Exhibit (c)(5)
UHS Acquisition Corp.
c/o X.X. Childs Associates, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
(000) 000-0000
Facsimile: (000) 000-0000
February 16, 1998
Xx. Xxxxxx X. Xxxxxx
Universal Hospital Services, Inc.
0000 Xxxxxxxxx Xxxxx
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Dear Xx. Xxxxxx:
Reference is made to the Agreement and Plan of Merger
dated November 25, 1997 (the "Merger Agreement"), by and among X.X.
Childs Equity Partners, L.P. ("Holdings"), UHS Acquisition Corp., a
Minnesota corporation and a wholly owned subsidiary of Holdings ("Merger
Sub"), and Universal Hospital Services, Inc., a Minnesota corporation
("UHS"). As you know, subject to the terms and conditions of the Merger
Agreement, Merger Sub will merge with and into UHS (the "Merger"), with
UHS to be the surviving entity (UHS, in its capacity as the corporation
surviving the Merger, is sometimes hereinafter referred to as the
"Company").
You currently serve as Director of Finance of UHS, and
this Employment Agreement is being entered into as inducement for
Holdings and Merger Sub to consummate the Merger and the other
transactions contemplated by the Merger Agreement, for other good and
valuable consideration and to provide for your services to the Company
following the Merger as follows:
1. Position; Duties. From and after the date of the
Merger, the Company shall employ you, and you agree to serve and accept
employment, for the Term (as defined herein), as Vice President and Chief
Financial Officer of the Company, subject to the direction and control of
the Board of Directors of the Company (the "Board"), and, in connection
therewith, to reside in the United States, to oversee and direct the
financial operations 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. Your place of employment shall be in the
Minneapolis, Minnesota area. 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. 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 the Effective Time (as defined in
the Merger Agreement) and end as of the close of business on the date
which is three years from the Effective Time, subject to earlier
termination pursuant to the terms hereof (the "Term"). Following the
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.
3. Compensation and Benefits.
(a) Base Salary. Your base salary shall be at the 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). The Board will annually
review your base salary beginning in 1999. Necessary withholding taxes,
FICA contributions and the like shall be deducted from your base salary.
(b) Bonus; Options. In addition to your base salary, you
shall be entitled to receive a bonus of up to 100% of your base salary,
based on the achievement of the annual EBITDA targets contained in
Exhibit A (such targets to be subject to adjustment by the Board of
Directors of the Company, in good faith, to reflect any acquisitions,
dispositions and material changes to capital spending). 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. You
will also be entitled to receive certain stock options pursuant to one or
more executive or employee stock option plans to be adopted by the
Company; the proposed terms of such stock options (which are subject to
change) are contained in Exhibit A attached hereto.
(c) 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. Your
benefits will also consist of five weeks paid vacation time, an annual
physical exam and reimbursement for tax preparation costs.
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 in monthly
installments and continue to provide the benefits provided hereunder, in
each case 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 substantially and competently to perform your
duties hereunder for a period of 90 consecutive days or for 90 days
during any six-month period during the Term (a "Disability"), the Company
may terminate your employment hereunder by written notice to you. In the
event of such termination, the Company shall pay to you your base salary
in monthly installments and continue to provide the benefits provided
hereunder, in each case for six months following such termination.
(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. 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; or
(v) you have breached any provision of this Employment
Agreement contained in Paragraphs 6, 7 or 8 hereof; or
(vi) you have breached any provision of this Employment
Agreement (other than Paragraph 6, 7, or 8 hereof) and such breach shall
not have been cured within sixty (60) 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 Executive Employees (as defined herein) 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
President and Chief Financial Officer of the Company, the Vice President
of Rental and Sales - West of the Company, the Director of Human
Resources and Administration of the Company, the Vice President of Rental
and Sales - East of the Company and the Vice President of Business and
Development of the Company.
(e) Resignation Without Good Reason. You may terminate
your employment hereunder upon sixty days' 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 immediately. 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.
(f) Resignation For Good Reason. You may terminate your
employment hereunder at any time upon thirty days' written notice to the
Company, for Good Reason. In the event of such termination, the Company
shall (i) continue to pay you your base salary through 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 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 executive compensation to Executive Employees imposed by
the Board in response to negative financial results or other adverse
circumstances affecting the Company; or
(ii) the Company has reduced or reassigned a material
portion of your duties hereunder or has required you to relocate outside
the greater Minneapolis, Minnesota area; or
(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 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, in any stock option plans adopted by the Company in accordance
with Paragraph 3(b) hereof, or as may be required by law.
(h) Other Employment. Notwithstanding anything in this
Employment Agreement to the contrary, if your employment hereunder is
terminated pursuant to Paragraph 4(d) or (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 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. You recognize that in order to
guard the legitimate interests of the Company and its affiliates, it is
necessary for the Company to protect all confidential information. The
existence of any claim or cause of action by you against the Company
shall not constitute and shall not be asserted as a defense to the
enforcement by the Company of this Employment Agreement. You further
agree that your obligations under Paragraphs 6, 7 and 8 hereof shall be
absolute and unconditional.
6. Confidentiality. You agree that during and at all times
after the Term, you will keep secret all confidential matters and
materials of the Company (including its subsidiaries and affiliates),
including, without limitation, know-how, trade secrets, real estate plans
and practices, individual office results, customer lists, pricing
policies, operational methods, any information relating to the Company
(including any of its subsidiaries and affiliates) products, processes,
customers and services and other business and financial affairs of the
Company (including its subsidiaries and affiliates) (collectively, the
"Confidential Information"), to which you had or may have access and will
not disclose such Confidential Information to any person other than
Holdings or the Company, their respective authorized employees and such
other persons 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 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,
(i) within the United States and Canada (a) own, operate, manage or
control, (b) serve as an officer, director, partner, employee, agent,
consultant, advisor or developer or in any similar capacity to, or (c)
have any financial interest in, or aid or assist anyone else in the
conduct of, any person or enterprise which is engaged in the moveable
medical equipment rental business; provided, however, that the foregoing
provisions of this Paragraph 7 shall not apply in the event that (i) your
employment hereunder is terminated upon the expiration 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, and (ii) no circumstances
exist at the time of such notice which would constitute "Cause" as set
forth in Paragraph 4(c) hereof. As used herein, "Prohibition Period"
means the period from and after the Effective Time to and including the
date which is twelve months from the Date of Termination.
8. Non-solicitation. During the Prohibition Period, you
will not, directly or indirectly, hire, recruit, solicit, call upon,
divert, take away, entice or in any other manner persuade or attempt to
do any of the foregoing with respect to, any employee, independent
contractor, dealer, supplier, client, customer or business contact of the
Company or any of its subsidiaries to discontinue his or her position or
relationship, or violate any agreement, with the Company or any of its
subsidiaries as employee, independent contractor, dealer, supplier,
client, 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.
9. Modification. You agree and acknowledge that the
duration, scope and geographic area of the covenants described in
Paragraphs 6, 7 and 8 are fair, reasonable and necessary in order to
protect the good will and other legitimate interests of the Company and
its subsidiaries, that adequate consideration has been received by you
for such obligations, and that these obligations do not prevent you from
earning a livelihood. If, however, for any reason any court of competent
jurisdiction determines that any restriction contained in Paragraphs 6, 7
or 8 are not reasonable, that consideration is inadequate or that you
have been prevented unlawfully from earning a livelihood, such
restriction shall be interpreted, modified or rewritten to include as
much of the duration, scope and geographic area identified in such
Paragraph 6, 7 or 8 as will render such restrictions valid and
enforceable.
10. Equitable Relief. You acknowledge that Merger Sub or
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, Merger Sub or 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 Merger Sub
or the Company. The existence of any claim or cause of action by you
against Merger Sub or the Company or any of its subsidiaries, whether
predicated on this Employment Agreement or otherwise, shall not
constitute a defense to the enforcement by Merger Sub or the Company of
this Employment Agreement. You agree not to defend on the basis that
there is an adequate remedy at law.
11. Stockholders' Agreement. In connection with the
acquisition of any equity securities, or options therefor, 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.
12. Life Insurance. Either Merger Sub or the Company, as
the case may be, 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 Merger Sub or 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 Merger Sub or
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 Merger Sub or the Company or
any such subsidiary has applied for such insurance.
13. Successors; Assigns; Amendment; Notice. This
Employment Agreement shall be binding upon and shall inure to the benefit
of Merger Sub and its successors (including, after the Effective Time,
the Company). 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 Merger Sub (or, after the Effective Time, 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 (if confirmed)
or mailed (certified or registered mail, postage prepaid, return receipt
requested) to you or Merger Sub (or, after the Effective Time, 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 Merger Sub (or, after the Effective Time, the Company)
to the other.
14. Entire Agreement. This Employment Agreement, together
with the Stockholders' Agreement as executed in accordance with Paragraph
11 hereof, embodies the entire agreement and understanding between you
and Merger Sub (and, after the Effective Time, the Company) with respect
to the subject matter hereof and supersedes all such prior agreements and
understandings, including without limitation the Severance Pay Plan for
Displaced Universal Hospital Services, Inc. Employees dated November
1997, and any other severance, separation or termination pay plans,
policies, programs, agreements or arrangements adopted by the Company.
15. 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.
16. Governing Law. This Employment Agreement shall be
governed by and construed and enforced in accordance with the laws of the
state of Minnesota applicable to contracts made and to be performed in
such state without giving effect to the principles of conflicts of laws
thereof.
17. 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.
18. 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.
If you accept and agree to the foregoing, please sign and
return a counterpart of this letter to Merger Sub at the above address,
whereupon this letter will become a binding Employment Agreement between
you and the Company as of the Effective Time.
Very truly yours,
UHS Acquisition Corp.
By: /s/ Xxxxxx X. Xxx
_________________________
Name: Xxxxxx X. Xxx
Title: Vice President
Accepted and agreed to:
/s/ Xxxxxx X. Xxxxxx
____________________________
Xxxxxx X. Xxxxxx
Exhibit A
NON-QUALIFIED STOCK OPTIONS
PROPOSED KEY PROVISIONS
I. Options Subject to EBITDA Target Vesting.
Effective at the closing of the Merger, Executive will be granted
non-qualified options to acquire, at "buy-in-price"(1), an aggregate number
of shares of common stock of the Company equal to the percentage
specified in Schedule A out of the total numbers of shares allocated to
the management incentive option plan which in the aggregate equals 7.5%
of the outstanding common stock and common stock equivalents of the
Company, on a fully diluted basis.
The above options will vest according to the schedule hereinbelow
based on the Company's achievement of the annual EBITDA targets set forth
in the Management LBO Plan (subject to audited results), as may be
amended or revised in good faith by the Board for acquisitions,
divestitures, material increases in annual projected capital expenditures
(described in Section III below) or other circumstances. Such annual
EBITDA targets are referred to herein respectively as the "Management
Target" and are described in Section III below.
(a) Options to acquire between 0% and 20% of the total number
of option shares shall vest in each fiscal year beginning
with the fiscal year ending on December 31, 1998 in which
the Company meets or exceeds 90% of the Management Target,
on a linear basis such that, if, for example, the Company
achieves 95% of the Management Target, 10% of the total
number of option shares would vest.
(b) Options to acquire 20% of the total number of option
shares shall vest in each fiscal year beginning with the
fiscal year ending on December 31, 1998 in which the
Company meets or exceeds the Management Target. No more
than 20% of the total number of option shares shall vest
in any fiscal year, except as noted in Section I.c. below.
--------------
1 i.e., the price per share, as adjusted to reflect subsequent
changes in capitalization, at which X.X. Childs acquired its
original shares of common stock of the Company.
(c) Irrespective of the foregoing, if at the end of the fifth
fiscal year the company: (i) on a cumulative basis meets
the cumulative Management Target for such period; and (ii)
meets or exceeds the annual Management Target for the
fifth fiscal year, additional options will then vest such
that the total number of vested options under the
management incentive option plan will be no less than 100%
of the total number of options allocated to such plan.
In the event of a Change of Control(2) transaction, the unvested
portion of the options will become vested in a proportion equal to the
ratio of options which have actually vested at such time to the total
number of options as would have vested had the Company achieved the
Management Target for all periods prior to the change of control.
Irrespective of the foregoing, if at the end of the last fiscal year
ending prior to the Change of Control, the company: (i) on a cumulative
basis meets the cumulative Management Target for such period; and (ii)
meets or exceeds the annual Management Target for such fiscal year,
additional options will then vest such that the total number of vested
options under the management incentive option plan will be no less than
100% of the total number of options allocated to such plan.
Each option shall expire, unless earlier exercised or terminated,
ten years and six months from the date of grant.
In the case of termination of Executive's employment for Cause or
Resignation Without Good Reason, as defined in the Employment Agreement,
each option shall terminate at the time of termination of employment.
