Exhibit 10.41
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of March 27,
2013, by and between Catasys, Inc., a Delaware corporation (“Employer”), and
Susan Etzel, an individual (“Employee”).
 
RECITALS
 
A.           WHEREAS, Employee has experience and expertise applicable to
employment with Employer to perform as the Chief Financial Officer of Employer,
Employer has agreed to employ Employee and Employee has agreed to enter into
such employment, on the terms set forth in this Agreement.
 
B.           WHEREAS, Employee acknowledges that this Agreement is necessary for
the protection of Employer’s investment in its business, good will, products,
methods of operation, information, and relationships with its customers and
other employees.
 
C.           WHEREAS, Employer acknowledges that Employee desires definition of
his compensation and benefits, and other terms of his employment.
 
NOW, THEREFORE, in consideration thereof and of the covenants and conditions
contained herein, the parties agree as follows:
 
AGREEMENT
 
1.           TERM OF AGREEMENT
 
1.1           Initial Term.  The initial term of this Agreement shall begin as
of January 1, 2013 (“Commencement Date”) and shall continue until the earlier
of:  (a) the date on which it is terminated pursuant to Section 5 of this
Agreement; or (b) two (2) years following the Commencement Date (“Initial
Term”).  After the expiration of the Initial Term, Employee shall be employed on
an at-will basis, with either party able to terminate the employment, with or
without cause and with or without notice.
 
2.           EMPLOYMENT
 
2.1           Employment of Employee.  Employer agrees to employ Employee to
render services on the terms set forth herein.  Employee hereby accepts such
employment on the terms and conditions of this Agreement.
 
2.2           Position and Duties.  Employee shall serve as the Chief Financial
Officer and Secretary of Employer, reporting to Employer’s President, and shall
have the general powers, duties and responsibilities of management usually
vested in that office in a corporation or such other powers, position and duties
as may be prescribed from time to time by the President or Employer’s Board of
Directors (“Board”).
 
 
 

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2.3           Standard of Performance.  Employee agrees that he will at all
times faithfully and industriously and to the best of his ability, experience
and talents perform all of the duties that may be required of and from him
pursuant to the terms of this Agreement.  Such duties shall be performed at such
place or places as the interests, needs, business and opportunities of Employer
shall reasonably require or render advisable.
 
2.4           Exclusive Service.
 
                                           (a) Employee shall devote all of his
business energies and abilities and all of his productive time to the
performance of his duties under this Agreement (reasonable absences during
holidays and vacations excepted), and shall not, without the prior written
consent of Employer, render to others any service of any kind (whether or not
for compensation) that, in the opinion of Employer, would materially interfere
with the performance of his duties under this Agreement, and
 
                                 (b) Employee shall not, without the prior
written consent of Employer, maintain any affiliation with, whether as an agent,
consultant, employee, officer, director, trustee or otherwise, nor shall he
directly or indirectly render any services of an advisory nature or otherwise
to, or participate or engage in, any other business activity.
 
3.           COMPENSATION
 
3.1           Compensation.  During the term of this Agreement, Employer shall
pay the amounts and provide the benefits described in this Section 3, and
Employee agrees to accept such amounts and benefits in full payment for
Employee’s services under this Agreement.
 
3.2           Base Salary.  Employer shall pay to Employee a base salary of one
hundred fifty thousand ($150,000) annually in equal bi-weekly or semi-monthly
installments, less applicable taxes.
 
3.3           Discretionary Bonus.  Except as described in Section 5.1 below,
Employee is eligible to receive an annual bonus in the sole discretion of
Employer based on Employee achieving designated individual goals and milestones,
and the overall performance and profitability of the Company.  To the extent
that a discretionary bonus is granted, it will be based on a calendar year and
shall be paid no later than March 14th of the following year.
 
3.4           Equity Incentive Plan.  Except as otherwise set forth herein,
vesting of options will cease upon the termination of Employee’s employment with
Employer.
 
3.5           Fringe Benefits.  Subject to Section 3.7 below, Employee will be
entitled:
 
(a)           to participate, on the same basis as other employees of the
Company, in any medical, dental, vision, life, short-term and long-term
disability insurance and flexible spending accounts (subject to certain
co-payments by Employee).  Employee’s participation in such plans shall be
subject to all terms and conditions of such plans, including Employee’s ability
to satisfy any medical or health requirements imposed by the underwriters of any
insurance policies paid to fund the plans; and
 
 
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(b)           to participate, on the same basis as other employees of the
Company, in the Company’s 401(k) plan, with said participation subject to all
terms and conditions of such plans.
 
3.6           Paid Time Off.  Employee shall participate in the Employer’s
flexible paid time off program.  Under this program Employee is entitled to take
paid time off in accordance with Employers policy as in effect from time to
time.  All time off must be approved in advance by Employee’s supervisor and not
interfere with the reasonable performance of Employee’s duties as provided for
in this Agreement and such other restrictions and requirements as outlined in
the policy.
 
