EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into by and
between MEDCATH INCORPORATED, a North Carolina corporation (the "COMPANY") and
Xxxxxxx Xxxxxxxx, a resident of North Carolina ("Employee") and is effective the
7th day of August ,1997.
WHEREAS, the Company desires to employ Employee as a full-time employee and
Employee desires to accept that position in accordance with the terms hereof.
NOW, THEREFORE, it is agreed as follows:
1. Employment. Employee shall be employed as President PPM Division. For
new and very valuable consideration described herein, the Company shall employ
Employee and Employee accepts employment upon the terms and conditions
hereinafter set forth, with such employment to commence on the 8th day of
September, 1997.
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 responsible for
directing all operations and development within the PPM Division. Employee shall
also have such other duties as assigned to Employee from time to time by the
Company's officers or other senior management team members. Employee shall
become a full-time resident of either Charlotte, NC or a community within a
reasonable commuting distance thereof as soon as reasonably possible.
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 a one-time payment of up
to Fifteen Thousand dollars ($15,000.00) based upon Employee's incurred expenses
in selling his current home to be paid upon Employee's relocation to Charlotte,
NC ("Moving Bonus") and the Company shall pay to Employee an annual salary of
One Hundred Thirty Thousand Dollars ($130,000) 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 officers or senior
management team members of the Company as designated by the President on an
annual basis coinciding with the conclusion of the company's fiscal year
(September 30). Employee shall also be eligible to participate in an annual
bonus compensation plan each year of employment. The initial bonus plan
potential will be approximately 40% of annual salary and will be based upon
mutually agreed upon performance objectives. The award 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 the day that is thirty
(30) days prior to 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 lime to time by the
Company. The Company will pay reasonable moving expenses as well as up to three
(3) months temporary housing in Charlotte.
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 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 fulfull 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 for a
period of thirty (30) days, by reason of physical or mental infirmity, to
perform on a full-time basis Employee's 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 (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.
(d) Salary and Benefits.
(i) If the Company terminates Employee's employment under this
Agreement for any reason other than cause, the Company will continue
to be liable for Employee's salary, and all awarded bonuses, to be
paid on a monthly basis for a period of five (5) 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
benifits following the date of termination of Employee's employment.
-2-
(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 paragraph 5(d)(i) above, if any.
Notwithstanding anything in this Agreement to the contrary, no farther
salary or benefits shall be due to Employee once Employee begins to
receive the proceeds of any disability insurance policy.
(e) Repayment of Moving Bonus. In the event Employee terminates his
employment with the Company within twelve months of receiving bonus,
Employee shall repay the Company a pro rata portion of the Moving Bonus.
Such repayment shall be equal to the Moving Bonus times the number of
months remaining in that twelve (12) month period divided by twelve (12).
6. Confidentiality, Non-disclosure and Non-Competition.
(a) In General. For purposes of this Paragraph 6, all references to
the Company shall include all affiliates of the Company. During the course
of Employee's employment, Employee will be exposed and have access to
substantial quantities of information 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, design of facilities and terms
of agreements to which the Company is a party.
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 customers and their needs and to
the marketing and pricing pursued by the Company with respect to those customers
and the Company's products and services.
This Paragraph 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
-3-
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 Paragraph 6 should
be construed broadly in favor of the Company. In light of the foregoing.
Employee agrees to the terms of subparagraph (b) and (c) below.
(b) Confidential Information. Employee promises that:
(i) Employee 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; and
(ii) 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.
(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, owner, officer, director, advisor, 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, in any manner directly or indirectly, whether as an employee,
officer, owner, partner, shareholder, consultant, agent or otherwise, any
Competitive Business within fifty (50) miles of any location which the Company
(1) has provided facilities or services of any type whatsoever during Employee's
employment with the Company, or (2) is actively developing any facility or
service.
(ii) For purposes of this subparagraph (c), a "Competitive Business"
shall include:
(A) A hospital in any market where MedCath owns or manages a
Heart Hospital;
(B) Any health care facility or service providing primarily
cardiology related facilities or services;
(C) Any health care facility or service which the Company was
actively developing, or actively considering the development
of, during Employee's employment by the Company.
-4-
7. Enforcement. If there is a breach or threatened breach of the provisions
of Paragraph 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 Paragraph 6 shall be enforced to the fullest
extent permissible under the law and public policies applied. In the event that
any paragraph, subparagraph, sentence, clause, phrase, word, or figure is found
by any applicable authority to be invalid or unenforceable, such unenforceable
provision shall be deemed to be deleted from this Agreement and the balance of
Paragraph 6 shall thereupon be modified in order to render the same valid and
enforceable.
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 [Home address on file] 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.
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 priciples, and
that law shall be applied in connection with its enforcement in other stares
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.
-5-
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.
-6-
EXECUTION PAGE
TO
EMPLOYMENT AGREEMENT
MEDCATH INCORPORATED
By:/s/ Xxxxx Xxxxx
8/7/97 ------------------
------ Xxxxx Xxxxx, Executive Vice President/COO
Date
By:/s/ Xxxxxxx Xxxxxxxx
8/7/97 ---------------------
------ Xxxxxxx Xxxxxxxx
(SEAL)
Date
