EX-10.12




 EXHIBIT 10.12 
 EMPLOYMENT AGREEMENT 
 This Employment Agreement (this
“Agreement”) is effective as of September 1, 2011, between University General Health System, Inc., a Nevada corporation and any of its Affiliates to which this Agreement is hereafter assigned (the “Company”), and Donald W.
Sapaugh sole, a resident of Galveston County, Texas (“Employee”). In consideration of the premises and the mutual covenants contained herein, the parties hereby agree as follows: 

1. Employment. The Company hereby agrees to employ Employee and Employee hereby agrees to work as President for the Company and/or
those of the Company’s or subsidiaries, (each a “Subsidiary”) as directed by the Company. Employee’s principal office shall be in Houston, Texas. So long as Employee is employed by the Company, Employee shall devote
Employee’s skill, energy and substantially all of his business-related efforts to the faithful discharge of Employee’s duties as an employee (and if applicable, as an officer and director) of the Company in accordance with applicable rules
governing such duties in the State of Texas. In providing services hereunder, Employee shall comply with and follow all directives, policies, standards and regulations from time to time established by the Company on behalf of the Company or its
Affiliates. 
 2. Term of Employment. Employee’s employment by the Company pursuant to this Agreement shall continue
in effect for a term of three years from the date of this Agreement (the “Initial Period”), which shall be automatically extended for additional, successive one year periods (the “Additional Periods”) commencing on the third
anniversary date of this Agreement and on each anniversary date thereafter, unless either party gives notice of nonrenewal as provided in Section 10(e) or otherwise terminates this Agreement in accordance with the other provisions of
Section 10. 
 3. Representations and Warranties. Subject to applicable rules governing attorney conduct in the
State of Texas, Employee represents and warrants that Employee is under no contractual or other restrictions or obligations that will significantly limit Employee’s activities on behalf of the Company or will prohibit or limit the disclosure or
use of by Employee of any information which directly or indirectly relates to the nature of the Company or the services to be rendered by Employee under this Agreement. . 
 4. Compensation. Subject to the provisions of Section 10, Employee will be entitled to the compensation and benefits set forth in this Section 4. 

(a) During the Initial Period, the Company shall pay Employee an Annual Base Salary, payable semi-monthly, in equal semi-monthly
installments at a rate equal to $456,000 per year for the first calendar year or portion thereof. In each subsequent calendar year during the term of this Agreement, the Company shall pay to Employee an Annual Base Salary determined by the General
Partner following its annual salary and performance review. Employee’s Annual Base Salary will be reviewed at least annually in the fourth quarter of each fiscal year of Employee’s employment hereunder, commencing in the second quarter of
2012, or as the board determines is appropriate. 








 (b) All payments of salary and other compensation to Employee shall be made after deduction
of any taxes required to be withheld with respect thereto under applicable federal and state laws. 
 5. Fringe Benefits;
Expenses. 
 (a) During the term of employment of Employee hereunder, Employee shall participate in all employee benefit
plans sponsored by the Company for its executive employees, including but not limited to sick leave and disability leave, Employee and Employee’s dependents under the Company’s health insurance plan and dental insurance and pension and/or
profit sharing plans; provided, however, that except as provided below, the nature, amount and limitations of such plans shall be determined from time to time by the General Partner of the Company. 

(b) The Company will reimburse Employee for all reasonable business expenses incurred by Employee in the scope of Employee’s
employment; provided, however, that Employee must file expense reports with respect to such expenses in accordance with the Company’s policies as are in effect from time to time. 

(c) During the term of employment of Employee hereunder, Employee shall be initially entitled to 160 hours of paid-time-off
(“PTO”) as of the beginning of the Term. Thereafter, the Company will accrue additional PTO for the benefit of Employee in accordance with the Company’s PTO program for its executive employees. 

