EXHIBIT 10.18
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Employment Agreement") dated as of February
14, 2003 ("Effective Date"), between UNIVERSAL HOSPITAL SERVICES, INC., a
Delaware corporation (the "Company"), and XXXXXX X. XXXXXXX (the "Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept employment with the Company, on the terms and conditions set forth in
this Agreement.
Accordingly, the Company and the Executive agree as follows:
1. Position; Duties. The Company agrees to employ the Executive,
and the Executive agrees to serve and accept employment, for the Term (as
defined below) as Senior Vice President, Outsourcing Services of the Company,
subject to the direction and control of the Chief Executive Officer and the
Board of Directors of the Company (the "Board"), and, in connection therewith,
to reside in the Minneapolis, Minnesota area, to oversee and direct the
operations of the outsourcing services of the Company and to perform such other
duties as the Chief Executive Officer and Board may from time to time reasonably
direct. The Executive's place of employment will be in the Minneapolis,
Minnesota area. During the Term, the Executive agrees to devote substantially
all of his time, energy, experience and talents during regular business hours,
and as otherwise reasonably necessary, to such employment, to devote his 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 the Executive receives any compensation
therefor, without the prior written consent of the Board; provided, however,
that Executive shall be permitted to serve as a member of the Board of Directors
of the companies listed on Annex 1; provided, further, that the Executive shall
be entitled to engage in such other business activities as do not unreasonably
conflict with the Executive's duties and responsibilities to the Company
pursuant to this Employment Agreement upon notice to and consent by the Company,
which consent will not be unreasonably withheld. The Executive will not be given
duties inconsistent with his executive position.
2. Term of Employment Agreement. The term of the Executive's
employment hereunder will begin as of the Effective Date and end as of the close
of business on the Date of Termination (as defined in Section 4(h)) (the
"Term").
3. Compensation and Benefits.
(a) Base Salary. The Executive's base salary will be an annual
rate of $230,000, payable in equal bi-weekly installments. The Board will review
the Executive's base salary annually and make adjustments as it deems
appropriate. Necessary withholding taxes, FICA contributions and the like will
be deducted from the Executive's base salary.
(b) Bonus. In addition to the Executive's base salary, the
Executive will be entitled to receive a bonus under the Company's Executive
Bonus Plan based on the Company's achievement of the annual EBITDA target
established by the Board for each fiscal year (each an "EBITDA Target"), on the
same basis as other executives of the Company, as such plan has been described
to the Executive and may be amended from time to time by the Board. The EBITDA
Target for any fiscal year will be subject to adjustment by the Board, in good
faith, to reflect any acquisitions, dispositions and material changes to capital
spending.
(c) Options. As of the Effective Date, the Company will grant to
the Executive options to purchase a total of 180,000 shares of the Company's
common stock, $.01 par value (the "Common Stock"), at an exercise price of
$13.64 per share, which options shall be granted under the Company's 1998 Stock
Option Plan (the "Plan"). A copy of the Plan has been provided to the Executive.
Such options will vest in accordance with, and will have such other terms as
provided in, the Stock Option Agreement attached hereto as Exhibit A.
(d) Other. The Executive will be entitled to such health, life,
disability, pension, sick leave and other benefits as are generally made
available by the Company to its executive employees. The Executive will also
accrue five weeks paid vacation during each year during the Term, in accordance
with and subject to the Company's vacation policy.
(e) Stock Purchase. The Executive shall be entitled to purchase up
to 34,000 shares of the Company's common stock at a purchase price of $13.64 per
share, subject to the terms of the offering memorandum attached as Exhibit B and
the stock subscription agreement attached as Exhibit C.
4. Termination.
(a) Death. This Employment Agreement will automatically terminate
upon the Executive's death. In the event of such termination, the Company will
pay to the Executive's legal representatives the Executive's base salary in
monthly installments and continue to provide the benefits provided hereunder, in
each case for twelve months following such termination.
(b) Disability. If during the Term the Executive becomes
physically or mentally disabled whether totally or partially, either permanently
or so that the Executive is unable substantially and competently to perform his
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 the
Executive's employment hereunder by written notice to the Executive. In the
event of such termination, the Company will pay to the Executive his base salary
in monthly installments and continue to provide the benefits provided hereunder,
in each case for twelve months following such termination.
(c) Cause. The Executive's employment hereunder may be terminated
at any time by the Company for Cause (as defined herein) by written notice to
the Executive. In the event of such termination, all of the Executive's rights
to payments (other than payment for services already rendered) and any other
benefits otherwise due hereunder will cease immediately. The Company will have
"Cause" for termination of the Executive's employment hereunder if any of the
following has occurred:
(i) the commission by the Executive of a felony for which
he is convicted; or
(ii) the material breach by the Executive of his
agreements or obligations under this Agreement, if such breach is
described in a written notice to the Executive
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referring to this Section 4(c)(ii), and such breach is not capable of
being cured or has not been cured within thirty (30) days after receipt
of such notice.
