October 27, 2005
Mr. O. Edwin French
President
French Healthcare Consulting, Inc.
P.O. Box 535, 6011 Riverside Drive
Secretary, MD 21664
     Re: Consulting Services Agreement
Gentlemen:
     This letter agreement (this “Agreement”) confirms that MedCath Corporation
(“MedCath”) has retained French Healthcare Consulting, Inc. (“FHC”) to provide
consulting services and that FHC has agreed to provide such services, all in
accordance with the following terms.
     1. Consulting Services. During the Term of this Agreement (as defined in
paragraph 3 below), FHC agrees to provide to MedCath hospital management
consulting services to assist MedCath in managing its affiliated hospitals. FHC
shall diligently consult and communicate with MedCath regarding the services
performed. FHC represents that it has substantial experience in providing such
services to other clients of FHC.
     2. Fees. As compensation for the consulting services to be provided during
the Term, MedCath agrees to pay FHC $40,000 per month in monthly installments
within 30 days of receipt of invoices from FHC.
     3. Term. Unless terminated earlier as provided herein, this Agreement will
have a “Term” commencing as of October 25, 2005 and continuing to and including
December 31, 2005. This Agreement may be renewed thereafter for additional
thirty (30) day periods upon our mutual written agreement. Partial months shall
be prorated by the actual number of calendar days served by this Agreement
divided by the number of calendar days during the month with such percentage
then applied to the fee in 2 above. Notwithstanding the foregoing, this
Agreement may be terminated by MedCath immediately FHC or its employees who
perform the services hereunder:
     (a) Fails or refuses to comply with the policies, standards and regulations
of MedCath or the Federal and State laws and regulations applicable to services
provided under this Agreement;
     (b) Conducts himself in an unprofessional, unethical or fraudulent manner;
     (c) Commits a felony;

 

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French Healthcare Consulting, Inc.
October 27, 2005
Page 2
     (d) Commits any offense involving moral turpitude, including fraud, theft
or embezzlement; or
     (e) Commits any breach of the terms of this Agreement that is not cured
upon notice to you.
     4. Confidentiality, Non-Solicitation, and Non-Disclosure Agreements.
     (a) Confidentiality. During the Term of this Agreement, MedCath will
furnish FHC with and provide FHC employees access to proprietary and
confidential information relating to MedCath’s business and financial affairs
(including the business and financial affairs of all affiliates and operations
of MedCath) including, without limitation, financial statements and data;
summaries and projections; customer information; vendor information; pricing;
technology; employment practices; marketing strategies and reports; planning and
operational materials; plans and specifications; contracts and agreements;
manuals and data; information subject to the attorney-client privilege and
attorney work product doctrine or other privilege recognized at law; possible
trade secrets; and other information (“Confidential Information”) to assist FHC
in providing consulting services to MedCath under the terms of this Agreement.
The term “Confidential Information” also includes, without limitation, business
plans of MedCath; the terms of all documents and agreements; the legal structure
of all MedCath entities or of any acquisition, management, or joint venture
transaction to which any MedCath entity is a party; all financial statements;
all plans and designs for hospitals; reimbursement procedures; credentialing
information; utilization information; the types of procedures, the number of
procedures, and the charges for procedures performed at any hospital owned by
MedCath; relationships with vendors; the identity of all investors in MedCath or
in any joint venture developing or managing a hospital and the amounts invested;
and the terms of all agreements to which MedCath is a party.
     As a condition to and in consideration of MedCath’s furnishing Confidential
Information to FHC, FHC agrees that (i) Confidential Information will not be
used other than in connection with providing services under the terms of this
Agreement and that Confidential Information will not be disclosed by FHC or any
of its employees to any person (except as permitted by this Agreement) and will
be kept confidential by FHC, (ii) FHC will make all necessary and appropriate
efforts to safeguard Confidential Information from disclosure to anyone other
than as permitted hereby and (iii) FHC will immediately report to MedCath any
use or disclosure of Confidential Information not permitted by this Agreement.
     The term “Confidential Information” does not include any Confidential
Information disclosed which (i) at the time of disclosure or thereafter is
generally available to and known by the public (other than as a result of a
disclosure in violation of this Agreement); (ii) was available to FHC on a
nonconfidential basis from a source other than any MedCath entity, provided that
such source is not and was not bound by a confidentiality agreement with any
MedCath entity; or (iii) has been independently acquired or developed by FHC
without violating any of its obligations under this Agreement.