(d) During the term of employment of Employee hereunder, the Company will pay all license fees, occupation taxes, continuing legal
education, and such other reasonable educational costs and expenses necessary to maintain Employee’s good standing under any professional licenses. 
 (e) During the term of employment of Employee hereunder, the Company shall use reasonable efforts to provide (i) life insurance payable to Employee’s designated beneficiary in an amount of at
least two-times Employee’s Annual Base Salary and (ii) disability insurance on behalf of Employee which, as a goal, shall provide for salary continuation in the event of long-term or permanent disability in an amount equal to $10,000 per
month. 
 6. Indemnification and Insurance. The Company shall indemnify Employee with respect to matters relating to
Employee’s services to the Company or any of its Affiliates (as defined in Exhibit A attached hereto) to the extent permitted by applicable law and as set forth in the Company’s Articles of Incorporation and Bylaws and otherwise in
accordance with the terms of any other indemnification which is generally applicable to executive officers of the Company or any of its Affiliates that may be provided by the Company or any such Affiliate from time to time. The foregoing indemnity
is contractual and will survive any adverse amendment to or repeal of the Articles of Incorporation or Bylaws. The Company will also cover Employee under a professional liability insurance policy as well as a policy of officers’ and
directors’ liability insurance providing coverage that is comparable to that provided now or hereafter to any other executive officer, partner, or director of the Company. The provisions of this Section 6 will survive the termination of
Employee’s employment for any reason and the term of this Agreement. 

  
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 7. Change in Control of the Company. 

(a) If a Change of Control (as defined in Exhibit A attached hereto) occurs and if during the Protected Period (as defined in Exhibit A
attached hereto), Employee’s employment is terminated or not renewed pursuant to Section 10, whether by the Company or by Employee, then the Company shall promptly pay or otherwise provide to Employee the benefits set forth below:

 (i) An amount equal to Employee’s Annual Base Salary then in effect, payable in a single lump sum by
certified or bank cashier’s check within 30 days of such termination; and 
 (ii) An amount equal to the
product of (A) the maximum monthly premium payment that may be charged to continue coverage for Employee and Employee’s dependents under the Company’s health insurance plan under COBRA and under all life insurance and disability
policies provided by Employer for Employee, multiplied by (B) 12 months (payable over such period). Any unpaid amount under this clause (ii) will cease if Employee obtains substantially similar coverage under new employment. 

The Company will use its best efforts to keep the policies of insurance referred to in clause (ii) above in effect for the benefit of the Employee
through the 12 month period, and after the expiration of such 12 month period, if the Employee is unable to secure reasonable alternative coverage as a result of lack of insurability, at the written request of the Employee, the Company will use
reasonable commercial efforts to continue such coverage, provided that the Company will have no obligation to incur any incremental cost or risk (other than minor administration inconvenience) and Employee shall agree in writing to bear all such
cost and risk and hold the Company harmless against same. Notwithstanding the foregoing, Employee shall not be entitled to any benefits under this Section 7 if such termination is (i) due to Employee’s death, (ii) by the Company
on account of Employee’s disability as provided in Section 10(d) below, (iii) by the Company for Cause (as defined in Exhibit A attached hereto) or (iv) by Employee for other than Good Reason (as defined in Exhibit A attached
hereto) as provided in Section 10 below. 
 8. Gross-Up of Parachute Payments. 

(a) To provide Employee with adequate protection in connection with Employee’s ongoing employment with the Company, this Agreement or
other incentive plans of the Company provide Employee with various benefits in the event of termination of Employee’s employment with the Company during the Protected Period. If Employee’s employment is terminated or not renewed pursuant
to Section 10 during a Protected Period or otherwise in connection with a “change of control” of the Company, within the meaning of Section 2806 of the Internal Revenue Code of 1986, as amended (the “Code”), a portion
of those benefits could be characterized as “excess parachute payments” within the meaning of Section 2806 of the Code. The parties hereto acknowledge that the protections set forth in this Section 8 are


  
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important, and it is agreed that Employee should not have to bear the full burden of the excise tax that might be levied under Section 4999 of the Code or any similar provision of state or
federal law, in the event that any portion of the benefits payable to Employee pursuant to this Agreement or the other incentive plans of the Company are treated as an excess parachute payment. The parties, therefore, have agreed as set forth in
this Section 8. 
 (b) Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any
payment or distribution (including income recognized by Employee upon the early vesting of restricted property or upon the exercise of options whose exercise date has been accelerated) by the Company or any other person to or for the benefit of
Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 8) (a “Payment”) would be
subject to the excise tax imposed by Section 4999 of the Code or any similar provision of state or federal law or any interest or penalties are incurred by Employee with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay an additional payment, not to exceed $250,000 in the aggregate (a “Gross-Up Payment”), in an amount such that after
payment by Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed on the
Gross-Up Payment, Employee retains an amount of the Gross-Up Payment equal to fifty percent (50%) the Excise Tax imposed on the Payments. The Employee will bear the cost of the remaining 50% until the aggregate Gross Payments from the Company
have reached $250,000, and will thereafter bear all additional taxes, interest or penalties. 
 (c) In the event of any dispute
as to the applicability or amount of any Gross-Up Payment, all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the independent accounting firm regularly employed by the Company (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and to Employee
within 15 business days after the receipt of notice from Employee that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm will be borne by the Company. If the Accounting Firm
determines that no Excise Tax is payable by Employee, it shall furnish Employee with a written statement that failure to report the Excise Tax on Employee’s applicable federal income tax return would not result in the imposition of a negligence
or similar penalty. Any determination by the Accounting Firm shall be binding on the Company and Employee unless and until a final determination is received from the Internal, Revenue Service indicating a contrary result. As a result or uncertainty
in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments may not have been made by the Company that should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. If the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Employee, consistent with the maximum limitation stated in paragraph 8(b) above. In the event it is determined by the Accounting Firm that the Gross
Payments previously made by the Company exceeded the limitations stated in paragraph 8(b) above, upon written notice from the Company, accompanied by a copy of the Accounting Firm’s calculation of same, the amount of such overpayment shall be
promptly paid by the Employee to the Company. 