(d) Without Cause. The Executive's employment hereunder may be
terminated at any time by the Company without Cause by written notice to the
Executive. In the event of such termination, the Company shall (i) continue to
pay the Executive the Executive's base salary and provide the Executive
continued group health plan benefits at the active employee rate and in
accordance with the Executive's group health plan elections on the date of
termination through the date that is twelve months following the Date of
Termination and (ii) pay to Executive within 10 days following the Date of
Termination, a lump sum payment equal to the amount of Executive's bonus that
would have been payable to the Executive for the fiscal year in which the Date
of Termination occurs had the Company achieved 100% of the then applicable
EBITDA Target for such fiscal year.
(e) Resignation Without Good Reason. The Executive may terminate
the Executive's employment hereunder upon sixty days' prior written notice to
the Company, without Good Reason (as defined herein). In the event of such
termination, all of the Executive's rights to payment (other than payment for
services already rendered) and any other benefits otherwise due hereunder will
cease upon the date of such termination.
(f) Resignation For Good Reason. The Executive may terminate the
Executive's 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 the Executive the Executive's base salary and provide
the Executive the benefits provided in Section 3(d) hereunder through the date
that is twelve months following the Date of Termination and (ii) pay to
Executive within 10 days following the Date of Termination, a lump sum payment
equal to the amount of Executive's bonus that would have been payable to the
Executive for the fiscal year in which the Date of Termination occurs had the
Company achieved 100% of the then applicable EBITDA Target for such fiscal year.
The Executive will have "Good Reason" for termination of the
Executive's employment hereunder if, other than for Cause, any of the following
has occurred:
(i) the Executive's base salary or the bonus (as a
percentage of base salary) to which the Executive may be entitled as
the result of the Company reaching the then applicable EBITDA Target
under the Executive Bonus Plan 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;
(ii) the Board establishes an unachievable and
commercially unreasonable EBITDA Target that the Company must achieve
in order for the Executive to receive a bonus under Section 3(b) of
this Employment Agreement;
(iii) the Company has reduced or reassigned a material
portion of the Executive's duties hereunder, has required the Executive
to relocate outside the greater Minneapolis, Minnesota area or has
relocated the corporate headquarters of the Company
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outside the greater Minneapolis, Minnesota area or has removed or
relocated outside the greater Minneapolis area, a material number of
employees or senior management of the Company; or
(iv) the Company has breached this Employment Agreement in
any material respect.
(g) Change of Control. If the Executive is terminated without
Cause or resigns for Good Reason at any time within six months prior to, or
twenty-four months following, a Change of Control, or the Executive terminates
employment for any reason during the thirty (30) day period following the six
month anniversary of the Change of Control, and notwithstanding Sections 4(d)
and 4(f), and in lieu of amounts provided under Sections 4(d) and 4(f), the
Company shall (i) continue to pay the Executive the Executive's base salary and
provide the Executive the benefits provided in Section 3(d) hereunder through
the date that is twelve months following the Date of Termination and (ii) pay to
Executive within 10 days following the Date of Termination, a lump sum payment
equal to the amount of Executive's bonus that would have been payable to the
Executive for the fiscal year in which the Date of Termination occurs had the
Company achieved 100% of the then applicable EBITDA Target for such fiscal year.
Notwithstanding any provision of this Employment Agreement to the contrary, in
the event that any payment or benefit received or to be received by the
Executive in connection with a Change in Control of the Company or termination
of Executive's employment constitutes a "parachute payment," within the meaning
of Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code") which would be subject to the excise tax imposed by Section 4999 of the
Code (the "Excise Tax"), then the Company shall pay the Executive in cash an
additional amount (the "Gross-Up Payment") such that, after payment by Executive
of all taxes, including but not limited to income taxes (and any interest and
penalties imposed with respect thereto) and the Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed on the parachute payments. For purposes of this
Section 4(g), "Change of Control" shall mean when any "person" (as defined in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934), other than the
Company, X.X. Childs Equity Partners, L.P. or any of its affiliates, any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any Subsidiary, or any corporation owned, directly or indirectly, by
the stockholders of the Company, in substantially the same proportions as their
ownership of stock of the Company, acquires, in a single transaction or a series
of transactions (i) "beneficial ownership" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of securities representing more than 50% of the
combined voting power of the Company (or, prior to a public offering, more than
50% of the Company's outstanding shares of Common Stock), or (ii) substantially
all of the assets of the Company. For purposes of this Section 4(g),
"Subsidiary" shall mean any corporation in an unbroken chain of corporations
beginning with the Company if, at the time of a Change of Control, each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in the chain.
