Exhibit 10.17
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
This AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “ Employment Agreement
”) dated as of December 31, 2008, is between UNIVERSAL
HOSPITAL SERVICES, INC., a Delaware corporation (the “
Company ”), and Gary D. Blackford (the “
Executive ”). This Employment Agreement amends
and restates the employment agreement between the Executive and the
Company dated May 31, 2007, as amended by letter dated
July 27, 2007, but has no effect on the supplemental letter
between the parties dated May 31, 2007, which remains in full
effect.
The Company wishes to continue to
employ the Executive, and the Executive wishes to remain employed
with the Company, on the terms and conditions set forth in this
Employment Agreement. This Employment Agreement replaces any
existing employment agreement between the Executive, on the one
hand, and Company or any of its subsidiaries or predecessor
entities, on the other hand, and the parties acknowledge that the
Executive has no remaining rights, obligations or entitlements
under any such agreement, other than (i) any rights or
entitlements of the Executive to indemnification or coverage under
any directors and officers indemnity insurance, (ii) with
respect to any equity owned by Executive or options or other awards
granted to the Executive, (iii) with respect to an excise tax
gross-up under Section 4(g) of the Employment Agreement,
dated as of June 25, 2002, between the Company and the
Executive, as amended on or prior to the date hereof (the “
Original Agreement ”), and (iv) under the letter
of June 25, 2002 with regarding the retention by the Executive
of certain property upon termination of his employment.
Accordingly, the Company and the
Executive agree as follows:
1.
Position;
Duties. The Company agrees to
employ the Executive, and the Executive agrees to serve and accept
employment, for the Term (as defined below) as Chairman and Chief
Executive Officer of the Company, as Chairman and a member of the
Board of Directors (the “ Board ”) of UHS
Holdco, Inc., the parent of the Company (the “
Parent ”), and as a member of the Board of Directors
of the Company, subject, in his capacity as Chief Executive
Officer, to the direction and control of the Board, and, in
connection therewith, to reside in the Minneapolis, Minnesota area,
to oversee and direct the operations of the Company and to perform
such other duties commensurate with his position as the Board may
from time to time reasonably direct. The Executive shall also
be appointed as Chairman and Chief Executive Officer of any parent
holding or operating company other than any non-public company that
solely holds equity or debt of the Company. The
Executive’s place of employment will be in the Minneapolis,
Minnesota area. The Executive shall have all of the
authorities, duties and responsibilities commensurate with his
position. During the Term, the Executive agrees to devote
substantially all of his time, energy, experience and talents
during regular business hours, and as otherwise reasonably
necessary, to such employment. The Executive shall be
entitled to engage in other business activities of a material
nature, as a director, consultant or in any similar capacity,
whether or not the Executive receives any compensation therefor;
provided , that the Executive notifies the Board of such
other business activities and the Board determines in good faith
that such other business activities do not unreasonably conflict
with the Executive’s duties and responsibilities to the
Company pursuant to this Employment Agreement. The
Executive
1
will not be given duties
inconsistent with his executive position. The parties
acknowledge that the Executive is a member of the Board of
Directors of Wright Medical Group, Inc.
2.
Term of
Employment Agreement . The term of the
Executive’s employment hereunder began May 31, 2007, and
ends as of the close of business on May 31, 2010, 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
Employment 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
sixty (60) days’ written notice prior to the date on which
such renewal would otherwise occur. In the event that the
Executive’s employment is not renewed by the Company in
accordance with this Section 2 upon the expiration of the Term
or any Renewal Term, the Executive’s employment shall
terminate as of the date of such expiration, and such termination
shall be deemed a termination without “Cause” for
purposes of this Employment Agreement.
3.
Compensation
and Benefits .
(a)
Base
Salary . The Executive’s
base salary as of May 31, 2007, is an annual rate of $432,000,
payable in equal bi-weekly installments. The Board will
review the Executive’s base salary annually and make such
increases as it deems appropriate. Any decrease may only be
made in connection with an across-the-board reduction (of
approximately the same percentage but no more than five percent
(5%) of the then-base salary) in executive compensation to
executive employees imposed by the Board in response to materially
negative financial results or other materially adverse
circumstances affecting the Company. Necessary withholding
taxes, FICA contributions and the like will be deducted from the
Executive’s base salary.
