Exhibit 10.8
July 30, 1998
Mr. Xxxx Xxxxxx
00000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxx:
Reference is made to that certain Stock Purchase and Sale Agreement
dated July 30, 1998 (the "Stock Purchase and Sale Agreement"), by and among
Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxx, Xxxxx X. Xxxxx and The Xxxxxxx Xxxxxx Family
Trust (the "Shareholders"), certain charities named therein, and Universal
Hospital Services, Inc., a Minnesota corporation ("UHS" or the "Company"). As
you know, subject to the terms and conditions of the Stock Purchase and Sale
Agreement, UHS will acquire all of the outstanding shares (the "Acquisition") of
HCI Acquisition Corp. ("HCI").
You currently serve as President of HCI, and this Employment Agreement
is being entered into as inducement for UHS to consummate the Acquisition and
other transactions contemplated by the Stock Purchase and Sale Agreement. For
these reasons and for other good and valuable consideration and to provide for
your services to UHS following the Acquisition, the parties hereto agree as
follows:
1. Position; Duties. From and after the date of the Acquisition, the
Company shall employ you, and you agree to serve and accept employment, for the
Term (as defined herein) as Vice President--Alternate Care Rentals of the
Company, subject to the direction and control of the Board of Directors of the
Company (the "Board"), and, in connection therewith, to oversee and direct the
development of specified Alternate Care Rentals of the Company as determined in
conjunction with the Chief Executive Officer (the "CEO") of the Company and to
perform such other duties as the Board or the Chief Executive Officer of the
Company may from time to time reasonably direct. Your place of employment shall
be in the St. Louis, Missouri, or Minneapolis, Minnesota, areas 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 shall not be given duties inconsistent
with your executive position.
Mr. Xxxx Xxxxxx
July 30, 1998
Page 2
2. Term of Employment Agreement. The term of your employment hereunder
shall begin as of the Closing Date (as defined in the Stock Purchase and Sale
Agreement) and end as of the close of business on the date which is three years
from the Closing 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 shall 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 shall be at annual rate of $125,000,
payable in equal bi-weekly installments. Such base salary shall 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
1999. Necessary withholding taxes, FICA contributions and the like shall be
deducted from your base salary.
(b) Bonus. In addition to your base salary, you shall be entitled to
receive a bonus of up to 100% of your base salary, based on the achievement of
the annual EBITDA targets applicable to all other Executive Employees (as
defined in Paragraph 4(d) hereof) of the Company that participate in the bonus
program (such targets, as they may be adjusted by the Board of Directors of the
Company from time to time with respect to all such management employees in the
same manner, in good faith, to reflect any acquisitions, dispositions and
material changes to capital spending (the "Management Targets")). The amount of
such bonus 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.
(c) Options. On the date hereof you will also receive options to
purchase a total of 89,944 shares of the Company's common stock, $.01 par value
(the "Common Stock"), 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 shall 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 1998), an annual physical exam and
reimbursement for tax preparation costs.
Mr. Xxxx Xxxxxx
July 30, 1998
Page 3
4. Termination.
(a) Death. This Employment Agreement shall automatically terminate upon
your death. In the event of such termination, the Company shall 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 termination, the Company shall
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 shall
cease immediately. The Company shall 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
shall not have been cured within sixty days after notice thereof from
the Company to you.
Mr. Xxxx Xxxxxx
July 30, 1998
Page 4
(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 shall (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 shall 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" shall 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 than payment for services already rendered) and any other
benefits otherwise due hereunder shall cease upon the date of such termination.
It is acknowledged and agreed that termination of your employment upon
expiration of the Term shall 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 shall (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 shall 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;
Mr. Xxxx Xxxxxx
July 30, 1998
Page 5
(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 St.
Louis, Missouri metropolitan area or the greater Minneapolis, Minnesota
metropolitan area; provided that it being understood and agreed that
the Company shall not require you to relocate from St. Louis to
Minneapolis without reasonable notice and without first giving you the
reasonable opportunity to choose the date of such relocation within the
12-month period following such notice.
(g) Date and Effect of Termination. The date of termination of your
employment hereunder, pursuant to this Xxxxxxxxx 0, xxxxx xx, (x) 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 shall 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 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 shall 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)
Mr. Xxxx Xxxxxx
July 30, 1998
Page 6
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 shall be paid to you in accordance with the terms of such plan or
program.
5. Acknowledgement. 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" shall not include any
information which is in the public domain 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 competitive
with the activities of the business actually conducted by the Company or HCI on
the Closing Date. 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 following the
Closing Date.
Mr. Xxxx Xxxxxx
July 30, 1998
Page 7
The non-competition agreement contained in this Paragraph 7 shall not
prevent you from (i) 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 or HCI on the Closing Date or (ii) having solely a financial interest in
Advanced Durable Medical, Inc. ("ADM"), so long as ADM does not engage in a
business competitive with the activities of the business actually conducted by
the Company or HCI on the Closing Date. It is understood and agreed that ADM's
business as conducted on the Closing Date is the renting or leasing of equipment
which is paid for by third party payors (as opposed to the lessee) or provided
to certain users on a subcontracting basis (e.g. the arrangement between ADM and
Unity Health Services, pursuant to which ADM provided equipment and set up). For
purposes of this Agreement, the term "publicly traded" shall 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 shall be given at the sole
discretion of the Board.
The non-solicitation agreement contained in this Paragraph 7 shall not
apply to (i) any employee of the Company or HCI whose employment relationship
with the Company or HCI 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 or HCI.
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 shall be
interpreted, modified or rewritten to include as much of the
Mr. Xxxx Xxxxxx
July 30, 1998
Page 8
duration, 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 shall, 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 shall 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, shall 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").
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 shall
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
shall be binding upon and shall inure to the benefit of the Company and shall
not be assigned by the Company without your prior written consent. This
Employment Agreement shall be binding upon you and shall inure to the benefit of
your heirs, executors, administrators and legal representatives, but shall 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
Mr. Xxxx Xxxxxx
July 30, 1998
Page 9
communications permitted or required under this Employment Agreement shall be in
writing and shall 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 shall 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 shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
15. Governing Law. This Employment Agreement shall 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 shall be deemed an original but all of which
together shall 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 shall not be construed to limit or affect the
substance of this Employment Agreement.
Mr. Xxxx Xxxxxx
July 30, 1998
Page 10
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 Closing Date.
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 Xxxxxx
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