In the case of termination of Executive's employment without
Cause or his resignation for Good Reason, again as defined in the
Employment Agreement, options which have vested at the time of
termination/resignation shall terminate on the 91st day after the date of
employment termination or resignation, and options which have not vested
shall terminate immediately.
------------
2 A "Change of Control" means, generally, a sale of the business of
the Company to any person, firm, entity or group which, together
with its affiliates, prior to such transaction, did not own more
than 50% of the outstanding common equity of the Company.
If Executive's employment is terminated due to death or
disability pursuant to the Employment Agreement, options which have
vested at the time of termination/resignation shall terminate on the
181st day after the date of employment termination or death and may be
exercised during such period by the Executive or his legal representative
or estate, as the case may be, and options which have not vested shall
terminate immediately.
II. Additional Options
Certain eligible members of management will be granted options
for an additional 3.5% of the Company as outlined in Schedule B, which
options shall vest, if within five years of the effective date of the
Merger, the original common stock investors of the Company in the Merger
achieve a realized value(3) of the multiple specified in the table below
for the corresponding time period, or more on their original investment.
Additional Options Pursuant to Section II
Realized value achieved prior to the Minimum multiple of realized value
following years after closing to original common stock investors
-----------------------------------------------------------------------------
Year 3 4.0x
Year 4 4.5x
Year 5 5.0x
III. Management Target
Fiscal Year Ended EBITDA Target ($000)(4) Capital Expenditures
($1000)
-----------------------------------------------------------------------------
December 31, 1998 $29,709 $21,100
December 31, 1999 32,977 22,600
December 31, 2000 36,445 22,700
December 31, 2001 40,314 25,000
December 31, 2002 44,635 31,200
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3 For purpose hereof, "realized value" will mean, in general, the
cash or market value of registered, publicly traded and tradeable
securities not subject to transfer or Rule 144 restrictions
received in a Change of Control.
4 Calculation of EBITDA will exclude expenses related to: (i) any
payments to X.X. Childs; (ii) annual bank fees related to Merger
related debt financing; (iii) Bazooka bed asset impairment
write-downs; (iv) all severance payments incurred prior to
December 31, 1998; and (v) compensation incurred during fiscal
1998 for certain senior executives who are terminated in
connection with the Merger (the amount of which will be net of a
pro forma adjustment for the pre-Merger time period for raises
given to senior executives who receive promotions and raises in
connection with the Merger).
IV. Forfeited Options
Provision shall be made in the Stock Option Plan for options
forfeited to be available for grant at fair market value to management
employees in the discretion of the Board.
Schedule A
Initial Allocation of Management Incentive Option Plan
Employee % of total number of shares of
common stock issued at closing(1)
---------------------------------------------------------------------------
Xxxxx Xxxxxxxxx 1.500%
Xxxxx Xxxxxx 0.625%
Xxxxxxx Xxxxxxx 0.625%
Xxxxxx Xxxxx 0.625%
Xxxx Xxxxxxx 0.625%
Xxxxx Xxxxx 0.625%
Other Employees(2) 2.875%
Total 7.500%
--------------
1 Closing of the Merger.
2 To be allocated by Xxxxx Xxxxxxxxx with the approval of
the board of directors.
Schedule B
Allocation of Additional Options
Employee % of total number of shares of
common stock issued at closing(1)
-----------------------------------------------------------------------------
Xxxxx Xxxxxxxxx 1.0%
Xxxxx Xxxxxx 0.5%
Xxxxxxx Xxxxxxx 0.5%
Xxxxxx Xxxxx 0.5%
Xxxx Xxxxxxx 0.5%
Xxxxx Xxxxx 0.5%
Total 3.5%
----------------------
1 Closing of the Merger.
Exhibit B
UNIVERSAL HOSPITAL SERVICES, INC.
STOCKHOLDERS' AGREEMENT
Dated as of [ ], 1998
TABLE OF CONTENTS
ARTICLE I
Definitions
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Transfer Provisions
2.1 Restrictions on Transfers . . . . . . . . . . . . . . . . . 11
2.2 Call by the Company . . . . . . . . . . . . . . . . . . . . 11
2.3 Put By Management Holders . . . . . . . . . . . . . . . . . 15
2.4 Tagalong . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.5 Dragalong . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.6 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . 21
2.7 Restrictions on Other Agreements . . . . . . . . . . . . . 21
2.8 Stockholder Action . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
Registration Rights
3.1 General . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 Piggyback Registration . . . . . . . . . . . . . . . . . . 22
3.3 Obligations of the Company . . . . . . . . . . . . . . . . 23
3.4 Furnish Information . . . . . . . . . . . . . . . . . . . . 27
3.5 Expenses of Registration . . . . . . . . . . . . . . . . . 27
3.6 Underwriting Requirements . . . . . . . . . . . . . . . . . 27
3.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . 28
3.8 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.9 Market Stand-Off Agreement . . . . . . . . . . . . . . . . 32
ARTICLE IV
Certain Miscellaneous Other Provisions
4.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.2 Entire Agreement; Amendment; Termination . . . . . . . . . 33
4.3 Severability . . . . . . . . . . . . . . . . . . . . . . . 33
4.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.5 Binding Effect; Assignment . . . . . . . . . . . . . . . . 34
4.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . 34
4.7 Recapitalization, Exchanges, etc. . . . . . . . . . . . . . 35
4.8 JWC Representative . . . . . . . . . . . . . . . . . . . . 35
4.9 Action Necessary to Effectuate the Agreement . . . . . . . 36
4.10 Purchase for Investment; Legend on Certificate . . . . . . 36
4.11 Effectiveness of Transfers . . . . . . . . . . . . . . . . 37
4.12 Additional Stockholders . . . . . . . . . . . . . . . . . . 37
4.13 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 38
4.15 Headings, etc. . . . . . . . . . . . . . . . . . . . . . . 38
4.16 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 38
4.17 Effective Time . . . . . . . . . . . . . . . . . . . . . . 38
Exhibits
Exhibit A - - Schedule of Stockholders . . . . . . . . . . . . . A-1
Exhibit B - - Form of Promissory Note . . . . . . . . . . . . . . . B-1
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "Agreement") is entered into
as of [ ], 1998, by and among Universal Hospital Services, Inc., a
Minnesota corporation (the "Company"), those persons listed as the
Management Holders on the signature pages hereof (the "Management
Holders") and those persons listed as the JWC Holders on the signature
pages hereof (the "JWC Holders").
RECITALS
A. Upon consummation of the transactions contemplated by the
Agreement and Plan of Merger, dated as of November 25, 1997 by and among
X.X. Childs Equity Partners, L.P., a Delaware limited partnership, UHS
Acquisition Corp., a Minnesota corporation, and Universal Hospital
Services, Inc., a Minnesota corporation (the "Acquisition Agreement"),
and of certain related transactions to be consummated concurrently
therewith, the Stockholders (as hereinafter defined) will own (and may
hereafter acquire) certain shares of Common Stock (as hereinafter
defined) and certain options, warrants, securities and other rights to
acquire from the Company, by exercise, conversion, exchange or
otherwise, shares of Common Stock or securities convertible into Common
Stock.
B. All of the Stockholders desire to enter into this Agreement
for the purpose of regulating certain aspects of the Stockholders'
relationships with one another and with the Company.
AGREEMENT
In consideration of the premises and the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties to this Agreement mutually agree as follows:
ARTICLE I
Definitions
1.1 Definitions. For the purposes of this Agreement, the
following terms shall be defined as follows:
The "1933 Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute thereto, and the rules and
regulations of the SEC promulgated thereunder, all as the same shall be
in effect from time to time.
The "1934 Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor federal statute thereto, and the rules and
regulations of the SEC promulgated thereunder, all as the same shall be
in effect from time to time.
An "Affiliate" of a specified Person shall mean a Person who,
directly or indirectly, through one or more intermediaries, controls or
is controlled by or is under common control with the specified Person
and, when used with respect to the Company or any Subsidiary of the
Company, shall include any holder of at least 5% of the capital stock,
or any officer or director, of the Company or any Subsidiary of the
Company.
"Business Day" shall mean any day, other than a Saturday,
Sunday or a day on which commercial banking institutions in New York,
New York or Boston, Massachusetts are authorized or required by law to
be closed.
"Call Event" shall have the meaning set forth in Section 2.2(a).
"Call Group" shall have the meaning set forth in Section 2.2(a).
"Call Notice" shall have the meaning set forth in Section 2.2(a).
"Call Option" shall have the meaning set forth in Section 2.2(a).
"Call Price" shall mean, as of any date, a per share price
equal to the remainder of (a) (i) the excess of (A) the product of 4.75
times EBITDA, over (B) the aggregate amount of the Consolidated
Indebtedness as of the date of the most recently prepared consolidated
balance sheet of the Company and its Subsidiaries, divided by (ii) the
aggregate number of Common Stock Equivalents at the time outstanding,
minus, (b) in the case of Vested Options, the per share exercise price
payable in connection with such Vested Options.
"Call Securities" shall have the meaning set forth in Section
2.2(a).
"Cause" shall mean, with respect to any Management Holder, such
Management Holder's (a) continued failure, whether willful, intentional
or grossly negligent, after written notice, to perform substantially
his duties as an employee of the Company or any of its Subsidiaries,
other than as a result of a "Disability" as defined (if applicable) in
any Employment Agreement by and between the Company and the Management
Holder; (b) dishonesty in the performance of such Management Holder's
duties as an employee of the Company; (c) conviction or confession of
an act or acts on such Management Holder's part constituting a felony
under the laws of the United States or any state thereof; (d) other
willful act or omission on such Management Holder's part which is
materially injurious to the financial condition or business reputation
of the Company or any of its Subsidiaries; (e) breach of any duty or
obligation of noncompetition or confidentiality owed by such Management
Holder to the Company or any of its Subsidiaries; or (f) breach of any
provision or covenant contained in any employment agreement between
such Management Holder and the Company or any of its Subsidiaries,
which breach shall not have been cured within sixty (60) days after
notice thereof from the Company to the Management Holder.
"Common Stock" shall mean shares of Common Stock, par value
$.01 per share, of the Company.
"Common Stock Equivalents" shall mean, as of any date, (a) all
shares of Common Stock outstanding as of such date and (b) all shares
of Common Stock that may be acquired as of such date pursuant to Vested
Options.
The "Company" shall mean Universal Hospital Services, Inc., a
Minnesota corporation, and its successors and assigns.
"Company Call Period" shall have the meaning set forth in
Section 2.2(a).
"Consolidated Indebtedness" shall mean, as of any date, the
aggregate amount outstanding, on a consolidated basis, of (a) all
indebtedness of the Company and its Subsidiaries for borrowed money
(other than intercompany debt), (b) those letters of credit that would
be required to be honored upon liquidation of the Company and/or its
Subsidiaries (c) all notes payable, drafts accepted and other
obligations (including, without limitation, any amounts representing
deferred signing bonuses payable to various employees of the Company in
accordance with the terms of their respective employment agreements
with the Company and any Promissory Note (as hereinafter defined) of
the Company issued pursuant to Section 2.3(e) hereof) representing
extensions of credit to the Company and/or its Subsidiaries, whether or
not representing obligations for borrowed money, and (d) that portion
of obligations with respect to capital leases which is reflected as a
liability on the most recently prepared consolidated balance sheet of
the Company and its Subsidiaries.
"Cost Price" shall mean, with respect to any Subject
Securities, the purchase price, if any, per share of Common Stock or
per Vested Option, as the case may be, paid to the Company for such
Subject Securities by the original holder thereof; provided, however,
that in the event that any such Subject Securities were obtained by the
holder thereof pursuant to the terms of an agreement in writing between
JWC Equity Partners and/or UHS Acquisition Corp., a Minnesota
corporation, and the holder of such Subject Securities, as referenced
in the first clause of Section 1.6(a) or the first clause of Section
1.8(a) of the Acquisition Agreement, then the Cost Price of such
Subject Securities shall be (a) in the case of Common Stock, the Merger
Consideration (as defined in the Acquisition Agreement), and (b) in the
case of Vested Options, the Option Consideration (as defined in the
Acquisition Agreement). If at any time the number of shares of Common
Stock outstanding is (a) increased by a stock dividend payable in
shares of Common Stock or by a subdivision or split-up of shares of
Common Stock or (b) decreased by a combination of shares of such Common
Stock, following the record date for such stock dividend, subdivision,
split-up or combination, the Cost Price per share of Common Stock shall
be adjusted upward or downward, as appropriate, to reflect the decrease
or increase in shares of Common Stock outstanding.
"Designated Employee" and "DESIGNATED EMPLOYEES" shall have the
meanings set forth in Section 2.2(e).
"Dragalong Group" shall have the meaning set forth in Section
2.5(a).