 

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French Healthcare Consulting, Inc.
October 27, 2005
Page 3
     In the event that FHC becomes legally compelled (by deposition,
interrogatory, request for documents, order, subpoena, civil investigative
demand, or similar process issued by a court of competent jurisdiction or by a
governmental body) to disclose any of the Confidential Information, FHC will
give prompt prior written notice of the requirement to MedCath so that MedCath
has a reasonable opportunity to seek a protective order or other appropriate
remedy or waive in writing compliance with the terms of this Agreement. In the
event that such protective order or other remedy is not obtained, and regardless
of whether or not compliance with the provisions hereof is waived, then it is
agreed that only that portion of the Confidential Information which subjects FHC
to legal compulsion shall be disclosed and reasonable efforts shall be made to
obtain assurance that confidential treatment will be accorded such information.
     By FHC’s execution of this Agreement, FHC agrees that upon request by
MedCath and upon the termination or expiration of this Agreement FHC will
immediately return to MedCath all Confidential Information and other MedCath
property including, without limitation, all originals, copies, computer data, or
other records or information in any form whatsoever, and will not retain
summaries or copies thereof in any form whatsoever (whether prepared by MedCath
or FHC) and FHC shall provide a written certification thereof to MedCath. It is
understood and agreed that Confidential Information and any work product created
by FHC derived or based on the Confidential Information will remain at all times
the property of MedCath.
     (b) Non-Solicitation. FHC further agrees not to hire or solicit, directly
or indirectly, the employment of or hire any employee of MedCath until the
expiration of a period of one year after the termination of this Agreement.
     (c) Enforcement. FHC agrees that the foregoing restrictions are fair and
reasonable. If there is a breach or threatened breach of the provisions of this
paragraph 4, in addition to other remedies at law or equity, MedCath will be
entitled to injunctive relief. FHC’s obligations under this paragraph 4 will
survive the termination or expiration of this Agreement.
     5. Assignment. Neither this Agreement nor any interest therein may be
assigned by FHC without the prior written consent of MedCath. Subject to the
previous sentence, this Agreement will be binding upon and inure to the benefit
of the successors, heirs, and assigned of the parties hereto.
     6. Reimbursement for Expenses. MedCath will reimburse FHC for its
reasonable travel and lodging expenses which are first approved in writing by
MedCath. To the greatest extent possible, all travel, rental car, and lodging
arrangements will be made by or through MedCath to obtain any corporate rate
available to MedCath. FHC must submit documentation reasonably acceptable to
MedCath of such expenses to receive reimbursement.
     7. Independent Contractor. FHC is an independent contractor of MedCath and
not an employee, officer, partner, joint venturer, or agent of MedCath and
neither FHC nor any employee of FHC will be considered an employee of MedCath
within the meaning or the application of any federal, state or local laws or
regulations. Neither FHC nor any employee of

 

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French Healthcare Consulting, Inc.
October 27, 2005
Page 4
FHC will have any claim under this Agreement or otherwise against MedCath for
vacation pay, paid sick leave, retirement benefits, social security, worker’s
compensation, health insurance, disability or unemployment insurance benefits,
or other employee benefits of any kind. FHC understands and agrees that
(i) neither FHC nor any employee of FHC will be treated as an employee of
MedCath for federal or state tax purposes; (ii) MedCath will not withhold from
the compensation payable to FHC hereunder any sums for income tax, unemployment
insurance, social security, or any other withholding pursuant to any law or
requirement of any governmental body or make available any of the benefits
afforded to employees of MedCath; and (iii) all of such payments, withholdings,
and benefits, if any, are FHC’s sole responsibility.
     8. Notices. Any notice required or permitted to be given under this
Agreement will be sufficient if in writing and sent by registered mail,
telecopy, overnight courier, or hand delivery to office of FHC or to MedCath at
the following addresses:

     
MedCath:
  MedCath Corporation
 
  10720 Sikes Place, Suite 300
 
  Charlotte, NC 28277
 
  Attention: John T. Casey, Chairman and Chief Executive Officer
 
   
FHC:
  French Healthcare Consulting, Inc.
 
  O. Edwin French, President
 
  P.O. Box 535, 6011 Riverside Drive
 
  Secretary, MD 21664

     9. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto. It may not be amended other than by written instrument signed by
the party against whom enforcement is sought.
     10. Applicable Law. This Agreement shall be construed in accordance with
the laws of North Carolina.
     11. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement. 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.

 

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French Healthcare Consulting, Inc.
October 27, 2005
Page 5
     Please execute both copies of this Agreement below to confirm our agreement
as set forth herein and return one fully executed copy to me.

             
 
  Very truly yours,
 
           
 
  MedCath Corporation      
 
           
 
  By:   /s/ JOHN T. CASEY          
 
           
 
      John T. Casey, Chairman and Chief    
 
      Executive Officer    

Agreed and Accepted:
French Healthcare Consulting, Inc.
By: /s/ O. Edwin French     
       O. Edwin French, President