3.7           Deduction from Compensation.  Employer shall deduct and withhold
from all compensation payable to Employee all amounts required to be deducted or
withheld pursuant to any present or future law, ordinance, regulation, order,
writ, judgment, or decree requiring such deduction and withholding.
 
4.           REIMBURSEMENT OF EXPENSES
 
4.1           Travel and Other Expenses.  Employer shall pay to or reimburse
Employee for those travel, promotional, professional continuing education and
licensing costs (to the extent required), professional society membership fees,
seminars and similar expenditures incurred by Employee which Employer determines
are reasonably necessary for the proper discharge of Employee’s duties under
this Agreement and for which Employee submits appropriate receipts and indicates
the amount, date, location and business character in a timely manner.
 
4.2           Liability Insurance.  Employer shall provide Employee with
officers and directors’ insurance, or other liability insurance, consistent with
its usual business practices, to cover Employee against all insurable events
related to his employment with Employer.
 
4.3           Indemnification.  Promptly upon written request from Employee,
Employer shall indemnify Employee, to the fullest extent under applicable law,
for all judgements, fines, settlements, losses, costs or expenses (including
attorney’s fees), arising out of Employee’s activities as an agent, employee,
officer or director of Employer, or in any other capacity on behalf of or at the
request of Employer.  Such agreement by Employer shall not be deemed to impair
any other obligation of Employer respecting indemnification of Employee
otherwise arising out of this or any other agreement or promise of Employer or
under any statute.
 
5.           TERMINATION
 
5.1           Termination With Good Cause; Resignation.  Employer may terminate
Employee’s employment at any time, with or without notice or Good Cause (as
defined below).  If Employer terminates Employee’s employment with Good Cause,
or if Employee resigns, Employer shall pay Employee his salary prorated through
the date of termination, at the rate in effect at the time notice of termination
is given, together with any benefits accrued through the date of
termination.  Employer shall have no further obligations to Employee under this
Agreement or any other agreement, and all unvested options will terminate.
 
 
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5.2           Termination Without Good Cause.  Employer shall have the right to
terminate Employee’s employment without Good Cause. If Employer terminates
Employee’s employment without Good Cause:
 
(a)           Employer shall pay Employee her salary prorated through the date
of termination, at the rate in effect at the time notice of termination is
given, together with any benefits accrued through the date of termination;
 
(b)           All of Employee’s unvested stock options will vest immediately;
 
(c)           Employer will continue to pay Employee her base salary for a
period of three (3) months after the date Employee’s termination becomes
effective; and
 
(d)           In addition to any rights under COBRA and subject to standard
employee contributions in effect at the date of termination, Employee shall
continue to participate in the Employer’s group medical plan at for a period of
three (3) months from the date the Employee’s termination becomes effective,
provided that medical insurance coverage will terminate sooner if Employee
becomes eligible for coverage under another employer’s plan.
 
To be eligible for the compensation provided for in this Section 5.2 (other than
in Section 5.2(a)), Employee must execute a full and complete release of any and
all claims against Employer in the standard form then used by Employer
(“Release”), at which time Employer shall have no further obligations to
Employee under this Agreement or any other agreement.
 
5.3           Good Cause. For purposes of this Agreement, a termination shall be
for “Good Cause” if Employee, in the good faith opinion of Employer, shall:
 
(a)           Commit an act of fraud, moral turpitude, misappropriation of funds
or embezzlement;
 
(b)           Breach Employee’s fiduciary duty to Employer, including, but not
limited to, acts of self-dealing (whether or not for personal profit);
 
(c)           Materially breach this Agreement, the Confidentiality Agreement
(defined below), or Employer’s written Codes of Ethics as adopted by the Board;
 
(d)           Willfully, recklessly or negligently violate any material
provision of Employer’s written Employee Handbook, or any applicable state or
federal law or regulation;
 
(e)           Fail or refuse (whether willfully, recklessly or negligently) to
comply with all relevant and material obligations, assumable and chargeable to
an executive of his corporate rank and responsibilities, under the
Sarbanes-Oxley Act and the regulations of the Securities and Exchange Commission
promulgated thereunder;
 
 
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(f)           Fail or refuse (whether willfully, recklessly or negligently) to
perform the responsibilities and duties specified herein (other than a failure
caused by temporary disability); provided, however, that no termination shall
occur on that basis unless the Employer first provides the Employee with written
notice to cure; the notice to cure shall reasonably specify the acts or
omissions that constitute the Employee’s failure, refusal or lack of sufficient
expertise to perform his duties, and the Employee shall have a reasonable
opportunity (not to exceed ten (10) business days after the date of notice to
cure) to cure; termination shall be effective as of the date of written notice
of failure to cure; or
 
(g)           Be convicted of, or enter a plea of guilty or no contest to, a
felony or misdemeanor under state or federal law, other than a traffic violation
or misdemeanor not involving dishonesty or moral turpitude.
 