"EBITDA" shall mean, as of any date for which it is to be
determined, the consolidated earnings of the Company and its
Subsidiaries before interest, taxes, depreciation and amortization and
after deduction of all operating expenses, all as calculated in
accordance with generally accepted accounting principles consistently
applied, as reflected in the Company's consolidated financial
statements for the four (4) most recent consecutive fiscal quarters of
the Company ending at least 45 days prior to such date.
"Equity Partners Agreement" shall have the meaning set forth in
Section 4.8.
"Executive Officers" shall mean Xxxxx X. Xxxxxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx and Xxxx X.
Xxxxxxx.
"Good Reason" shall mean, with respect to any Management
Holder, such Management Holder's resignation from his employment with
the Company or any of its Subsidiaries following and because of (a) the
Company's reducing or reassigning a material portion of the Management
Holder's duties under his employment agreement, if any, without Cause
(b) in the case of Xxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx,
Xxxxxxx X. Xxxxxxx or Xxxx X. Xxxxxxx, the Company's requiring such
Executive Officer to relocate outside the greater Minneapolis, Minnesota
area; (c) in the case of Xxxxx X. Xxxxx only, the Company's requiring Xx.
Xxxxx to relocate outside the greater Madison, Wisconsin area; (d) a reduction
of the Management Holder's base salary other than in connection with an
across-the-board reduction of executive compensation imposed by the Board of
Directors of the Company in response to negative financial results or other
adverse circumstances affecting the Company; (e) an illness of the Management
Holder, that, in the good faith determination of the Board of Directors
of the Company, is likely to result in the Management Holder becoming
disabled and unable to continue his employment with the Company; or (f)
a material breach by the Company of any Employment Agreement by and
between the Company and the Management Holder.
"Holder" shall have the meaning set forth in Section 3.1.
"Initiating Stockholder" shall have the meaning set forth in
Section 2.4(a).
"JWC Equity Partners" shall mean X.X. Childs Equity Partners,
L.P., a Delaware limited partnership.
"JWC Holders" shall have the meaning set forth in the preamble
preceding the Recitals to this Agreement and shall also include
Permitted Transferees of the JWC Holders and other transferees of the
JWC Holders unless immediately prior to such Transfer such transferee
was a Management Holder.
"JWC Inc." shall mean X.X. Childs Associates, Inc., a Delaware
corporation.
"JWC Representative" shall have the meaning set forth in
Section 4.8.
"Management Holders" shall have the meaning set forth in the
preamble preceding the Recitals to this Agreement and shall also
include (a) any director, officer or management employee of the Company
or any of its Subsidiaries (other than JWC Holders) who, with the
written consent of the Company and the JWC Representative, hereafter
becomes a party to this Agreement and (b) Permitted Transferees of the
Management Holders, unless immediately prior to such Transfer such
transferee was a JWC Holder.
"Non-Initiating Management Holders" shall have the meaning set
forth in Section 2.3(c).
"Participating Notice" shall have the meaning set forth in
Section 2.4(a).
"Participating Offerees" shall have the meaning set forth in
Section 2.4(a).
"Participating Securities" shall have the meaning set forth in
Section 2.4(a).
"Permitted Transfer" shall mean:
(a) a Transfer of any Subject Securities between any JWC
Holder or Management Holder who is a natural person and such
Stockholder's spouse, children, parents or siblings (whether natural,
step or by adoption) or to a trust solely for the benefit of one or
more of any of such Persons; provided that with respect to any such
Transfer, the Stockholder retains, as trustee or by some other means,
the sole authority to vote such Subject Securities (including any
Common Stock that may be acquired pursuant to any Vested Options);
(b) a Transfer of Subject Securities by a JWC Holder to JWC
Inc. or to an officer, employee or consultant of JWC Inc. or to a
corporation or to a partnership (or other entity for collective
investment, such as a fund) which is (and continues to be) controlled
by, controlling or under common control with JWC Inc.;
(c) a Transfer of Subject Securities (i) by a Management
Holder to another Management Holder or (ii) from a JWC Holder to
another JWC Holder;
(d) a Transfer of Subject Securities between any Stockholder
who is a natural person and such Stockholder's guardian or conservator;
or
(e) (i) a bona fide pledge of Subject Securities by a JWC
Holder to a bank or financial institution [or (ii) any pledge existing
at the date hereof of Subject Securities by a Management Holder].
No Permitted Transfer shall be effective unless and until the
transferee of the Subject Securities so transferred executes and
delivers to the Company an executed counterpart of this Agreement in
accordance with Section 4.13 hereof.
"Permitted Transferee" shall mean any Person who shall have
acquired and who shall hold any Subject Securities pursuant to a
Permitted Transfer.
"Person" means an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government or any
agency or political subdivision thereof, or other entity.
"Promissory note" shall have the meaning set forth in Section
2.3(e).
"Public Float Date" shall mean the first date on which shares
of Common Stock shall have been sold pursuant to one or more Public
Offerings in which the aggregate proceeds (before deducting underwriter
discounts and commissions) to the Company and the selling stockholders,
if any, of such shares equal or exceed $25 million.
A "Public Offering" shall mean the completion of a sale of
shares of Common Stock pursuant to a registration statement which has
become effective under the 1933 Act, excluding registration statements
on Form S-4 or Form S-8 or similar limited purpose forms.
"Put Event" shall have the meaning set forth in Section 2.3(a).
"Put Notice" shall have the meaning set forth in Section 2.3(a).
"Put Option" shall have the meaning set forth in Section 2.3(a).
"Put Period" shall have the meaning set forth in Section 2.3(a).
"Put Price" shall mean, as of any date, a per share price equal
to the remainder of (a) (i) the excess of (A) the product of 4.5 times
EBITDA, over (B) the aggregate amount of the Consolidated Indebtedness
as of the date of the most recently prepared consolidated balance sheet
of the Company and its Subsidiaries, divided by (ii) the aggregate
number of Common Stock Equivalents at the time outstanding, minus, (b)
in the case of Vested Options, the per share exercise price payable in
connection with such Vested Options.
"Put Securities" shall have the meaning set forth in Section
2.3(a).
"Registrable Securities" shall mean, as of any date, with
respect to any Stockholder, (a) all shares of Common Stock held by such
Stockholder as of such date and (b) all shares of Common Stock that may
be acquired as of such date by such Stockholder upon exercise of Vested
Options; provided that, as to any particular Registrable Securities,
such securities shall cease to be Registrable Securities when (i) a
registration statement (other than a registration statement on Form
S-8) with respect to the sale or exchange of such securities shall have
become effective under the 1933 Act and such securities shall have been
disposed of in accordance with such registration statement, (ii) a
registration statement on Form S-8 with respect to such securities
shall have become effective under the 1933 Act, (iii) such securities
shall have been sold or acquired under a Rule 144 Transaction, or (iv)
such securities have ceased to be outstanding.
"Rule 144 Transaction" means a transfer of Common Stock (a)
complying with Rule 144 under the 1933 Act as such rule or a successor
thereto is in effect on the date of such transfer (but only a sale
pursuant to a "brokers transaction" as defined in clauses (i) and (ii)
of paragraph (g) of Rule 144 as in effect on the date hereof) and (b)
occurring at a time when the Common Stock is registered pursuant to
Section 12 of the 1934 Act.
"Sale Request" shall have the meaning set forth in Section
2.5(a).
"Schedule of Stockholders" shall refer to the Schedule of
Stockholders attached hereto as Exhibit A as from time to time amended
pursuant to Section 4.2.
"SEC" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the 1933 Act.
"Stockholder" shall mean any party hereto other than the
Company, including any Person who hereafter becomes a party to this
Agreement pursuant to Section 4.13 hereof.
"Stockholder Group" shall mean any of (a) the JWC Holders taken
as a group or (b) the Management Holders taken as a group. The Company
shall not in any case be deemed to be a member of any Stockholder Group
(whether or not the Company holds or repurchases any Common Stock
Equivalents).
"Subject Securities" shall mean any Common Stock or Vested
Options now or hereafter held by any Stockholder.
"Subsidiary" with respect to any Person (the "parent") shall
mean any Person of which such parent, at the time in respect of which
such term is used, (a) owns directly or indirectly more than fifty
percent (50%) of the equity or beneficial interest, on a consolidated
basis, or (b) owns directly or controls with power to vote, indirectly
through one or more Subsidiaries, shares of capital stock or beneficial
interest having the power to cast at least a majority of the votes
entitled to be cast for the election of directors, trustees, managers
or other officials having powers analogous to those of directors of a
corporation. Unless otherwise specifically indicated, when used herein
the term Subsidiary shall refer to a direct or indirect Subsidiary of
the Company.
"Third Party" means any Person other than the Company.
"Transfer" shall mean to transfer, sell, assign, pledge,
hypothecate, give, grant or create a security interest in or lien on,
place in trust (voting or otherwise), assign an interest in or in any
other way encumber or dispose of, directly or indirectly and whether or
not by operation of law or for value, any of the Subject Securities.
"Vested Options" shall mean, as of any date, options, warrants,
securities and other rights to acquire from the Company, by exercise,
conversion, exchange or otherwise, shares of Common Stock or securities
convertible into Common Stock, but only to the extent that such
options, warrants, securities and other rights are both, as of such
date, (a) vested under the terms thereof or under any plan, agreement
or instrument pursuant to which such options, warrants, securities and
other rights were issued, and (b) so exchangeable, exercisable or
convertible.
ARTICLE II
Transfer Provisions
2.1 Restrictions on Transfers.
(a) Without the prior written consent of the holders of a
majority of the Common Stock Equivalents at the time held by the JWC
Holders, no Stockholder shall Transfer all or any part of the Subject
Securities at the time held by such Stockholder to any Person.
(b) The provisions of this Section 2.1 shall not apply to a
Transfer which is (i) a Permitted Transfer, (ii) pursuant to a Public
Offering, or (iii) after a Public Offering, pursuant to a Rule 144
Transaction.
2.2 Call by the Company.
(a) (i) If the employment of a Management Holder by the
Company or any of its Subsidiaries shall terminate (a "CALL
EVENT") for any reason prior to the Public Float Date, then,
subject to Section 2.2(a)(ii), the Company shall have the right
to purchase (the "Call Option"), by delivery of a written notice
(the "Call Notice") to such terminated Management Holder (with
a copy thereof to the JWC Representative) no later than 90 days
after the date of the Call Event (the "Company Call Period"),
and such Management Holder and such Management Holder's direct
and indirect transferees (a "Call Group") shall be required to
sell, all or any portion of the Subject Securities which are
held by the members of the Call Group on the date of such Call
Event that (A) were originally issued by the Company to such
Management Holder, and (B) were owned by such Management Holder
or his direct or indirect transferees on the date of the Call
Event (such Subject Securities to be purchased hereunder being
referred to collectively as the "Call Securities") at, except
as otherwise provided in Section 2.2(a)(ii) hereof, a price
per share equal to the greater of (x) the Call Price of such
Call Securities as of the date of the Call Event and (y) the
Cost Price of such Call Securities.
(ii) Notwithstanding anything set forth in
this Section 2.2 to the contrary, in the event a Management
Holder resigns without Good Reason from his employment with
the Company or any of its Subsidiaries, or his employment is
terminated for Cause by the Company or a Subsidiary, then
the purchase price per share payable for the Call Securities
shall be an amount equal to the Cost Price of such Call
Securities.
(b) The closing of any purchase of Call Securities by the
Company from a Call Group pursuant to this Section 2.2 shall take place
at the principal office of the Company on such date within 30 days
after the expiration of the Company Call Period with respect to such
Call Group as the Company shall specify to the members of such Call
Group in writing. At such closing, the members of the Call Group shall
deliver, against payment for the Call Securities in accordance with
Section 2.2(f) hereof, to the Company certificates and/or other
instruments representing, together with stock or other appropriate
powers duly endorsed with respect to, the Call Securities, free and
clear of all claims, liens and encumbrances. All of the foregoing
deliveries will be deemed to be made simultaneously and none shall be
deemed completed until all have been completed.
(c) Notwithstanding anything set forth in this Section 2.2 to
the contrary, prior to the exercise by the Company of its Call Option
to purchase Call Securities pursuant to this Section 2.2, one or more
prospective or existing employees of the Company or any Subsidiary may
be designated by the Chief Executive Officer of the Company, subject to
the approval of the Board of Directors of the Company (individually, a
"Designated Employee" and, collectively, "Designated Employees"), who
shall have the right, but not the obligation, to exercise the Call
Option and to acquire, in lieu of the Company, some or all (as
determined by the Company) of the Call Securities that the Company is
entitled to purchase from the Call Group hereunder, for cash and
otherwise on the same terms and conditions as set forth in Section
2.2(b) which apply to the repurchase of Call Securities by the Company.
