Document:

Ex-10.1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT dated as of August 28, 1995 and by and between
MEDCATH, INC., a North Carolina corporation (the “Corporation”); and Joan
McCanless (“McCanless”), a resident of North Carolina (the “Agreement”).

     WHEREAS, the Corporation desires to employ McCanless as a full-time
employee and McCanless desires to accept that position in accordance with the
terms hereof;

     NOW, THEREFORE, it is agreed as follows:

     1.    Employment. For new and very valuable consideration described herein,
the Corporation shall employ McCanless and McCanless accepts employment upon
the terms and conditions hereinafter set forth.

     2.    Duties. As an employee, McCanless shall be employed as Vice President
— Disease Management (Title to be revised upon commencement of employment.)
As such she shall be responsible for developing clinical pathways at all of
MedCath’s heart Hospitals, working with the physicians and Hospital Presidents
to install pathways and train clinical personnel, develop MedCath’s data bases
for caturing clinical outcomes and any and all other areas of Disease
Management or clinical analysis as may be identified by Officers of the
Corporation. She may also potentially have duties relating to the development
and operation of freestanding cardiac catheterization centers, cardiac imaging
centers, heart hospitals, mobile cardiac catheterization unit routes,
cardiology related programs, or such other duties as shall be assigned to her
from time to time by the Officers of the Corporation.

     During the term of employment hereunder, McCanless shall not be engaged in
any other business activity whether or not such business activity is pursued
for gain, profit, or other pecuniary advantage unless agreed on by the
President of the Corporation. It is understood that McCanless is currently an
Officer and principle shareholder in Decision Support Systems, a privately held
Corporation. McCanless and the Corporation agree that she will, prior to
joining MedCath engage personnel to replace her on a day-to-day operating basis
at Decision Support Systems and that her involvement will continue on a
Director level only. If at any time in the future, in the sole discretion of
the Corporation, McCanless’s ownership interest in Decision Support Systems
detracts from her performance at MedCath, or in any way causes a conflict with
MedCath’s interests, then McCanless agrees to divest herself of that ownership
interest in a timely fashion.

     3.    Compensation. For and in consideration of the services to be rendered
by McCanless hereunder, the Corporation shall pay to McCanless an annual salary
of One Hundred Thousand Dollars ($100,000.00) and continue during the term of
this agreement and which shall be paid on a monthly basis unless otherwise
agreed to by the parties hereto. McCanless shall also participate in an annual
bonus compensation plan each year of her employment. The initial bonus plan
will be $30,000 relating to goals and objectives pertaining to the management
of the

 

 

Diagnostic Division. McCanless’s salary shall be reviewed by the Chief
Operating Officer of the Corporation on an annual basis. McCanless will only
be eligible for the bonus award if she is employed by the Corporation on the
last day of the year for which the bonus applies. During McCanless’s initial
year of employment she will be guaranteed a minimum bonus of $10,000.

     4.    Miscellaneous Benefits. During her employment, the Corporation shall
provide McCanless with additional benefits substantially equivalent to those
which are generally provided to other similar employees of the Corporation.
The Corporation shall reimburse McCanless for reasonable expenses incurred by
her in the course of her employment with the Corporation provided those
expenses are consistent with reasonable policies provided from time to time by
the Corporation’s Board of Directors.

     5.    Termination of Employment.

             (a)    By the Corporation for Cause. The Corporation shall have the right to
terminate McCanless’s employment for cause as provided herein by giving written
notice thereof. “Cause” shall mean that McCanless 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 Corporation
monetarily; violates a material term of this Agreement including, but not
limited to, failure to fulfill the duties assigned to McCanless by the
Corporation; becomes disabled; or submits a notice of resignation to the
Corporation. McCanless shall be deemed disabled if she has been unable, by
reason of physical or mental infirmity, to perform on a full-time basis her
assigned responsibilities. The existence of disability shall be reasonably
determined by the Board of Directors of the Corporation.