  
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 9. Options and Other Stock-Related Plans. The terms and conditions of any option,
stock or equity bonus, restricted stock or equity, equity award or other equity-related plan or program with respect to capital stock or partnership interests of the Company which may be granted to Employee or in which Employee may participate shall
be governed by the applicable Company plan, if any, and/or separate agreement(s) between the Company and Employee with respect thereto. 
 10. Termination or Non-Renewal of Employment. 
 (a) Termination by
Either Party: General Provisions. Either the Company or Employee may terminate Employee’s employment hereunder at any time during the term of this Agreement by delivery of ninety (90) days prior written notice by the terminating party
to the other party. Promptly after such termination of employment, in addition to any other payments or benefits provided in this Section 10, the Company shall pay to Employee an amount equal to the sum of (i) the Employee’s earned
but unpaid Annual Base Salary through the date of termination of employment at the rate in effect at the time of such termination, (ii) vacation pay earned but not taken to the date of such termination, and (iii) all other amounts
previously deferred by Employee or earned but not paid as of such date under all Company incentive or deferred compensation plans or programs. 
 (b) Termination for Cause: Resignation without Good Reason. If the Company terminates Employee’s employment for Cause, or if the Employee terminates employment without Good Reason, the
payments due to Employee shall be limited to the amounts described in Section 10(a). 
 (c) Termination Without Cause:
Termination for Good Reason. If the Company terminates Employee’s employment without Cause (except as provided in Section 10(d) below), or if the Employee terminates Employee’s employment for Good Reason, then the Company shall
promptly pay or otherwise provide to Employee the following amounts in addition to those set forth in Section 10(a): 
 (i) An amount equal to Employee’s Annual Base Salary then in effect, payable in a single lump sum by certified or bank cashier’s check within 30 days of such termination; and 

(ii) An amount equal to the product of (A) the maximum monthly premium payment that may be charged to continue
coverage for Employee and Employee’s dependents under the Company’s health insurance plan under COBRA, and under all life insurance and disability policies provided by Employer for Employee multiplied by (B) 12 months (payable over
such period). Any unpaid amount under this clause (ii) will cease if Employee obtains substantially similar coverage under new employment. 

  
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 (d) Termination on Disability. If at any time during the term of Employee’s
employment hereunder, Employee is unable due to physical or mental disability, to perform effectively Employee’s duties hereunder, the Company shall continue payment of salary as provided in Section 4 during the first 3 month period of
such disability to the extent not covered by the Company’s disability insurance policies (the Company may offset against its obligations in this sentence the amounts actually received by the Employee under such policies). Upon the expiration of
such 3 month period, the Company, at its sole option, may continue payment of Employee’s salary for such additional periods as the Company elects, or may terminate Employee’s employment hereunder without any further compensation
obligations to Employee hereunder. If Employee should die during the term of Employee’s employment hereunder, Employee’s employment and the Company’s obligations hereunder for compensation payments shall terminate as of the end of the
month in which Employee’s death occurs. 
 (e) Non-Renewal of Employment; General Provisions. Either the Company or
Employee may elect not to renew Employee’s employment hereunder at the end of the Initial Period, or at the end of any Additional Period thereafter, by delivery of ninety (90) days prior written notice by the electing party to the other
party. At the expiration of the employment term (in addition to any other amounts provided in Section 10(f) below in the case of a non-renewal by the Company), the Company shall pay to Employee an amount equal to the sum of
(i) Employee’s earned but unpaid Annual Base Salary through the date of termination of employment at the rate then in effect, (ii) vacation pay earned but not taken to the date of such termination, and (iii) all other amounts
previously deferred by Employee or earned but not paid as of such date under all Company incentive or deferred compensation plans or programs. In the event of a non-renewal by the Employee, the amounts due the Employee shall be limited to the
amounts specified in clause (i), (ii) and (iii) of the preceding sentence. 
 (f) Non-Renewal by the Company at End
of Initial Period or Additional Period. If the Company elects not to renew the Employee’s employment as of the end of the Initial Period or an Additional Period, and provided the Employee continues to perform Employee’s duties and
responsibilities through the end of such Initial Period or Additional Period, as the case may be, then the Company shall promptly pay or otherwise provide to Employee the following amounts in addition to those set forth in Section 10(a):