Concurrently with any such purchase of Call Securities by any such
Designated Employee, such Designated Employee shall execute a
counterpart of this Agreement whereupon such Designated Employee shall
be deemed a "Management Holder" and shall have the same rights and be
bound by the same obligations as the other Management Holders
hereunder. Payment under this Section 2.2(c) and under Section 2.2(d)
below shall be made by a certified check or checks payable to the
respective members of the Call Group, in an amount equal to the
purchase price for such Call Securities under Section 2.2(a) hereof.
(d) If and to the extent that, subsequent to a Call Event, (i)
neither the Company nor any Designated Employee elects to exercise the
Call Option by delivery of a Call Notice prior to the expiration of the
Company Call Period with respect to such Management Holder in
accordance with this Section 2.2 and (ii) if applicable, the Management
Holder has not delivered a Put Notice to the Company prior to the
expiration of the Put Period with respect to such Management Holder in
accordance with Section 2.3(a), then the JWC Holders, pro rata in
accordance with the respective Common Stock Equivalents at the time
held by the JWC Holders so exercising their rights under this Section
2.2(d), may exercise the Call Option in lieu of the Company and such
Designated Employees by delivery of a Call Notice to such terminated
Management Holder no later than 30 days after the expiration of the
Company Call Period with respect to such Management Holder. The
closing of any purchase of Call Securities by such JWC Holders shall
take place on such date within 60 days after the expiration of the
Company Call Period with respect to such Management Holder as the
holders of a majority of the Common Stock Equivalents at the time held
by the JWC Holders so exercising their rights under this Section 2.2(d)
shall specify to the members of such Call Group in writing, provided
that if any such JWC Holder fails to purchase all or a portion of the
number of Call Securities which such JWC Holder may purchase pursuant
to this Section 2.2(d), then the other JWC Holders so exercising their
rights under this Section 2.2(d) shall be entitled to purchase such
Call Securities (pro rata based upon their respective Common Stock
Equivalents at the time held, or as otherwise agreed, by such JWC
Holders).
(e) If none of the Company, any Designated Employees or any
JWC Holders elects to exercise the Call Option and deliver a Call
Notice within 120 days after the date of the Call Event, then the Call
Option provided for in this Section 2.2 shall terminate, but such
Management Holder and his direct and indirect transferees shall
continue to hold such Call Securities pursuant to all of the other
provisions of this Agreement, including Sections 2.1 and 2.5 hereof.
(f) At each closing for the purchase of Call Securities to be
purchased pursuant to Section 2.2(a) above, the Company shall
repurchase such Call Securities for cash (by delivery of a certified
check or checks payable to the Management Holder or his direct or
indirect transferees, as the case may be). If an agreement or
indenture governing indebtedness for borrowed money of the Company or
any Subsidiary contains a restriction on the amount of Call Securities
that can be repurchased from any terminated Management Holder or his
direct or indirect transferees in any given fiscal year of the Company,
the maximum amount which the Company shall be permitted to pay in such
fiscal year for the repurchase of Call Securities pursuant to Section
2.2 hereof from a terminated Management Holder or his transferees shall
be, in the aggregate, (x) the maximum amount permitted by such
agreement or indenture for the fiscal year of the Company in which such
Management Holder terminates his employment with the Company, less (y)
the aggregate amount previously paid by the Company to repurchase Call
Securities from any other Management Holder whose employment with the
Company terminated in such fiscal year.
2.3 Put by Management Holders.
(a) (i) If the employment of any Management Holder by the
Company or any Subsidiary shall be terminated for any reason
(other than for Cause or upon a resignation without Good Reason)
prior to the Public Float Date (any such termination being
hereinafter referred to as a "Put Event"), any such terminated
or resigning Management Holder and his direct and indirect
transferees shall have the right (the "Put Option"), subject to
Section 2.3(a)(ii) below, by delivery of one or more written
notices to the Company (with copies to each Non-Initiating
Management Holder and JWC Holder) (the "Put Notice") during the
30-day period beginning on the date of the Put Event (the "Put
Period"), to cause the Company to purchase, and the Company shall
purchase, all of the Subject Securities that (x) were originally
issued by the Company to such Management Holder, and (y) were
owned by such Management Holder or his direct or indirect
transferees on the date of the Put Event (such Subject Securities
to be purchased hereunder being referred to collectively as the
"Put Securities"), at the Put Price of such Put Securities as of
the date of the Put Event. Neither termination for Cause nor
resignation without Good Reason shall constitute a Put Event.
(ii) If and to the extent that, subsequent to
a Put Event and prior to the expiration of the Put Period with
respect to such Management Holder, the Management Holder and his
direct and indirect transferees do not elect to exercise the Put
Option by delivery of a Put Notice to the Company in accordance
with this Section 2.3, all of the Management Holder's and such
transferees' rights to sell Put Securities to the Company
pursuant to this Section 2.3 shall terminate.
(b) The closing of the purchase of any Put Securities from a
Management Holder or his direct and indirect transferees pursuant to
this Section 2.3 shall take place at the principal office of the
Company on such date within 30 days after the expiration of the Put
Period with respect to such Management Holder as the Company shall
specify to such Management Holder and his direct and indirect
transferees in writing. At any closing pursuant to this Section 2.3,
the Company shall deliver the payment for the Put Securities in
accordance with Section 2.3(e) hereof against delivery of certificates
and/or other instruments representing, together with stock or other
appropriate powers duly endorsed with respect to, the Put Securities
specified in the Put Notice, free and clear of all claims, liens and
encumbrances.
(c) The Company shall have the right, but not in any case the
obligation, to satisfy its obligations pursuant to this Section 2.3 by
allowing the Management Holders other than the Management Holder and
his direct and indirect transferees, if any, exercising his rights
under this Section 2.3 (the "Non-Initiating Management Holders"), to
purchase all or any portion of the Put Securities, pro rata in
accordance with the Common Stock Equivalents at the time held by such
Non-Initiating Management Holders (with rights to over-allotment to the
other Non-Initiating Management Holders should any Non-Initiating
Management Holder choose to purchase none (or less than its pro rata
share) of such Put Securities under this Section 2.3(c)). Each
Non-Initiating Management Holder shall, within 30 days after the
receipt of the Put Notice by it, notify the Company if such
Non-Initiating Management Holder wishes to purchase all or any portion
of its pro rata share of the Put Securities at the Put Price. At the
closing of the purchase of the Put Securities in accordance with
Section 2.3(b) above, each Non-Initiating Management Holder purchasing
Put Securities shall deliver a certified check or checks payable to the
Management Holder or his direct or indirect transferees, as the case
may be, selling Put Securities as specified in the Put Notice, in an
aggregate amount equal to the Put Price for such Put Securities,
against delivery of certificates and/or other instruments representing
the Put Securities to be purchased by it in accordance with this
Section 2.3(c), free and clear of all claims, liens and encumbrances,
together with stock or other appropriate powers therefor duly endorsed.
(d) If and to the extent that, subsequent to a Put Event, the
Non-Initiating Management Holders elect to purchase fewer than all of
the Put Securities by delivery of written notice to the Company
pursuant to Section 2.3(c), the Company shall have the right, but not
in any case the obligation, to satisfy its obligations pursuant to this
Section 2.3 by allowing the JWC Holders to purchase all or any portion
of the Put Securities, pro rata in accordance with the Common Stock
Equivalents at the time held by such JWC Holders (with rights to
over-allotment to the JWC Holders should any JWC Holder choose to
purchase none (or less than its pro rata share) of such Put Securities
under this Section 2.3(c)). The procedures by which such JWC Holders
shall notify the Company and purchase the Put Securities shall be
identical in all respects to the procedures provided for in Section
2.3(c) for the Non-Initiating Management Holders.
(e) Notwithstanding anything to the contrary set forth herein,
the Company shall not be required to purchase Put Securities pursuant
to this Section 2.3 (i) after the Public Float Date, (ii) if, after
giving effect to such purchase, the Company would be (or with the lapse
of time or the giving of notice would be) in default under any of the
agreements and indentures governing indebtedness for borrowed money of
the Company or any Subsidiary or (iii) if the Company does not at the
time have sufficient funds legally available for such purchase.
(f) At each closing for the purchase of Put Securities to be
purchased pursuant to Section 2.3(a)(i) above, such Subject Securities
shall, subject to Section 2.3(f) below, be purchased as follows: to the
extent (and only to the extent) that (i) funds are legally available
for the repurchase of equity securities of the Company and (ii) the
Company is permitted to repurchase for cash equity securities of
terminated employees pursuant to the agreements and indentures
governing indebtedness for borrowed money of the Company or any
Subsidiary, the Company shall repurchase such Put Securities for cash
(by delivery of a certified check or checks payable to the Management
Holder or his direct or indirect transferees, as the case may be). If
the Company is unable pursuant to the foregoing provisions of this
Section 2.3(e) to purchase for cash any Put Securities from any
terminated Management Holder or his direct or indirect transferees, the
purchase price therefor shall be paid by delivery of a subordinated
promissory note (each a "Promissory Note") substantially in the form
attached hereto as Exhibit B in an original principal amount equal to
the purchase price of such Put Securities not so paid in cash. If an
agreement or indenture referred to in clause (ii) above contains a
restriction on the amount of Put Securities that can be repurchased
from any terminated Management Holder or his direct or indirect
transferees in any given fiscal year of the Company, the maximum amount
which the Company shall be required to apply to the repurchase of Put
Securities pursuant to this Section 2.3 in such fiscal year shall be,
in the aggregate, (x) the maximum amount permitted by such agreement or
indenture for the fiscal year of the Company in which such Management
Holder terminates his employment with the Company, less (y) the
aggregate amount previously paid by the Company to repurchase Put
Securities from any other Management Holder whose employment with the
Company terminated in such fiscal year.
(g) Any amounts which would otherwise be available with
respect to any fiscal year of the Company for the repurchase of Put
Securities and Call Securities shall first be applied to prepayment of
outstanding Promissory Notes issued under Section 2.3(e) and any
payment-in-kind Promissory Notes issued in payment of interest, in the
order in which such Promissory Notes were issued, until all such
Promissory Notes have been prepaid in accordance herewith. Prepayments
shall be applied first to accrued and unpaid interest and second to
principal.
2.4 Tagalong. Except as provided in Section 2.2 or 2.3
hereof, no Stockholder shall Transfer (in one or a series of
transactions within any 24-month period) any Subject Securities
representing more than ten percent (10%) of the Common Stock
Equivalents held by such Stockholder on the date of execution of this
Agreement by such stockholder, to a Third Party without complying with
the terms and conditions set forth in this Section 2.4, as applicable;
provided that this Section 2.4 shall not in any way limit or affect the
restrictions of Section 2.1, and any Stockholder may be an Initiating
Stockholder (as defined below) under this Section 2.4 only if such
Transfer is permitted under Section 2.1:
(a) Any Stockholder (the "Initiating Stockholder") desiring to
Transfer such Subject Securities shall give not less than 10 days'
prior written notice of such intended Transfer to each other
Stockholder ("Participating Offerees") and to the Company. Such notice
(the "Participation Notice") shall set forth the terms and conditions
of such proposed Transfer, including the name of the prospective
transferee, the number of Common Stock Equivalents proposed to be
transferred (the "Participation Securities") by the Initiating
Stockholder, the purchase price per share proposed to be paid therefor
and the payment terms and type of Transfer to be effectuated. Within
15 days following the delivery of the Participation Notice by the
Initiating Stockholder to each Participating Offeree and to the
Company, each Participating Offeree shall, by notice in writing to the
Initiating Stockholder and to the Company, have the opportunity and
right to sell to the purchasers in such proposed Transfer (upon the
same terms and conditions as the Initiating Stockholder) up to that
number of Subject Securities representing Common Stock Equivalents at
the time held by such Participating Offeree as shall equal the product
of (i) a fraction, the numerator of which is the number of Common Stock
Equivalents owned by such Participating Offeree as of the date of such
proposed Transfer and the denominator of which is the aggregate number
of Common Stock Equivalents owned as of the date of such Participation
Notice by each Initiating Stockholder and by all Participating Offerees
so electing to sell Subject Securities pursuant to this Section 2.4(a),
multiplied by (ii) the number of Participation Securities. The amount
of Participation Securities to be sold by any Initiating Stockholder
shall be reduced to the extent necessary to provide for such sales of
Subject Securities by Participating Offerees.
(b) At the closing of any proposed Transfer in respect of
which a Participation Notice has been delivered, the Initiating
Stockholder, together with all Participating Offerees so electing to
sell Subject Securities pursuant to this Section 2.4(a) shall deliver
to the proposed transferee certificates and/or other instruments
representing the Subject Securities to be sold, free and clear of all
liens and encumbrances, together with stock or other appropriate powers
duly endorsed therefor, and shall receive in exchange therefor the
consideration to be paid or delivered by the proposed transferee in
respect of such Subject Securities as described in the Participation
Notice.