5.4           Death or Disability.  To the extent consistent with federal and
state law, Employee’s employment, salary, and accrual of commissions shall
terminate on his death or disability.  “Disability” means (i) Employee’s
inability to engage in any substantial, gainful activity by reason of any
medically determinable physical of mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than six (6) months, or (ii) Employee is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than six
(6) months, receiving income replacement benefits for a period of not less than
three (3) months under an accident or health plan covering Employer’s
employees.  In the event of termination due to death or Disability, Employer
shall pay Employee (or his legal representative) his salary prorated through the
date of termination, at the rate in effect at the time of termination, together
with any benefits accrued through the date of termination. Employer shall have
no further obligations to Employee (or his legal representative) under this
Agreement.
 
5.5           Return of Employer Property.  Within five (5) days after the
Termination Date, Employee shall return to Employer all products, books,
records, forms, specifications, formulae, data processes, designs, papers and
writings relating to the business of Employer including without limitation
proprietary or licensed computer programs, customer lists and customer data,
and/or copies or duplicates thereof in Employee’s possession or under Employee’s
control.  Employee shall not retain any copies or duplicates of such property
and all licenses granted to him by Employer to use computer programs or software
shall be revoked on the Termination Date.
 
6.           DUTY OF LOYALTY
 
6.1           During the term of this Agreement, Employee shall not, without the
prior written consent of Employer, directly or indirectly render services of a
business, professional, or commercial nature to any person or firm, whether for
compensation or otherwise, or engage in any activity directly or indirectly
competitive with or adverse to the business or welfare of Employer, whether
alone, as a partner, or as an officer, director, employee, consultant, or holder
of more than one percent (1%) of the capital stock of any other
corporation.  Otherwise, Employee may make personal investments in any other
business so long as these investments do not require him to participate in the
operation of the companies in which he invests.
 
 
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7.           CONFIDENTIAL INFORMATION
 
7.1           Trade Secrets of Employer.  Employee, during the term of this
Agreement, will develop, have access to and become acquainted with various trade
secrets which are owned by Employer and/or its affiliates and which are
regularly used in the operation of the businesses of such entities.  Employee
shall not disclose such trade secrets, directly or indirectly, or use them in
any way, either during the term of this Agreement or at any time thereafter,
except as required in the course of his employment by Employer.  All files,
contracts, manuals, reports, letters, forms, documents, notes, notebooks, lists,
records, documents, customer lists, vendor lists, purchase information, designs,
computer programs and similar items and information, relating to the businesses
of such entities, whether prepared by Employee or otherwise and whether now
existing or prepared at a future time, coming into his possession shall remain
the exclusive property of such entities, and shall not be removed for purposes
other than work-related from the premises where the work of Employer is
conducted, except with the prior written authorization by Employer.
 
7.2           Confidential Data of Customers of Employer.  Employee, in the
course of his duties, will have access to and become acquainted with financial,
accounting, statistical and personal data of customers of Employer and of their
affiliates.  All such data is confidential and shall not be disclosed, directly
or indirectly, or used by Employee in any way, either during the term of this
Agreement (except as required in the course of employment by Employer) or at any
time thereafter.
 
7.3           Inevitable Disclosure.  After Employee’s employment has
terminated, Employee shall not accept employment with any competitor of
Employer, where the new employment is likely to result in the inevitable
disclosure of Employer’s trade secrets or confidential information, or it would
be impossible for Employee to perform his new job without using or disclosing
trade secrets or confidential information.
 
7.4           Continuing Effect.  The provisions of this Section 7 shall remain
in effect after the Termination Date.
 
8.           NO SOLICITATION
 
8.1           No Solicitation of Employees.  Employee agrees that he will not,
during his employment with Employer, and for two (2) years thereafter, encourage
or solicit any other employee of Employer to terminate his or her employment for
any reason, nor will he assist others to do so.
 
8.2           No Solicitation of Customer.  Employee agrees that he will not,
during his employment with Employer, and for two (2) years thereafter, directly
or indirectly call on, or otherwise solicit, business from any actual customer
or potential customer known by Employee to be targeted by Employer, nor will he
assist others in doing so.
 
9.           INTELLECTUAL PROPERTIES.
 
To the extent permissible under applicable law, all intellectual properties made
or conceived by Employee during the term of this employment by Employer shall be
the right and property solely of Employer, whether developed independently by
Employee or jointly with others. The Employee will sign the Employer’s standard
Employee Innovation, Proprietary Information and Confidentiality Agreement
(“Confidentiality Agreement”).
 