(h) Date and Effect of Termination. The date of termination of the
Executive's employment hereunder, pursuant to this Section 4, will be, (i) in
the case of Section 4(a), the date of the Executive's death, (ii) in the case of
Sections 4(b), (c) or (d), the date specified as the last day of employment in
the Company's notice to the Executive of such termination, (iii) in the
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case of Section 4(e), or 4(f), the date specified in the Executive's notice to
the Company of such termination (in each case, the "Date of Termination"), or
(iv) in the case of Section 4(g), the date specified in the Executive's notice
to the Company for resignation for Good Reason or the Company's notice to the
Executive for termination without Cause. Upon any termination of the Executive's
employment hereunder pursuant to this Section 4, the Executive will 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 or the Stockholders' Agreement between
the Company and the equity security holders of the Company (the "Stockholders'
Agreement"), in any stock option plans adopted by the Company in accordance with
Section 3(b) hereof, or as may be required by law.
(i) Terminations Not a Breach. The termination of the Executive's
employment pursuant to this Section 4 shall not constitute a breach of this
Employment Agreement by the party responsible for the termination, and the
rights and responsibilities of the parties under this Employment Agreement as a
result of such termination shall be as described in this Section 4.
5. Acknowledgment. The Executive agrees and acknowledges that in
the course of rendering services to the Company and its clients and customers,
the Executive will have access to and become acquainted with confidential
information about the professional, business and financial affairs of the
Company and its affiliates. The Executive acknowledges 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. The Executive recognizes 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 the Executive against the Company shall not constitute and
shall not be asserted as a defense to the enforcement by the Company of Section
6. The Executive further agrees that the Executive's obligations under Section 6
shall be absolute and unconditional.
6. Confidentiality. The Executive agrees that during and at all
times after the Term, the Executive 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 (collectively, the
"Confidential Information"), to which the Executive had or may have access and
will not disclose such Confidential Information to any person other than the
Company, their respective authorized employees and such other people to whom the
Executive has been instructed to make disclosure by the Board, in each case only
to the extent required in connection with court process. "Confidential
Information" will 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 the Executive in violation of this Employment
Agreement.
7. Modification. The Executive agrees and acknowledges that the
perpetual duration and scope of the covenants described in Section 6 are fair,
reasonable and necessary in order to protect the good will and other legitimate
interests of the Company and its subsidiaries, that
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adequate consideration has been received by the Executive for such obligations,
and that these obligations do not prevent the Executive from earning a
livelihood. If, however, for any reason any court of competent jurisdiction
determines that any restriction contained in Section 6 is not reasonable, that
consideration is inadequate or that the Executive has been prevented unlawfully
from earning a livelihood, such restriction will be interpreted, modified or
rewritten to include as much of the duration, scope and geographic area
identified in Section 6 as will render such restrictions valid and enforceable.
8. Equitable Relief. The Executive acknowledges that the Company
will suffer irreparable harm as a result of a breach of this Employment
Agreement by the Executive 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 the Executive of any provision of this Employment
Agreement, the Company will, 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
the Executive, and the Executive hereby consents to the entry of such relief
against the Executive and agrees not to contest such entry. Such relief will be
in addition to and not in substitution of any other remedies available to the
Company. The existence of any claim or cause of action by the Executive against
the Company or any of its subsidiaries, whether predicated on this Employment
Agreement or otherwise, will not constitute a defense to the enforcement by the
Company of this Employment Agreement. The Executive agrees not to defend on the
basis that there is an adequate remedy at law.
9. Life Insurance. The Company may, at its discretion and at any
time after the execution of this Employment Agreement, apply for and procure, as
owner and for its own benefit, and at its own expense, insurance on the
Executive's life, in such amount and in such form or forms as the Company may
determine. The Executive will have no right or interest whatsoever in such
policy or policies, but the Executive agrees that the Executive will, at the
request of the Company, submit himself to such medical examinations, supply such
information and execute and deliver such documents as may be required by the
insurance company or companies to which the Company or any such subsidiary has
applied for such insurance.
10. Successors; Assigns; Amendment; Notice. This Employment
Agreement will be binding upon and will inure to the benefit of the Company and
will not be assigned by the Company without the Executive's prior written
consent. This Employment Agreement will be binding upon the Executive and will
inure to the benefit of the Executive's heirs, executors, administrators and
legal representatives, but will not be assignable by the Executive. This
Employment Agreement may be amended or altered only by the written agreement of
the Company and the Executive. All notices or other communications permitted or
required under this Employment Agreement will be in writing and will be deemed
to have been duly given if delivered by hand, by facsimile transmission to the
Company (if confirmed) or mailed (certified or registered mail, postage prepaid,
return receipt requested) to the Executive or the Company at the last known
address of the party, or such other address as will be furnished in writing by
like notice by the Executive or the Company to the other.
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11. Entire Agreement. This Employment Agreement, together with the
agreements specifically referred to herein, embodies the entire agreement and
understanding between the Executive and the Company with respect to the subject
matter hereof and supersedes all such prior agreements and understandings.
12. 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 will remain in full
force and effect and will in no way be affected, impaired or invalidated.
13. Governing Law. This Employment Agreement will 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.
14. Counterparts. This Employment Agreement may be executed in two
or more counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument, and all signatures need
not appear on any one counterpart.