 (i) An amount equal to Employee’s Annual Base Salary then in effect, payable in a single lump sum by
certified or bank cashier’s check within 30 days of such termination; and 
 (ii) An amount equal to the
product of (A) the maximum monthly premium payment that may be charged to continue coverage for Employee and Employee’s dependents under the Company’s health insurance plan under COBRA, and under all life insurance and disability
policies provided by Employer for Employee multiplied by (B) 12 months (payable over such period). Any unpaid amount under this clause (ii) will cease if Employee obtains substantially similar coverage under new employment.

 (g) Continuance of Insurance. The Company will use its best efforts to keep the policies of insurance referred to in
clause (ii) of Sections 10(c) and Section 10(f) above in effect for the benefit of the Employee through the 12 month period (as the case may be), and after the expiration of such 12 month period (as the case may be) if the Employee is
unable to secure reasonable alternative coverage as a result of lack of insurability, at the written request of the 

  
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Employee, the Company will use reasonable commercial efforts to continue such coverage, provided that the Company will have no obligation to incur any incremental cost or risk (other than minor
administration inconvenience) and Employee shall agree in writing to bear all such cost and risk and hold the Company harmless against same. 
 (h) Waiver of Claims. In the event this Agreement expires as a result of non-renewal by the Company, or is terminated by the Company without Cause or as a result of a disability of Employee in
accordance with Section 10(d), or is terminated by Employee with Good Reason, Employee agrees to accept, in full settlement of any and all claims, losses, damages and other demands that Employee may have arising out of such termination or
non-renewal, as liquidated damages and not as a penalty, the payments, benefits and vesting of rights set forth in this Agreement. Employee hereby waives any and all rights Employee may have to bring any cause of action or proceeding contesting any
such termination or non-renewal; provided, however, that such waiver shall not be deemed to affect Employee’s rights to enforce any other obligations of the Company unrelated to employment. Under no circumstances shall Employee be entitled to
any compensation or confirmation of any benefits under this Agreement for any period of time following Employee’s date of termination if Employee’s termination is for Cause. 

(i) Lock-ups, etc. During the one year period after Employee receives the lump sum payments as provided in Section 10(c) or
(f) above, Employee shall sign any lock-up letters, standstill agreements, or other similar documentation specifically required by an underwriter from such Employee in connection with a public offering of securities by the Company or take other
actions reasonably related thereto as requested by the Board of Directors of the Company; provided, however, that equivalent agreements are being required of Company management and the period of any such lock-up or standstill agreements shall not
exceed the shorter of (i) 180 days or (ii) the balance of the one (1) year period. In the event Employee fails to sign any such letters, agreements or similar documentation or take any such action, the Company may seek and obtain
specific performance of such covenant, including any injunction requiring execution thereof or the taking of any such actions, and Employee hereby appoints the then president of the Company in office from time to time to sign any such documents on
Employee’s behalf so long as such documents are prepared on the same basis as other shareholders generally or as all Company management shareholders. 
 (j) Liquidated Damages upon Termination. If the Company terminates Employee’s employment without Cause (except as provided in Section 10(d) below), or if the Employee terminates
Employee’s employment for Good Reason, , Employee shall be awarded as liquidated damages caused by any such separation with the Company, the Employee shall be awarded 2% of the units of TrinityCare Senior Living, LLC, or such units as necessary
for the Employee and Mr. Albert W. Denson to have 51% of the outstanding units of TrinityCare Senior Living, LLC. 