(b)
Bonus . In addition to the
Executive’s base salary, but subject to the other provisions
of this Employment Agreement, the Executive will be entitled to
receive a bonus based on the achievement of the annual EBITDA
target established by the Board (or any compensation committee
thereof) for each calendar year, which shall be paid in the
calendar year following the calendar year in which it is earned;
provided , that the target for any calendar year will be
subject to adjustment by the Board (or any compensation committee
thereof), in good faith, to reflect any acquisitions, dispositions
and material changes to capital spending made after the date
hereof. The amount of such bonus, if any, will correspond to
achievement of target EBITDA in accordance with the
following:
|
Percentage
Achievement of Target
EBITDA
|
|
Percentage of Base
Salary
|
|
|
90% or less
|
|
0
|
%
|
|
100%
|
|
85
|
%
|
|
110% or more
|
|
170
|
%
|
Bonus amounts between the above amounts will be
determined by straight line interpolation ( e.g. , if
percentage achievement is 95%, the bonus shall be 42.5% of base
salary). For
2
computational purposes, “base
salary” shall equal the amount received pursuant to
Section 3(a) for the calendar year.
(c)
Equity Grant . As soon as practicable following
May 31, 2007, the Executive shall be granted options to
purchase Parent’s common stock, $.01 par value per share,
under Parent’s stock option plan pursuant to terms mutually
agreed upon by the parties in accordance with the terms set forth
on Exhibit A attached hereto.
(d)
Other . The Executive will be entitled to such health,
life, disability, pension, sick leave and other benefits as are
generally made available by the Company to its executive
employees. If the Executive elects not to participate in the
Company’s group health plan, but rather obtains health
coverage directly through Minnesota Blue Cross Blue Shield, or such
other insurer as the Board may approve, the Company shall reimburse
the Executive for the reasonable cost of such coverage on a monthly
basis, but in no event later than March 15 th of the calendar year
following the calendar year to which such premium expenses
relate. The Executive will also accrue five weeks paid
vacation during each year during the Term in accordance with and
subject to the Company’s vacation policy.
4.
Termination
.
(a)
Death . This Employment Agreement will automatically
terminate upon the Executive’s death. In the event of
such termination, the Company will pay to the Executive’s
legal representatives the sum of (i) 100% of the
Executive’s annual base salary (as in effect on the Date of
Termination (as defined below)), (ii) $11,350, and
(iii) any earned but unpaid bonus for a calendar year ending
prior to the Date of Termination. Such amount shall be paid
to Executive’s estate in a single lump sum payment the
61 st day following the Date
of Termination. Additionally, the Company will pay to the
Executive’s legal representatives a pro rata bonus for the
calendar year in which such termination occurs (based on the number
of days elapsed in such calendar year prior to the Date of
Termination), at the time during the next calendar year that the
Company pays bonuses to other senior executives for the calendar
year in question, to the extent such bonus would be payable based
on actual results of the Company, as calculated in accordance with
Section 3(b) above (the “ Pro-Rata Bonus
”). Additionally, upon any termination hereunder, the
Executive’s estate shall be entitled to receive any accrued
but unpaid salary and unused vacation pay through the Date of
Termination in accordance with Section 3(a) of this
Agreement and the terms of the Company’s vacation plan or
policy then in effect, and any accrued vested benefits through any
benefit plan, program or arrangement of the Company at the times
specified therein (collectively, the “ Accrued
Obligations ”).
(b)
Disability . If during the Term the Executive becomes
physically or mentally disabled whether totally or partially,
either permanently or so that the Executive has been unable
substantially and competently to perform his duties hereunder for
one hundred eighty (180) days during any twelve-month period during
the Term (a “ Disability ”), the Company may
terminate the Executive’s employment hereunder by written
notice to the Executive. In the event of such termination,
the Company will pay to the Executive or his legal representative
the sum of (i) 100% of the Executive’s annual base
salary (as in effect on the Date of Termination), (ii) $11,350
and (iii) any earned but unpaid bonus for a calendar year
ending prior to the Date of Termination. Such amounts under
clauses (i), (ii) and (iii) above shall,
3
subject to Section 15
hereof, be paid to the Executive or his legal representative in a
single lump sum payment on the 61 st day following the Date
of Termination. Additionally, the Executive or his legal
representative shall be entitled to receive the Accrued Obligations
and the Pro-Rata Bonus, if any, at the time specified therefor in
Sections 3(a) and 4(a), respectively.
(c)
Cause . The Executive’s
employment hereunder may be terminated at any time by the Company
for Cause (as defined herein) by written notice to the
Executive. In the event of such termination, all of the
Executive’s rights to any payments (other than the Accrued
Obligations, which shall be paid at the time specified therefor in
Section 4(a)) will cease immediately. The Company will
have “Cause” for termination of the Executive’s
employment hereunder if any of the following has
occurred:
(i)
the commission by the Executive of a felony for which he is
convicted; or
(ii)
the material breach by the Executive of his agreements or
obligations under this Employment Agreement, if such breach is
described in a written notice to the Executive referring to this
Section 4(c)(ii), and such breach is not capable of being
cured or has not been cured within thirty (30) days after receipt
of such notice.
(d)
Without
Cause . The Executive’s
employment hereunder may be terminated at any time by the Company
without Cause by written notice to the Executive. In the
event of such termination, the Company will pay, subject to
Section 4(j), to the Executive the sum of (i) 185% of the
Executive’s annual base salary (as in effect on the Date of
Termination), (ii) $11,350 and (iii) any earned but
unpaid bonus for a calendar year ending prior to the Date of
Termination. Such amounts under clauses (i), (ii) and
(iii) above shall, subject to Section 15 hereof, be paid
to the Executive or his legal representative in a single lump sum
payment on the 61 st day following the Date
of Termination. Additionally, the Executive shall be entitled
to receive the Accrued Obligations and the Pro-Rata Bonus, if any,
at the time specified therefor in Sections 3(a) and 4(a),
respectively.
(e)
Resignation
Without Good Reason . The Executive may
terminate the Executive’s employment hereunder upon sixty
(60) days’ prior written notice to the Company, without Good
Reason (as defined herein). In the event of such termination,
all of the Executive’s rights to any payments (other than the
Accrued Obligations, which shall be paid at the time specified
therefor in Section 4(a)) will cease upon the Date of
Termination.
(f)
Resignation
For Good Reason . The Executive may
terminate the Executive’s employment hereunder at any time
upon thirty (30) days’ written notice to the Company for Good
Reason. In the event of such termination, the Company will
pay, subject to Section 4(j), to the Executive the sum of
(i) 185% of the Executive’s annual base salary (as in
effect on the Date of Termination), (ii) $11,350 and
(iii) any earned but unpaid bonus for a calendar year ending
prior to the date of such termination. Such amounts under
clauses (i), (ii) and (iii) above shall, subject to
Section 15 hereof, be paid to the Executive or his legal
representative in a single lump sum payment on the 61
st
day
following the Date of Termination. The Executive shall be
entitled to receive Accrued Obligations and the Pro-Rata Bonus, if
any, at time specified therefor in Sections 3(a) and 4(a),
respectively.
4
The Executive will have “Good
Reason” for termination of the Executive’s employment
hereunder if other than for Cause, any of the following has
occurred:
(i)
the Executive’s base salary or the percentage of base salary
to which the Executive may be entitled as the result of the Company
reaching the annual EBITDA targets as provided in
Section 3(b) of this Employment Agreement has been
reduced other than in connection with an across-the-board reduction
(of approximately the same percentage but no more than five (5%) of
the then base salary) in executive compensation to executive
employees imposed by the Board in response to materially negative
financial results or other materially adverse circumstances
affecting the Company;
(ii)
the Board (or any compensation committee thereof) establishes an
unachievable and commercially unreasonable annual EBITDA target
that the Company must achieve in order for the Executive to receive
a bonus under Section 3(b) of this Employment Agreement
and the Executive provides written notice of his objection to the
Board (or such compensation committee) within ten
(10) business days after such target has been established and
communicated in writing to the Executive stating that the Executive
believes such target to be unachievable and commercially
unreasonable;
(iii)
the Executive is not elected or re-elected to the
Board;
(iv)
the Company has required the Executive to relocate outside the
greater Minneapolis, Minnesota area or has relocated the corporate
headquarters of the Company outside the greater Minneapolis,
Minnesota area or has removed or relocated outside the greater
Minneapolis area, a material number of employees or senior
management of the Company in each case, without the
Executive’s written consent;
(v)
any diminution in title, or any material diminution in
responsibilities, duties or authorities, without the
Executive’s written consent; or
(vi)
the Company has breached this Employment Agreement in any material
respect if such breach is described in a written notice to the
Company referring to this Section 4(c)(ii), and such breach is
not capable of being cured or has not been cured within thirty (30)
days after receipt of such notice.
(g)
Change of
Control . If the Executive is
terminated without Cause or resigns for Good Reason at any time
within six (6) months prior to, or twenty four (24) months
following a Change of Control, or the Executive terminates
employment for any reason during the thirty (30) day period
following the six (6) month anniversary of the Change of
Control, then, notwithstanding Sections 4(d) and 4(f) and
in lieu of amounts provided under Sections 4(d) and 4(f), the
Company shall pay the Executive the sum of (i) 285% of the
Executive’s annual base salary (as in effect on the Date of
Termination), (ii) $11,350 and (iii) any earned but
unpaid bonus for a calendar year ending prior to the Date of
Termination. Such amounts under clauses (i), (ii) and (iii)
above shall, subject to Section 15 hereof, be paid to the Executive
or his legal representative in a single lump sum payment on the
61 st day following the Date
of Termination, except that in the event the Executive’s
employment terminates within six (6) months prior to
a
5
Change in Control due to termination by the
Company without Cause or due to termination by the Executive for
Good Reason, then on the Date of Termination, the Executive shall
be entitled to receive payment in accordance with the terms of
Section 4(d), and within thirty (30) days following a Change
in Control, the Executive shall receive a single lump sum payment
in an amount equal to the difference between the amount paid in
accordance with Section 4(d) and the amount to be paid in
accordance with this Section 4(g). The Executive shall
be entitled to receive the Accrued Obligations and the Pro-Rata
Bonus, if any, at the time specified therefor in Sections
3(a) and 4(a), respectively. Notwithstanding any
provision of this Employment Agreement to the contrary, in the
event that any payment or benefit received or to be received by the
Executive in connection with a Change of Control of the Company or
termination of the Executive’s employment constitutes a
“parachute payment,” within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986,
as amended (the “ Code ”) which would be subject
to the excise tax imposed by Section 4999 of the Code (the
“ Excise Tax ”), then the Company shall pay the
Executive in cash an additional amount (the “ Gross-Up
Payment ”) such that, after payment by the Executive of
all taxes, including but not limited to income taxes (and any
interest and penalties imposed with respect thereto) and the Excise
Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed on
the parachute payments. The Gross-up Payment shall be paid to
the Executive (or deposited with the government as withholding and
deduction) in a single lump sum payment within ninety (90) days
following the date on which the Executive is required to pay the
Excise Tax to the government in respect of the Executive’s
“parachute payment”, but in no event later than the end
of the Executive’s taxable year next following the
Executive’s taxable year in which the Executive remits the
related taxes.
For purposes of
this Section 4(g), “Change of Control” shall mean
(i) when any “person” (as defined in
Section 13(d) and 14(d) of the Securities Exchange
Act of 1934) (other than the Company, Bear Stearns Merchant Manager
III (Cayman), L.P. (on November 1, 2008, Bear Stearns Merchant
Banking, which was affiliated with Bear, Stearns & Co.
Inc., spun out into an independent firm and changed its name to
“Irving Place Capital”) or its affiliates, any trustee
or other fiduciary holding securities under an employee benefit
plan of the Company or any Sub
|
