Document:

Ex-10.58

 

SEPARATION AND RELEASE AGREEMENT

     THIS SEPARATION AND RELEASE AGREEMENT (this “Agreement”) is made and entered into by
and between MEDCATH CORPORATION, a Delaware corporation (the “Company”), and CHARLES R.
SLATON whose address is 1412 Lands End Pt. N, Russellville, Arkansas 72802 (the
“Executive”).

Recitals

     In recognition of the termination of the Executive’s employment with the Company under
circumstances entitling him to severance benefits under Section 6.1(a) of that certain Amended and
Restated Executive Employment Agreement between the Company and the Executive dated as of September
30, 2005 (the “Employment Agreement”) and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the Company and the Executive agree to the following:

     1. Termination of Employment. The Executive’s employment by the Company shall
terminate effective as of November 25, 2005 (the “Separation Date”). During the period
from the effective date of this Agreement through the Separation Date (the “Notice
Period”), the Company shall pay and provide to the Executive all salary and benefits due to the
Executive under the Employment Agreement. The Executive is not authorized to perform, and will not
during the Notice Period perform, any job-related duties for or on behalf of the Company, its
subsidiaries or the partnerships and limited liability companies in which the Company directly or
indirectly has an ownership interest (all of which entities are included within the definition of
“Company” for purposes of this Agreement), except as may otherwise be directed in advance
by the Chief Executive Officer of the Company.

     2. Severance Benefits. The Executive shall receive the following benefits in
connection with the termination of his employment:

     (a) Severance Payment. The Company shall pay to the Executive the
“Severance Payment” (as defined in the Employment Agreement) in the amount of
$1,050,000 over 12 months in substantially equal bi-weekly installment payments in
accordance with the Company’s normal payroll practices, less applicable
withholdings and taxes, commencing within 10 business days after the later of (i)
the effective date of this Agreement or (ii) the Separation Date.

     (b) Accrued but Unpaid Compensation and Expense Reimbursements. The
Company shall pay to the Executive in a single lump sum payment, less applicable
withholding and taxes, within 30 days after the later of (i) the effective date of
this Agreement or (ii) the Separation Date the sum of (A) the “Vacation Payment” (as
defined in the Employment Agreement) in the amount of $56,662.24, (B) the
“Compensation Payment” (as defined in the Employment Agreement) in the amount of
$-0- and (C) the “Expense Payment” (as defined in the Employment Agreement) in the
amount of $-0-..

     (c) Welfare Benefits. The Executive shall be entitled to continue
coverage under the Company’s group medical plan for himself and his eligible
dependents for the period beginning on the Separation Date and ending on the earlier
of (i) the second anniversary of the Separation Date or (ii) the date on

 

 

which the Executive becomes covered under a
group medical plan of
 a
new employer (the “Coverage Period”). The 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. 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 on the
Separation Date.

     The Executive shall have the right and option to convert his group coverage
under the Company’s long-term disability and life insurance plans to individual
coverage. The Executive shall be solely responsible for the full cost and expense
of such converted individual coverage.

     3. Stock Option Awards. The Executive was awarded options to purchase 325,000 shares
of the Company’s common stock under the Company’s 1998 Stock Option Plan for Key Employees. As of
the date of this Agreement, the following options to purchase 97,500 shares of the Company’s common
stock (the “Vested Options”) had become fully vested and exercisable:

	 	 	 	 	 	 	 	 	 
	Grant Date	 	# of Vested Options	 	Exercise Price	 
	3 Sept 2003
	 	 	65,000	 	 	$	9.34	 
	12 Dec 2003
	 	 	24,200	 	 	$	9.95	 
	7 Jan 2004
	 	 	8,300	 	 	$	10.58	 

The Vested Options are and shall remain exercisable as provided by their terms from the date of
this Agreement through the close of business on Thursday, February 23, 2006. The remaining options
awarded to the Executive to purchase 227,500 shares of the Company’s common stock shall be
forfeited and cancelled as of the Separation Date. Executive acknowledges that any exercise of
options or sale of the Company’s stock on or prior to November 25, 2005 shall continue to be
subject to the terms of the Company’s policy on trading in its securities by its executives and
employees, and thereafter, and at all times, any such trading shall continue to be subject to
Executive’s compliance with applicable securities laws and regulations regarding such trading of
securities.