11. No Mitigation Obligation. The Company acknowledges that it will be difficult and may be impossible (i) for Employee to
find reasonably comparable employment following termination of Employee’s employment and (ii) to measure the amount of damages which Employee may suffer as a result of the termination of Employee’s employment. Accordingly, all amounts
paid to Employee under this Agreement following Employee’s termination of employment are acknowledged by the Company to be reasonable and to be liquidated damages, and Employee will not be required to mitigate the amount of such payments by
seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever (including from other employment) create any mitigation, offset, reduction or any other obligation on the part of Employee
under this Agreement. 

  
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 12. Covenant Not to Compete. 

(a) During Employee’s employment with the Company or any of its Affiliates and thereafter during the Restricted Period (as defined in
Exhibit A attached hereto), regardless of the reason for the termination of Employee’s employment, Employee will not engage in or carry on, directly or indirectly, either for himself or as a member of a partnership or as a shareholder,
investor, owner, officer or director of a company or other entity, or as an employee, agent, associate or consultant of any person, partnership, corporation or other entity, any business that directly competes with any services or products produced,
sold, conducted, developed, or in the process of development by the Company or its Affiliates on the date of termination of Employee’s employment within a 35 mile radius of such business or entity 

(b) Notwithstanding the foregoing, Employee shall not be deemed to be in violation of Section 12(a) based solely on the ownership of
less than one percent of any class of securities of a publicly-held company whose gross assets exceed $100,000,000. 
 (c)
Employee acknowledges that the limitations set forth herein on Employee’s rights to compete with the Company and its Affiliates are reasonable and necessary for the protection of the Company and its Affiliates. In this regard, Employee
specifically agrees that the limitations as to period of time and geographic area, as well as all other restrictions on Employee’s activities specified herein, are reasonable and necessary for the protection of the Company and its Affiliates.
In particular, Employee acknowledges that the parties anticipate that Employee will be actively seeking markets for the products and services of the Company and its Affiliates throughout the United States during Employee’s employment with the
Company. 
 (d) In the event that there shall be any violation of the covenant not to compete set forth in this Section 12,
then the time limitation thereof shall be extended for a period of time equal to the period of time during which such violation continues; and in the event the Company is required to seek relief from such violation in any court, board of arbitration
or other tribunal, then the covenant shall be extended for a period of time equal to the pendency of such proceedings, including all appeals. 
 (e) Employee agrees that the remedy at law for any breach by Employee of this Section 12 will be inadequate and that the Company shall also be entitled to injunctive relief. 

13. Confidential Information. During the term of Employee’s employment hereunder, and for two years after Employee’s
termination of employment, Employee shall not use or disclose, without the prior written consent of the Company, Confidential Information (as defined in Exhibit A attached hereto) relating to the Company or any of its Affiliates, and upon
termination of Employee’s employment will return to the Company all written materials in Employee’s possession embodying such Confidential Information. Employee will promptly disclose to the Company all Confidential Information, as well as
any business opportunity related to the Company which comes to Employee’s attention during the term of Employee’s employment with the Company. Employee agrees that the remedy at law for any breach by Employee of this Section 12 will
be inadequate and that the Company shall also be entitled to injunctive relief. 

  
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 14. Intellectual Property. 

(a) To the extent they relate to, or result from, directly or indirectly, the actual or anticipated operations of the Company or any of
its Affiliates, Employee hereby agrees that all patents, trademarks, copyrights, trade secrets, and other intellectual property rights, all inventions, whether or not patentable, and any product, drawing, design, recording, writing, literary work or
other author’s work, in any other tangible form developed in whole or in part by Employee during the term of this Agreement, or otherwise developed, purchased or acquired by the Company or any of its Affiliates, shall be the exclusive property
of the Company or such Affiliate, as the case may be (“Intellectual Property”). Employee however shall have the right to utilize any intellectual or work product developed by himself or herself in the normal course of business after any
termination of employment. 
 (b) Employee will hold all Intellectual Property in trust for the Company and will deliver all
Intellectual Property in Employee’s possession or control to the Company upon request and, in any event, at the end of Employee’s employment with the Company. 
 (c) Employee shall assign and does hereby assign to the Company all property rights that Employee may now or hereafter have in the Intellectual Property. Employee shall take such action, including, but
not limited to, the execution, acknowledgment, delivery and assistance in preparation of documents, and the giving of testimony, as may be requested by the Company to evidence, transfer, vest or confirm the Company’s right, title and interest
in the Intellectual Property. 
 (d) Employee will not contest the validity of any invention, any copyright, any trademark or
any mask work registration owned by or vesting in the Company or any of its Affiliates under this Agreement. 
 15.
Definitions. As used in this Agreement , the terms defined in Exhibit A have the means assigned to such terms in such exhibit. 
 16. Notices. All notices, requests, demands and other communications required by or permitted under this Agreement shall be in writing and shall be sufficiently delivered if delivered by hand, by
courier service, or sent by registered or certified mail, postage prepaid, to the parties at their respective addresses listed below: 
 (a)    If to Employee: 
 Donald W. Sapaugh

