Exhibit 10.4
October 18, 1999
Xx. Xxxx X. Xxxxx
0000 Xxxxxxxxx Xxxxxx
Xx. Xxxx, XX 00000
Dear Xx. Xxxxx:
This letter sets forth the agreed terms of your employment with Universal
Hospital Services, Inc. (the "Company"). For good and valuable consideration,
the parties hereto agree as follows:
1. Position; Duties. The Company agrees to employ you, and you agree to serve
and accept employment, for the Term (as defined below) as Senior Vice President
and Chief Financial Officer of the Company, subject to the direction and control
of the Board of Directors of the Company (the "Board"), and, in connection
therewith, to perform such duties as the Board or the Chief Executive Officer
(the "CEO") of the Company may from time to time reasonably direct. Your place
of employment will be in the greater Minneapolis/St. Xxxx metropolitan area as
mutually agreed with the CEO. During the Term, you agree to devote all of your
time, energy, experience and talents during regular business hours, and as
otherwise reasonably necessary, to such employment, to devote your best efforts
to advance the interests of the Company and not to engage in any other business
activities of a material nature, as an employee, director, consultant or in any
other capacity, whether or not you receive any compensation therefor, without
the prior written consent of the Board. You will not be given duties
inconsistent with your executive position.
2. Term of Employment Agreement. The term of your employment hereunder will
begin 11/15/99 or such earlier date that you may designate and end as of the
close of business on the date which is three years from starting date, subject
to earlier termination pursuant to the terms hereof (including the Renewal Term,
as defined in the next sentence, the "Term"). Following the initial Term, this
Agreement will automatically be renewed for successive one-year terms (each a
"Renewal Term") unless notice of termination is given by either party upon not
less than 30 days' written notice prior to the date on which such renewal would
otherwise occur.
3. Compensation and Benefits.
(a) Base Salary. Your bases salary will be at annual rate of $170,000,
payable in equal bi-weekly installments. Such base salary will be adjusted
annually based on changes in the consumer price index (all urban consumers,
U.S. city average). The Board will annually review your base salary
beginning in 2000. Necessary withholding taxes, FICA contributions and the
like will be deducted from your base salary.
(b) Bonus. In addition to your base salary, you will be entitled to receive
a bonus based on the achievement of the annual EBITDA targets contained in
exhibit A (such targets to be subject to adjustment by the Board of
Directors of the company, in good faith, to reflect any acquisitions,
dispositions, and material changes to capital spending). The EBITDA bonus
amount would rise linearly from 0% of base salary to 100% of base salary
based on achievement of EBITDA of 90% to 110% of target EBITDA. No bonus
shall be payable if EBITDA is 90% or less of target EBITDA. You will
automatically earn 75% of the EBITDA payout and a pool of cumulative monies
will be created from the other 25% from all executives to be distributed
per CEO and Board subjective determination. A $30,000.00 bonus will be paid
to you for 1999 contributions at the same time the other executive bonuses
are paid.
(c) Options. On the date hereof you will also receive options to purchase a
total of 112,430 shares of the Company's common stock, $.01 par value (the
"Common Stock"), at an exercise price of $3.31 per share, which options
will be granted under the Company's 1998 Stock Option Plan (the "Plan"). A
copy of the Plan has been provided to you. Such options will vest in
accordance with, and will have such other terms as provided in, the Stock
Option Agreement attached hereto as Exhibit A and the Plan.
(d) Other. You will be entitled to such health, life, disability, vacation,
pension, sick leave and other benefits as are generally made available by
the Company to its executive employees. Your benefits will also consist of
five weeks paid vacation time (pro-rated for 1999), an annual physical exam
and reimbursement for tax preparation costs.
4. Termination.
(a) Death. This Employment Agreement will automatically terminate upon your
death. In the event of such termination, the Company will pay to your legal
representatives your base salary in monthly installments and continue to
provide the benefits provided hereunder, in each case for six months
following such termination.
(b) Disability. If during the Term you become physically or mentally
disabled, whether totally or partially, either permanently or so that you
are unable substantially and competently to perform your duties hereunder
for a period of 90 consecutive days or for 90 days during any six-month
period during the Term (a "Disability"), the Company may terminate your
employment hereunder by written notice to you. In the event of such
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termination, the Company will pay to you your base salary in monthly
installments and continue to provide the benefits provided hereunder, in
each case for six months following such termination.
(c) Cause. Your employment hereunder may be terminated at any time by the
Company for Cause (as defined herein) by written notice to you. In the
event of such termination, all of your rights to payments (other than
payment for services already rendered) and any other benefits otherwise due
hereunder will cease immediately. The Company will have "Cause" for
termination of your employment hereunder if any of the following has
occurred.
