EXHIBIT 10.18
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into effective as of
January 1, 2001, by and between United Surgical Partners International, Inc., a
Delaware corporation ("USP"), and Xxxxxxx X. Xxxxxx ("Employee"), with reference
to the following facts:
RECITALS
A. USP desires to employ Employee in the capacities and on the terms and
conditions hereinafter set forth and Employee is willing to serve in such
capacities and on such terms and conditions.
B. This Agreement shall replace any and all existing employment agreements
and arrangements between USP and Employee.
NOW, THEREFORE, in consideration of the foregoing premises and thc mutual
covenants contained herein, USP and Employee mutually agree as follows:
AGREEMENT
1. EMPLOYMENT. USP hereby employs Employee as the President of USP.
2. DUTIES. Employee shall devote substantially all of his working time,
energies and skills to USP's business. Employee shall report to the Chief
Executive Officer of USP and shall have such duties, responsibilities and
authority as are set forth in the Bylaws of USP for the position of President.
Employee agrees to serve USP diligently and to the best of his ability.
3. COMPENSATION.
(a) Base Salary. USP shall pay Employee a Base Salary ("Base Salary") at a
rate of $350,000 per year. In addition, the Board of Directors of USP shall
consider granting increases in such salary based on Employee's performance and
the growth and/or profitability of USP, but it shall have no obligation to grant
any such increases in compensation. Base Salary shall be payable in equal
semi-monthly installments on the 15th day and the last working date of the
month, or at such other times and in such installments as may be agreed upon
between USP and Employee. All payments shall be subject to the deduction of
payroll taxes and similar assessments as required by law.
(b) PERFORMANCE BONUSES. In addition to the Base Salary, Employee shall be
eligible to receive bonus compensation of up to 100% of the Base Salary based on
such performance goals and criteria as the Board of Directors or USP shall, from
time to time, determine.
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4. EXPENSES AND BENEFITS. USP agrees to provide Employee with the
following benefits:
(a) EXPENSE REIMBURSEMENTS. Employee is authorized to incur reasonable
expenses in connection with the business of USP, including expenses for
entertainment, travel and similar matters. USP will reimburse Employee for such
expenses upon presentation by Employee of such documentation as USP shall from
time to time require.
(b) OFFICE SERVICES. USP will provide Employee with an administrative
assistant of his choice and reasonable office space and services.
(c) INSURANCE. Major medical health insurance and disability insurance as
currently in place (as the same may be modified from time to time by USP for its
senior executives).
(d) EMPLOYEE BENEFIT PLANS. Participation in any other employee benefit
plans now existing or hereafter adopted by USP for its employees.
(e) OTHER. Such items and benefits as USP shall, from time to time,
consider necessary or appropriate to assist Employee in the performance of his
duties.
(f) VACATIONS. Employee shall be entitled (in addition to the usual public
holidays) to a paid vacation of an aggregate of five weeks in each calendar
year.
5. TERM. The term of this Agreement shall be from the date of this
Agreement to December 31, 2002, and shall thereafter be automatically renewed
for successive one year terms unless either party gives notice of non-renewal at
least 90 days prior to the end of the original or any such renewal term;
provided, however, that either party may terminate this Agreement at any time
upon at least 90 days prior written notice. In the event of such termination by
USP, Employee shall be entitled to severance pay based on his Base Salary at the
time of termination, plus a bonus (payable monthly on a pro rata basis) at a
rate equal to the average annual bonuses paid to Employee for the two calendar
years preceding the date of notice of termination, for a period of 12 months
following termination or until December 31, 2002, whichever is later. Such
severance pay shall be payable in monthly installments and USP shall continue
the benefits set forth in Sections 4(b) and (c) for the period during which such
severance payments are to be made. In addition, this Agreement shall terminate
as provided for in Section 7 or upon the death of Employee.
6. DISABILITY.
(a) In the event that Employee becomes Permanently Disabled (as
hereinafter defined) during the term of this Agreement. Employee shall continue
in the employ of USP but his compensation hereunder shall be reduced to
three-fourths of the Base Salary then in effect as set forth in Section 3(a),
commencing upon the determination of Employee's Permanent Disability and
continuing thereafter until the first to occur of (i) 24 months or (ii) the
death of Employee; and during such period of time. Employee shall not be
entitled to payment of
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expenses or benefits specified in Section 4 (except for reimbursement of
expenses incurred by Employee prior to becoming Permanently Disabled), except
that USP shall continue to provide Employee with the insurance benefits
specified in Section 4(c). The obligation of USP for continuation of
three-fourths of Employee's Base Salary shall be net of payments to Employee
from the disability insurance referred to in Section 4(c).
For purposes of this Agreement, the terms "Permanent Disability" or
"Permanently Disabled" shall mean three months of substantially continuous
disability. Disability shall be deemed "substantially continuous" if, as a
practical matter, Employee, by reason of his mental or physical health, is
unable to sustain reasonably long periods of substantial performance of his
duties. Frequent long illnesses, though different from the preceding illness and
though separated by relatively short periods of performance, shall be deemed to
be "substantially continuous." Disability shall be determined in good faith by
the Board of Directors, whose decision shall be final and binding upon Employee.