 204 Century Drive 
 Friendswood, Texas 77546 

  
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 (b)    If to the Company: 

University General Health System, Inc. 

Attn. Chairman or Chief Executive Officer 

7501 Fannin St 
 Houston, TX 77054 
 Any party may change such party’s address by such notice to the other
parties. 
 17. Set-off Rights. The Company’s obligations to make the payments and provide the benefits required by
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against Employee or others, unless such amount is a
determinable liability of the Employee to the Company. 
 18. Assignment. This Agreement is personal to Employee, and
Employee shall not assign any of Employee’s rights or delegate any of Employee’s duties hereunder without the prior written consent of the Company. Neither Employee nor Employee’s spouse will have the right to commute, encumber, or
otherwise dispose of any payments under this Agreement. The Company shall have the right to assign this Agreement to a successor in interest in connection with a merger, sale of substantially all assets, or the like; provided however, that an
assignment of this Agreement to an entity with operations, products or services outside of the industries in which the Company is then active shall not be deemed to expand the scope of Employee’s covenant not to compete with such operations,
products or services without Employee’s written consent. The Company shall require any Person who is the successor (whether direct or indirect, by purchase, merger, consolidation, reorganization, or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform, by a written agreement in form and substance reasonably satisfactory to Employee, all of the obligations of the Company under this Agreement. As used in this Agreement,
the term “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, written agreement, or otherwise. 

19. Survival. The provisions of this Agreement shall survive the termination of Employee’s employment hereunder in accordance
with their terms. 
 20. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of Texas, county of Harris without regard to the choice-of-law principles thereof. 
 21. Binding Upon
Successors. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, legal representatives, successors and permitted assigns. 

22. Entire Agreement. This Agreement constitutes the entire agreement between the Company and Employee with respect to the terms
of employment of Employee by the Company and supersedes all prior agreements and understandings, whether written or oral, between them concerning such terms of employment. 

  
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 23. Amendments and Waivers. This Agreement may be amended, modified or supplemented,
and any obligation hereunder may be waived, only by a written instrument executed by the parties hereto. The waiver by either party of a breach of any provision of this Agreement shall not operate as a waiver of any subsequent breach. No failure on
the part of any party to exercise, and no delay in exercising, any right or remedy. hereunder shall operate as a waiver hereof, nor shall any single or partial exercise of any such right or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right or remedy. 
 24. Cumulative Rights And Remedies. All rights and remedies
hereunder are cumulative and are in addition to all other rights and remedies provided by law, agreement or otherwise. Employee’s obligations to the Company and the Company’s rights and remedies hereunder are in addition to all other
obligations of Employee and rights and remedies of the Company created pursuant to any other agreement. 
 25.
Construction. Each party to this Agreement has had the opportunity to review this Agreement with legal counsel. This Agreement shall not be construed or interpreted against any party on the basis that such party drafted or authored a
particular provision, parts of or the entirety of this Agreement. 
 26. Severability. In the event that any provision or
provisions of this Agreement is held to be invalid, illegal or unenforceable by any court of law or otherwise, the remaining provisions of this Agreement shall nevertheless continue to be valid, legal and enforceable as though the invalid or
unenforceable parts had not been included therein. In addition, in such event the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible with respect to those
provisions which were held to be invalid, illegal or unenforceable. 
 27. Attorneys’ Fees and Costs. If any action
at law or in equity is brought to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which it may be
entitled. 
  
 IN WITNESS WHEREOF, the Company and Employee
have executed this Agreement on the date first above written. 
  