     4. Intentionally Omitted.

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     5. Continuing Applicability of Employment Agreement Covenants.

     (a) Non-Competition. The Executive agrees that for a period of 1 year
from the Separation Date, the Executive will not engage in or have an interest,
either directly or indirectly, whether as a shareholder, partner, owner, investor,
officer, director, advisor, consultant or as an employee who has any substantially
similar types of employment responsibilities as Executive had with the Company, in
any Competitive Business (other than an ownership position by the Executive of less
than 5% in any company whose shares are publicly traded) which is located or which
operates within 50 miles of:

     (i) any hospital or fixed site cardiac catheterization lab in
each case which the Company owns or manages or the Company’s
corporate headquarters, or

     (ii) any location with respect to which the Company was
actively developing or negotiating as of the Separation Date to own
or manage a hospital, cardiac catheterization lab or a hospital’s
cardiology or cardiovascular surgery program (for purposes of this
section, the term “actively developing or negotiating” means either
definitive documents, a letter of intent, memorandum of
understanding or other comparable document had been executed or the
material terms thereof were being actively negotiated).

For purposes of this Section, the term “Competitive Business” means any
entity that owns or manages hospitals or cardiac catheterization labs and that
derives, directly or indirectly, more than 10% of its gross annual revenue from
providing cardiology or cardiovascular-related healthcare services. The Executive
and the Company agree that this covenant not to compete is a reasonable covenant
under the circumstances, and further agree that if in the opinion of any court of
competent jurisdiction such restraint is not reasonable in any respect, such court
shall have the right, power and authority to excise or modify such provision or
provisions of this covenant as to the court shall appear not reasonable and to
enforce the remainder of the covenant as so amended. The Company and the Executive
acknowledge and agree that the Executive may at any time during the 1 year period
following the Separation Date request a waiver of the foregoing restrictions on his
employment during such period in connection with an actual job offer he has received
from a prospective employer or a position with a prospective employer he intends to
actively pursue, and the Company may grant or reject such wavier request in its sole
discretion.

     (b) Non-solicitation of Company Employees. The Executive agrees that
for a period of 1 year from the Separation Date, the Executive will not, on his own
behalf or on behalf of any person, firm or company, directly or indirectly, solicit
or offer employment to any person who has been employed by the Company or its
subsidiaries at any time during the 12 months immediately preceding such
solicitation.

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     (c) Company Confidential Information. The Executive will not, without
the prior written consent of the Company, use, divulge, disclose or make accessible
to any other person, firm, partnership, corporation or other entity any Confidential
Information (as hereinafter defined) pertaining to the business of the Company or
any of its subsidiaries, except when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the Company, or by any administrative body or legislative body
(including a committee thereof) with jurisdiction to order the Executive to divulge,
disclose or make accessible such information. For purposes of this Section, the
term “Confidential Information” means non-public information concerning the
financial data, strategic business plans, and other non-public, proprietary and
confidential information of the Company, its subsidiaries, Kohlberg Kravis Roberts &
Co., Welsh, Carson, Anderson & Stowe VII, L.P., or their respective affiliates as in
existence as of the date of Executive’s termination of employment that, in any case,
is not otherwise available to the public (other than by the Executive’s breach of
the terms hereof). Confidential Information further includes without limitation
customer information, vendors, operations and operating procedures, pricing,
financial information, technology, marketing strategies, design of facilities,
employment practices, contractual agreements, and trade secrets.

     6. Confidentiality. The Executive agrees to keep the terms of this Agreement in
strict confidence and not to disclose this document or its contents to any person other than his
attorney, accountant, and spouse. Furthermore, to the extent the Executive is permitted to
disclose such information, he agrees to inform the person receiving such information of this
confidentiality obligation and hereby warrants that the person receiving such information shall be
similarly bound to this confidentiality obligation.

     7. Release.

     (a) By the Company. In consideration of the Executive’s promises set forth in
this Agreement and the performance thereof, the Company, for itself, and its affiliates and
their respective officers, directors, employees, agents, successors and assigns, hereby
releases and forever discharges the Executive from all claims or liabilities the Company or
any of said entities or any third parties (including officers, directors and employees of
the Company or its affiliates) have or might have as a result of the Executive’s status as
an officer, director or employee of the Company or any of said entities or the termination
of that status; provided, however, that this release shall not apply to any
claims the Company may have, now or hereafter, which arise out of or are relate to the
Executive’s dishonesty with respect to the Company or its affiliates or which arise out of
any violation of this Agreement. As of the date of this Agreement, the Company has no
knowledge of any potential claim against the Executive that would not be released by this
Section.