 
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10.           OTHER PROVISIONS
 
10.1          Compliance With Other Agreements.  Employee represents and
warrants to Employer that the execution, delivery and performance of this
Agreement will not conflict with or result in the violation or breach of any
term or provision of any order, judgment, injunction, contract, agreement,
commitment or other arrangement to which Employee is a party or by which he is
bound.
 
10.2          Injunctive Relief.  Employee acknowledges that the services to be
rendered under this Agreement and the items described in Sections 6, 7, 8 and 9
of this Agreement are of a special, unique and extraordinary character, that it
would be difficult or impossible to replace such services or to compensate
Employer in money damages for a breach of this Agreement.  Accordingly, Employee
agrees and consents that if he violates any of the provisions of this Agreement,
Employer, in addition to any other rights and remedies available under this
Agreement or otherwise, shall be entitled to temporary and permanent injunctive
relief, without the necessity of proving actual damages and without the
necessity of posting any bond or other undertaking in connection therewith.
 
10.3          Attorneys’ Fees.  The prevailing party in any suit or other
proceeding brought to enforce, interpret or apply any provisions of this
Agreement, shall be entitled to recover all costs and expenses of the proceeding
and investigation (not limited to court costs), including all attorneys’ fees.
 
10.4          Counsel. The parties acknowledge and represent that, prior to the
execution of this Agreement, they have had an opportunity to consult with their
respective counsel concerning the terms and conditions set forth
herein.  Additionally, Employee represents that he has had an opportunity to
receive independent legal advice concerning the taxability of any consideration
received under this Agreement.  Employee has not relied upon any advice from
Employer and/or its attorneys with respect to the taxability of any
consideration received under this Agreement.  Employee further acknowledges that
Employer has not made any representations to him with respect to tax issues.
 
10.5          Nondelegable Duties.  This is a contract for Employee’s personal
services.  The duties of Employee under this Agreement are personal and may not
be delegated or transferred in any manner whatsoever, and shall not be subject
to involuntary alienation, assignment or transfer by Employee during his life.
 
10.6          Governing Law.  The validity, construction and performance of this
Agreement shall be governed by the laws, without regard to the laws as to choice
or conflict of laws, of the State of California.
 
10.7          Venue.  If any dispute arises regarding the application,
interpretation or enforcement of  any provision of this Agreement, including
fraud in the inducement, such dispute shall be resolved either in federal or
state court in Los Angeles, California.
 
 
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10.8          No Jury. If any dispute arises regarding the application,
interpretation or enforcement of  any provision of this Agreement, including
fraud in the inducement, the parties hereby waive their right to a jury trial.
 
10.9          No Punitive Damages. If any dispute arises regarding the
application, interpretation or enforcement of  any provision of this Agreement,
including fraud in the inducement, the parties hereby waive their right to seek
punitive damages in connection with said dispute.
 
10.10        Severability.  The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions, and this
Agreement shall be construed in all respects as if any invalid or unenforceable
provision were omitted.
 
10.11        Binding Effect.  The provisions of this Agreement shall bind and
inure to the benefit of the parties and their respective successors and
permitted assigns.
 
10.12        Notice.  Any notices or communications required or permitted by
this Agreement shall be deemed sufficiently given if in writing and when
delivered personally or forty-eight (48) hours after deposit with the United
States Postal Service as registered or certified mail, postage prepaid and
addressed as follows:
 
(a)           If to Employer, to the principal office of Employer in the State
of California, marked “Attention: Chief Executive Officer”; or
 
(b)           If to Employee, to the most recent address for Employee appearing
in Employer’s records.
 
10.13        Headings.  The Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
 
10.14        Amendment and Waiver.  This Agreement may be amended, modified or
supplemented only by a writing executed by each of the parties.  Either party
may in writing waive any provision of this Agreement to the extent such
provision is for the benefit of the waiving party.  No waiver by either party of
a breach of any provision of this Agreement shall be construed as a waiver of
any subsequent or different breach, and no forbearance by a party to seek a
remedy for noncompliance or breach by the other party shall be construed as a
waiver of any right or remedy with respect to such noncompliance or breach.
 
 
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10.15        Entire Agreement.  This Agreement is the only agreement and
understanding between the parties pertaining to the subject matter of this
Agreement, and supersedes all prior agreements, summaries of agreements,
descriptions of compensation packages, discussions, negotiations,
understandings, representations or warranties, whether verbal or written,
between the parties pertaining to such subject matter.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
 
 
EMPLOYEE:
     /s/ Susan Etzel Susan Etzel

 

 
EMPLOYER:
          CATASYS, INC.                      
 
By:
/s/ Richard A. Anderson       Richard A. Anderson       Its President & COO    
     

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