Exhibit 10.16

 

Universal Hospital Services, Inc.

Executive Severance Pay Plan

 

June 1, 2007

 

I.      Purpose

 

To provide a severance pay plan for the Executives (as defined below) of
Universal Hospital Services, Inc. (the “Company”) who are not eligible for
severance pay under any other plan or agreement with the Company. The provisions
of this Executive Severance Pay Plan (the “Plan”) will not apply to any
Executive who is covered by an employment agreement. Executives who receive
severance under this Plan will not be eligible to receive severance under any
other plan or agreement of the Company. No severance benefits become payable
pursuant to this Plan in the event of termination of employment upon an
Executive’s death or disability. This Plan replaces the Executive Severance Pay
Plan dated November 1, 2006.

 

II.    Definitions.

 

A.    “Cause” means:

 

(i.)           Executive’s continued failure, whether willful, intentional, or
grossly negligent, after written notice, to perform substantially Executive’s
duties (the “Duties”) as determined by Executive’s immediate supervisor, or the
Chief Executive Officer, or a Senior Vice President of the Company (other than
as a result of a disability);

 

(ii.)          dishonesty or fraud in the performance of Executive’s Duties or a
material breach of Executive’s duty of loyalty to the Company or its
subsidiaries;

 

(iii.)         conviction or confession of an act or acts on Executive’s part
constituting a felony under the laws of the United States or any state thereof
or any misdemeanor which materially impairs such Executive’s ability to perform
the Duties;

 

(iv.)         any willful act or omission on Executive’s part which is
materially injurious to the financial condition or business reputation of the
Company or any of its subsidiaries; or

 

(v.)          any breach by Executive of any non-competition, non-solicitation,
non-disclosure or confidentiality agreement applicable to Executive.

 

B.    “Change of Control” means (i) any event as a result of which Bear Stearns
Merchant Manager III (Cayman), L.P. and its affiliates collectively cease to own
and control all of the economic and voting rights associated with ownership of
at least 50.1% of the outstanding capital stock of Company; or (ii) any sale or
transfer of all or substantially all of the assets of the Company.

 

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C.    “Change of Control Period” means the period starting 30 days before the
Change in Control and continuing through 6 months after the Change in Control.

 

D.    “Date of Termination” means the date specified as Executive’s last date of
employment in the Company’s notice of termination to Executive or Executive’s
Notice of Resignation for Good Reason to the Company.

 

E.     “Executive” means any Executive Vice President, Senior Vice President or
any Vice President of the Company, and the Controller as such titles are in use
effective June 1, 2007.

 

F.     “Resignation for Good Reason” means:

 

Executive’s termination of employment upon 30 days’ written notice to the
Company, for Good Reason. Executive shall have “Good Reason” for termination of
employment if, other than for cause, any of the following has occurred,
Executive has given notice thereof within 90 days of the event, the Company has
not cured within 30 days of receive of such notice, and Executive actually
terminates employment within 60 days thereafter:

 

(i.)     The Company has reduced or reassigned a material portion of Executive
duties (per Executive job description);

 

(ii.)    The Executive’s base salary has been materially reduced other than in
connection with an across-the-board reduction (of approximately the same
percentage) in executive compensation to employees imposed by the board of
directors of the Company in response to negative financial results or other
adverse circumstances affecting the Company; or

 

(iii.)   The Company has required Executive to relocate in excess of 50 miles
from the location where the Executive is currently employed.

 

G.    “Severance Period” means the period from the Date of Termination through
the date which is 12 months from the Date of Termination.

 

III.   Severance Pay

 

A.    Executives who separate from the Company as a result of termination by the
Company without Cause (other than death or disability) or by the Executive for
Good Reason and who sign the general release and other agreement described in
Section IV below within 45 days of such termination and who do not rescind the
general release within the time allowed by the Company are entitled to the
severance pay specified below. An Executive who is separated from employment due
to dismissal for Cause is not entitled to any severance pay and an Executive who
voluntarily resigns, except for Resignation for Good Reason, from employment is
not entitled to severance pay. The Controller is entitled to the severance pay
specified below only if he or she is terminated by the Company without Cause
(other than death or disability) or resigns for Good Reason, during the Change
of Control Period, but the Controller is not entitled to any severance pay if he
or she is terminated for Cause or resigns without Good

 

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Reason, or for any other termination that is not during the Change of Control
Period.