     (b) By the Executive. The Executive, for himself, his heirs, executors,
administrators, and assigns, hereby releases, waives, and forever discharges any and all
claims or liabilities against the Company, its affiliates, predecessors, successors or
assigns, and their respective officers, directors, trustees, Executives, representatives and
agents, from any and all claims or liabilities of whatever kind or nature which he has ever

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had or which he now has, known or unknown, including, but not limited to, any and all
claims or counterclaims for breach of contract, breach of fiduciary duty, unfair
competition, defamation, wrongful or unlawful discharge, discrimination, constructive
discharge, for past or future wages, salary, bonuses, earnings, restricted stock, deferred
compensation or other forms of compensation, claims or counterclaims for violations of Title
VII of the Civil Rights Act of 1964 as amended, 42 U.S.C. § 2000(e) et seq., the Americans
with Disabilities Act, the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et
seq., or the Employee Retirement Income Security Act of 1974, and all amendments thereto,
violations of any federal, state and/or municipality whistle-blowing statutes or laws or
fair employment statutes or laws, or violations of any other law, rule, regulation, or
ordinance pertaining to employment, wages, hours, stock ownership, or any other terms and
conditions of employment and termination of employment, and any other claims, counterclaims
and/or third-party claims, which have been, or could have been, asserted by Executive in any
court, arbitration, or other forum arising out of or in any way related to the relationship
between the Executive and the Company or the termination thereof, to the fullest extent
permitted by law. Provided, however, that the foregoing release shall not
apply to (i) claims that may arise after the date this Agreement is executed or from a
violation of this Agreement, or (ii) claims for the Executive’s vested and accrued benefits
as of the Separation Date under the Company’s employee benefit plans, including the MedCath
Incorporated 401(k) Profit Sharing Plan and Trust and the MedCath Corporation 401(k)
Restoration Plan.

NOTE: This Agreement applies to age discrimination claims under the Age Discrimination in
Employment Act (ADEA), 29 U.S.C. § 621 et seq., as amended by the Older Workers Benefit Protection
Act (OWBPA) (these laws prohibit age discrimination in employment or benefits as to individuals 40
years of age and older). Under the OWBPA, the Executive has the right to consider this Agreement
for 21 days before accepting it. Before signing this Agreement, the Executive is advised to
consult with an attorney of his choice, at the Executive’s expense. Further, under the OWBPA the
Executive has the right to revoke this Agreement at any time within the 7 day period following the
date the Executive signs this Agreement. This Agreement shall not become effective or enforceable
until the 7 day revocation period expires. Finally, this Agreement does not interfere with the
Executive’s right to file a charge or participate in a proceeding conducted by the Equal Employment
Opportunity Commission (EEOC); however, the Executive acknowledges and agrees that this Agreement
does waive and release the Executive’s ability to claim any monetary recovery or damages should the
EEOC pursue claims on the Executive’s behalf.

     8. Revocation Right. If the Executive desires to revoke this Agreement during the 7
day period following the Executive’s execution and delivery of this Agreement, the Executive shall
provide notice to the Company no later than midnight on the last day of the 7 day revocation
period. Notice should be given by submitting a written statement of revocation via hand delivery,
mail, fax, or e-mail to Philip D. Song, Esq., MedCath Corporation, 10720 Sikes Place, Suite 300,
Charlotte, North Carolina 28277, Facsimile (704) 708-5035 and e-mail address:
phil.song@medcath.com. Notice may also be given by calling or leaving a voice mail message for
Philip D. Song, Esq. at (704) 708-6610 ext. 1126 before midnight on the last day of the 7 day
revocation period, then immediately confirming the call or message with written notice as stated
above. The Executive’s revocation must be in writing to be effective.