Employee hereby consents to medical examinations by such physicians and medical
consultants as USP shall, from time to time, require.
7. TERMINATION BY USP FOR CAUSE. USP shall have the right to terminate
Employee's employment under this Agreement for "Cause" by an affirmative vote to
so terminate by not less than 75% of the members of USP's Board of Directors, in
which event, no compensation shall be paid or other benefits furnished to
Employee after termination for Cause. Termination for Cause shall be effective
immediately upon notice sent or given to Employee. For purposes of this
Agreement, the term "Cause" shall mean and be strictly limited to: (a)
conviction of a crime constituting a felony under state or federal law; (b)
commission of any material act of dishonesty against USP; or (c) willful and
material breach of this Agreement by Employee.
8. NON-COMPETITION. Employee recognizes and understands that in performing
the responsibilities of his employment, he will occupy a position of fiduciary
trust and confidence, pursuant to which he will develop and acquire experience
and knowledge with respect to USP's business. It is the expressed intent and
agreement of Employee and USP that such knowledge and experience shall be used
exclusively in the furtherance of the interests of USP and not in any manner
which would be detrimental to USP's interests. Employee further understands and
agrees that USP conducts its business within a specialized market segment
throughout the United States and in portions of Europe, and that it would be
detrimental to the interests of USP if Employee used the knowledge and
experience which he currently possesses or which he acquires pursuant to this
employment hereunder for the purpose of directly or indirectly competing with
USP, or for the purpose of aiding other persons or entities in so competing with
USP. Employee therefore agrees that so long as he is employed by USP and, if
this Agreement is terminated by USP pursuant to Section 5, for an additional
period equal to the shorter of one year following termination or for the period
of time Employee is receiving a salary or severance payments from USP, unless
Employee first secures the written consent of USP, Employee will not directly or
indirectly invest, engage or participate in or become employed by any entity in
direct or indirect competition with USP's business, which shall include the
ownership and/or operation of outpatient surgical centers and surgical specialty
hospitals in the United States and the ownership and/or operation of hospitals
in the countries in Europe in which USP owns or
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operates hospitals as of the date of termination. These non-competition
provisions shall not be construed to prohibit Employee from being employed in
the health care industry during the applicable period, but rather to permit him
to be so employed so long as such employment does not involve Employee's direct
or indirect participation in a business which is the same or similar to USP's
business (as defined above). In the event that the provisions of this Section 8
should ever be deemed to exceed the time or geographic limitations permitted by
applicable laws, then such provisions shall be reformed to the maximum time or
geographic limitations permitted by applicable law.
9. STOCK OPTIONS. In the event that (a) USP elects to terminate this
Agreement pursuant to Section 5, (b) there is a "Change of Control Event" (as
defined below) or (c) USP breaches this Agreement by termination of Employee
without the notice required under Section 5 or without Cause under Section 7,
then in each such event, all USP stock options held by Employee and all
restricted stock awards made to him by USP (whether issued subject to forfeiture
or to be issued when and if they become vested) shall thereupon automatically be
amended so as to (i) cause to vest, immediately prior to the date of such Change
in Control Event or termination of employment, all such then unvested stock
options and restricted stock awards, and (ii) provide Employee 90 days to
exercise such options (or such greater period as may be provided by the terms of
such options). For purposes of the foregoing, the term "Change of Control Event"
shall mean (i) a consolidation or merger of USP with or into any other
corporation (other than a merger which will result in the voting capital stock
of USP outstanding immediately before the effcctive date of such consolidation
or merger being converted into more than 50% of the voting capital stock of the
surviving entity outstanding immediately after such consolidation or merger),
(ii) a sale of all or substantially all of the properties and assets of the
Company as an entirety in a single transaction or in a series or related
transactions to any other "person" or (iii) the acquisition of "beneficial
ownership" by any "person" or "group" (other than Welsh, Carson, Xxxxxxxx &
Xxxxx VII, L.P. or its affiliates) of voting stock of the Company representing
more than 50% of the voting power of all outstanding shares of such voting
stock, whether by way of merger of consolidation or otherwise. As used herein,
(x) the terms "person" and "group" shall have the meanings set forth in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not applicable, (y) the term "beneficial owner" shall have the
meaning set forth in Rules 13d-3 and 13d-5 under the Exchange Act, whether or
not applicable, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time or upon
the occurrence of certain events, and (z) any "person" or "group" will be deemed
to beneficially own any voting stock so long as such person or group
beneficially owns, directly or indirectly, in the aggregate a majority of the
voting stock of a registered holder of such voting stock.
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10. GENERAL PROVISIONS.