15. Headings. All headings in this Employment Agreement are for
purposes of reference only and will not be construed to limit or affect the
substance of this Employment Agreement.
UNIVERSAL HOSPITAL SERVICES, INC.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chairman
/s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
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ANNEX 1
Authentic Brands Inc.
Thinking Networks Inc.
8
EXHIBIT A
UNIVERSAL HOSPITAL SERVICES, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 14th day of February, 2003, by and
between UNIVERSAL HOSPITAL SERVICES, INC., a Delaware corporation (the
"Company"), and XXXXXX X. XXXXXXX ("Optionee").
WHEREAS, in consideration of Optionee executing and delivering to the
Company an Employment Agreement, dated of even date herewith, and pursuant to
the Universal Hospital Services, Inc. 1998 Stock Option Plan (the "Plan"), the
Company wishes to grant this stock option to Optionee.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall be defined as set forth below:
(a) "Affiliate" shall mean any Person that directly or
indirectly controls, is controlled by, or is under common control with,
another Person.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Cause" shall have the meaning set forth in the
Employment Agreement.
(d) "Change of Control" shall have the meaning set forth
in the Employment Agreement.
(e) "Common Stock" shall mean shares of Common Stock, par
value $.01 per share, of the Company.
(f) "Company" shall mean Universal Hospital Services,
Inc., a corporation organized under the laws of the State of Delaware,
or any successor corporation.
(g) "Disability" shall have the meaning set forth in the
Employment Agreement.
(h) "EBITDA Target" shall mean, for any fiscal year, the
EBITDA target for the Company as approved by the Board for purposes of
the vesting of incentive stock options held by the Company's management
employees under the Plan, as such EBITDA targets may be adjusted by the
Board from time to time, in good faith, to reflect any acquisitions,
dispositions and material changes to capital spending.
(i) "Employment Agreement" shall mean that Employment
Agreement dated February 14, 2003 between Optionee and the Company.
(j) "Good Reason" shall have the meaning set forth in the
Employment Agreement.
(k) "Person" has the meaning ascribed to it in Section
13(d)(3) or Rule 14(d)(2) of the Securities Exchange Act of 1934.
(l) "Plan" shall mean the Universal Hospital Services,
Inc. 1998 Stock Option Plan, as amended from time to time.
(m) "Stockholders' Agreement" shall mean the Universal
Hospital Services, Inc. Stockholders' Agreement dated as of February
28, 1998, by and among the Company and each of its stockholders, as
amended.
(n) "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if, at the
time of granting of an Option, each of the corporations (other than the
last corporation in the unbroken chain) owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one
of the other corporations in the chain.
2. Grant of Option. The Company hereby grants to Optionee the
right and option (the "Option") to purchase all or any part of an aggregate of
180,000 shares (the "Option Shares") of the Common Stock of the Company at the
price of $13.64 per Option Share (the "Exercise Price") on the terms and
conditions set forth herein. It is understood and agreed that the Exercise Price
is equal to 100% of the fair market value of each such Option Share on the date
of this Agreement. Except as otherwise provided in Section 8 hereof, the Option
is intended to be entitled to treatment as an incentive stock option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
3. Vesting of Option. The Option shall vest in accordance with
subparagraphs (a) through (d) of this Section 3, based on the Company's
achievement of the annual EBITDA Targets established by the Board of Directors):
(a) Options to acquire between 0% and 25% of the total
number of shares of Option Shares shall vest on April 1 of each year,
beginning with April 1, 2004, provided that the Company meets or
exceeds 90% of the EBITDA Target for the fiscal year preceding such
April 1, on a linear basis with the percentage of achievement of such
EBITDA Target (such that, if, for example, the Company achieves 95% of
the EBITDA Target, 12.5% of the total number of Option Shares would
vest).
(b) Options to acquire 25% of the total number of Option
Shares shall vest on April 1 of each year, beginning with April 1,
2004, provided that the Company meets or exceeds the EBITDA Target for
the fiscal year preceding such April 1. No more than 25% of the total
number of Option Shares shall vest in any fiscal year, except as noted
in paragraph (c) or (d) below, or Section 5 below.
(c) Irrespective of the foregoing, if following the end
of the fiscal year ended December 31, 2007 the Company: (i) on a
cumulative basis meets the cumulative EBITDA Target for the four year
period preceding such fiscal year end; and (ii) meets or
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exceeds the annual EBITDA Target for such fiscal year, additional
Options shall then vest such that the total number of Option Shares for
which the Option shall be vested shall equal to 100%.
(d) Notwithstanding the foregoing, this Option shall vest
with respect to 100% of the total number of Option Shares, eight years
following the date of grant, provided that the Initial Optionee has
been continuously employed by the Company or any Subsidiary through
such date.