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     9. Compliance with Older Workers Benefit Protection Act: By signing this Agreement,
the Executive specifically acknowledges and represents that:

     (a) The Executive has been given a period of 21 days to consider the terms of
this Agreement;

     (b) The terms of this Agreement are clear and understandable to the Executive;

     (c) The terms and benefits set forth in this Agreement were individually
negotiated between the Executive and the Company and the Executive was not offered,
nor is he participating in, an exit incentive or employment termination program
offered to a group or class of Company employees;

     (d) The benefits the Company will provide to the Executive under this Agreement
exceed the benefits that Executive was otherwise entitled to receive as an employee
of the Company;

     (e) The Executive has been advised to consult with an attorney (at Executive’s
expense) prior to signing this Agreement; and

     (f) The Executive has been advised that he has the right to revoke this
Agreement at any time within the 7 day period following his signature of this
Agreement.

     10. Scope of Agreement. The Executive and Employer agree that this constitutes a full
resolution and satisfaction of all duties and obligations arising out of their previous employment
relationship and supersedes any other agreement, whether express or implied, regarding terms and
conditions of employment. Both parties acknowledge that they have carefully reviewed and
understand the terms of this Agreement.

     11. Enforcement. Executive and the Company agree that the covenant not to compete
described in Section 5 is a reasonable covenant under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction such restraint is not reasonable in any
respect, such court shall have the right, power and authority to excise or modify such provision or
provisions of the covenant as to the court shall appear not reasonable and to enforce the remainder
of the covenant as so amended. The Executive agrees that any breach of the covenants contained in
Sections 5 or 6 of this Agreement would irreparably injure the Company. Accordingly, the Executive
agrees that the Company may, in addition to pursuing any other remedies it may have in law or in
equity, cease making any payments otherwise required by this Agreement and obtain an injunction
against Executive from any court having jurisdiction over the matter restraining any further
violation of this Agreement by the Executive.

     12. Governing Law and Venue. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina. The Executive consents to the
exclusive jurisdiction of any federal or state court sitting in Mecklenburg County, North Carolina
in any dispute arising from this Agreement.

     13. Intentionally Omitted.

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     14. Modification. This Agreement constitutes the entire indivisible agreement between
the parties relating to the subject matter hereof and shall not be modified, amended, altered or
changed except by written agreement signed by the Company and the Executive.

     15. Effective Date. This Agreement shall not become effective and enforceable until
it is signed by the Company and 8 days have passed following the Executive’s execution of this
Agreement. The Executive has the right to revoke this Agreement at any time within the seven-day
period following Employee’s signature of this Agreement. No attempted revocation by Employee after
the expiration of this 7 day period shall have any effect on the terms of this Agreement.

     IN WITNESS WHEREOF, the Company and the Executive have signed this Agreement on the dates set
forth below:

	 	 	 
	 

	 	CHARLES R. SLATON
	 
	 	 
	 

	 	/s/ Charles R. Slaton
	 

	 	Date: 11/19/2005
 

	 
	 	 
	 

	 	MEDCATH CORPORATION
	 
	 	 
	 

	 	By:
/s/ John T. Casey
 

	 

	 	Its: Chairman and Chief Executive Officer
	 
	 

	 	Date: 11/22/2005
 

7<PAGE>

                                                                    Exhibit 10.1

                          RESALE RESTRICTION AGREEMENT

      This RESALE RESTRICTION AGREEMENT (the "Agreement") with respect to
certain stock option award agreements (the "Option Agreements") issued under the
Corrections Corporation of America Amended and Restated 1997 Employee Share
Incentive Plan (the "1997 Plan") and the Corrections Corporation of America
Amended and Restated 2000 Stock Incentive Plan, as amended (the "2000 Plan" and
together with the 1997 Plan, the "Plans"), is made by and between Corrections
Corporation of America, a Maryland corporation (the "Company"), and the holder
of the Company's options named in Exhibit A hereto (the "Holder").

      WHEREAS, the Holder has been granted one or more options (the "Options")
to acquire shares of common stock of the Company in such quantities and at the
exercise prices set forth in Exhibit A hereto pursuant to the Option Agreements
(the "Shares");

      WHEREAS, the Options upon execution hereof shall be deemed fully vested
and exercisable by reason of an action of the Company's Board of Directors
effective December 30, 2005 (the "Acceleration"); and

      WHEREAS, the Company wishes, and the Holder has agreed, to impose certain
resale restrictions on the Shares underlying to the Options as provided herein
on the terms and conditions contained herein.

