the establishment of
the earnings per share or other performance targets to be set
by the Board annually shall not be deemed to constitute such
an amendment);
(iii) A reduction or elimination of Employee's
eligibility to participate in any of Company's employee
benefit plans that is inconsistent with the eligibility of
similarly situated executives of the Company to participate
therein; or
(iv) Any relocation to a primary workplace that
is more than fifty (50) miles from Employee's workplace in
effect as of the date of this Agreement.
(d) Salary and Benefits.
(i) Only if (x) the Company terminates
Employee's employment under this Agreement for any reason
other than Cause, or (y) the Employee terminates his
employment under this Agreement for Good Reason, then the
Company will continue to be liable for Employee's Annual Base
Compensation to be paid on a monthly basis for a period of
twelve (12) months following the date of termination, as long
as and only if Employee is not otherwise in default hereunder
during that period; provided, however, that Employee's salary
shall not be payable once Employee becomes employed
substantially full-time or otherwise earns, on a monthly
basis, at least 75% of Employee's monthly salary hereunder.
(ii) Upon any termination of Employee's
employment for cause, Employee shall not be entitled to any
further salary, bonuses or benefits following the date of
termination of Employee's employment.
(iii) Upon termination of Employee's employment
for any reason, Employee shall be entitled to receive only
such additional benefits which have accrued or become payable
to Employee prior to the end of Employee's actual employment.
(iv) Upon termination, Employee shall not be
entitled to any additional salary or benefits other than those
accrued prior to the date of termination or as provided in
Section 5(d)(i) above, if any. Notwithstanding anything in
this Agreement to the contrary, no further salary or benefits
shall be due to Employee once Employee begins to receive the
proceeds of any disability insurance policy.
6. Confidentiality, Non-Disclosure and Non-Competition.
(a) In General. For purposes of this Section 6, all
references to the Company shall include all legal entities directly or
indirectly affiliated with the Company, including but not limited to,
its wholly-owned subsidiaries and the limited partnerships and limited
3
4
liability companies which are owned all or in part by the Company or
its subsidiaries and which in turn own or are developing the Company's
affiliated heart hospitals. During the course of Employee's employment,
Employee will be exposed and have access to substantial quantities of
information (which information may be in any form whatsoever, including
but not limited to information stored on a computer hard and floppy
discs, compact discs, on electromagnetic tape, or electronically
recorded) and technology (the "Confidential Information") relating to
the Company's business that are valuable trade secrets or confidential
information, including, but not limited to, information concerning
customers, operations, pricing, technology, marketing strategies,
methods of operations, management procedures and methods, design of
facilities and terms of agreements to which the Company and its
affiliates are a party, and the number of procedures, the types of
procedures and the charges for the procedures performed at the heart
hospitals or any other hospital or medical facility operated or managed
by any legal entities directly or indirectly affiliated with the
Company.
The Confidential Information was developed, compiled and/or
tested by the Company at considerable amounts of money in building upon
and expanding that Confidential Information. The Confidential
Information enables the Company to conduct its business with success
and with a competitive advantage as long as the Confidential
Information remains not generally known to others, whether those others
operate in direct competition with the Company or its customers or
begin operations in geographical areas which are of interest to the
Company, specifically within the United States.
Employee, by reason of Employee's role as an employee of the
Company, is familiar with and has access to the Company's partners,
customers and affiliated physicians and their needs and to the
marketing and pricing pursued by the Company with respect to those
partners, customers and affiliated physicians and the Company's
products and services.
This Section is designed to prohibit Employee from using the
Confidential Information and knowledge and relationships developed as
an insider of the Company for Employee's own benefit or for the benefit
of parties other than the Company. The Company would not give Employee
access to the Confidential Information and authority without Employee's
execution of this Agreement and Employee willingly signs this Agreement
because Employee has received additional consideration to do so and
because Employee believes Employee's relationship with the Company is
and will be in Employee's own best interest. Both parties agree that
the provisions of this Section 6 should be construed broadly in favor
of the Company. In light of the foregoing, Employee agrees to the terms
of subsection (b) and (c) below.
(b) Confidential Information. Employee promises that:
(i) During or after termination of Employee's
relationship with the Company, Employee will not, directly or
indirectly, use, or disclose or make available to anyone
outside the Company, any Confidential Information; and
4
5
(ii) He will take all reasonable precautions to
safeguard all Confidential Information at all times so that it
is not exposed to, or taken by, unauthorized persons, and,
when entrusted to Employee, will exercise Employee's best
efforts to assure its safekeeping.
(c) Competition.
(i) Employee agrees that:
(A) Employee will not, during the
period of Employee's employment with the Company,
engage or be interested, directly or indirectly, in
any manner, as a partner, shareholder, owner,
officer, director, advisor, consultant, agent,
employee or in any other capacity in any Competitive
Business; and
(B) In the event Employee's employment
with the Company ceases for any reason, Employee will
not engage in, for a period of eighteen (18) months
after that termination (the "Restrictive Period"), in
any manner directly or indirectly, whether as an
employee, officer, owner, partner, shareholder,
consultant, agent or in any other capacity, any
Competitive Business within the territory (the
"Restricted Territory") defined as within
seventy-five (75) miles of any of the following:
(x) the offices of the Company in
Charlotte, North Carolina;
(y) any hospital which is owned all or
in part or managed by the Company or its affiliates
during Employee's employment with the Company or
which the Company or its affiliates were actively
attempting to develop during such period of
employment;
(z) any medical practice,
catheterization laboratory or other medical facility
or service in each case owned (all or in part) or
managed by Company or its affiliates or to which the
Company or its affiliates provides consulting
services during Employee's employment with the
Company or which were actively being developed or
negotiated during such period of employment.