4. Manner of Exercise.
(a) The Option can be exercised only by Optionee or other
proper party by delivering within the option period written notice to
the Company at its principal office. The notice shall state the number
of shares as to which the option is being exercised and be accompanied
by payment in full of the option price for all shares designated in the
notice.
(b) Optionee may pay the option price in cash, by check
(bank check, certified check or personal check), by money order or with
the approval of the Company (i) by delivering to the Company for
cancellation shares of Common Stock of the Company with a fair market
value as of the date of exercise equal to the option price of the
portion thereof being paid by tendering such shares, or (ii) by
delivering to the Company a combination of cash and shares of Common
Stock of the Company with an aggregate fair market value and a
principal amount equal to the option price. For these purposes, the
fair market value of the Company's shares of Common Stock as of any
date shall be determined pursuant to the Plan.
(c) Until such time as the occurrence of a Public
Offering, as such term is defined in the Stockholders' Agreement, upon
exercise of the Option, the Company shall not issue any Option Shares
until Optionee signs and assents to the Stockholders' Agreement, unless
at such time Optionee is already a party to the Stockholders'
Agreement.
5. Change of Control. In the event of a Change of Control, the
vesting schedule contained in Section 3 shall accelerate and the Optionee shall
have the right to acquire the total number of the Option Shares upon exercise of
the Option immediately prior to such Change of Control.
6. Expiration. The Option shall expire, unless earlier exercised
or terminated, ten years from the date of grant.
7. Effect of Termination of Relationship with the Company.
(a) In the case of termination of Optionee's employment
for Cause or resignation without Good Reason, the Option shall
terminate on the 30th day following the date of termination of
employment.
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(b) In the case of termination of Optionee's employment
without Cause or the Optionee's resignation for Good Reason, the
portion of the Option that has vested at the time of termination or
resignation shall terminate three months after the date of employment
termination or resignation, and the portion of the Option that has not
vested shall terminate immediately.
(c) If the Optionee's employment is terminated due to
death or Disability, the portion of the Option that has vested at the
time of termination or resignation shall terminate six months after the
date of employment termination or death and may be exercised during
such period by the Optionee or his or her legal representative or
estate, as the case may be, and the portion of the Option that has not
vested shall terminate immediately.
8. Limitation on Treatment as Incentive Stock Option. Optionee
understands that to the extent that the aggregate fair market value (determined
at the time the option was granted) of the shares of Common Stock of the Company
with respect to which all options that are incentive stock options within the
meaning of Section 422 of the Code are exercisable for the first time by
Optionee during any calendar year exceed $100,000, in accordance with Section
422(d) of the Code, such options shall be treated as options that do not qualify
as incentive stock options.
9. Miscellaneous.
(a) The Option is issued pursuant to the Plan and is
subject to its terms. The Company hereby agrees that the Plan shall be
available for inspection during business hours at the principal office
of the Company.
(b) Prior to execution of this Agreement and in
consideration of the covenants made herein by the Company, Optionee
shall have executed and delivered to the Company the Employment
Agreement.
(c) This Agreement shall not confer upon Optionee any
right with respect to continuance of employment by the Company or any
of its subsidiaries, nor will it interfere in any way with the right of
the Company to terminate such employment at any time. Optionee shall
have none of the rights of a shareholder with respect to shares subject
to the Option until such shares shall have been issued to Optionee upon
exercise of the Option.
(d) The exercise of all or any parts of the Option shall
only be effective at such time that the sale of shares of Common Stock
pursuant to such exercise will not violate any state or federal
securities or other laws.
(e) The Option may not be transferred, except by will or
the laws of descent and distribution to the extent provided in Section
7(c) hereto, and during Optionee's lifetime the Option is exercisable
only by Optionee.
(f) If there shall be any change in the shares of Common
Stock of the Company through merger, consolidation, reorganization,
recapitalization, dividend in the form of stock (of whatever amount),
stock split or other change in the corporate structure
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of the Company, and all or any portion of the Option shall then be
unexercised and not yet expired, then appropriate adjustments in the
outstanding Option shall be made by the Company, in order to prevent
dilution or enlargement of option rights. Such adjustments shall
include, where appropriate, changes in the number of Option Shares and
the Exercise Price.
(g) If Optionee shall dispose of any of the Option Shares
acquired by Optionee pursuant to the exercise of the Option within two
years from the date the Option was granted or within one year after the
transfer of any such shares to Optionee upon exercise of the Option,
then, in order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it under
the circumstances, Optionee shall promptly notify the Company of the
dates of acquisition and disposition of such shares, the number of
shares so disposed of, and the consideration, if any, received for such
shares. In order to comply with all applicable federal or state income
tax laws or regulations, the Company may take such action as it deems
appropriate to insure (i) notice to the Company of any disposition of
the Option Shares within the time periods described above and (ii)
that, if necessary, all applicable federal or state payroll,
withholding, income or other taxes are withheld or collected from
Optionee.
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IN WITNESS WHEREOF, the parties hereto have caused this Incentive Stock
Option Agreement to be executed on the day and year first above written.