             (b)    By the Corporation Without Cause. Subject to (d) below, the
Corporation may terminate McCanless’s employment at any time without cause by
giving McCanless written notice thereof.

             (c)    By McCanless. McCanless may terminate her employment upon at least
(45) days’ written notice.

             (d)    Salary and Benefits.    (i) If the Corporation terminates McCanless’s
employment under this Agreement for any reason other than cause, the
Corporation will continue to be liable for her salary and all accrued bonuses
to be paid on a monthly basis for a period of six (6) months following the date
of termination, as long as and only if McCanless is not otherwise in default
hereunder during that period; provided, however, that her salary shall not be
payable once McCanless becomes employed substantially full-time or otherwise
earns, on a monthly basis, at least 75% of her monthly salary hereunder. (ii)
Upon any termination of McCanless’s employment for cause, McCanless shall not
be entitled to any further salary, bonuses or benefits following the date of
termination of her employment. (iii) Upon termination of McCanless’s
employment for any reason, McCanless shall be entitled to receive only such
additional benefits which have accrued or become payable to her prior to the
end of her actual employment. (iv) Upon termination, McCanless shall not be
entitled to any additional salary or benefits other than those accrued prior to
the date of termination. Notwithstanding anything in

 

 

this Agreement to the contrary, no further salary or benefits shall be due to
McCanless once she begins to receive the proceeds of any disability insurance
policy.

     6.    Confidentiality, Non-Disclosure and Non-Competition. During the course
of McCanless’s employment, McCanless has been and will be exposed and have
access to substantial quantities of information and technology (the
“Confidential Information”) relating to the Corporation’s business that are
valuable trade secrets or confidential information, including information
concerning customers, operations, pricing, technology and marketing strategies.

     The Confidential Information was developed, compiled and/or tested by the
Corporation at considerable amounts of money in building upon and expanding
that Confidential Information. The Confidential Information enables the
Corporation to conduct is 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 Corporation, specifically within the United States.

     McCanless, by reason of her role as an employee of the company, is
familiar with and has access to the Corporation’s customers and their needs and
to the marketing and pricing pursued by the Corporation with respect to those
customers and the Corporation’s products and services.

     This Paragraph is designed to prohibit McCanless from using the
Confidential Information and knowledge and relationships developed as an
insider of the Corporation for her own benefit or for the benefit of parties
other than the Corporation. The Corporation would not give McCanless access to
the Confidential Information and authority without McCanless’s execution of
this Agreement and McCanless willingly signs this Agreement because she has
received additional consideration to do so and because she believes her
relationship with the Corporation is and will be in her own best interest.
Both parties agree that this Paragraph’s provisions should be construed broadly
in favor of the Corporation.

     In light of the foregoing, the parties agree as follows:

		
	 	(a)    Confidential Information.
	 
	 	McCanless promises that:

		
	 	       (i)     During or after termination of her relationship with the
Corporation, she will not, directly or indirectly, use, or disclose
or make available to anyone outside the Corporation, any
Confidential Information.

		
	 	       (ii)    she will safeguard all Confidential Information at all
times so that it is not exposed to, or taken by, unauthorized
persons, and, when entrusted to her, will exercise her best efforts
to assure to safekeeping.

 

 

		
	 	(b)    Competition.

		
	 	McCanless agrees that:

		
	 	       (i)     she will not, during the period of her relationship with
the Corporation, engage or be interested, directly or indirectly,
in any manner, as a partner, officer, director, advisor, employee
or in any other capacity in any business similar to business to the
Corporation.

		
	 	       (ii)    The Corporation’s business is unusual and that by virtue
of her relationship with the Corporation she is, and will become
more, familiar with and close to the Confidential Information and
the Company’s business and Customers. In the event her
relationship with the Corporation ceases for any reason, she 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 or
otherwise, in any business or other activity similar in business to
and in competition with the company within seventy-five (75) miles
of any location which the Corporation has (x) provided cardiology
services of any type whatsoever during her employment with the
Corporation, or (y) made a written proposal to provide such
services, which proposal was made at least in part as a result of
the efforts of McCanless.