(c) The provisions of this Section 2.4 shall not apply to (i)
any Transfer pursuant to a Public Offering, (ii) following a Public
Offering, pursuant to a Rule 144 Transaction or (iii) any Transfers
pursuant to Section 2.5 hereof.
2.5 Dragalong.
(a) If Stockholders holding at least a majority of Common
Stock Equivalents at the time held by the Stockholders (the "Dragalong
Group") determine to sell or exchange (in a sale or exchange of
securities of the Company or in a merger, consolidation or other
business combination or any similar transaction) in one or a series of
bona fide arms-length transactions to an unrelated and unaffiliated
Third party fifty percent (50%) or more of the Subject Securities at
the time held by them (the actual percentage of the total number of
Subject Securities held by the Dragalong Group represented by the
Subject Securities determined to be so sold or exchanged being referred
to as the "Dragalong Percentage"), then, upon 30 days' written notice
from the Dragalong Group to the other Stockholders, which notice shall
include reasonable details of the proposed sale or exchange including
the proposed time and place of closing and the consideration to be
received by the Dragalong Group (such notice being referred to as the
"Sale Request"), each other Stockholder shall be obligated to, and
shall, (i) sell, transfer and deliver, or cause to be sold, transferred
and delivered, to such Third Party the Dragalong Percentage of the
Subject Securities at the time held by such Stockholder, in the same
transaction at the closing thereof and shall (A) execute and deliver
such agreements for the purchase of such Subject Securities and other
agreements, instruments and certificates as the members of the
Dragalong Group shall execute and deliver in connection with such
proposed transaction and (B) deliver certificates and/or other
instruments representing all of such Stockholder's Subject Securities,
together with stock or other appropriate powers therefor duly
executed, at the closing, free and clear of all claims, liens and
encumbrances), and each Stockholder shall receive upon the closing of
such transaction the same per share consideration to be paid or
delivered by the proposed transferee in respect of such Stockholder's
Subject Securities as shall be payable to the members of the Dragalong
Group in respect of their Subject Securities, and (ii) if stockholder
approval of the transaction is required, vote such Stockholder's Common
Stock in favor thereof.
(b) The provisions of this Section 2.5 shall not apply to any
Transfer (i) pursuant to a Public Offering or (ii) pursuant to a
Permitted Transfer.
2.6 [RESERVED]
2.7 Restrictions on Other Agreements. Except for JWC Holders
as provided in Sections 4.8 and 4.9, no Stockholder shall grant any
proxy or enter into or agree to be bound by any voting trust with
respect to any Subject Securities nor shall any Stockholder enter into
any stockholders agreements or arrangements of any kind with any Person
with respect to any of the Subject Securities on terms which conflict
with the provisions of this Agreement (whether or not such agreements
and arrangements are with other Stockholders or holders of Common Stock
Equivalents that are not parties to this Agreement), including but not
limited to, agreements or arrangements with respect to the acquisition,
disposition or voting of Subject Securities inconsistent herewith.
2.8 Stockholder Action. Each Stockholder agrees that, in such
Stockholder's capacity as a stockholder of the Company, such
Stockholder shall, pursuant to Section 2.5 hereof, vote, or grant
proxies relating to the Common Stock at the time held by such
Stockholder to vote, all of such Stockholder's Common Stock in favor of
any sale or exchange of securities of the Company or any merger,
consolidation or other business combination or any similar transaction
pursuant to Section 2.5 hereof if, and to the extent that, approval of
the Company's stockholders is required in order to effect such
transaction.
ARTICLE III
Registration Rights
3.1 General. For purposes of this Article III: (a) the terms
"register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement on Form X-0,
X-0 or S-3 in compliance with the 1933 Act and the declaration or
ordering of effectiveness of such registration statement; and (b) the
term "Holder" means any Stockholder.
3.2 Piggyback Registration. If, at any time, the Company
determines to register any Public Offering of any of the Common Stock
Equivalents for the account of any JWC Holder under the 1933 Act in
connection with the public offering of such securities, the Company
shall, at each such time, promptly give each Holder written notice of
such determination no later than 30 days before its intended filing
with the SEC. Upon the written request of any Holder received by the
Company within 10 days after the giving of any such notice by the
Company, the Company shall use its best efforts to cause to be
registered under the 1933 Act all of the Registrable Securities of such
Holder that such Holder has requested be registered. If the total
amount of Registrable Securities that are to be included by the Company
in such registration exceeds the amount of securities that the
underwriters reasonably believe compatible with the success of the
offering, then the Company will include in such registration only the
number of securities which in the opinion of such underwriters can be
sold, in the following order:
(i) first, all securities of the Company to
be offered for the account of the Company; and
(ii) second, the Registrable Securities, pro
rata based on the number of Registrable Securities held by
each Holder seeking to have Registrable Securities included
in such registration.
3.3 Obligations of the Company.
(a) Whenever required under Section 3.2 hereof to use its best
efforts to effect the registration of any Registrable Securities, the
Company shall:
(i) prepare and file with the SEC a
registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration
statement to become and remain effective, including, without
limitation, filing of post-effective amendments and supplements
to any registration statement or prospectus necessary to keep
the registration statement current;
(ii) as expeditiously as reasonably possible,
prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in
connection with such registration statement as may be necessary
to comply with the provisions of the 1933 Act with respect to
the disposition of all securities covered by such registration
statement and to keep each registration and qualification under
this Agreement effective (and in compliance with the 1933 Act)
by such actions as may be necessary or appropriate for a period
of 90 days after the effective date of such registration
statement (unless all securities covered by such registration
statement are sooner disposed of), all as requested by such
Holder or Holders;
(iii) as expeditiously as reasonably possible
furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they
may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them in accordance with the
plan of distribution provided for in such registration
statement;
(iv) as expeditiously as reasonably possible
use its best efforts to register and qualify the securities
covered by such registration statement under such securities
or "blue sky" laws of such jurisdictions as shall be reasonably
appropriate for the distribution of the securities covered by
the registration statement; provided that the Company shall not
be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to
service of process in any such jurisdiction; and further
provided that (anything in this Agreement to the contrary
notwithstanding with respect to the bearing of expenses) if
any jurisdiction in which the securities shall be qualified
shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne
by selling stockholders, then such expenses shall be payable
by selling stockholders pro rata, to the extent required by
such jurisdiction;
(v) notify each seller of Registrable
Securities covered by such registration statement, at any time
when a prospectus relating thereto is required to be delivered
under the 1933 Act, upon discovery that, or upon the happening
of any event as a result of which, the prospectus included in
such registration statement, as then in effect, includes an
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances under which they were made, and at the request of
any such seller or Holder promptly prepare to furnish to such
seller or Holder a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made;
(vi) otherwise use its best efforts to comply
with all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least 12 months but not more than 18 months, beginning with
the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy
the provisions of Section ll(a) of the 1933 Act, and will
furnish to each such seller at least 2 Business Days prior to
the filing thereof a copy of any amendment or supplement to
such registration statement or prospectus and shall not file
any thereof to which any such seller shall have reasonably
objected, except to the extent required by law, on the grounds
that such amendment or supplement does not comply in all
material respects with the requirements of the 1933 Act or of
the rules or regulations thereunder;
(vii) provide and cause to be maintained a
transfer agent and registrar for all Registrable Securities
covered by such registration statement from and after a date
not later than the effective date of such registration
statement; and
(viii) use its best efforts to list all
Registrable Securities covered by such registration statement
on any securities exchange on which any class of Registrable
Securities is then listed.
(b) The Company will furnish to each Holder on whose behalf
Registrable Securities have been registered pursuant to this Agreement
a signed counterpart, addressed to such Holder, of (i) an opinion of
counsel for the Company dated the effective date of such registration
statement, and (ii) a so-called "cold comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included in such registration statement, and such
opinion of counsel and accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters
delivered to underwriters in connection with underwritten public
offerings of securities.
(c) If the Company at any time proposes to register any of its
securities under the Securities Act subject to the piggyback
registration rights of the Holders under Section 3.2 hereof, and such
securities are to be distributed by or through one or more
underwriters, then the Company will make reasonable efforts, if
requested by any Holder of Registrable Securities who requests
registration of Registrable Securities in connection therewith pursuant
to Section 3.2 hereof, to arrange for such underwriters to include such
Registrable Securities among the securities to be distributed by or
through such underwriters.
(d) In connection with the preparation and filing of each
registration statement registering Registrable Securities under this
Agreement, the Company will give the Holders of Registrable Securities
on whose behalf such Registrable Securities are to be so registered and
their underwriters, if any, and their respective counsel and
accountants the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with
the SEC, and each amendment thereof or supplement thereto, and will
give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers,
its counsel and the independent public accountants who have certified
its financial statements, as shall be reasonably necessary, in the
opinion of such Holders or such underwriters or their respective
counsel, in order to conduct a reasonable and diligent investigation
within the meaning of the 1933 Act. Without limiting the foregoing,
each registration statement, prospectus, amendment, supplement or any
other document filed with respect to a registration under this
Agreement shall be subject to review and reasonable approval by the
Holders registering Registrable Securities in such registration and by
their counsel.
3.4 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this
Article III that each Holder shall furnish to the Company such
information regarding such Holder, the Registrable Securities held by
such Holder, and the intended method of disposition of such securities
as the Company shall reasonably request and as shall be required in
connection with the action to be taken by the Company.
3.5 Expenses of Registration. All expenses incurred in
connection with a registration pursuant to Section 3.2 hereof
(excluding underwriters' discounts and commissions, which shall be
borne by the sellers), including without limitation all registration
and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders (which counsel
shall be selected by the holders of a majority in interest of such
Holders based on the number of Registrable Securities included in such
registration) shall be borne by the Company.
3.6 Underwriting Requirements. In connection with any
underwritten registration of Registrable Securities under this
Agreement, the Company shall, if requested by the Company or the
underwriters for any Registrable Securities included in such
registration, enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such
representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with
respect to secondary distributions, including, without limitation,
provisions relating to indemnification and contribution. The Holders
on whose behalf Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement, and
the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall
be also made to and for the benefit of such Holders of Registrable
Securities. Such underwriting agreement shall comply with Section 3.7.
3.7 Indemnification. In the event any Registrable Securities
are included in a registration statement pursuant to this Article III:
(a) To the fullest extent permitted by law, the Company will
indemnify and hold harmless each Holder joining in a registration, any
underwriter (as defined in the 0000 Xxx) for it, and each Person, if
any, who controls such Holder or such underwriter within the meaning of
the 1933 Act, from and against any losses, claims, damages, expenses
(including reasonable attorneys' fees and expenses and reasonable costs
of investigation) or liabilities, joint or several, to which they or
any of them may become subject under the 1933 Act or otherwise, insofar
as such losses, claims, damages, expenses or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based on any untrue or alleged untrue statement of any
material fact contained in such registration statement including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made
therein not misleading in light of the circumstances under which they
were made or arise out of any violation by the Company of any rule or
regulation promulgated under the 1933 Act applicable to the Company and
relating to action or inaction required of the Company in connection
with any such registration; provided that the indemnity agreement
contained in this Section 3.7(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld), nor shall the Company be
liable to anyone for any such loss claim, damage, liability or action
to the extent that it arises out of or is based upon an untrue
statement or omission made in connection with such registration
statement, preliminary prospectus, final prospectus or amendments or
supplements thereto in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by such Holder, underwriter or control person. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Holder, underwriter or
control person and shall survive the transfer of such securities by
such Holder.
(b) To the fullest extent permitted by law, each Holder
joining in a registration shall indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
registration statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act, and each agent and any underwriter
for the Company and any Person who controls any such agent or
underwriter and each other Holder and any Person who controls such
Holder (within the meaning of the 0000 Xxx) against any losses, claims,
damages or liabilities to which the Company or any such director,
officer, control person, agent, underwriter or other Holder may become
subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based
upon an untrue statement of any material fact contained in such
registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto,
or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or omission was made in such
registration statement, preliminary or final prospectus, or amendments
or supplements thereto, in reliance upon and in conformity with written
information furnished by such Holder with respect to such Holder
expressly for use in connection with such registration, and such Holder
shall reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, control person, agent,
underwriter or other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action; provided
that the indemnity obligation of each such Holder hereunder shall be
limited to and shall not exceed the proceeds actually received by such
Holder upon a sale of Registrable Securities pursuant to a registration
statement hereunder; provided, further that the indemnity agreement
contained in this Section 3.7(b) shall not apply to amounts paid in
settlements effected without the consent of such Holder (which consent
shall not be unreasonably withheld). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer, Holder,
underwriter or control person and shall survive the transfer of such
securities by such Holder.