UNIVERSAL HOSPITAL SERVICES, INC.
By:______________________________
Name:____________________________
Title:___________________________
_________________________________
Xxxxxx X. Xxxxxxx, Optionee
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EXHIBIT B
Xxxxxx X. Xxxxxxx
Name of Offeree
CONFIDENTIAL OFFERING MEMORANDUM
TO CERTAIN INDIVIDUAL MANAGEMENT EMPLOYEES OF
UNIVERSAL HOSPITAL SERVICES, INC.
DATED AS OF FEBRUARY 14, 2003
UP TO 34,000 SHARES OF COMMON STOCK
OFFERING PRICE: $13.64 PER SHARE
Universal Hospital Services, Inc. is offering for sale to you shares of
our common stock, par value $0.01 per share, at an offering price of $13.64 per
share in accordance with the terms described in this memorandum. This memorandum
is intended to summarize certain important factors that you should consider
prior to investing in the company. You should read this memorandum and the
exhibits attached to it carefully.
You should be aware of the following important factors related to this
offering:
- THIS MEMORANDUM IS CONFIDENTIAL AND IS SOLELY FOR YOUR USE IN
CONNECTION WITH MAKING A DECISION TO INVEST IN THE SHARES.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES OFFERED
HEREBY IN ANY STATE OR JURISDICTION WHERE THE OFFER OR SALE
WOULD BE PROHIBITED OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER IN SUCH STATE.
- THE SHARES ARE OFFERED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
VARIOUS STATE SECURITIES LAWS. THE SHARES HAVE NOT BEEN
REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- THE SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS
DESCRIBED ON THE NEXT PAGE UNDER "ECONOMIC RISK," WHICH MEANS
YOU MAY NOT BE ABLE TO TRANSFER OR SELL THE SHARES WHEN YOU
WANT TO.
- WHEN YOU PURCHASE THE SHARES, YOU MUST SIGN THE COMPANY'S
STOCKHOLDERS' AGREEMENT, WHICH CONTAINS IMPORTANT PROVISIONS
AND RESTRICTIONS RELATED TO YOUR SHARES AS DESCRIBED ON THE
NEXT PAGE UNDER "STOCKHOLDERS' AGREEMENT."
SUMMARY OF THE OFFERING
INTRODUCTION. We have authorized up to 34,000 shares of our common
stock for you to purchase at a price of $13.64 per share. We are not required to
sell all of the shares authorized nor are you obligated to purchase any of the
shares. You may purchase all or a portion of the shares. If you decide to invest
in the shares, you must sign the Stock Subscription Agreement included with this
memorandum and indicate the number of shares you will be purchasing and return
it to the company on or prior to March 14, 2003. See "Instructions for
Investing" below.
In making an investment decision you must rely on your own examination
of the company and the terms of the offering, including the merits and risks
involved.
We are distributing this offering memorandum with our most recent
reports filed with the Securities and Exchange Commission on Form 10-K and Form
10-Q. You should read the exhibits carefully.
If you desire additional information or want to make any inquiry of
management, you may contact Xxxx X. Xxxxxxxxx, Chief Executive Officer, 0000
Xxxx 00xx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxx, Xxxxxxxxx 00000 or by telephone at
(000) 000-0000. You will be asked to acknowledge in the Stock Subscription
Agreement that you were given the opportunity to obtain additional information
and that you did so to your satisfaction or elected to waive the opportunity.
ECONOMIC RISK. You must bear the economic risk of investing in the
shares for an indefinite period. If the value of the company decreases, you
could lose all or a substantial portion of your investment. The shares may not
be sold, transferred or otherwise disposed of by you without registration under
the Securities Act and applicable state securities laws unless, in the opinion
or our counsel, such a registration is not required.
STOCKHOLDERS' AGREEMENT. If you decide to purchase shares, you will be
required to sign the company's Stockholders' Agreement, a copy of which is
included with this memorandum. The Stockholders' Agreement contains important
provisions and you should read it carefully. You should note that under some
circumstances the Stockholders' Agreement authorizes the company to repurchase
the shares from you and you will be required to sell the shares at that time at
the price you paid for the shares, even if the price of your shares has
increased. The Stockholders' Agreement also limits your ability to transfer or
sell your shares to third parties and in some circumstances, such as a business
combination or similar transaction, requires you to sell your shares to an
outside buyer.
EMPLOYMENT. We are offering you the opportunity to invest in the
company as an appreciation of your commitment to the company. This offering is
in no way a condition to your employment and you are not obligated to make an
investment. Your choice whether to invest or not will not affect your employment
with the company.