     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 Corporation 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,
but the unenforceability or modification of any particular paragraph,
subparagraph, sentence, clause, phrase, word, or figure be adjudicated to be
wholly invalid or unenforceable, 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
McCanless at__________________; to the Corporation at 7621 Little Avenue, Suite 106, Charlotte,
NC 28226. 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 to
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 Corporation under this
Agreement shall insure to the benefit of and shall be binding upon the
successors and assigns of the

 

 

Corporation. As a personal service contract the rights and obligations of
McCanless under this agreement may not be assigned by her.

     11.    Entire Agreement. This instrument may not be changed orally but only
by an agreement in 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 this State, 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.

     IN WITNESS WHEREOF, the parties have signed and sealed this Agreement as
of the date first above written.

	 	 	 
	 	 	
MEDCATH INCORPORATED
	 
	 	By:	
            /s/ David Crane

                        David Crane

                        Chief Operating Officer

/s/ Joan
McCanless        

Joan McCanless

 

 

Attachment A:

     Confidential information shall not include information that is in the
public domain or is available or shall become available to McCanless by means
other than her employment with the company.

Attachment B:

     For purposes of this agreement, confidential information shall not include
information related to the development, implementation, and automation of
clinical paths, which was previously known or in the public domain.

                    /s/
Joan McCanless  8/7/95Ex-10.2

 

Exhibit 10.2

EMPLOYMENT, CONFIDENTIALITY AND NON-COMPETE AGREEMENT

     This EMPLOYMENT, CONFIDENTIALITY AND NON-COMPETE AGREEMENT (the
“Agreement”) is made and entered into by and between MEDCATH INCORPORATED, a
North Carolina corporation (the “Company”) and THOMAS K. HEARN (“Employee”), a
resident of North Carolina, and is effective the 3rd day of December 1999 (the
“Effective Date”).

     WHEREAS, the Company and the Employee desire to continue Employee’s
employment in accordance with the terms hereof, which provides to Employee new
and additional consideration which was not previously provided to the Employee
by the Company;

     NOW, THEREFORE, it is agreed as follows:

     1.     Employment. Employee shall continue to be employed as President,
Diagnostics Division for the Company.

     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 as assigned by the Company.

     While employed by the Company, 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
One Hundred Eighty-Five Thousand Dollars ($185,000.00), which shall be paid on
a bi-weekly basis unless otherwise agreed to by the parties hereto. While
Employee remains employed by the Company, Employee’s salary shall be reviewed
by the Company on an annual basis.

     Employee shall be eligible to participate in an annual bonus compensation
plan each year of employment under the terms, conditions and guidelines
established for eligible employees’ participation. The bonus plan will be
based on factors relating to the success of the Company and the Employee’s
performance. Performance includes the accomplishment of certain objectives
outlined by the Company at the beginning of the annual bonus compensation plan
year. Employee understands that in order to be eligible for any bonus,
Employee must be actively employed by the Company at the time the bonus is paid
and/or satisfy all eligibility criteria imposed by applicable state law.

     4.     Miscellaneous Benefits. During Employee’s employment with the Company,
Employee shall be eligible for additional benefits, including life insurance,
medical insurance, paid time off, etc., under the same terms and conditions as
those which apply to similar employees of the Company, as they may be changed
from time to time.

 

 

     With regard to business expenses, the Company shall reimburse Employee for
reasonable business related expenses incurred in the course of Employee’s
employment with the Company, provided those expenses are consistent with the
policies established from time to time by the Company. Employee must submit
acceptable documentation of the expenses in order to receive reimbursement.

     5.     Termination of Employment.

     (a)     By the Company for Cause. The Company shall have the right to
terminate Employee’s employment immediately and without prior notice in the
event that the Company believes it has cause to terminate employment. “Cause”
includes, but is not limited to, fraud; dishonesty; disloyalty; conviction of
criminal conduct; conduct which is or threatens significant injury to the
Company monetarily; conduct which may have a significant or threatened negative
impact upon the image of the Company; failure to fulfill the duties assigned to
Employee by the Company; violation of this Agreement; submission of a notice of
resignation to the Company; engaging in or condoning sexual harassment; failure
to abide by applicable laws, rules, regulations and work rules; or actions or
omissions which the Company considers to be of a similar nature or degree.