(ii) For purposes of this subsection (c), a
"Competitive Business" shall include any of the following:
(v) any hospital which provides any
cardiology care or cardiovascular surgery services;
5
6
(w) any hospital which initiates a
cardiology care or cardiovascular surgery service or
program within one (1) year following Employee's
termination of employment with the Company;
(x) any business which operates, owns
or manages a cardiac catheterization laboratory or
any other cardiology or cardiovascular diagnostic or
therapeutic facility;
(y) any medical practice whose
physicians include, among others, cardiologists or
cardiovascular surgeons; and
(z) any physician practice management
company which has relationships or affiliations with
any medical practice that includes a cardiologist or
cardiovascular surgeon.
(d) Non-Solicitation. Employee agrees that he will not,
during the period of his employment with the Company, and for a period
of twelve (12) months thereafter, directly or indirectly induce or
solicit any employee of Company to leave his or her employment with
Company during the term of such employee's employment and for a period
of twelve (12) months thereafter.
7. Enforcement. If there is a breach or threatened breach of the
provisions of Section 6 of this Agreement, in addition to other remedies at law
or equity, the Company shall be entitled to injunctive relief. The parties
desire and intend that the provisions of Section 6 shall be enforced to the
fullest extent permissible under the law and public policies applied. If any
court of competent jurisdiction shall at any time deem or find any term of this
Agreement or any particular restrictive covenant contained in Section 6 too
broad, extensive or lengthy, such court is hereby authorized to "blue pencil"
this Agreement so that the other provisions of Section 6 shall nevertheless
stand, the Restricted Period shall be deemed to be the longest period
permissible by law under the circumstances and the Restricted Territory shall be
deemed to comprise the largest territory permissible by law under the
circumstances. The court in each case shall reduce the Restricted Period and/or
Restricted Territory and/or the scope of any Competitive Business to the maximum
permissible size, length or scope.
8. Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be sent by registered mail, by
other reasonable means of delivery providing overnight service, or by hand to
Employee at 0000 Xxxxxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000; to the
Company at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, XX 00000, Attention: Xxxxx
Xxxxx. Notice shall be deemed to have been given when deposited with the Postal
Service or other delivery service or, if delivered by hand, when received by the
addressee. A party may change the address to which notice it must be given by
advising the other parties in writing of the new address.
6
7
9. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the waiving party.
10. Assignment. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company. As a personal service contract the rights
and obligations of Employee under this Agreement may not be assigned by
Employee.
11. Entire Agreement. This Agreement sets forth the entire
understanding between the parties with respect to the subject matter hereof and
cannot be amended orally but only by a writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
12. Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of North Carolina applicable to contracts
made and to be performed in North Carolina, without reference to choice of laws
principles, and that law shall be applied in connection with its enforcement in
other states and jurisdictions to the fullest extent possible.
13. Counterpart Executions; Facsimiles. This Agreement may be
executed in any number of counterparts with the same effect as if all of the
parties had signed the same document. Such executions may be transmitted to the
parties by facsimile and such facsimile execution shall have the full force and
effect of an original signature. All fully executed counterparts, whether
original executions or facsimile executions or a combination, shall be construed
together and shall constitute one and the same agreement.
14. Attorneys Fees And Expenses. In the event either party hereto
makes or institutes a claim, demand, action, litigation, arbitration or other
proceeding relating to or arising out of the matters or relationships set forth
in or contemplated by this Agreement, (any such occurrence being referred to as
a "Dispute"), then the prevailing party in such Dispute shall be entitled to
recover from the other party hereto all reasonable attorneys fees and other
costs and expenses reasonably incurred by the prevailing party during the course
of such Dispute. Such amount shall be due and payable in full within three (3)
days following written demand therefore made by the prevailing party to the
other party hereto. A party hereunder shall be deemed to be a prevailing party
once a favorable finding, ruling, order, judgment, decision or other such action
is taken or entered in favor of one party which becomes unappealable. Without
limiting any other rights of the prevailing party hereunder, in the event that
in connection with a Dispute, the defending party makes a settlement offer which
is, in all material respects equal to or more valuable or favorable than the
terms upon which any such Dispute is ultimately decided, resolved or settled,
then the defending party shall be deemed to be a prevailing party under this
paragraph with respect to all of its reasonable attorneys' fees, costs and
expenses which it incurs after it makes such offer in writing to the other party
hereto.
7
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the following execution page(s) effective as of the day and year first above
written.
MEDCATH INCORPORATED
August 23, 1999 By: /s/ Xxxxx Xxxxx
----------------- ---------------------------------------
Date
Title: Executive Vice President
------------------------------------
August 26, 1999 /s/ R. Xxxxxxx Xxxxx, Jr. (SEAL)
----------------- -------------------------------------
Date R. XXXXXXX XXXXX, JR.
8
