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Exhibit 10.12
CONSULTING AGREEMENT
This Consulting Agreement is entered into this 1st day of August, 1996,
by and between Xxxx X. Xxxxxx (the "CONSULTANT") and New American Healthcare
Corporation, a Tennessee corporation (the "CORPORATION").
WHEREAS, the Corporation wishes to retain the Consultant to provide
advisory consulting services and other assigned projects, and the Consultant
wishes to accept such position; and
WHEREAS, Consultant has a great number of contacts within the
healthcare community throughout the United States and has utilized and will
continue to utilize his positive relationships to provide leads for acquisitions
for the Corporation and its affiliates throughout the United States.
NOW, THEREFORE, and in consideration of the amounts and services set
forth below and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Engagement as Consultant. The Corporation has retained the
Consultant to provide advisory consulting services and other assigned projects,
including, but not limited to: (i) actively assist in the transition as
requested by NAHC, including but not limited to maintaining support for
Corporation from the medical staff, advising Corporation on Hospital strategies
and operations, assisting with evaluations of employees, assisting with the
determination of needed capital expenditures, advising on the recruitment of
physicians, advising on the political relationship of Doctors Hospital of
Wentzville to area elected officials and employers and assisting with tertiary
health care affiliation relationships; (ii) pro-actively seek acquisition leads
for the Corporation; (iii) visit hospitals, as requested by Corporation, to
build relationships with key decision makers; (iv) perform initial site visits,
as requested by Corporation, to provide information to be used in determining
Corporation's interest in hospitals; (v) perform analysis on hospitals, as
requested by Corporation, for possible contacts to acquire or lease; (vi)
perform other duties as requested by the senior management of Corporation which
are consistent with Consultant's status as an independent contractor and not an
employee. During the term of this Agreement, Consultant will not use for his
personal benefit or for the direct or indirect benefit of any other person or
business entity, whether or not for monetary gain, any leads for potential
acquisitions or management or consulting or joint venture relationships within
the healthcare field, including, without limitation, any information related to
the potential acquisition of any hospital, joint venture of any hospital, or any
other healthcare entity or business; all of which Consultant agrees to provide
exclusively to the Corporation, unless the Corporation formally and in writing
rejects such potential business; provided, further, leads with respect to and
acquisitions within fifty (50) miles of Springfield, Illinois are excluded from
this provision. As an independent contractor, the Consultant is subject to the
control or direction of Corporation as to the result to be accomplished by
Consultant's work, and not as to the means and methods for accomplishing that
result. The Consultant agrees to use his reasonable best efforts to assist the
Corporation with respect to its operations, business, ethics and affairs. The
Consultant agrees that he will spend no less than one hundred (100) hours per
month
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in performing the above duties and assignments. The Consultant agrees that
within ten (10) days following the end of each month he will submit to the
Corporation a reasonably detailed report of activities, disposition of
activities/status, date of activities, hours (or tenths thereof) dedicated on
such date to performing such activities, all in the form reasonably satisfactory
to the Corporation.
2. Term.
(a) This term of this agreement shall commence and be
effective on August 1, 1996, the closing date of the Asset Purchase Agreement
dated July 31, 1996 between Doctors Hospital - Wentzville, L.P. and NAHC of
Missouri, Inc. (the "Asset Purchase Agreement"). Unless earlier terminated as
otherwise provided herein, said term of the agreement shall continue until the
third anniversary of such date of term of commencement, at which time the
agreement will expire unless extended on terms mutually agreeable to the
parties.
(b) Consultant's agreement hereunder shall be terminable by
the Corporation at any time for cause, which shall include but not be limited to
(i) insubordination, malfeasance, or misconduct, including breach of business
ethics; (ii) charge or conviction of a felony or of a misdemeanor involving
moral turpitude; (iii) the inability of Consultant to perform his duties
hereunder for a period of ninety (90) consecutive days (or ninety (90) days in
any one-hundred twenty (120) consecutive day period) by reason of illness or
mental or physical disability; (iv) death; (v) other circumstances deemed by
Corporation to be materially detrimental to Corporation. In the case of
termination under this Section 2(b), all obligations of the parties shall cease
except the Consultant's obligations under Sections 4 and 5 hereof.
3. Compensation. Commencing as of the date hereof, during the term the
Corporation shall pay the Consultant in monthly installments of Sixteen Thousand
Six Hundred Sixty-Six and 67/100 Dollars ($16,666.67) or a pro rata amount for
any period less than a full month payable on the last day of each month with
respect to the preceding month.
4. Confidentiality. The Consultant shall not, either during or after
the term hereof, disclose to any person confidential or proprietary information
concerning the Corporation's business.