 

B.    Upon qualifying for severance pay subject to Section IV, Executive will be
paid the following amounts in the following manner:

 

(i.)     Executive will continue to be paid his or her salary through the
Severance Period, in the manner and at the times paid during such Executive’s
employment with the Company; provided, however, that the first such payment will
be made immediately following the effectiveness of the release described in
Section IV, and will include any such payments that would otherwise have been
made prior to the time the release was effective.

 

(ii.)    Executive may elect to continue group health and dental benefits under
COBRA to the extent he or she is eligible. If the Executive timely elects to
continue these benefits under COBRA, the Company will pay the full premium for
group health and dental benefits for 12 months following the Date of Termination
(or such shorter period as such coverage is elected by Executive). The Company
will make such payments beginning as soon as practicable following the
effectiveness of the release described in Section IV for any payment then due,
and thereafter on a monthly basis.. This 12 months of coverage at the Company’s
expense (or such shorter period as such coverage is elected by Executive) will
be considered the first 12 months (or shorter period) of the Executive’s
continuation period for group health and dental benefits in accordance with
COBRA. After such period, the Executive will be responsible for the full cost of
premiums if the Executive chooses to continue these benefits.

 

(iii.)   If prior to the date which is 12 months after the Date of Termination,
Executive finds other employment, the amount of severance payments payable to
Executive after such termination in accordance with B(i) above will be reduced
by the value of the compensation Executive receives in his or her new employment
through the date which is 12 months after the Date of Termination and the
amounts payable in accordance with B(ii) will be similarly discontinued if
similar medical and dental benefits are secured through the new employer.

 

(iv.)   If termination is pursuant to Resignation for Good Reason, the Company
will provide the Executive a prorated portion of the bonus earned for the then
current fiscal year, based upon the number of days Executive was employed during
that year. Such Executive bonus will be payable in the next calendar year at the
time annual bonuses are paid to the other executives employed by the Company, on
that last day of the Company’s fiscal year.

 

(v.)    Executive will be paid or otherwise provided such benefits as may be
required by law.

 

(vi.)   All severance payments are subject to any required withholding.

 

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IV.     General Release and Other Agreements.

 

Executive will not be entitled to receive any of the severance pay described
above until such time as Executive signs (A) an effective general release of all
claims against the Company and its affiliates in the form and manner prescribed
by the Company and (B) an agreement further providing (i) Executive’s agreement
not to disclose or use confidential information of the Company, (ii) Executive’s
agreement during the Severance Period not to compete with the Company in the
medical equipment rental business, (iii) Executives’ agreement during the
Severance Period not to solicit for employment or hire any person who was an
employee of the Company at any time within the one year period before the
Executive’s Date of Termination, and (iv) Executive’s agreement during the
Severance Period not to induce or attempt to induce any customer, supplier,
licensee, licensor, franchisee or other business relation of the Company to
cease doing business with the Company, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary. A failure to execute such a general release
and other agreements within 45 days of Executive’s Date of Termination or a
subsequent rescission of such general release within the time allowed will
result in the loss of any rights to receive payments or benefits under this
Plan.

 

V.      Section 409A.

 

This Plan is intended to be exempt from the requirements of Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”). To the extent that this
Plan or any part thereof is deemed to be a nonqualified deferred compensation
plan subject to Section 409A of the Code and the Treasury Regulations (including
proposed regulations) and guidance promulgated thereunder, the provisions of
this Plan shall be interpreted in a manner to the maximum extent possible to
comply with Section 409A of the Code.

 

VI.     Amendment and Modification of Plan. This Plan may be modified, amended
or terminated at any time by the CEO and the Board of Directors of the Company.

 

VII.   No Employment Rights. Neither this Plan for the benefits hereunder shall
be a term of the employment of any employee, and the Company shall not be
obligated in any way to continue the Plan. The terms of this Plan shall not give
any employee the right to be retained in the employment of the Company.

 

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