      NOW, THEREFORE, for good and valuable consideration, the sufficiency of
which is hereby acknowledged, it is agreed as follows:

      1. The Holder acknowledges that he or she has reviewed this Agreement in
full.

      2. As consideration for the benefit of the Acceleration bestowed upon the
Holder by the Company, the Holder agrees not to sell, contract to sell, grant
any option to purchase, transfer the economic risk of ownership in, make any
short sale of, pledge or otherwise transfer or dispose of any Shares (or any
interest in any Shares) until the Shares have been released from the foregoing
resale restrictions, as further described below (such restrictions are
hereinafter referred to as the "Resale Restrictions").

      3. Except with respect to Shares that are listed as "Current" on Exhibit A
(as set forth in Section 4 below), the Resale Restrictions shall lapse on the
dates set forth in the "Lapse Date" column of Exhibit A and with respect to the
number of unexercised Shares as set forth in the "Unexercised Shares" column of
Exhibit A.

      4. The Company agrees that the Shares denoted as "Current" in the "Lapse
Date" column in Exhibit A shall not be subject to the Resale Restrictions.

                                       1
<PAGE>

      5. Notwithstanding the foregoing, in the event the Holder's employment or
service with the Company is terminated for any reason, 100% of the Shares
underlying the Options shall become free from the Resale Restrictions on the
effective date of termination.

      6. This Agreement shall be effective as of December 30, 2005.

      7. The Holder represents and warrants that he or she has full power to
enter into this Agreement.

      8. Except as set forth herein, all other terms and conditions applicable
to the Options shall remain the same. This Agreement, the Option Agreements and
the Plans constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior understandings
and agreements of the Company and the Holder with respect to the subject matter
hereof, and may not be modified except by means of a writing signed by the
Company and the Holder. In the event any terms of this Agreement, the Option
Agreements or the Plans differ, the terms of this Agreement shall prevail. This
Agreement is to be construed in accordance with and governed by the internal
laws of the State of Maryland without giving effect to any choice of law rule
that would cause the application of the laws of any jurisdiction other than the
internal laws of the State of Maryland to the rights and duties of the parties.
Nothing in this Agreement (except as expressly provided herein) is intended to
confer any rights or remedies on any persons other than the parties. Should any
provision of this Agreement be determined to be illegal or unenforceable, such
provision shall be enforced to the fullest extent allowed by law and the other
provisions shall nevertheless remain effective and shall remain enforceable.

      9. This Agreement shall be binding upon the Company and the Holder as well
as the successors and assigns (if any) of the Company and the Holder.

                   [The following page is the Signature Page.]

                                       2
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered on the date set forth beside such party's signature.

Dated: December __, 2005
                                       CORRECTIONS CORPORATION OF AMERICA

                                       By: _________________________________
                                       Name:  John Ferguson
                                       Title:  Chief Executive Officer

Dated: December __, 2005
                                       HOLDER:

                                       _____________________________________
                                       (Signature)

                                       _____________________________________
                                       (Printed/Typed Name)

                                       3
<PAGE>

                                    EXHIBIT A

                               OPTION INFORMATION

NAME OF HOLDER:  ____________________________

<TABLE>
<CAPTION>
ORIGINAL OPTION GRANT DATE    ORIGINAL QUANTITY OF SHARES   UNEXERCISED SHARES    APPLICABLE PLAN    EXERCISE PRICE   LAPSE DATE(1)
--------------------------    ---------------------------   ------------------    --------------     --------------   -------------
<S>                           <C>                            <C>                  <C>                <C>              <C>
</TABLE>

(1) IN THE EVENT OF A "CHANGE IN CONTROL" OR "POTENTIAL CHANGE IN CONTROL" OF
THE COMPANY (AS SUCH TERMS ARE DEFINED IN THE APPLICABLE PLAN), THE LAPSE DATES
SET FORTH HEREIN SHALL ACCELERATE TO THE DATE OF SUCH "CHANGE IN CONTROL" OR
"POTENTIAL CHANGE IN CONTROL" IN THE SAME MANNER THAT THE VESTING OF AN OPTION
ACCELERATES UNDER THE APPLICABLE PLAN.

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