(i) your continued failure, whether willful, intentional or
grossly negligent, after written notice, to perform substantially your
duties hereunder (other than as a result of a Disability);
(ii) dishonesty in the performance of your duties hereunder:
(iii) conviction or confession of an act or acts on your part
constituting a felony under the laws of the United States or any state
thereof;
(iv) any other willful act or omission on your part which is
materially injurious to the financial condition or business reputation
of the Company or any of its subsidiaries;
(v) you have breached any provision of this Employment Agreement
contained in Paragraphs 6, 7 and 8 hereof; or
(vi) you have breached any provision of this Employment Agreement
(other than paragraphs 6, 7 or 8 hereof) and such breach will not have
been cured within sixty days after notice thereof from the Company to
you.
(d) Without Cause. Your employment hereunder may be terminated at any time
by the Company without Cause by written notice to you. In the event of such
termination, the Company will (i) continue to pay you your base salary
through the date which is twelve months from the Date of Termination (as
defined herein), and (ii) pay to you a prorated bonus based upon the number
of days that you were employed by the Company during the fiscal year to
which such bonus relates, such bonus to be payable at such time as annual
bonuses with respect to such fiscal year are paid to all other Executive
Employees (as defined herein) who are employed by the Company on the last
day of such fiscal year. It is acknowledged and agreed that termination of
your employment upon expiration of the Term will not be deemed to
constitute a termination without Cause for purposes of this Employment
Agreement or for any other purpose. For purposes of this Employment
Agreement, "Executive Employees" will be deemed to mean the Vice Presidents
of the Company.
(e) Resignation Without Good Reason. You may terminate your employment
hereunder upon sixty days' prior written notice to the Company, without
Good Reason (as defined herein). In the event of such termination, all of
your rights to payment (other
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than payment for services already rendered) and any other benefits
otherwise due hereunder will cease upon the date of such termination. It is
acknowledged and agreed that termination of your employment upon expiration
of the Term will not be deemed to constitute resignation without Good
Reason for purposes of this Employment Agreement or any other purpose.
(f) Resignation For Good Reason. You may terminate your employment
hereunder at any time upon thirty days' written notice to the Company, for
Good Reason. In the event of such termination, the Company will (i)
continue to pay you your base salary though the date which is twelve months
from the Date of Termination, and (ii) pay to you a prorated bonus based
upon the number of days that you were employed by the Company during the
fiscal year to which such bonus relates, such bonus to be payable at such
time as annual bonuses with respect to such fiscal year are paid to all
other Executive Employees who are employed by the Company on the last day
of such fiscal year.
You will have "Good Reason" for termination of your employment hereunder
if, other than for Cause, any of the following has occurred:
(i) your base salary has been reduced other than in connection
with an across-the-board reduction (of approximately the same
percentage) in executive compensation to Executive Employees imposed
by the Board in response to negative financial results or other
adverse circumstances affecting the Company;
(ii) the Company has reduced or reassigned a material portion of
your duties hereunder;
(iii) your illness, that in the good faith determination of the
Board of Directors of the Company is likely to result in you becoming
disabled and unable to continue your employment with the Company;
(iv) the Company has breached this Employment Agreement in any
material respect; or
(v) the Company requires you to relocate outside of the
Minneapolis/St. Xxxx metropolitan area.
(g) Date and Effect of Termination. The date of termination of your
employment hereunder, pursuant to this Paragraph 4, will be, (i) in the
case of Paragraph 4(a), the date of your death, (ii) in the case of
Paragraphs 4(b), (c) or (d), the date specified as your last date of
employment in the Company's notice to you of such termination or (iii) in
the case of Paragraph 4(e) or 4(f), the date specified in your notice to
the Company of such termination (in each case, the "Date of Termination").
Upon any termination of your employment hereunder pursuant to this
Paragraph 4, you will not be entitled to any further payments or benefits
of any nature pursuant to this Employment Agreement, or as a result of such
termination, except as specifically provided for in this Employment
Agreement, the Stockholders' Agreement (as defined in Paragraph 10 hereof)
in any
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stock option plans adopted by the Company in accordance with Paragraph 3(b)
hereof, or as may be required by law.
(h) Other Employment. Notwithstanding anything in this Employment Agreement
to the contrary, if your employment hereunder is terminated pursuant to
Paragraph 4(d) or if you terminate your employment pursuant to Paragraph
4(f), and if prior to the date which is twelve months after the Date of
Termination you find other employment, the amount of payments or benefits
payable to you after such termination in accordance with the terms of this
Employment Agreement will be reduced by the value of your compensation in
your new employment through the date which is twelve months after the Date
of Termination.