(c) Any person seeking indemnification under this Section 3.7
will (i) give prompt notice to the indemnifying party of any claim with
respect to which it seeks indemnification, but the failure to give such
notice will not affect the right to indemnification hereunder, (except
to the extent the indemnifying party is materially prejudiced by such
failure) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such
indemnifying party, and other indemnifying parties similarly situated,
jointly to assume the defense of such claim with counsel reasonably
satisfactory to the parties. In the event that the indemnifying
parties cannot mutually agree as to the selection of counsel, each
indemnifying party may retain separate counsel to act on its behalf and
at its expense. The indemnified party shall in all events be entitled
to participate in such defense at its expense through its own counsel.
If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be
unreasonably withheld). No indemnifying party will consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such
claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the reasonable
fees and expenses of such additional counsel.
(d) If for any reason the foregoing indemnification is
unavailable to any party or insufficient to hold it harmless as and to
the extent contemplated by the preceding paragraphs of this Section
3.7, then each indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim,
damage expense or liability in such proportion as is appropriate to
reflect the relative benefits received by the applicable indemnifying
party, on the one hand, and the applicable indemnified party, as the
case may be, on the other hand, and also the relative fault of the
applicable indemnifying party and any applicable indemnified party, as
the case may be, as well as any other relevant equitable
considerations.
3.8 Rule 144. With a view to making available to the Holders
and their transferees the benefits of Rule 144 and Rule 144A under the
1933 Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public
without registration, the Company agrees to use its best efforts to
take all action that may be required as a condition to the availability
after a public offering of Rule 144, Rule 144A or such other rules or
regulations, including without limitation to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times subsequent to 90
days after the effective date of the first registration statement
covering an underwritten public offering filed by the Company;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act
(including, without limitation, under Section 13 or Section 15 of the
0000 Xxx); and
(c) furnish to any Holder forthwith upon request a written
statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after 90 days after the effective
date of said first registration statement filed by the Company), and of
the 1933 Act and the 1934 Act (at any time after it has become subject
to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents
so filed by the Company as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC permitting the selling of
any such securities without registration.
3.9 Market Stand-Off Agreement. Each Stockholder agrees not
to sell or otherwise transfer or dispose of any Common Stock (or other
securities) of the Company at the time held by such Stockholder (other
than securities included in the applicable registration statement or
shares purchased in the public market after the effective date of
registration) or any interest or future interest therein during such
period (not to exceed 180 days) as is mutually acceptable to a majority
in interest of Stockholders and the underwriter following the effective
date of each registration statement of the Company filed under the 1933
Act which includes securities of the Company to be sold to the public
in an underwritten offer.
ARTICLE IV
Certain Miscellaneous Other Provisions
4.1 Remedies. The parties to this Agreement acknowledge and
agree that the covenants of the Company and the Stockholders set forth
in this Agreement may be enforced in equity by a decree requiring
specific performance. Without limiting the foregoing, if any dispute
arises concerning the sale or other disposition of any of the
securities of the Company subject to this Agreement or concerning any
other provisions hereof or the obligations of the parties hereunder,
the parties to this Agreement agree that an injunction may be issued in
connection therewith. Such remedies shall be cumulative and
non-exclusive and shall be in addition to any other rights and remedies
the parties may have under this Agreement or otherwise.
4.2 Entire Agreement; Amendment; Termination.
(a) This Agreement, together with the Acquisition Agreement,
sets forth the entire understanding of the parties, and supersedes all
prior agreements and all other arrangements and communications, whether
oral or written, with respect to the subject matter hereof.
(b) The Schedule of Stockholders may be amended in writing by
the Company to reflect changes in the composition of the Stockholders
and changes in their addresses or telecopy numbers that may occur from
time to time as a result of Permitted Transfers or Transfers permitted
under Article II hereof. Amendments to the Schedule of Stockholders
reflecting Permitted Transfers or Transfers permitted under Article II
hereof shall become effective when the amended Schedule of
Stockholders, and a copy of the Agreement as executed by any new
transferee in accordance with Section 4.14, are filed with the Company.
(c) Any other amendment to this Agreement shall be in writing
and shall require the written consent of (a) the Company, (b) either
the JWC Representative or the holders of a majority of Common Stock
Equivalents at the time held by the JWC Holders, and, (c) if adverse to
the interests of a particular Stockholder or Stockholder Group, that
Stockholder or the holders of a majority of the Common Stock
Equivalents at the time held by that Stockholder Group, as the case may
be.
(d) Notwithstanding the foregoing provisions of this Section
4.2, this Agreement may be terminated at any time upon the written
consent of (i) the Company and (ii) the holders of a majority of the
Common Stock Equivalents at the time held by the Management Holders and
the JWC Holders (or the JWC Representative), voting together as a
single group.
4.3 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all
respects as if the invalid or unenforceable provision were omitted.
4.4 Notices. All notices, consents and other communications
required, or contemplated under this Agreement shall be in writing and
shall be delivered in the manner specified herein or, in the absence of
such specification, shall be deemed to have been duly given (i) 3
Business Days after mailing by first class certified mail, postage
prepaid, (ii) when delivered by hand, (iii) upon confirmation of
receipt by telecopy, or (iv) 1 Business Day after sending by overnight
delivery service, to the respective addresses of the parties set forth
below:
(a) For notices and communications to the Company:
c/o X.X. Childs Associates, L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
(b) For notices and communications to the Stockholders, to the
respective addresses set forth in the Schedule of Stockholders.
(c) With a copy in the case of the JWC Holders to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
By notice complying with the foregoing provisions of this Section 4.4,
each party shall have the right to change the mailing address for
future notices and communications to such party.
4.5 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and to
their respective transferees, successors, assigns, heirs and
administrators; provided that the rights under this Agreement may not
be assigned except as expressly provided herein. No such assignment
shall relieve an assignor of its obligations hereunder.
4.6 Termination. Without affecting any other provision of
this Agreement requiring termination of any rights in favor of any
Stockholder, Permitted Transferee or any other transferee of Common
Stock Equivalents, the provisions of Articles II and III of this
Agreement shall terminate as to such Stockholder, Permitted Transferee
or other transferee, when, pursuant to and in accordance with this
Agreement, such Stockholder, Permitted Transferee or other transferee,
as the case may be, no longer owns any Common Stock Equivalents.
4.7 Recapitalization, Exchanges, etc. The provisions of this
Agreement shall apply, to the full extent set forth herein with respect
to Common Stock Equivalents, to any and all shares of capital stock of
the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued
in respect of, in exchange for, or in substitution of the Common Stock
Equivalents, by reason of a stock dividend, stock split, stock
issuance, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or otherwise. Upon the
occurrence of any such events, amounts hereunder shall be appropriately
adjusted.
4.8 JWC Representative. Each JWC Holder hereby designates and
appoints (and each Permitted Transferee of each such JWC Holder shall
be deemed to have so designated and appointed) Xxxxxx X. Xxxxx, with
full power of substitution (the "JWC Representative") the
representative of each such Person to perform all such acts as are
required, authorized or contemplated by this Agreement to be performed
by any such Person and hereby acknowledges that the JWC Representative
shall be the only Person authorized to take any action so required,
authorized or contemplated by this Agreement by each such Person. Each
such Person further acknowledges that the foregoing appointment and
designation shall be deemed to be coupled with an interest and shall
survive the death or incapacity of such Person. Each such person
hereby authorizes (and each Permitted Transferee shall be deemed to
have authorized) the other parties hereto to disregard any notice or
other action taken by such Person pursuant to this Agreement except for
the JWC Representative. The other parties hereto are and will be
entitled to rely on any action so taken or any notice given by the JWC
Representative and are and will be entitled and authorized to give
notices only to the JWC Representative for any notice contemplated by
this Agreement to be given to any such Person. A successor to the JWC
Representative may be chosen by the holders of a majority of the Common
Stock Equivalents at the time held by the JWC Holders; provided that
written notice thereof is given by the successor JWC Representative to
the Company, the Management Holders and the other JWC Holders. Each of
the JWC Holders agrees to be bound by all of the provisions of
paragraph 3.07 of the First Amended and Restated Agreement of Limited
Partnership of X.X. Childs Equity Partners, L.P. dated as of December
20, 1995 (the "Equity Partners Agreement") including without
limitation, the provisions of paragraph 3.07(b) thereof, and further
agrees to be bound by the confidentiality provisions set forth in
paragraph 14.08 of the Equity Partners Agreement as if such JWC Holder
were a limited partner under the Equity Partners Agreement.
4.9 Action Necessary to Effectuate the Agreement. The parties
hereto agree to use their reasonable best efforts to take or cause to
be taken all such corporate and other action as may be necessary to
effect the intent and purposes of this Agreement.
4.10 Purchase for Investment; Legend on Certificate. Each
Stockholder acknowledges that all of the securities of the Company held
by such Stockholder are being (or have been) acquired for investment
and not with a view to the distribution thereof and that no transfer,
hypothecation or assignment of any such securities (including the
Common Stock for which such securities may be exercisable or
exchangeable or into which such securities may be convertible) may be
made except in compliance with applicable federal and state securities
laws. All the certificates or other instruments representing any of
such securities (including the Common Stock for which such securities
may be exercisable or exchangeable or into which such securities may be
convertible) which are now or hereafter held by any Stockholder shall
be subject to the terms of this Agreement and shall have endorsed in
writing, stamped or printed, thereon the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF
_____________ ___, 1997, AS AMENDED FROM TIME TO TIME, A COPY OF
WHICH IS ON FILE WITH AND AVAILABLE FROM THE SECRETARY OF THE
COMPANY."
4.11 Effectiveness of Transfers. Any Subject Securities
transferred by a Stockholder (other than pursuant to an effective
registration statement under the 1933 Act or a Rule 144 Transaction)
shall be held by the transferee thereof pursuant to this Agreement.
Such transferee shall, except as otherwise expressly stated herein,
have all the rights and be subject to all of the obligations of a
Stockholder under this Agreement automatically and without requiring
any further act by such transferee or by any parties to this Agreement.
Without affecting the preceding sentence, if such transferee is not a
Stockholder on the dates of such transfer, then such transferee, as a
condition to such transfer, shall confirm such transferee's obligations
hereunder in accordance with Section 4.12 hereof. The Subject
Securities shall not be transferred on the Company's books and records,
and no transfer thereof shall be otherwise effective, unless any such
transfer is made in accordance with the terms and conditions of this
Agreement, and the Company is hereby authorized by all of the
Stockholders to enter appropriate stop transfer notations on its
transfer records to give effect to this Agreement.
4.12 Additional Stockholders. Any Person acquiring any Subject
Securities (except for any acquisition thereof (a) in an offering
registered under the 1933 Act or (b) in a Rule 144 Transaction) shall
on or before the transfer or issuance to it of such Subject Securities,
sign a counterpart signature page hereto in form reasonably
satisfactory to the Company and the JWC Representative and shall
thereby become a party to this Agreement; provided that a transferee
which is a pledgee and within the definition of a Permitted Transferee
shall not be obligated so to agree until foreclosure on its pledge.
The Company shall require each Person acquiring an option, warrant or
other right to purchase shares of Common Stock under any option or
other equity participation plan to execute a counterpart signature page
hereto.
4.13 No Waiver. No course of dealing and no delay on the part
of any party hereto in exercising any right, power or remedy conferred
by this Agreement shall operate as a waiver thereof or otherwise
prejudice such party's rights, powers and remedies. No single or
partial exercise of any rights, powers or remedies conferred by this
Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
4.14 Counterparts. This 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.
4.15 Headings, etc. All headings and captions in this
Agreement are for purposes of reference only and shall not be construed
to limit or affect the substance of this Agreement. Words used in this
Agreement, regardless of the gender and number used, will be deemed and
construed to include any other gender, masculine, feminine, or neuter,
and any other number, singular or plural, as the context requires. As
used in this Agreement, the word "including" is not limiting, and the
word "or" is not exclusive. The words "this Agreement", "hereto",
"herein", "hereunder", "hereof", and words or phrases of similar import
refer to this Agreement as a whole, together with any and all Schedules
and Exhibits hereto, and not to any particular article, section,
subsection, paragraph, clause or other portion of this Agreement.
4.16 Governing Law. This Agreement shall be construed under
and governed by the substantive and procedural laws of The Commonwealth
of Massachusetts applicable to a contract executed in and wholly
performed within Massachusetts.
4.17 Effective Time. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall become binding and
effective as of the date of the Closing (as defined in the Merger
Agreement).
[Signatures on Following Pages]
UNIVERSAL HOSPITAL SERVICES, INC.