							
	 “COMPANY”
	 		 		 	 UNIVERSITY GENERAL HOSPITAL SYSTEM INC.,
 a Nevada Corporation

				
		 		 		 	/s/ Hassan Chahadeh
		 		 		 	By: Hassan Chahadeh
		 		 		 	Title: Chairman, Chief Executive Officer
				
	 “EXECUTIVE”
	 		 		 	/s/ Donald W. Sapaugh
		 		 		 	Donald W. Sapaugh, an individual


  
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 A-1










 EXHIBIT A 
 DEFINITIONS 
 “Annual Base Salary” means the salary of
Employee in effect at the relevant time determined in accordance with Section 4(a) hereof. 
 “Affiliate”
means, with respect to any Person, each other Person who controls, is controlled by, or is under common control with the Person specified. Without limiting the generality of the foregoing, Affiliates of the Company. 

“Cause” when used in connection with the termination of employment with the Company, means the termination of
Employee’s employment by the Company by reason of (i) the conviction of Employee of a crime involving moral turpitude by a court of competent jurisdiction; (ii) the proven commission by Employee of an act of fraud upon the Company;
(iii) the willful and proven misappropriation of any funds or property of the Company by Employee; (iv) the willful, continued and unreasonable failure by Employee to perform material duties assigned to Employee after reasonable written
notice and opportunity to cure such performance has been given by the Company; (v) the knowing engagement by Employee in any direct, material conflict of interest with the Company without compliance with the Company’s conflict of interest
policy, if any then in effect; (vi) the knowing engagement by Employee, without the approval of the General Partner of the Company, in any activity which would result in a material injury to the Company or any of its Affiliates; or
(vii) the knowing engagement in any activity which would constitute a material violation of the provisions of the Company’s Insider Trading Policy or Business Ethics Policy, if any, then in effect. 

“Certificate of Formation” means the Company’s Certificate of Formation, including all amendments thereto, filed
with the Texas Secretary of State under and pursuant to the Texas Business Organizations Code, and the issuance of a certificate of filing for the Company by the Texas Secretary of State. 

“Change of Control” means the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Designated Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange
Act”)) of 50% or more of either (1) the then outstanding partnership interests of the Company (the “Outstanding Company Common Stock”), Management Control or (2) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of managers (the “Outstanding. Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of
Control: (a) any acquisition of Common Stock of the Company or voting securities of the Company directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege), (b) any acquisition of Common Stock
of the Company or voting securities of the Company by the Company (c) any acquisition of Common Stock of the Company or voting securities of the Company by any employee benefit plan(s) (or related


  
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trust(s)) sponsored or maintained by the Company or any corporation controlled by the Company and approved by the incumbent General Partner, or (d) any acquisition by any corporation
pursuant to a reorganization, merger or consolidation, if, immediately following such reorganization, merger or consolidation, the conditions described in clauses (1), (2) and (3) of paragraph (iii) below of this definition are
satisfied. 
 “Partnership Agreement” means the Company’s Partnership Agreement, as amended, executed by
the partners of the Company in accordance with the Texas Business Organizations Code. 
 “Confidential
Information” includes information conveyed or assigned to the Company or any of its Affiliates by Employee or conceived, compiled, created, developed, discovered or obtained by Employee from and during Employee’s employment
relationship with the Company, whether solely by Employee or jointly with others, which concerns the affairs of the Company or its Affiliates and which the Company could reasonably be expected to desire be held in confidence, or the disclosure of
which would likely be embarrassing, detrimental or disadvantageous to the Company or its Affiliates and without limiting the generality of the foregoing includes information relating to inventions, and the trade secrets, technologies, algorithms,
products, services, finances, business plans, marketing plans, legal affairs, supplier lists, client lists, potential clients, business prospects, business opportunities, personnel assignments, contracts and assets of the Company or any of its
Affiliates and information made available to the Company or any of its Affiliates by other parties under a confidential relationship. Confidential Information, however, shall not include information (a) which is, at the time in question, in the
public domain through no wrongful act of Employee, (b) which is later disclosed to Employee by one not under obligations of confidentiality to the Company or any of its Affiliates or Employee, (c) which is required by court or governmental
order, law or regulation to be disclosed, or (d) which the Company has expressly given Employee the right to disclose pursuant to written agreement. 
 “Good Reason” means the occurrence of any of the following events: 

(a) Employee is assigned duties, taken as a whole, that are materially inconsistent with, or materially diminished from, Employee’s
positions, duties, responsibilities and status with the Company immediately prior to such action, or Employee’s status,’ reporting responsibilities, titles or offices are materially diminished from those in effect immediately prior to such
action, or Employee’s duties and responsibilities are materially increased without a corresponding reasonable increase in the Employee’s compensation (provided that in the case of such a change within a Protected Period, such increase must
be satisfactory to the Employee in Employee’s sole reasonable judgment), except in each case in connection with the termination of Employee’s employment by the Company for Cause or on account of disability, or as a result of the
Employee’s death, or by the Employee for other than Good Reason; provided, however, that, Good Reason shall not be triggered under this subsection (a) by an immaterial action not taken in bad faith or by an action that is remedied
by the Company promptly after receipt of written notice from Employee; or 

