Exhibit 10.19
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
This AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “Employment Agreement”
) dated as of December 31, 2008 (“ Effective
Date” ) , between UNIVERSAL HOSPITAL SERVICES,
INC. , a Delaware corporation (the “Company”
) and Walter T. Chesley (the “ Executive”
) amends and restates the employment agreement between the
Executive and the Company dated July 17, 2007.
The Company wishes to continue to
employ the Executive, and the Executive wishes to remain employed
with the Company, on the terms and conditions set forth in this
Employment Agreement. This Employment Agreement replaces any
existing employment agreement between the Executive, on the one
hand, and Company or any of its subsidiaries or predecessor
entities, on the other hand, and the parties acknowledge that the
Executive has no remaining rights, obligations or entitlements
under any such agreement, other than (i) any rights or
entitlements of the Executive to indemnification or coverage under
any directors and officers indemnity insurance, (ii) with
respect to any equity owned by Executive or options or other awards
granted to the Executive, (iii) with respect to an excise tax
gross-up in Section 4(g) of the Employment Agreement,
dated as of February 2003, between the Company and the
Executive, as amended on or prior to the date hereof (the “
Original Agreement ”) but only as such excise tax
gross-up applies to an acquisition occurring prior to the date
hereof.
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, Human Resources 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 development and execution
of the human resources strategy 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
therefore, without the prior written consent of the Board,
provided, that 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.
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2.
Term of Employment
Agreement . The
term of the Executive’s employment hereunder began as of
July 17, 2007, and will 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 as of July 17, 2007, is an
annual rate of $197,600, 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 eligible to receive a target bonus of 65% of base salary under
the Company’s Executive Bonus Plan based on the
Company’s achievement of the annual EBITDA target established
by the Board (or any compensation committee thereof) for each
calendar year (each an “EBITDA Target” )
, as such plan may be amended from time to time by the Board
(or any compensation committee thereof). The EBITDA Target for any
calendar year will be subject to adjustment by the Board (or any
compensation committee thereof), in good faith, to reflect any
acquisitions, dispositions and material changes to capital
spending. The bonus under this Section 3(b) will be
payable in accordance with the Company’s normal payroll
practices in the calendar year following the calendar year in which
it is earned.
(c) 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 (5) weeks paid vacation during
each year during the Term, in accordance with and subject to the
Company’s vacation policy.
4.
Termination
.
(a)
Death . This Employment Agreement will automatically
terminate upon the Executive’s death. In the event of
such termination, the Company will pay to the Executive’s
estate (i) Executive’s annual base salary (as in effect
on the Date of Termination) (as defined below) and (ii) the
sum of $11,350. Such amounts shall be paid to the Executive’s
estate in equal monthly installments for twelve (12) consecutive
months beginning on the 61 st day following the Date
of 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
ninety (90) consecutive days or for ninety (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 (i) the Executive’s annual base salary (as in
effect on the Date of Termination) and (ii) the sum of
$11,350. Such amounts shall be, subject to
Section 19
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hereof, paid to the
Executive in equal monthly installments for twelve (12) consecutive
months beginning on the 61 st day following the Date
of 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
emp1oyment hereunder if any of the following has
occurred:
(i) the commission by the
Executive of a felony for which he is convicted; or
(ii) the material breach by the
Executive of his agreements or obligations under this Employment
Agreement, if such breach is described in a written notice to the
Executive referring to this Section 4(c)(ii), and such breach
is not capable of being cured or has not been cured within thirty
(30) days after receipt of such notice.
(d)
Without Cause . The Executive’s employment
hereunder may be terminated at any time by the Company without
Cause by written notice to the Executive. In the event of
such termination, the Company shall pay the Executive the aggregate
of: (i) the Executive’s annual base salary (as in
effect on the Date of Termination); (ii) the sum of $11,350;
and (iii) the bonus that would have been payable to the
Executive for the calendar year in which the Date of Termination
occurs had the Company achieved 100% of the then applicable EBITDA
Target for such calendar year. Amounts under clauses (i) and
(ii) above shall be, subject to Section 19 hereof, paid
to the Executive in equal monthly installments for twelve (12)
consecutive months beginning on the 61 st day following the Date
of Termination and any bonus amount under clause (iii) above
shall, subject to Section 19 hereof, be paid in a single lump
sum on the 61 st day following the Date
of Termination.