INSTRUCTIONS FOR INVESTING. If you would like to make an investment
with the company, please return to Xxxx X. Xxxxxxxxx, Chief Executive Officer,
the following:
- A SIGNED SUBSCRIPTION AGREEMENT INCLUDED WITH THIS MEMORANDUM
SIGNED BY YOU AND, IF APPLICABLE, BY YOUR SPOUSE, INDICATING
ON APPENDIX I THERETO HOW MANY SHARES YOU WILL BE PURCHASING;
- A CHECK, MADE OUT TO UNIVERSAL HOSPITAL SERVICES, INC., FOR
THE SHARES (THE AMOUNT OF YOUR CHECK WILL BE THE NUMBER OF
SHARES YOU ARE PURCHASING MULTIPLIED BY $13.64); AND
- A SIGNED COPY OF THE STOCKHOLDERS' AGREEMENT.
When we have received these materials from you, we will execute a stock
certificate in your name and will place the certificate in the company's stock
ledger. Please complete these materials by March 14, 2003. THIS OFFERING WILL
TERMINATE ON MARCH 14, 2003.
EXHIBIT C
FORM OF STOCK SUBSCRIPTION AGREEMENT
STOCK SUBSCRIPTION AGREEMENT (the "Agreement"), dated as of
_______________________, 2003, by and between UNIVERSAL HOSPITAL SERVICES, INC.,
a Delaware corporation (the "Company"), and XXXXXX X. XXXXXXX (the "Purchaser").
WHEREAS, the Company desires to offer for sale shares of its common
stock, par value $.01 per share, of the Company (the "Common Stock") to the
Purchaser; and
WHEREAS, the Purchaser desires to subscribe for and acquire from the
Company, and the Company desires to sell to the Purchaser, the aggregate number
of shares of Common Stock set forth on Appendix I hereto, as hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and in consideration
of the mutual agreements contained herein, the parties hereto agree as follows:
1. Subscription for and Acquisition of Common Stock.
(a) Upon the terms and subject to the conditions hereinafter set
forth, the Purchaser hereby subscribes for and shall purchase for cash in an
amount set forth on Appendix I hereto, and the Company shall sell to the
Purchaser the aggregate number of shares of Common Stock set forth on Appendix I
hereto (the "Shares") at a purchase price of $13.64 per share of Common Stock
for the total consideration in cash set forth on Appendix I hereto (the
"Purchase Price").
(b) In consideration of the sale by the Company and the purchase
by the Purchaser of the Shares, (i) the Company shall deliver to the Purchaser
certificates representing the Shares and (ii) the Purchaser shall deliver or
cause to be delivered to the Company the Purchase Price in immediately available
funds.
2. Investment Representations of Purchaser.
(a) The Purchaser hereby represents and warrants that (i) the
Purchaser is acquiring the Shares for the Purchaser's own account, for
investment only and not with a view toward resale or other distribution of the
Shares within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"); (ii) the Purchaser has no present intention of selling or
otherwise disposing of all or any portion of the Shares; and (iii) the Purchaser
understands that the Shares have not been registered under the Securities Act,
in reliance upon exemptions contained in the Securities Act and applicable
regulations promulgated thereunder or interpretations thereof, and cannot be
offered for sale, sold or otherwise transferred unless such sale or transfer is
so registered or qualifies for exemption from registration under the Securities
Act.
(b) The Purchaser acknowledges that he has been advised by the
Company that: (i) the Shares must be held indefinitely and the Purchaser must
continue to bear the economic risk of the investment in the Shares unless the
offer and sale of such Shares is subsequently registered under the Securities
Act and all applicable state or foreign securities laws or an exemption from
such registration is available; (ii) it is not anticipated that there will be
any public market for the Shares in the foreseeable future; (iii) the Shares may
be considered "restricted securities" within
the meaning of Rule 144 promulgated under the Securities Act; (iv) Rule 144 is
not presently available with respect to the offers or sales of any securities of
the Company, and the Company has made no covenant and is under no obligation to
make such Rule available; (v) when and if the Shares may be disposed of without
registration under the Securities Act in reliance on Rule 144, such disposition
can be made only by certain persons in limited amounts in accordance with the
terms and conditions of such Rule; (vi) if the registration will require the
availability of an exemption under the Securities Act and if an exemption for
such offers or sales is not available, registration of the Shares may be
required, but that the Company is under no obligation to register the Shares or
to facilitate compliance or to comply with any exemption, except as otherwise
provided in the Stockholders' Agreement; (vii) a restrictive legend or legends
substantially in the form set forth in the Stockholders' Agreement dated as of
February 25, 1998, as amended, by and among the Company and each of the
stockholders of the Company (the "Stockholders' Agreement") shall be placed on
the certificates representing the Shares; and (viii) a notation shall be made in
the appropriate records of the Company indicating that the Shares are subject to
restrictions on transfer and, if the Company should at some time in the future
engage the services of a stock transfer agent, appropriate stop transfer
restrictions will be issued to such transfer agent with respect to the Stock.