  
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 (b) Employee’s Annual Base Salary is reduced (i) within a Protected Period, from
that in effect immediately prior to the commencement of a Protected Period or as the same may be increased from time to time thereafter, or (ii) other than within a Protected Period, from that which was in effect prior to such action unless
such reduction is part of a general reduction in compensation within the officer ranks due to economic or company-wide considerations; or 
 (c) The Company (i) within a Protected Period, fails to continue in effect any benefit or compensation plan, including, but not limited to, the annual bonus plan, qualified retirement plan, executive
life insurance plan and/or health and accident plan, in which Employee is participating immediately prior to the commencement of the Protected Period, or plans providing, in the sole reasonable judgment of Employee, Employee with substantially
similar benefits, or the Company takes any action that would adversely affect Employee’s participation in or reduce Employee’s benefits under any of such plans (excluding any such action by the Company that is required by law), or
(ii) other than within a Protected Period, takes any action to materially reduce or eliminate Employee’s participation in the Company’s benefit or compensation plans unless such reduction or elimination is part of a general reduction
in benefits within the officer ranks due to economic or company-wide considerations; or 
 (d) The Company requires the Employee
to take any action that Employee reasonably concludes would violate or conflict ethical rules governing attorney conduct or other applicable law; or 
 (e) The Company requires Employee at any time to relocate more than 50 miles from Houston, Texas; or 
 (f) The amendment, modification or repeal of any provision of the Certificate of Formation of the Company, the Partnership Agreement or any other governing document of the Company that was in effect
immediately prior to the commencement of a Protected Period, if such amendment, modification or repeal would materially adversely affect Employee’s rights to indemnification by the Company; or 

(g) The Company shall violate or breach any obligation of the Company (regardless whether such obligation be set forth in the Partnership
Agreement and/or in this Agreement or any other separate agreement entered into between the Company and Employee) to indemnify Employee against any claim, loss, expense or liability sustained or incurred by Employee by reason, in whole or in part,
of the fact that Employee is or was an officer or director of the Company; or 
 (h) The Company shall violate or breach any
other material obligation of the Company owing to Employee relating to Employee’s employment with the Company, provided that in the event of a violation or breach that is reasonably subject to being cured by the Company, Good Reason shall only
occur if the Company shall fail or refuse to commence a cure within 15 days after written notice thereof is given by Employee to the Company or shall thereafter fail to diligently prosecute such cure to completion; or 

(h) The Company shall fail to keep in force, for the benefit of Employee, directors’ and officers’ insurance policy with
coverage amounts and scope at least equal to the coverage amounts in effect on the date hereof; or 

  
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 (i) The Company shall fail to obtain from a successor (including a successor to a material
portion of the business or assets of the Company) a satisfactory assumption in writing of the Company’s obligations under this Agreement; or 
 (j) The Company shall fail to provide Employee with office space, related facilities and support personnel (including, but not limited to, administrative and secretarial assistance) that are both
commensurate with the Employee’s position and Employee’s responsibilities to and position with the Company and not materially dissimilar to the office space, related facilities and support personnel provided to other executive officers of
the Company; or 
 (k) The Company notifies Employee of the Company’s intention not to observe or perform one or more of
the material obligations of the Company under this Agreement. 
 “Person” means any individual, corporation,
trust, partnership, limited partnership, foundation, association, limited liability company, joint stock association or other legal entity. 
 “Protected Period” means the period of time beginning with a Change of Control and ending six months following such Change of Control; provided, however, that if any event has
occurred which could reasonably be expected to result in a Change of Control and a Change of Control occurs within six months after such event, then the Protected Period will begin on the date of such event. 

“Restricted Period” means the period beginning on the date of the termination or resignation of Employee’s
employment with the Company and its Affiliates and ending as follows, as applicable: 
 (i) one (1) year
after the termination of Employee’s employment if Employee is not entitled to benefits under Section 7(a) or 10(c); or; 
 (ii) two (2) years after the termination of Employee’s employment, if Employee receives all of the benefits under Section 7(a) or 10(c) (after giving effect to any permissible setoff).


  
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