(e) Resignation Without
Good Reason . The Executive may terminate the
Executive’s employment hereunder upon sixty (60) days’
prior written notice to the Company, without Good Reason (as
defined herein). In the event of such termination, all of the
Executive’s rights to 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 (30) days’ written notice to the Company, for
Good Reason. In the event of such termination, the Company
shall pay the Executive the aggregate of: (i) the
Executive’s annual base salary (as in effect on the Date of
Termination); (ii) the sum of $11,350; and (iii) the
bonus that would have been payable to the Executive for the
calendar year in which the Date of Termination occurs had the
Company achieved 100% of the then applicable EBITDA Target for such
calendar year. Amounts under clauses (i) and (ii) above
shall be, subject to Section 19 hereof, paid to
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the Executive in equal
monthly installments for twelve (12) consecutive months beginning
on the 61 st day following the Date
of Termination and any bonus amount under clause (iii) above
shall, subject to Section 19 hereof, be paid in a single lump
sum on the 61 st day following the Date
of Termination.
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 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 (6) months prior to, or
twenty-four (24) months following, a Change of Control, or the
Executive terminates employment for any reason during the thirty
(30) day period following the six (6) month anniversary of the
Change of Control, and notwithstanding Sections 4(d) and 4(f)
, and in lieu of amounts provided under Sections
4(d) and 4(f), the Company shall pay the Executive the
aggregate of: (i) the Executive’s annual base salary (as
in effect on the Date of Termination); (ii) the sum of $11,350
; and (iii) the bonus that would have been payable to
the Executive for the calendar year in which the Date of
Termination occurs had the Company achieved 100% of the then
applicable EBITDA Target for such calendar year. Amounts under
clauses (i) and (ii) above shall be, subject to
Section 19 hereof, paid to the Executive in equal monthly
installments for twelve (12) consecutive months beginning on the
61 st day following the Date of Termination and
any bonus amount under clause (iii) above shall, subject to
Section 19 hereof, be paid in a single lump sum on the
61 st day following the Date of
Termination. 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
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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. The Gross-Up Payment shall be
paid to the Executive (or deposited with the government as
withholding and deduction) in a single lump sum payment within
ninety (90) days following the date on which the Executive is
required to pay the Excise Tax to the government in respect of the
Executive’s “parachute payment”, but in no event
later than the end of the Executive’s taxable year next
following the Executive’s taxable year in which the Executive
remits the related taxes.
For purposes of this
Section 4(g) “ Change of Control”
shall mean (i) when any “person” (as
defined in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934), other than the Company, Bear Stearns
Merchant Manager III (Cayman), L.P. (on November 1, 2008, Bear
Stearns Merchant Banking, which was affiliated with Bear,
Stearns & Co. Inc., spun out into an independent firm and
changed its name to “Irving Place Capital”) or its
affiliates, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any 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 (whether by merger,
consolidation, reorganization or otherwise), (A) “
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
(B) substantially all or all of the assets of the Company and
its Subsidiaries on a consolidated basis or (ii) a merger,
consolidation, reorganization or similar transaction of the Company
with a person (as defined above) if, following such transaction,
the holders of a majority of the Company’s outstanding voting
securities in the aggregate immediately prior to such transaction
do not own at least a majority of the outstanding voting securities
in the aggregate of the surviving corporation immediately after
such transaction. 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. In
the event of any merger, consolidation, reorganization or similar
transaction with, into or involving another corporation or other
entity, such entity shall be a “person” for purposes of
this Section 4(g).
(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
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specified as the last day of employment in the
Company’s notice to the Executive of such termination,
(iii) in the case of Section 4(e) or 4(f), the date
specified in the Executive’s notice to the Company of such
termination, or (iv) in the case of Section 4(g), the
date specified in the Executive’s resignation notice to the
Company or the Company’s notice to the Executive for
termina