(i) Termination Following Non-Renewal. In the event that (i) your
employment hereunder is not renewed at the end of the Term or any Renewal
Term pursuant to a notice of termination given by the Company to you in
accordance with Paragraph 2 hereof, (ii) you are still employed by the
Company after such non-renewal as an employee at will, (iii) the Company
thereafter terminates your employment as an employee at will, and (iv) no
circumstances exist at the time of such termination which would constitute
"Cause" as set forth in Paragraph 4(c) hereof, any amounts to which you are
entitled under any severance plan or program of the Company then in effect
which is generally applicable to employees of the Company will be paid to
you in accordance with the terms of such plan or program.
5. Acknowledgment. You agree and acknowledge that in the course of rendering
services to the Company and its clients and customers, you will have access to
and become acquainted with confidential information about the professional,
business and financial affairs of the Company and its affiliates. You
acknowledge that the Company is engaged and will be engaged in a highly
competitive business, and the success of the Company in the marketplace depends
upon its good will and reputation for quality and dependability. You agree and
acknowledge that reasonable limits on your ability to engage in activities
competitive with the Company are warranted to protect its substantial investment
in developing and maintaining its status in the marketplace, reputation and good
will.
6. Confidentiality. You agree that during and at all times after the Term, you
will keep secret all confidential matters and materials of the Company
(including its subsidiaries and affiliates), including, without limitation,
know-how, trade secrets, real estate plans and practices, individual office
results, customer lists, pricing policies, operational methods, any information
relating to the Company (including any of its subsidiaries and affiliates)
products, processes, customers and services and other business and financial
affairs of the Company (collectively, the "Confidential Information"), to which
you had or may have access and will not disclose such Confidential Information
to any person other than Holdings or the Company, their respective authorized
employees and such other person to whom you have been instructed to make
disclosure by the Board, in each case only to the extent required in the course
of your service to the Company hereunder or as otherwise expressly required in
connection with court process. "Confidential Information" will not include any
information which is in the public domain
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during or after the term, provided such information is not in the public domain
as a consequence of disclosure by you in violation of this Employment Agreement.
7. Non-competition. During the Prohibition Period (as hereinafter defined), you
will not, in any capacity, whether for your own account or for any other person
or organization, directly or indirectly, within North America (a) own, operate,
manage or control, (b) serve as an officer, director, partner, employee, agent,
consultant, advisor or developer or in any similar capacity to, or (c) have any
financial interest in, or aid or assist anyone else in the conduct of, any
person or enterprise which is engaged in a business substantially competitive
with the activities of the business actually conducted by the Company. As used
herein, "Prohibition Period" means the period from and after the date hereof to
and including the later of (i) the date which is twelve months from the Date of
Termination and (ii) the [third anniversary of start date].
The non-competition agreement contained in this Paragraph 7 will not prevent you
from owning, directly or indirectly, up to five percent (5%) of the publicly
traded stock in any corporation which is engaged in a business competitive with
the activities of the business actually conducted by the Company. For purposes
of this Agreement, the term "publicly traded" will mean traded on a recognized
national exchange or quoted on the NASDAQ National Market System in the United
States of America.
8. Non-solicitation. During the Prohibition Period, you will not, directly or
indirectly, hire, recruit, solicit, call upon, divert, take away, entice or in
any other manner persuade or attempt to do any of the foregoing with respect to,
any employee, independent contractor, dealer, supplier, client, customer or
business contact of the Company or any of its subsidiaries to discontinue his or
her position or relationship, or violate any agreement, with the Company or any
of its subsidiaries as employee, independent contractor, dealer, supplier,
client, customer or business contact, except with the prior written consent of
the Board, which consent will be given at the sole discretion of the Board.
The non-solicitation agreement contained in this Paragraph 7 will not apply to
(i) any employee of the Company whose employment relationship with the Company
has been terminated for at least three months prior to the date of such hiring,
recruitment or solicitation and (ii) any such employee whose employment is
terminated for any reason by the Company.
9. Modification; Equitable Relief.
(a) You agree and acknowledge that the duration, scope and geographic area
of the covenants described in Paragraphs 6, 7 and 8 are fair, reasonable
and necessary in order to protect the good will and other legitimate
interest of the Company and its subsidiaries, that adequate consideration
has been received by you for such obligations, and that these obligations
do not prevent you from earning a livelihood. If, however, for any reason
any court of competent jurisdiction determines that any restriction
contained in Paragraphs 6, 7 or 8 are not reasonable, that consideration is
inadequate or that you have been prevented unlawfully from earning a
livelihood, such restriction will be interpreted, modified or rewritten to
include as much of the duration,
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scope and geographic area identified in such Paragraphs 6, 7 or 8 as will
render such restrictions valid and enforceable.
