Exhibit 10.6
October 17, 2003
Xx. Xxxxx X. Xxxxxxxxx
Universal Hospital Services, Inc.
0000 Xxxxxxxxx Xxxxx
0000 Xxxx 00/xx/ Xxxxxx
Xxxxxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
You currently serve as Chairman of the Board of Directors of Universal
Hospital Services, Inc. (the "Company") pursuant to that certain employment
agreement dated as of July 25, 2001 (as amended by resolution of the Board of
Directors on June 25, 2002, the "2001 Employment Agreement"). As of January 1,
2004 (the "Effective Date"), this Employment Agreement replaces the 2001
Employment Agreement and sets forth the agreed terms of your employment with the
Company beginning as of the Effective Date. Prior to the Effective Date, the
terms of your employment will continue to be governed by the 2001 Employment
Agreement.
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 non-executive
Chairman of the Board 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 other duties as the Board may from time to time
reasonably direct. Your place of employment will be in the Minneapolis,
Minnesota area. You will not be given duties inconsistent with your position.
2. Term of Employment Agreement. The term of your employment hereunder
will begin as of the Effective Date and end as of the close of business on the
Date of Termination (as defined in Section 4(g)) (the "Term").
3. Compensation and Benefits.
(a) Base Salary. Your base salary will be at annual rate of for the
applicable year as set forth below, payable in equal bi-weekly installments.
Necessary withholding taxes, FICA contributions and the like will be deducted
from your base salary.
Fiscal Year Annual Base Salary
---------------------- ------------------
2004 $ 150,000
2005 $ 125,000
2006 through June 2009 $ 100,000
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(b) Bonus. You will be entitled to receive such bonus payment as is
payable with respect to the fiscal year ending December 31, 2003 in accordance
with the 2001 Employment Agreement. Thereafter, you will not be entitled to
participate in the Company's executive or other employee bonus plans.
(c) Other. You will be entitled to such health (including dental), life
and disability benefits as are generally made available by the Company to its
executive employees. You will not be entitled to any other benefits that are
generally made available by the Company to its executive employees.
4. Termination.
(a) Death. This Employment Agreement will automatically terminate upon
your death. In the event of such termination, the Company's obligations
hereunder will terminate with no further payments or severance.
(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 will pay
to you the amount of $100,000 annually (the "Severance Amount") and continue to
provide the benefits provided hereunder, in each case from the Date of
Termination until June 30, 2009 (the "Severance Period").
(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;
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October 17, 2003
(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 pay to you the Severance Amount and continue to
provide the benefits provided hereunder, in each case for the Severance Period;
provided, however, that if the Date of Termination with respect to such
termination by the Company pursuant to this Section 4(d) is on or after a Change
in Control (as defined below), then you will not be entitled to receive, nor
will the Company be obligated to pay, the Severance Amount, or any salary or
severance amount or continue any benefits hereunder, on or after such Date of
Termination. For purposes of this Agreement, a "Change in Control" shall mean
when any "person" (as defined in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934), other than the Company, X.X. Childs Equity Partners,
L.P., X.X. Childs Equity Partners III, L.P., or any of their respective
affiliates, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any of its subsidiaries, or any corporation
owned, directly or indirectly, by the stockholders of the Company, in
substantially the same proportions as their ownership of stock of the Company,
acquires, in a single transaction or a series of transactions (i) "beneficial
ownership" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of securities representing more than 50% of the combined voting power of the
Company (or, prior to a public offering, more than 50% of the Company's
outstanding shares of Common Stock), or (ii) substantially all of the assets 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 will cease upon the Date of Termination.
(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 continue to pay you
your base salary though the date which is eighteen months from the Date of
Termination; provided, however, that if the Date of
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Termination with respect to such termination by you pursuant to this Section
4(f) is on or after a Change in Control, then you will not be entitled to
receive, nor will the Company be obligated to pay, any salary or severance
amount or continue any benefits hereunder on or after such Date of Termination.
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 required you to relocate outside the
greater Minneapolis, Minnesota area;
(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; or
(iv) the Company has breached this Employment Agreement in any
material respect.
(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 between the Company and the
equity security holders of the Company, in any stock option plans adopted by the
Company in accordance with Paragraph 3(b) hereof, or as may be required by law.
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
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Company are warranted to protect its substantial investment in developing and
maintaining its status in the marketplace, reputation and good will. You
recognize that in order to guard the legitimate interests of the Company and its
affiliates, it is necessary for the Company to protect all confidential
information. The existence of any claim or cause of action by you against the
Company shall not constitute and shall not be asserted as a defense to the
enforcement by the Company of this Employment Agreement. You further agree that
your obligations under Paragraphs 6, 7 and 8 hereof shall be absolute and
unconditional.
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 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 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 the United States
and Canada (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. As used herein, "Prohibition Period" means the period from and
after the date hereof to and including the later of (i) the last day of the Term
or (ii) the last day of the Severance Period.
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,
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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.
9. Modification. 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, scope and
geographic area identified in such Paragraphs 6, 7 or 8 as will render such
restrictions valid and enforceable.
10. Equitable Relief. 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.
11. 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 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
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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.
12. Entire Agreement. This Employment Agreement 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.
13. 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.
14. 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.
15. 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.
16. 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.
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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/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
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Title: President and Chief Executive
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Officer
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Accepted and agreed to:
/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