Stockholders' Agreement
Counterpart Signature Page
IN WITNESS WHEREOF, the parties have executed this Agreement as
an instrument under SEAL as of the date first set forth above.
THE COMPANY:
UNIVERSAL HOSPITAL
SERVICES, INC.
By:_______________________________
Name:
Title:
UNIVERSAL HOSPITAL SERVICES, INC.
Stockholders' Agreement
Additional Counterpart Signature Page
THE MANAGEMENT HOLDERS:
_________________________________
Print Name:
UNIVERSAL HOSPITAL SERVICES, INC.
Stockholders' Agreement
Additional Counterpart Signature Page
THE JWC HOLDERS:
X.X. CHILDS EQUITY
PARTNERS, L.P.
By: X.X. Childs Advisors, L.P.,
its general partner
By: X.X. Childs Associates, L.P.,
its general partner
By: X.X. Childs Associates, Inc.,
its general partner
____________________________ By: _____________________________
Xxxxxx X. Xxxxx Title:
____________________________
Print Name:
By executing above, each of the foregoing JWC Holders
acknowledges that, pursuant to Section 4.8 of this Stockholders'
Agreement, each of the foregoing JWC Holders has designated and
appointed Xxxxxx X. Xxxxx as its sole representative to perform all
acts as are required, authorized or contemplated by this Stockholders'
Agreement, all as set forth in such Section 4.8.
EXHIBIT A
UNIVERSAL HOSPITAL SERVICES, INC.
STOCKHOLDERS' AGREEMENT
Schedule of Stockholders
EXHIBIT B
UNIVERSAL HOSPITAL SERVICES, INC.
STOCKHOLDERS' AGREEMENT
Form of Promissory Note
(see attached)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH APPLICABLE STATE
LAW.
AS PROVIDED IN THIS NOTE, PAYMENT OF PRINCIPAL OF AND INTEREST ON THIS
NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO ALL "SENIOR
DEBT" (AS SUCH TERM IS DEFINED IN THIS NOTE).
UNIVERSAL HOSPITAL SERVICES, INC.
SUBORDINATED NOTE DUE 20__
Boston, Massachusetts
U.S.$ _________ _____________ __, 19
FOR VALUE RECEIVED, the undersigned, Universal Hospital
Services, Inc., a Minnesota corporation (the ''Company''), hereby
promises to pay to __________, a __________ with a business address at
_______________(facsimile number __________) (the "holder"), on [I.E.
10 YEARS AFTER THE DATE OF ISSUANCE], the principal amount of
__________United States Dollars (U.S.$__________ ) or such part thereof
as then remains unpaid, with interest (computed on the basis of a
365/6-day year and the actual number of days elapsed) on the unpaid
principal amount hereof at a rate per annum equal to the Applicable
Rate (as defined in Section 4) from the date hereof payable
semiannually on the last day of May and November in each year (each
such date is hereinafter referred to as a "Payment Date"), beginning on
__________, 19__, until such principal amount shall become due and
payable (whether at maturity or a date fixed for payment or prepayment
or by acceleration or otherwise).
1. The Note. All payments of principal, interest and other
amounts payable on or in respect of this Note or the indebtedness
evidenced hereby shall be made at the address of the holder specified
herein. All payments received in respect of the indebtedness evidenced
by this Note shall, subject to the provisions of Section 5 hereof, be
applied first to interest hereon accrued to the date of payment, then
to the payment of other amounts (except principal) at the time due and
unpaid hereunder, and finally to the unpaid principal hereof.
If any payment on this Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to any payment of principal,
interest thereon shall be payable at the then Applicable Rate during
such extension.
2. Payment Provisions.
2.1 On __________ __, ____ [I.E. THE MATURITY DATE] or on
any accelerated maturity of this Note, the Company will pay to the
holder hereof the entire principal amount of this Note then
outstanding, without premium, but together with accrued and unpaid
interest thereon. The Company may at any time or from time to time
prepay all or any part of the outstanding principal amount of this Note
at the principal amount thereof, without premium, but together with
accrued and unpaid interest thereon.
2.2 Except as otherwise expressly provided herein,
payments on account of principal and interest with respect to this Note
shall be made by mailing a check or money order to the holder hereof at
the address of such holder appearing herein and without the necessity
of any presentment or notation of payment, except upon payment in full,
and the amount of principal so paid on this Note shall be regarded as
having been retired and canceled at the time of the mailing of such
payment. The holder of this Note, before any transfer thereof, shall
make a notation thereon of the date to which interest has been paid and
of all principal payments theretofore made thereon and shall in writing
notify the Company of the name and address of the transferee. Anything
herein to the contrary notwithstanding, the Corporation may elect to
pay interest payable on any Payment Date occurring on or before
__________ __, ____, in lieu of cash interest payments, by issuing and
delivering a note (each, a "Paid-in-Kind Interest Note") to the holder
hereof having an aggregate original principal amount equal to the
accrued and unpaid interest on this Note and otherwise containing the
same terms and provisions as this Note.
3. Defaults.
3.1 Events of Default. If any one or more Events of
Default shall occur and be continuing, then and in each and every such
case, the holder may proceed to protect and enforce his rights by suit
in equity, action at law and/or other appropriate proceeding either for
specific performance of any covenant or condition contained in this
Note, or in aid of the exercise of any power granted in this Note, and
may by notice in writing to the Company declare all or any part of the
unpaid balance of this Note then outstanding to be forthwith due and
payable without presentation, protest or further demand or notice of
any kind, all of which are hereby expressly waived, and the holder may
proceed to enforce payment of such balance or part thereof in such
manner as he may elect, except in each and every such case to the
extent the foregoing rights of the holder hereof are restricted by the
provisions of Section 5 hereof.
3.2 Annulment of Defaults. An Event of Default shall not
be deemed to have occurred or to be in existence for any purpose of
this Note if the holder shall have waived such Event of Default in
writing or stated in writing that the same has been cured to such
holder' s satisfaction, but no such waiver shall extend to or affect
any subsequent Event of Default or impair any of the rights of the
holder upon the occurrence thereof.
3.3 Waivers. The Company hereby waives to the extent not
prohibited by applicable law (a) all presentments, demands for
performance, notices of nonperformance (except to the extent required
by the provisions hereof or of any instrument executed and delivered in
connection with this Note), protests, notices or protest, and notices
of dishonor in connection with this Note.
4. Definitions. For purposes of this Note:
4.1 "Applicable Rate" shall mean, for any period, the
weighted average of the daily interest rates for such period applicable
to all borrowings by the Company outstanding during such period under
the Credit Agreement, as determined by the Company in accordance with
sound financial practice; provided, however, that if the Company is not
party to any Credit Agreement during any (or any portion of any)
period, the Applicable Rate during such (or such portion of such)
period shall be equal to the Prime Rate plus one percent (1%).
Notwithstanding anything in this Note to the contrary, the interest
rate hereunder shall not exceed the maximum legal rate.
4.2 "Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq.,
and the rules and regulations thereunder, all as from time to time in
effect, or any successor law, rules or regulations and any reference to
any statutory or regulatory provision shall be deemed to be a reference
to any successor statutory or regulatory provision.
4.3 "Business Day" shall mean any day other than a
Saturday or a Sunday or a day on which commercial banking institutions
in Boston, Massachusetts or New York, New York are authorized or
required by applicable law to be closed.
4.4 "Code" shall mean the Internal Revenue Code of 1986,
as amended, or any successor federal law of similar import.
4.5 "Credit Agreement" shall mean that Credit Agreement
dated as of [ ], 1997 by and among the Company, [
], the lenders from time to time party thereto, __________, as
administrative agent, and [ ], as Collateral Agent,
as amended and in effect from time to time.
4.6 "Debt" shall mean (a) indebtedness for borrowed money,
(b) obligations evidenced by bonds, debentures, notes or other similar
instruments, (c) obligations to pay the deferred purchase price of
property (other than trade accounts payable), (d) obligations as lessee
under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capitalized
leases, and (e) obligations under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise assure a creditor against loss in
respect of, indebtedness or obligations of the kinds referred to in
clauses (a) through (d) above.
4.7 "Event of Default" shall mean the occurrence and
continuance of any of the following events:
(a) The Company shall have failed, for a period of
thirty (30) days after written notice thereof, to make any
principal, interest, fee or other payment on any of the
indebtedness evidenced by this Note or pursuant to any provision
of this Note (notwithstanding that such payment shall have been
suspended pursuant to the subordination provisions hereof); or
(b) The Company shall have failed duly to observe or
perform in any material respect any other covenant, agreement or
provision contained in this Note other than those referred to in
subdivision (a) above, and such failure shall have continued for a
period of thirty (30) days after written notice thereof from the
holder of this Note to the Company; or
(c) The Company shall:
(i) commence a voluntary case under the
Bankruptcy Code or authorize, by appropriate proceedings
of its board of directors, the commencement of such a
voluntary case;
(ii) (A) have filed against it a petition
commencing an involuntary case under the Bankruptcy Code
that shall not have been dismissed within sixty (60)
days after the date on which such petition is filed, or
(B) file an answer or other pleading within such 60-day
period admitting or failing to deny the material
allegations of such a petition or seeking, consenting or
to acquiescing in the relief therein provided, or (C)
have entered against it an order for relief in any
involuntary case commenced under the Bankruptcy Code;
(iii) seek relief as a debtor under any
applicable law, other than the Bankruptcy Code, of any
jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or
alteration of the rights of creditors, or consent to or
acquiesce in such relief;
(iv) have entered against it an order by
a court of competent jurisdiction (A) finding it to be
bankrupt or insolvent, (B) ordering or approving its
liquidation or reorganization as a debtor or any
modification or alteration of the rights of its
creditors or (C) assuming custody of, or appointing a
receiver or other custodian for all or a substantial
portion of its property; or
(v) make an assignment for the benefit
of, or enter into a composition with, its creditors, or
appoint, or consent to the appointment or, or suffer to
exist a receiver or other custodian for, all or a
substantial portion of its property.
4.8 "Obligations" means any principal, interest (including
post-petition interest, whether or not allowed as a claim in any
proceeding), penalties, fees, costs, expenses, indemnifications,
reimbursements, damages and other liabilities payable under or in
connection with any Debt.
4.9 "Payment Date" shall have the meaning given such term
in the first paragraph of this Note.
4.10 "Person" shall mean any natural individual or any
corporation, firm, limited liability company, unincorporated
organization, association, partnership, a trust (inter vivos or
testamentary), an estate of a deceased individual, business trust,
joint stock company, joint venture or other organization, entity or
business, or any governmental authority.
4.11 "Prime Rate" shall mean the prime rate in effect as
announced from time to time by Chase Manhattan Bank.
4.12 "Senior Bank Debt" means all Obligations outstanding
under or in connection with the Credit Agreement.
4.13 "Senior Bank Documents" shall mean the Credit
Agreement and any note, mortgage, security agreement, pledge agreement,
guaranty or other agreement or instrument now or hereafter evidencing,
securing or executed in connection with any Senior Bank Debt, and any
credit agreement, note, mortgage, security agreement, pledge agreement,
guaranty or other agreement or instrument hereafter executed in
connection with any extension, renewal, refunding or refinancing
thereof.
4.14 "Senior Debt" means (a) the Senior Bank Debt and (b)
any other Debt, unless the instrument under which such Debt is incurred
expressly provides that it is on a parity with or subordinated in right
of payment to this Note. Notwithstanding anything to the contrary in
the foregoing, Senior Debt shall not include (i) any liability for
federal, state, local or other taxes owed or owing by the Company, (ii)
any Debt of the Company to any of its Subsidiaries or other Affiliates
or (iii) any trade payables.
4.15 "Senior Debt Default" shall have the meaning given
such term in Section 5.2 hereof.
4.16 "Subordinated Distributions" shall have the meaning
given such term in Section 5.1 hereof.
4.17 "Subordinated Payments" shall have the meaning given
such term in Section 5 hereof.
5. Subordination. The payment of principal (whether at
maturity, upon mandatory or voluntary prepayment, or upon declaration
or otherwise) of, interest on, and all fees, expenses, indemnities and
other amounts payable with respect to, this Note (collectively, the
"Subordinated Payments") are hereby subordinated and junior in right of
payment, to the extent and in the manner set forth in this Section to
all Senior Debt.
This Section shall constitute a continuing offer to all
persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Debt, whether now outstanding or hereafter
created, incurred, assumed or guaranteed, and such provisions are made
for the benefit of the holders (which term shall include owners, if not
otherwise holders, of Senior Debt) of Senior Debt, and such holders of
Senior Debt are made obligees hereunder and beneficiaries hereof (with
the same force and effect as if named herein) and any one or more of
them may enforce such provisions. This Section is binding upon the
Company and its successors and assigns and the holders, from time to
time, of this Note, each of whom, by his acceptance of this Note,
agrees to be bound by and comply with all of the provisions of this
Section. Notwithstanding any provision of this Note to the contrary,
neither this Section nor any of its provisions may be changed or waived
to adversely affect or impair in any way whatsoever the rights of the
holders of Senior Debt, except with the prior written consent of the
holders of the Senior Debt at the time outstanding.