5. Non-Compete.
(a) Consultant recognizes and acknowledges that all
information pertaining to the Business and the related affairs, clients,
customers or other relationships of Corporation is confidential and is a unique
and valuable asset of Corporation. Access to and knowledge of this information
were and are essential to the performance of Consultant's duties to Corporation.
Consultant will not during his retention as a consultant or thereafter, except
to the extent reasonably necessary in the performance of his duties for
Corporation, give to any person, firm, association, or governmental agency any
information concerning the affairs, business, clients, customers or other
relationships of Corporation except as required by law. Consultant will not make
use of this type of information for his own purposes or for the benefit of any
person or organization other than Corporation. Consultant shall use his best
efforts to prevent the disclosure of this information by
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others. All records, memoranda, copies thereof, etc. relating to the Business
whether made by Consultant or otherwise coming into his possession are
confidential and will remain the property of Corporation and all of the same
shall be returned to the Corporation promptly upon request by the Corporation.
(b) Consultant hereby covenants and agrees with Corporation
that during the "Noncompete Period" within the "Noncompete Area" he shall not
directly or indirectly, (a) acquire, lease, manage, consult for, finance or own
any part of (as member, shareholder or partner) any health care facility which
provides any services similar to the services provided by the Hospital or what
are normally provided by a non-urban hospital, including but not limited to,
skilled nursing, obstetrics, psychiatric, alcohol/chemical dependency, rural
health, primary care, urgent care, ambulatory surgery, diagnostics, psychiatric
counseling, home health, management service organization, network for
contracting for managed care, managed care organization, or any other health
related services, or (b) solicit for employment or employ any person who at
Closing became an employee of Corporation's subsidiary, or (c) disrupt or
attempt to disrupt any past, present or reasonably foreseeable future
relationship, contractual or otherwise between Corporation or its
subsidiary(ies), on the one hand, and any physician, physician group, or other
healthcare provider with whom Corporation or its subsidiary(ies) contracts with
in connection with the Hospital, on the other hand. The "NONCOMPETE PERIOD"
shall commence at the Closing and terminate on the third anniversary thereof.
The "NONCOMPETE AREA" shall mean the area within a fifty (50)-mile radius of the
Hospital. The following shall not be deemed a breach of this covenant: (i)
advertisements for the Springfield Illinois Hospital which is partially owned by
Xx. Xxxxxx and Xx. Xxxxxxxx, which are not targeted to the Noncompete Area, but
which incidentally happen to overlap into the Noncompete Area; and (ii)
ownership of less than five percent (5%) of the stock of a publicly held
company.
6. Set-Off Rights. If the Corporation or the Corporation's subsidiary
has any claims against the Consultant or against the Doctors Hospital -
Wentzville, L.P. or its general partner under that certain Asset Purchase
Agreement (the "AGREEMENT") dated July 31, 1996 by and between Doctors Hospital
- Wentzville and the Corporation's subsidiary, or under any contracts or
documents accompanying or executed in connection with the closing thereunder,
Corporation and its subsidiaries may set off the amounts of such claims against
the payments to be made to Consultant under this agreement (the "SET-OFF
RIGHTS"). It will be in the sole discretion of the Corporation whether to use
the Set-Off Rights or whether to exercise any other remedies that may be
available to the Corporation and its subsidiaries under the terms of the
Agreement. Exercise of its Set-Off Rights by the Corporation will in no way
serve to prevent the Corporation from exercising any additional remedies that
are necessary or available against the Consultant or against Doctors Hospital -
Wentzville, L.P. or its general partner.
7. No Agency and Not Employee. It is understood that the Consultant is
to act as a consultant and advisor to the Corporation and is not an agent or
employee of the Corporation in any respect. The Consultant shall have no right,
authority or power to act for or on behalf of the Corporation.
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8. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Tennessee, which the parties mutually
agree is the appropriate law to govern the relationship hereunder.
9. Assignment. All terms of this Agreement shall be binding upon, and
inure to the benefit of, the successors and assigns of the Corporation. The
Consultant may not assign or delegate his duties and obligations hereunder
without the prior written consent of the Corporation.
10. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same instrument.
11. Entire Agreement. This instrument contains the entire agreement of
the parties and may be changed only by an agreement in writing signed by each of
the parties hereto. All capitalized terms not defined herein shall have the same
meaning as given them in the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties have executed this Consulting Agreement
as of the date set forth above.
CORPORATION
NEW AMERICAN HEALTHCARE CORPORATION
By: ____________________________________
Title: ____________________________________
CONSULTANT
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XXXX X. XXXXXX
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