(a) NOTICES. All notices required or permitted by this Agreement shall be
in writing and may be delivered in person or sent by regular, registered or
certified mail or United States Postal Service Express Mail, with postage
prepaid, or by other courier service, or by facsimile transmission, and shall be
deemed sufficiently given if served in the manner specified in this Section
10(a). The addresses and facsimile numbers set forth below shall be the parties
addressed and facsimile numbers for purposes for purposes of delivery or mailing
of notices:
If to USP: c/o United Surgical Partners International, Inc.
00000 Xxxxxxx Xxxx, Xxxxx 000 Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Chief Executive Officer
FAX No.:(000) 000-0000
If to Employee: Xxxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
FAX No.:(972)__________
The parties may change addresses and facsimile numbers noted above through
written notice in compliance with this Section lO(a). Any notice sent by
registered or certified mail, return receipt requested, shall be deemed given
when actually received by the addressee, as shown on the receipt card which must
be signed by a representative of the addressee. If sent by regular mail, the
notice shall be deemed given after the notice is addressed, mailed with postage
prepaid and when actually received by the addressee. Notices delivered by United
States Express Mail or other courier service shall be deemed given when actually
received by the addressee as shown by the signature of an authorized
representative of the addressee on the log or other documentation maintained by
the United States Postal Service or courier to show proof of delivery. If any
notice is transmitted by facsimile transmission or similar means, the notice
shall be deemed served or delivered upon telephone confirmation of receipt of
the transmission.
(b) CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, excluding principles of conflict
of laws.
(c) INTEGRATION: MODIFICATION AND WAIVER. This Agreement constitutes the
entire understanding of the parties hereto relating to the subject matter
hereof, supersedes any and all other agreements, whether oral or in writing,
between the parties hereto and their affiliates with respect to the employment
of Employee, and contains all covenants and agreements between the parties
hereto relating to such employment in any manner whatsoever; provided, however,
that except as expressly provided herein, this Agreement shall not affect any
stock option agreements, indemnity agreements or agreements relating to
Employee's purchase
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or ownership of USP securities to which Employee is now or hereafter a party.
This Agreement shall not be amended, modified or revised in any respect, except
by a writing signed by USP and Employee. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision, whether or not similar, and no waiver shall constitute a continuing
waiver. No waiver shall be binding unless executed in writing by the party
making the waiver-
(d) SEVERABILITY. If any provision of this Agreement shall be determined
by a court or governmental agency of competent jurisdiction to be invalid,
illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect the remainder of this Agreement, which shall remain in full force and
effect and be enforced in accordance with its remaining enforceable terms.
(e) ASSIGNMENT. Because of the personal nature of the services to be
rendered hereunder, the obligations of Employee under this Agreement may not be
delegated or assigned in whole or in part without the prior written consent of
USP (which consent may be withheld in its sole discretion). However, subject to
the foregoing limitation, this Agreement shall be binding upon, and shall insure
to the benefit of, the parties hereto and their respective heirs, devisees,
executors, administrators, trustees, legal representatives, successors,
transferees and assigns.
(f) ATTORNEYS' FEES. In any action or proceeding at law or in equity,
including but not limited to arbitration, brought to enforce or construe any
provisions or rights under this Agreement, the unsuccessful party or parties to
such litigation or arbitration, as determined by the appropriate court or
arbitrator pursuant to a final judgment or decree, shall pay the successful
party or parties all costs, expenses and reasonable attorneys' fees incurred by
such successful party or parties (including but not limited to such costs,
expenses and fees in connection with any appeals) and, if such successful party
or parties shall recover judgment in any such action or proceeding, such costs,
expenses and attorneys' fees shall be included as part of such judgment.
(g) SURVIVAL OF CERTAIN PROVISIONS. The provisions of Sections 4(a) (as to
expenses incurred prior to termination), 5, 8 and 9 shall survive the expiration
or other termination of this Agreement.
(h) HEADINGS AND CAPTIONS. Headings and captions are included in this
Agreement for purposes of convenience only and are not a part of this
Agreement.
(i) MISCELLANEOUS. Any term used in the plural shall refer to all members
of the relevant class and any term used in the singular shall refer to any one
or more of the members of the relevant class. References in this Agreement to
articles, sections, paragraphs and exhibits are to articles, sections,
paragraphs and exhibits to this Agreement. The terms "herein," "hereof,"
"hereto," "hereunder" and other terms similar to such terms refer to this
Agreement as a whole and not merely to the specific article, section, paragraph
or clause where such terms may appear.
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(j) COUNTERPARTS AND FACSIMILE SIGNATURES. Separate copies of this
Agreement may be signed by the parties hereto, with the same effect as though
all of the parties had signed one copy of this Agreement. Signatures transmitted
by facsimile shall be accepted as original signatures.
IN WITNESS WHEREOF, the undersigned have duly executed this Employment
Agreement as of the date first written above.
USP: UNITED SURGICAL PARTNERS INTERNATIONAL, INC.
By /s/ XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
Chief Executive Officer
EMPLOYEE: /s/ XXXXXXX X.XXXXXX
Xxxxxxx X.Xxxxxx
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