(c) The Purchaser further represents and warrants that (i) the
Purchaser and the Purchaser's representatives have carefully reviewed the
Confidential Offering Memorandum dated February 14, 2003, including the exhibits
thereto, and any supplement thereto furnished to the undersigned (collectively,
the "Memorandum"); (ii) the Purchaser understands and has taken cognizance of,
or has been advised by the Purchaser's representatives as to, all the risk
factors related to the purchase of the Shares, including those set forth in the
Memorandum and the exhibits thereto, and no representations have been made to
the Purchaser or such representatives concerning the Shares, the Company or its
business or prospects or other matters, except as set forth in the Memorandum;
(iii) the Purchaser and the Purchaser's representatives have been granted the
opportunity to ask questions of, and receive answers from, representatives of
the Company concerning the terms and conditions of the purchase of the Shares
and to obtain any documents, records or other additional information which the
Purchaser, or the Purchaser's representatives, deem necessary to verify the
accuracy of the information contained in the Memorandum; (iv) the Purchaser's
knowledge and experience in financial and business matters is such that the
Purchaser is capable of evaluating the merits and risks of the investment in the
Shares, or the Purchaser has been advised by a representative possessing such
knowledge and experience; (v) the Purchaser is a member of management or key
employee of the Company; (vi) in making the Purchaser's decision to purchase the
Shares hereby subscribed for, the Purchaser has relied solely upon the
independent investigations made by the Purchaser and, to the extent believed by
the Purchaser to be appropriate, the Purchaser's representatives, including the
Purchaser's own professional legal, tax and other advisors; (vii) the
Purchaser's financial condition is such that the Purchaser can afford to bear
the economic risk of holding the unregistered Shares for an indefinite period of
time and has adequate means for providing for the Purchaser's current needs and
personal contingencies; (viii) the Purchaser can afford to suffer a complete
loss of the Purchaser's investment in the Shares; (ix) the Shares are a
speculative investment which involves a high degree of risk of loss of the
Purchaser's investment therein and there are substantial restrictions on the
transferability of, and there will be no public market for, the Shares and,
accordingly, it may not be possible to liquidate the Purchaser's investment
without a substantial loss in the case of an emergency, if at all; and (x) the
Purchaser resides at
2
the address set forth on the signature page hereto and does not have any present
intention of establishing a residence in any other state or jurisdiction.
(d) The Purchaser further represents and warrants that (i) the
Purchaser has full right, power and authority to enter into and perform this
Agreement, and this Agreement has been duly authorized, executed and delivered
by the Purchaser and is valid, binding and enforceable against the Purchaser in
accordance with its terms; and (ii) either (A) the Purchaser is not legally
married or (B) this Agreement has been duly executed by the Purchaser's spouse
on the signature page hereof.
3. Conditions to the Company's Obligations. The Company's
obligation to issue the Shares hereunder is subject to the satisfaction at or
prior to the Purchase of the following further conditions:
(a) The representations and warranties of the Purchaser
contained in Section 2 hereof shall be true and correct as of the date
of the Purchase.
(b) The Purchaser shall have performed all obligations
and complied with all agreements required to be performed or complied
with by the Purchaser under this Agreement at or prior to the Purchase.
(c) The Purchaser shall have executed and delivered to
the Company the Stockholders' Agreement.
4. Binding Effect. The provisions of this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, successors and assigns. Notwithstanding the foregoing, neither
this Agreement nor any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by any of the parties hereto without the
prior written consent of the other parties hereto.
5. Applicable Law. The laws of the State of Minnesota shall
govern the interpretation, validity and performance of the terms of this
Agreement, regardless of the law that might be applied under applicable
principles or conflicts of law.
6. Survival of Representations and Warranties. The
representations and warranties of the parties hereto contained in this Agreement
shall survive the execution and delivery of this Agreement.
7. Headings; Execution in Counterparts. The headings and captions
contained herein are for convenience of reference only and shall not control or
affect the meaning or construction of any provision hereof. This Agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original and which together shall constitute one and the same instrument.
8. Amendment. This Agreement may not be amended, modified or
supplemented and no waivers of or consents to departures from the provisions
hereof may be given unless consented to in writing by the parties hereto. Unless
otherwise specified in such waiver or
3
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
9. Entire Agreement. This Agreement and the Stockholders'
Agreement and any other documents referred to herein contain the entire
agreement of the parties in respect of the matters set forth herein and therein.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
UNIVERSAL HOSPITAL SERVICES, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
PURCHASER:
________________________________________
Signature of Purchaser
________________________________________
Name of Purchaser
________________________________________
________________________________________
Address of Purchaser
ACKNOWLEDGMENT AND AGREEMENT OF SPOUSE
The undersigned spouse of the above-named Purchaser acknowledges that
he/she has read the foregoing Agreement and agrees to be bound thereby.
________________________________________
Signature of Spouse
________________________________________
Name of Spouse
5
APPENDIX I
Name of Purchaser Xxxxxx X. Xxxxxxx
Total Number of Shares of Common Stock
to be Purchased $_______________________
Per-Share Purchase Price $13.64
Aggregate Cash Purchase Price $_______________________
6
