Exhibit 10.7
November 12, 1998
Xx. Xxxxxx X. Xxxxxx
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Dear Xx. Xxxxxx:
Reference is made to the letter agreement dated August 17, 1998 (the
"Agreement") between Universal Hospital Services, Inc., a Minnesota corporation
("UHS" or the "Company") and you. This letter amends and restates the Agreement
in its entirety.
You currently serve as General Manager, Alternate Care of the Company.
This Amendment reflects your promotion to a new position as herein provided. For
this reason 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 hereof, 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 and Sales of the Company as
determined in conjunction with the Chief Executive Officer 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. 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. It is understood and
agreed that you may perform your duties while maintaining residency in the State
of Florida for a period not to exceed six months during any calendar year. You
shall not be given duties inconsistent with your executive position.
2. Term of Employment Agreement. The term of your employment hereunder
shall begin as of August 17, 1998 and end as of the close of business on August
17, 2001, subject to earlier termination pursuant to the terms hereof (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.
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November 12, 1998
Page 2
3. Compensation and Benefits.
(a) Base Salary. Your base salary, pro rated for the remainder of the
1998 calendar year, shall be at an 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).
Your base salary will be reviewed 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, beginning in 1999, you
shall have the opportunity 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. In connection with the Agreement, you received options to
purchase a total of 16,000 shares of the Company's common stock, $.01 par value
(the "Common Stock"), which options were granted under the Company's 1998 Stock
Option Plan (the "Plan"). A copy of the Plan has been provided to you. In
connection with this Amendment, you will also receive options to purchase a
total of 73,444 shares of Common Stock granted under the Plan (the "Additional
Options"). Such Additional Options will be granted at an exercise price equal to
the fair market value of the Common Stock as determined by the Board of
Directors on the date of grant and will vest in accordance with, and will have
such other terms as provided in the Incentive Stock Option Agreement attached
hereto as Annex 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. All continuous service with Patient's
Choice Healthcare, Inc. ("PCH") (whether before or after March 17, 1998) will be
recognized by the Company for purposes of the Company's welfare benefit plans
and for eligibility and vesting purposes under the Company's 401(k) plan, but
not for purposes of the Company's defined benefit pension plan. 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.
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November 12, 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 and continue to provide the benefits
hereunder, in each case in monthly installments 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 with reasonable accommodation substantially and competently to perform
the essential functions of your position 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 for six months following such
termination (i) pay to you your base salary in monthly installments and (ii)
continue to provide to you (concurrent with your COBRA benefit continuation
period) the health (including dental and life) insurance benefits referenced in
Paragraph 3(d) on the same basis, generally as in effect for you prior to such
termination. Upon such termination, any benefits which you may have been
receiving under the Company's short-term disability plan shall cease.
(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, except as required by law. 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;
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November 12, 1998
Page 4
(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.
(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 similarly-situated employees 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 or any Renewal 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 60 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,
except as required by law. It is acknowledged and agreed that termination of
your employment upon expiration of the Term or any Renewal Term shall not be
deemed to constitute resignation without Good Reason for purposes of this
Employment Agreement or any other purpose. It is understood and agreed that, for
purposes of Section 2.2 and 2.3 of the Stockholders' Agreement (as defined in
Section 10 hereof) and for purposes of your Incentive Stock Option Agreements,
if the Company should notify you that it is not renewing this Agreement for a
Renewal Term as provided in Section 2 hereof, termination of your employment, or
a resignation by you, in such event shall not be deemed to constitute a
resignation without Good Reason.
(f) Resignation For Good Reason. You may terminate your employment
hereunder at any time upon 30 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
Xx. Xxxxxx X. Xxxxxx
November 12, 1998
Page 5
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 compensation to all 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; 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 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. Your agreements in
Paragraphs 6, 7 and 8 hereof shall survive the termination of your employment as
herein provided.
(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
Xx. Xxxxxx X. Xxxxxx
November 12, 1998
Page 6
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) 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. 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 and will not use for the benefit of anyone other than
the Company 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" shall not include any information which is in the public domain
during or after the term, provided such
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November 12, 1998
Page 7
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
or 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 the
business of medical equipment rental or lease or related sales of equipment and
supplies. As used herein, "Prohibition Period" means the period from and after
the Closing Date to and including the later of (i) the date which is eighteen
months from the Date of Termination and (ii) August 17, 2001.
The non-competition agreement contained in this Paragraph 7 shall 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 the medical
equipment rental or leasing business. 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.
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
(including PCH) 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 8 shall not
apply to (i) any employee of the Company or PCH whose employment relationship
with the Company or PCH has been terminated for at least six 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 PCH.
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
Xx. Xxxxxx X. Xxxxxx
November 12, 1998
Page 8
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 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.
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November 12, 1998
Page 9
12. Successors; Assigns; Amendment; Notice. This Employment Agreement
shall be binding upon and shall inure to the benefit of the Company and its
successors and assigns. 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 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
Stock Purchase Agreement and 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 in all
respects, including validity, interpretation and effect, by the internal laws of
state of Minnesota, without giving effect to the principles of conflict of laws
thereof. Any action at law, suit in equity or judicial proceeding arising
directly, indirectly or otherwise in connection with, out of, related to or from
this Agreement or any provision hereof, shall be litigated only in the federal
or State courts, as applicable, sitting in the State of Ohio, County of
Franklin. The parties hereto consent to the jurisdiction of such courts for such
purposes. The parties hereto waive any claim to a change of venue because of the
doctrine of forum non conveniens or otherwise.
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.
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November 12, 1998
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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/ Xxxxx X. Xxxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Accepted and agreed to:
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