(b) You acknowledge that the Company will suffer irreparable harm as a
result of a breach of this Employment Agreement by you for which an
adequate monetary remedy does not exist and a remedy at law may prove to be
inadequate. Accordingly, in the event of any actual or threatened breach by
you of any provision of this Employment Agreement, the Company will, in
addition to any other remedies permitted by law, be entitled to obtain
remedies in equity, including without limitation specific performance,
injunctive relief, a temporary restraining order and/or a permanent
injunction in any court of competent jurisdiction, to prevent or otherwise
restrain any such breach without the necessity of proving damages, posting
a bond or other security, and to recover any and all costs and expenses,
including reasonable counsel fees, incurred in enforcing this Employment
Agreement against you, and you hereby consent to the entry of such relief
against you and agree not to contest such entry. Such relief will be in
addition to and not in substitution of any other remedies available to the
Company. The existence of any claim or cause of action by you against the
Company or any of its subsidiaries, whether predicated on this Employment
Agreement or otherwise, will not constitute a defense to the enforcement by
the Company of this Employment Agreement. You agree not to defend on the
basis that there is an adequate remedy at law.
10. Stockholders' Agreement. In connection with the acquisition of any equity
securities, or options therefore, of the Company, you will be expected to enter,
and you agree to enter, into a stockholders' agreement with the other equity
investors in the Company, substantially in the form attached hereto as Exhibit B
(the "Stockholders' Agreement"). Up to 60 days after your start date, you will
have an opportunity to purchase a minimum of $5,000 and an unlimited maximum
dollar amount of UHS stock @ 3.31per share. This share acquisition, if you so
choose, will be governed by the aforementioned stockholders agreement.
11. Life Insurance. The Company may, at its discretion and at any time after the
execution of this Employment Agreement, apply for and procure, as owner and for
its own benefit, and at its own expense, insurance on your life, in such amount
and in such form or forms as the Company may determine. You will have no right
or interest whatsoever in such policy or policies, but you agree that you will,
at the request of the Company, submit yourself to such medical examinations,
supply such information and execute and deliver such documents as may be
required by the insurance company or companies to which the Company or any such
subsidiary has applied for such insurance.
12. Successors; Assigns; Amendment; Notice. This Employment Agreement will be
binding upon and will inure to the benefit of the Company and will not be
assigned by the Company without your prior written consent. This Employment
Agreement will be binding upon you and will inure to the benefit of your heirs,
executors, administrators and legal representatives, but will not be assignable
by you. This Employment Agreement may be amended or altered only by the written
agreement of the Company and you. All notices or other communications permitted
or required under this
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Employment Agreement will be in writing and will be deemed to have been duly
given if delivered by hand, by facsimile transmission to the Company (if
confirmed) or mailed (certified or registered mail, postage prepaid, return
receipt requested) to you or the Company at the respective addresses on the
first page of this Employment Agreement, or such other address as will be
furnished in writing by like notice by you or the Company to the other.
13. Entire Agreement. This Employment Agreement, together with the Stockholders'
Agreement as executed in accordance with Paragraph 10 hereof, embodies the
entire agreement and understanding between you and the Company with respect to
the subject matter hereof and supersedes all such prior agreements and
understandings.
14. Severability. If any term, provision, covenant or restriction of this
Employment Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Employment Agreement will remain in full force and effect
and will in no way be affected, impaired or invalidated.
15. Governing Law. This Employment Agreement will be governed by and construed
and enforced in accordance with the laws of state of Minnesota applicable to
contracts made and to be performed in such state without giving effect to the
principles of conflicts of laws thereof.
16. Counterparts. This Employment Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument, and all signatures need not appear
on any one counterpart.
17. Headings. All headings in this Employment Agreement are for purposes of
reference only and will not be construed to limit or affect the substance of
this Employment Agreement.
If you accept and agree to the foregoing, please sign and return a counterpart
of this letter to the Company at the above address, whereupon this letter will
become a binding Employment Agreement between you and the Company as of the date
hereof.
Very truly yours,
UNIVERSAL HOSPITAL SERVICES, INC.
By /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President and Chief Executive
Officer
Accepted and agreed to:
/s/Xxxx X. Xxxxx
----------------------------------
Xxxx X. Xxxxx
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