5.1 Subordinated Distributions. Upon any payment or
distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities, by way of set-off
or otherwise (including any collateral, whether the proceeds thereof or
in kind, at any time securing this Note and including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other indebtedness of the Company being subordinated to
the payment of this Note) of the Company (all such payments and
distributions being referred to collectively as "Subordinated
Distributions"), upon any dissolution, winding up, liquidation (partial
or complete) or reorganization of the Company (whether voluntary or
involuntary and whether in bankruptcy, insolvency, receivership or
other proceedings, or upon an assignment for the benefit of creditors
or any other marshaling of the assets and liabilities of the Company or
otherwise), each of the Company and the holder of this Note, by
acceptance hereof, covenants and agrees that:
(a) all Senior Debt shall first be paid in full, or
provision made for such payment, in accordance with the terms of
such Senior Debt, before any payment or distribution of any
Subordinated Distribution is made on account of any Subordinated
Payments and before the holder of this Note shall be entitled to
retain any amounts so paid or distributed in respect thereof;
(b) any payment or distribution of any Subordinated
Distribution to which the holder of this Note would be entitled
except for the provisions of this Section, shall be paid or
delivered by the Company or any debtor, custodian, receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, directly to the holders of
Senior Debt or their representative or representatives (in
accordance with any certificate referred to in this Section) or to
the trustee or agent for the holders of such Senior Debt, as their
respective interests may appear, to the extent necessary to pay in
full all Senior Debt remaining unpaid in accordance with the terms
of such Senior Debt, after giving effect to any concurrent payment
or distribution to or for the holders of such Senior Debt, before
any payment or distribution is made to the holder of this Note;
and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of any Subordinated Distribution shall
be received by the holder of this Note before all Senior Debt is
paid in full, or provision made for the payment thereof, in
accordance with the terms of such Senior Debt, such payment or
distribution shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of such Senior Debt or
their representative or representatives, or to the trustee or
agent for the holders of such Senior Debt, as their respective
interests may appear, to the extent necessary to pay in full all
Senior Debt remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior
Debt.
The Company shall give prompt written notice to the holder of
this Note of any declaration of any Senior Debt as due and payable
before its stated maturity and of any event which pursuant to this
Section would prevent payment or distribution of any Subordinated
Distribution or any Subordinated Payment with respect to this Note.
The holder of this Note shall be entitled to assume that no such event
has occurred and shall not at any time be charged with knowledge of the
existence of any event which would prohibit the making of any payment
to it, unless and until such holder shall have received written notice
thereof from the Company or from the holders of Senior Debt or any
trustee, agent or representative thereof; and prior to the receipt of
any such written notice the holder of this Note shall be entitled to
assume conclusively that no such event exists, without, however,
limiting any such rights of holders of Senior Debt under this Section
to recover from the holder of this Note any payment made to any such
holder which it is not entitled under this Section to retain.
Upon any payment or distribution of any Subordinated
Distribution, the holder of this Note shall be entitled to rely upon an
order or decree of any court of competent jurisdiction in which such
bankruptcy, insolvency, reorganization, liquidation, receivership or
other proceeding is pending, or a certificate of the debtor, custodian,
receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, to the holder of this Note,
for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Debt and other
indebtedness of the Company, the amount distributed thereon and all
other facts pertinent thereto or to this Section.
The holder of this Note shall be entitled to rely on the
delivery to it of a written notice by a Person representing himself to
be a holder of Senior Debt to establish that such notice has been given
by a holder of Senior Debt.
5.2 No Payments Under Certain Circumstances.
(a) No payment (by purchase of this Note or
otherwise) shall be made or agreed to be made, directly or
indirectly, in cash, property or securities (other than
Paid-in-Kind Interest Notes), or by way of set-off or otherwise,
by the Company of any Subordinated Payment with respect to this
Note if, at the time of such payment or immediately after giving
effect thereto,
(i) (A) the Company shall be in default
in the payment of any principal of, premium, if any, or
interest on, or any other amounts due with respect to,
any Senior Debt, and all applicable grace or cure
periods shall have expired (a "Senior Debt Payment
Default") or (B) there shall have occurred and be
continuing any default (other than a Senior Debt Payment
Default) with respect to any Senior Debt and all
applicable grace or cure periods shall have expired (a
"Senior Debt Non-Payment Default", and including any
Senior Debt Payment Default, a "Senior Debt Default"),
which Senior Debt Non-Payment Default would entitle the
holder of such Senior Debt, or any trustee therefor, to
declare the principal of such Senior Debt, if not
already due and payable, to be due and payable, unless
and until such Senior Debt Non-Payment Default shall
have been cured or waived or shall cease to exist; and
(ii) the Company shall have been notified
in writing by the holder of such Senior Debt, or any
trustee therefor, of such Senior Debt Payment Default or
Senior Debt Non-Payment Default (a "Senior Debt Payment
Default Notice" and "Senior Debt Non-Payment Default
Notice," respectively, collectively a "Senior Debt
Default Notice").
(b) The Company shall immediately deliver to the
holder of this Note a copy of any Senior Debt Default Notice
received by the Company.
(c) If notwithstanding the foregoing provisions of
this Section 5.2, the Company shall make any Subordinated Payment
prohibited by the provisions of this Section, then, except as
hereinafter in this Section otherwise provided, unless and until
full payment of all amounts then due for principal of, sinking
fund, if any, premium, if any, and interest on, and all other
amounts payable with respect to, Senior Debt has been made or duly
provided for in accordance with the terms of such Senior Debt, or
unless and until any such default or Senior Debt Default shall
have been cured or waived or shall cease to exist, such prohibited
Subordinated Payment shall be held in trust for the benefit of,
and shall be paid over or delivered, in the form received and
without interest, to the holders of Senior Debt or their
respective representative or to the trustee or agent for the
holders of such Senior Debt, as their respective interests may
appear, to the extent necessary to pay in full all principal of,
premium, if any, and interest on, and all other amounts payable
with respect to, Senior Debt, to the extent any of the same are
then due after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
(d) Unless and until written notice of such event
shall be given to the holder of this Note at its address set forth
on the register maintained by the Company by or on behalf of any
holder of Senior Debt or by the Company, the holder of this Note
shall be entitled to conclusively presume that no event exists
which would prohibit the making of any payment to the holder of
this Note.
5.3 Standstill.
(a) Acceleration. No holder of this Note shall take
any action to accelerate the maturity of the indebtedness
evidenced by this Note unless the Senior Debt shall have been paid
in full or all Senior Debt shall theretofore have become due and
payable.
(b) Remedies. No holder of this Note as such will
commence any action or proceeding against the Company to recover
all or any part of any indebtedness evidenced by this Note or
bring or join with any creditor in bringing, unless the holders of
the Senior Debt then outstanding shall join therein, any
proceeding against the Company under any bankruptcy,
reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation or insolvency law or statute unless and
until all Senior Debt shall be paid in full, provided that the
foregoing shall not prohibit a holder of this Note from (x)
commencing an action against the Company to recover any amounts
owing to such holder which at the time the Company is entitled to
pay and such holder is entitled to receive under this Note,
including under Section 5.2, or (y) at any time at which the
holder of this Note shall be permitted to accelerate the maturity
of this Note as provided in Section 5.3(a), commencing any
proceeding against the Company under any bankruptcy,
reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation, or insolvency law or statute, provided
further, that any amounts received by the holder of this Note as a
result of any such action or proceeding shall be subject to the
provisions of Sections 5.1 and 5.2 of this Note.
5.4 No Impairment. Nothing contained in this Section or
elsewhere in this Note is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Debt and the
holder of this Note, the obligation of the Company, which is absolute
and unconditional, to pay to the holder of this Note, subject to the
rights of the holders of Senior Debt, all Subordinated Payments with
respect to this Note, as and when the same shall become due and payable
in accordance with its terms (subject to the applicable requirements of
the Code concerning withholding of taxes), or is intended to or shall
affect the relative rights of the holders and creditors of the Company
other than the holders of Senior Debt, nor shall anything herein or
therein prevent the holder of this Note from exercising all remedies
otherwise permitted by applicable law or under the terms of this Note
upon an Event of Default with respect to this Note subject to the
rights, if any, under this Section, of the holders of Senior Debt in
respect of Subordinated Distributions received upon the exercise of any
such remedy.
5.5 Subrogation. Subject to the payment in full of all
Senior Debt at the time outstanding, the holder of this Note shall be
subrogated (equally and ratably with the holders of all indebtedness of
the Company which, by its express terms, ranks on a parity with this
Note and is entitled to like rights of subrogation) to the rights of
the holders of Senior Debt (to the extent of payments or distributions
previously made to such holders of Senior Debt pursuant to the
provisions of this Section) to receive payments or distributions of
assets or securities of the Company payable or distributable to holders
of the Senior Debt until all Subordinated Payments with respect to this
Note shall be paid in full. For purposes of such subrogation, no
payments or distributions on the Senior Debt pursuant to Section 5.1 or
5.2 shall, as between the Company and its creditors other than the
holders of Senior Debt, and the holder of this Note, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Debt, and no payments or distributions to the holder of this Note of
assets or securities by virtue of the subrogation herein provided for
shall, as between the Company and its creditors other than the holders
of Senior Debt and the holder of this Note, be deemed to be a payment
to or on account of this Note. The provisions of this Section are and
are intended solely for the purpose of defining the relative rights of
the holder of this Note, on the one hand, and the holders of the Senior
Debt, on the other hand.
5.6 No Impairment of Rights. No right of any present or
future holder of any Senior Debt of the Company to enforce
subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such
holder of Senior Debt, or by any noncompliance by the Company with the
terms, provisions and covenants of this Note, regardless of any
knowledge thereof with which any such holder of Senior Debt may have or
be otherwise charged.
5.7 Waiver of Notice. The holder of this Note, by his
acceptance thereof, waives all notice of the acceptance of the
subordination provisions contained herein by each holder of Senior
Debt, whether now outstanding or hereafter incurred, and waives
reliance by each such holder upon such provisions.
5.8 Subordination Rights Not Impaired by Acts or Omissions
of Company or Holders of Senior Debt. The holders of Senior Debt may
at any time or from time to time, and in their absolute discretion,
change the manner, place or terms of payment of, change or extend the
time of payment of, renew or alter, any Senior Debt, or amend or
supplement any agreement, instrument or document evidencing any Senior
Debt, or exercise or refrain from exercising any other of their rights
under the Senior Debt including without limitation the waiver of
default thereunder, all without notice to or assent from the holder of
this Note. No right of any present or future holders of any Senior
Debt to enforce subordination as provided herein shall at any time in
any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act by any such holder
or by any noncompliance by the Company with the terms of this Note,
regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
6. Waivers; Amendments. Subject to the provisions of Section 8
hereof, amendments to and modifications of this Note may be made,
required consents and approvals may be granted, compliance with any
term, covenant, agreement, condition or other provision set forth
herein may be omitted or waived, either generally or in a particular
instance and either retroactively or prospectively with, but only with,
the written consent of the Company and the holder.
7. Notices. All notices and other communications which by any
provision of this Note are required or permitted to be given shall be
given in writing and shall be (a) mailed by first-class or express
mail, or by recognized courier service, postage prepaid, (b) sent by
facsimile or other form of rapid transmission, confirmed by mailing (by
first class or express mail, or by recognized courier service, postage
prepaid) written confirmation at substantially the same time as such
rapid transmission, or (c) personally delivered to the receiving party
(which if other than an individual shall be an officer or other
responsible party of the receiving party). All such notices and
communications shall be mailed, sent or delivered as follows: if to
the holder hereof, at the address and/or facsimile number of such
holder appearing on the first page hereof; if to the Company, c/o X.X.
Childs Associates, L.P., Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xx. Xxxx X. Childs (Facsimile No.:
(000) 000-0000); or to such other person(s), facsimile number(s) or
address(es) as the party to receive any such communication or notice
may have designated by written notice to the other party.
8. Section Headings. The headings contained in this Note are
for reference purposes only and shall not in any way affect the meaning
or interpretation of this Note.
9. Governing Law. The validity, interpretation, construction
and performance of this Note shall be governed by, and construed in
accordance with, the internal laws of the state of New York, without
giving effect to any choice or conflict of laws provision or rule that
would cause the application of domestic substantive laws of any other
jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to be
executed as a sealed instrument as of the date first above written.
UNIVERSAL HOSPITAL SERVICES, INC.
By:_______________________
Title:
