THIS
EMPLOYMENT AGREEMENT (this “ Agreement ”) is
made as of September 1, 2009, by and between MEDCATH
CORPORATION , a Delaware corporation (the “
Company ”), and DAVID BUSSONE (“
Executive ”).
The Company
desires to employ Executive to serve as Executive Vice President
and President, Operations Division, and Executive is willing to
accept such employment and perform services for the Company, all on
the terms and conditions hereinafter set forth.
NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
1.1
Position . Subject to the terms and conditions of this
Agreement, the Company agrees to employ Executive during the term
hereof as an Executive Vice President and President, Operations
Division. In such capacity, Executive shall report to the President
and Chief Executive Officer of the Company (the “ CEO
”) and shall have the customary powers, responsibilities and
authorities of such position and office for corporations of the
size and character of the Company, as it exists from time to time
and as are assigned by the CEO.
1.2
Duties . Subject to the terms and conditions of this
Agreement, Executive hereby accepts employment with the Company
commencing on September 1, 2009 and agrees to devote his full
working time and efforts, to the best of his ability, experience
and talent, to the performance of services, duties and
responsibilities in connection therewith. Executive shall perform
such duties and exercise such powers, commensurate with his
position, as the CEO shall from time to time delegate to him on
such terms and conditions and subject to such restrictions as the
board of directors of the Company (the “ Board
”) may reasonably from time to time impose.
1.3
Outside Activities . Nothing in this Agreement shall
preclude Executive (i) from engaging in charitable and
community affairs, from managing any passive investment made by him
in publicly traded equity securities or other property (provided
that no such investment
may exceed 5%
of the equity of any entity) or (ii) subject to Section 13(b)
hereof, from serving as a member of boards of directors or as a
trustee of any other corporation, association or entity, so long as
in the reasonable determination of the CEO and none of the
activities described in clauses (i) or (ii) interferes
with his duties and responsibilities hereunder.
2. Term
of Employment . Executive’s term of employment under this
Agreement shall commence on the Commencement Date and, subject to
the terms hereof, shall terminate on the third anniversary of the
Commencement Date; provided , however , that the term
of this Agreement and Executive’s employment hereunder shall
be automatically renewed and extended for additional one-year
periods commencing on the third anniversary of the Commencement
Date and on each anniversary date thereafter, unless the Company or
Executive provides written notice to the other party, at least
90 days prior to the expiration of the initial term or any
renewal term, of the non-renewal of this Agreement.
3.1
Salary . The Company shall pay Executive a base salary
(“ Base Salary ”) at the rate of $425,000 per
annum commencing as of the Commencement Date. Base Salary shall be
adjusted annually at the discretion of the Board but in no event
shall Base Salary be reduced but, as increased, shall constitute
“Base Salary” hereunder. Base Salary shall be payable
in accordance with the normal payroll practices of the Company but
no less frequently than monthly. The first review date for
Executive’s potential adjustment will be coincident with
executive salary review occurring around November, 2010, and
provided at the same time as other executives.
3.2
Bonus . For each fiscal year of Executive’s employment
hereunder, Executive shall participate in the bonus plan
established for the Company’s senior executives.
Executive’s target bonus with respect to each such fiscal
year shall be equal to 50% of Executive’s Base Salary for
such fiscal year (“target”) with a
“stretch” incentive consistent with an approved plan.
The Board (or a committee thereof) shall have complete authority to
establish all other terms and provisions of the bonus plan,
including the performance goals for the bonus plan, the threshold
performance required for the payment of any bonus under the plan,
the maximum bonus opportunity for Executive under the plan, and the
total cash compensation consistent with its exercise of
discretion.. Bonuses shall be paid within 2-
1 / 2
months following
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the fiscal year
to which they relate, and Executive must be employed by the Company
on the day the bonus is payable to be eligible to receive the
bonus.
3.3
Compensation Plans and Programs . Executive shall be
eligible to participate in any other compensation plan or program
maintained by the Company from time for senior executives of the
Company on terms and conditions that are comparable to those
applicable to such other senior executives.
3.4
Stock. Upon date of commencing work Executive shall be
awarded Restricted Shares under the Company’s Stock Award
Plan in the amount of $425,000 with vesting and all other terms as
applicable under the Plan authorizing the issuance. Executive will
also receive Restricted Shares in an amount equaling $75,000 in
recognition of a pro-rated bonus forfeited due to early departure
from his previous employer.
4.1
Employee Benefit Programs, Plans and Practices . The Company
shall provide Executive during the term of his employment hereunder
with participation in or coverage under all employee pension and
welfare benefit programs, plans and practices (commensurate with
his position in the Company from time to time and to the extent
permitted under any employee benefit plan) which the Company makes
available to its senior executives.
4.2
Vacation and Fringe Benefits . Executive shall be entitled
to five (5) weeks of paid vacation in each calendar year,
which shall be taken at such times as are consistent with
Executive’s responsibilities hereunder but which shall not
have any year-to-year carryover, consistent with the Executive PDO
and Continuation Policy annexed hereto as Exhibit “A”.
In addition, Executive shall be entitled to the perquisites and
other fringe benefits currently made available to senior executives
of the Company, commensurate with his position with the
Company.
4.3
Relocation Expenses . Executive shall become a full-time
resident of the Charlotte, North Carolina area no later than the
Commencement Date and shall relocate his family to the Charlotte,
North Carolina area as soon as practicable thereafter, consistent
with the terms, conditions, and parameters of the Relocation Costs
Agreement executed by Executive, and made a part hereof. Executive
shall utilize the Company’s retained relocation firm (Xonex)
for all relocation efforts. Company shall be responsible for
reimbursement of the real estate brokerage commission on the sale
of Executive’s current principal residence in Las
Vegas,
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Nevada,
provided that Executive utilizes the services of Xonex in listing
and selling Executive’s home, and ensures that the maximum
economic benefit of Xonex is realized in the transaction.
Additionally, should the sale price of Executive’s Las Vegas,
NV principal residence be less than $500,000, Company agrees to
reimburse Executive for an amount equal to $500,000 less the sale
price, up to a maximum amount of $75,000 provided Executive has
used best efforts to have his bank write-off a ‘short
sale’ amount. Any expenses incurred by Executive in the
relocation process which are not covered by the Company’s
agreement with Xonex are the sole responsibility of Executive,
absent prior written approval from the Company. Any reasonable and
customary expenses incurred by Executive and reimbursed by Company
shall be treated as after tax income.
5.
Expenses . Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this
Agreement, including, without limitation, expenses for travel and
similar items related to such duties and responsibilities. The
Company will reimburse Executive for all such expenses upon
presentation by Executive from time to time of appropriately
itemized and approved (consistent with the Company’s policy)
accounts of such expenditures.
6.
Termination of Employment .
6.1
Termination By the Company Without Cause or By Executive for
Good Reason . (a) The Company may terminate
Executive’s employment under this Agreement at any time for
any reason, provided that any such termination other than
for Cause (as defined in Section 6.4 hereof) may only be made
upon 30 days prior written notice to Executive. If
Executive’s employment under this Agreement is terminated by
the Company without Cause (other than as a result of
Executive’s death or Permanent Disability (as defined in
Section 6.2 hereof) or if Executive terminates his employment
for Good Reason (as defined in Section 6.1(c) hereof),
Executive shall receive any payments to which he is entitled under
any applicable compensation or employee benefit plan or program in
which he participates, including but not limited to those referred
to in Section 3.3 hereof. In addition, in the event of any
such termination described in the immediately preceding sentence,
Executive shall be entitled to receive the following:
(i) an amount
equal to the sum of (A) one times Executive’s Base
Salary if such termination occurs prior to a Change in Control (as
defined in 6.1(c) hereof) or more than 12 months after a
Change in Control or (B) if such
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termination
without cause occurs upon a Change in Control or at any time within
12 months after a Change in Control, the sum of two times
Executive’s Base Salary and one times Executive’s
Target Bonus (such amount, the “ Severance Payment
”);
(ii) a cash lump
sum payment in respect of (x) compensation earned but not yet
paid (including any awarded but deferred Bonus payments) (the
“ Compensation Payment ”), and
(y) reasonable expenses incurred under Section 5 but not
yet reimbursed (the “ Expense Payment ”);
and
(iii) after waiver
period for health coverage in 4.1, continued coverage under the
Company’s group medical plan in accordance with the terms
thereof for a period ending on the earlier of (A) the second
anniversary of the date of termination under this
Section 6.1(a) or (B) the date on which Executive becomes
eligible to be covered under comparable benefit plans of a new
employer (the “ Coverage Period ”),
provided that Executive shall be required to contribute an
amount toward the cost for such coverage during the Coverage Period
that is equal to the cost paid by active employees of the Company
for coverage under the Company’s group medical plan during
the Coverage Period, and for purposes of applying the group health
plan coverage continuation requirements of Section 4980B of
the Internal Revenue Code of 1986 and Section 601 et
seq . of the Employee Retirement Income Security Act of
1974, as amended, the “qualifying event” shall be the
termination of the Executive’s employment with the
Company.
(b) The
Severance Payment shall be paid by the Company to Executive over
the 12 month period following the date of termination in
substantially equal installment payments and in accordance with the
normal payroll practices of the Company but no less frequently than
monthly. The Compensation Payment and the Expense Payment shall be
paid by the Company to Executive in a cash lump sum payment within
30 days after the date of termination.
(c) For
purposes of this Agreement, “ Good Reason ”
shall mean any of the following (without Executive’s express
prior written consent):
(i) A substantial
reduction or elimination of Executive’s management
responsibility for the financial operations of the Company, other
than in connection with the termination of Executive’s
employment by the Company for Cause, by Executive without Good
Reason or as a result of Executive’s Permanent Disability or
death;
(ii) A reduction
by the Company in Executive’s Base Salary or Target Bonus;
or
(iii) A reduction
or elimination of Executive’s eligibility to participate in
any of the Company’s employee benefit plans that is
inconsistent with the eligibility of similarly situated executives
of the Company to participate therein;
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(iv) A required
relocation of Executive’s principal place of employment that
is more than 25 miles from his initial place of
employment.
(v) The Company
provides Executive written notice of the non-renewal of this
agreement pursuant to Section 2
For purposes of
this Agreement, “Change in Control” shall
mean:
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