     In the event that Employee is terminated for cause, Employee shall not be
entitled to receive any further salary, bonus or benefit following the date of
termination of the Employee’s employment, except as provided by applicable law
or company policy.

     (b)     By the Company Without Cause. The Company may terminate Employee’s
employment at any time without cause by giving Employee written notice thereof.

     In the event the Company terminates Employee’s employment without cause,
the Company will continue to pay Employee his/her current bi-weekly salary,
less applicable lawful deductions, for a period of nine (9) months following
the date of notice of termination of employment, or until Employee secures
other substantially full-time employment or earns, on a monthly basis, at least
75% of Employee’s monthly salary hereunder, whichever occurs first. Employee
shall be entitled to receive pro-rata vacation if terminated without cause,
plus other benefits as provided by applicable law or by Company policy.

     (c)     By Employee. Employee may terminate Employee’s employment with the
Company at any time by providing the Company with thirty (30) days written
notice. In the event of such termination, Employee shall not be entitled to
receive any further salary, bonus or benefit following Employee’s actual
termination, except as provided either by applicable law or Company. The
Company reserves the right to elect to provide pay in lieu of allowing Employee
to work during the notice period.

     6.     Confidentiality and Non-Disclosure Agreements. During the course of
Employee’s employment with the Company, it is understood that Employee will be
exposed and/or have access to substantial quantities of confidential
information relating to the Company’s business (including the business of all
affiliates and operations of the Company), such as customer information,
vendors, operations and operating procedures, pricing, financial

2

 

information, technology, marketing strategies, design of facilities,
employment practices, contractual agreements, and possibly trade secrets (the
“Confidential Information”).

     Employee agrees that both while employed by the Company and following
termination of Employee’s employment with the Company at any time in the
future.

		
	 	     (i)      Employee will take all reasonable precautions to safeguard all
Confidential Information at all times so that it is not comm     ed to,
exposed to, available to, or taken by any unauthorized person and will
personally use or disclose such information; and

		
	 	     (ii)      Employee will exercise Employee’s best efforts to assure the
safekeeping of the Company’s Confidential Information.

     Upon termination of Employee’s employment with the Company, Employee
agrees to immediately return to the Company all Confidential Information and
other Company property, including without limitation all originals copies,
computer data, or other records or information. It is understood and agreed
that Confidential Information and other property of the Company shall remain at
all times the property of the Company.

     7.     Non-Competition Agreement. Recognizing the fact that Employee will be
given or have access to the Confidential Information described in Section 6
above, and that the employee owes a duty of full loyalty to the Company and
it’s name, reputation and operational interests, Employee agrees that during
the period of Employee’s employment with the Company, Employee will not engage
in or have an interest in, either directly or indirectly, in any manner,
whether as a partner, owner, investor, officer, director, advisor, employee,
consultant, or in any other capacity, any Competitive Business.

     Employee further agrees that in the event that Employee’s employment with
the Company is terminated for any reason by either party, for a period of
eighteen (18) months from the date of termination of employment. Employee will
not seek, accept, or engage in any employment or work of a similar or related
nature to the work Employee performed for the Company where the employment or
work will be with a Competitive Business which is located or operates within
seventy-five (75) miles of:

		
	 	     (i)       any one of the Company or its affiliates’ facilities or a
location where the Company or one of its affiliates has provided services
during the term of Employee’s employment with the Company, or

		
	 	     (ii)      any location where the Company was derively developing a
facility or service before the termination of Employee’s employment with
the Company.

     For purposes of this section, “Competitive Business” shall be defined as a
hospital or any other health care employer, facility, or service providing
primarily cardiology related facilities or services.

3

 

     8.     Non-Solicitation Agreement. Employee acknowledges and agrees that
during the course of Employee’s employment with the Company, Employee will
become familiar with many of the Company’s employees, their knowledge, skills,
abilities, compensation, benefits, and other matters with respect to such
employees not generally known to the public. Employee further acknowledges and
agrees that any solicitation, luring away or hiring of the employees of the
Company, or other direct or indirect participation in such activities, would be
highly detrimental to the business of the Company and would cause the Company
great and irreparable harm. Consequently, Employee agrees that for a period of
one (1) year following the end of Employee’s employment with the Company,
Employee will not, directly or indirectly, solicit, lure, or hire any employees
of the Company or assist or aid in any such activity.

     9.     Enforcement. In the event that there is a breach of this Agreement by
either party, it is understood and agreed that the other party can seek damages
and other remedies available to it at law or in equity. In addition to those
remedies, however, in the event that Employee breaches Section 6, Section 7 or
Section 8 of this Agreement, or in the event that there is a threat of such a
breach of either of those sections, the Company shall have the right to seek
and shall be entitled to injunctive relief and attorney’s fees and court costs.
The parties desire and intend that the provisions of Sections 6, 7, and 8 be
enforced to the fullest extent permissible under the law.

     In the event that any provision of Section 6, Section 7 or Section 8 of
this Agreement is found by any applicable authority to be invalid or
unenforceable, the parties agree that either:

		
	 	     (i)       the court shall at the time the provision is declared invalid or
unenforceable, if permissible by law, modify the invalid or unenforceable
provision to reflect, in a lawful manner, the objectives of the parties
in entering into these agreements in Section 6, Section 7 and Section 8
or, in the alternative.

		
	 	     (ii)      the parties or their representatives shall meet within one (1)
week of the applicable decision and shall agree to modify that provision
which was found to be invalid or unenforceable in order to allow the
Company to obtain the objectives, to the extent allowed by law, of the
provisions found to be invalid or unenforceable. Should Employee fail or
refuse to meet within the one (1) week period, or should no agreement be
reached by the parties during the meeting, Employee agrees that the
Company may unilaterally modify the provision(s) declared to be invalid
or unenforceable to comply with the law, provided that the Company
notifies Employee of the change in the language of the Agreement within
three (3) weeks of the decision of the Court and pays to Employee the sum
of One Hundred Dollars ($100.00). In no event may language unilaterally
selected by the Company expand the scope of the Confidentiality, the
Non-Competition, or the Non-Solicitation Agreement beyond that originally
agreed upon.

     10.     Notices. Any written notice required or permitted to be given under
this Agreement shall be given to the Company by hand-delivering said notice
directly to Employee’s supervisor or by mailing by registered mail or by other
reasonable means of delivery providing overnight service, such notice to the
Company at the following address:

4

 

	 	Mr. Roger Simpson

Vice President Human Resources

MedCath Incorporated

7621 Little Avenue, Suite 106

Charlotte, North Carolina 28226

     Notice to Employee may be given by hand delivering said notice or by
mailing such notice to the last address Employee provided the Company in
writing. Notice shall be deemed to have been given one day after depositing
said notice with the postal service or other delivery service or, if
hand-delivered, when received by the addressee.

     11.     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.

     12.     Assignment. The rights and obligations of the Company under this
Agreement shall insure 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
him/her.

     13.     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 may only be amended by a writing signed by Employee and
either the individual executing the Agreement on behalf of the Company or an
individual in a higher position with the Company.

     14.     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.

     15.     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.

     16.     It is understood and agreed that Employee will not disclose or release
the existence or the terms of this Agreement.

5

 

     IN WITNESS WHEREOF, the parties herein execute this Agreement.

	 	 	 
	
COMPANY:  MEDCATH INCORPORATED
	 
	By:	 	
/s/ Joan McCanless

	 
	Title:	 	
CVP

	 
	Date:	 	
12/7/99

	 
	 
	EMPLOYEE:	 	
/s/ Thomas K. Hearn

	 
	Date:	 	
12/7/99

6

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