Exhibiti 10.23


 


AMENDED AND RESTATED PROFESSIONAL SERVICES
AGREEMENT


 


This Amended and Restated  Professional Services Agreement (this “Agreement”)
is made as of February 1, 2008  by
and among Bear Stearns Merchant Manager III, L.P (f/k/a Bear Stearns Merchant
Manager III (Cayman), L.P.), a Cayman Islands exempted limited partnership (“BSMB”),
and Universal Hospital Services, Inc. (the “Company”), a Delaware
corporation and amends and restates the Professional Services Agreement made as
of May 31, 2007 (the “Original Agreement”). Certain capitalized terms used
herein are defined in Section 8 below.


 


WHEREAS, the Company, UHS
Holdco, Inc., a Delaware corporation (“Holdco”), UHS Merger Sub, Inc.,
a Delaware corporation, and J.W. Childs Equity Partners III, L.P., in its
capacity as a representative of the stockholders of the Company, are parties to
an Agreement and Plan of Merger, dated as of April 15, 2007 (the “Merger
Agreement”);


 


WHEREAS, the parties
hereto desire to amend the Original Agreement in order that BSMB may provide to
the Company Merchant Banking Strategic Services (as defined herein) in exchange
for a portion of the fees currently payable by the Company to BSMB as Advisory
Fees; and


 


WHEREAS, Section 14
(Entire Agreement; Modification; Governing Law) of the Original Agreement
provides for its modification where approved in writing by an authorized
representative of the party against whom the terms of the modifications are
binding;


 


NOW, THEREFORE, the
parties agree as follows:


 


1.                                       Term.
This Agreement shall commence on the date hereof and shall terminate (except as
provided in the immediately following sentence) on the earliest to occur of (a) the
consummation of a Qualified Public Offering, (b) the consummation of a
Company Sale, and (c) the tenth anniversary of the date hereof (the “Term”);
provided, that if no Qualified Public Offering or Company Sale has been
consummated prior to the tenth anniversary, the Term shall be automatically
extended thereafter on a year to year basis unless (i) the Company
provides written notice to BSMB of its desire to terminate this Agreement or (ii) BSMB
provides written notice to the Company of its desire to terminate this
Agreement, in each case 90 days prior to the expiration of the Term or any
extension thereof, or at such time as a Qualified Public Offering or Company
Sale is consummated. The provisions of Sections 3(c), 5, 5, 6,
9, 9, 10, 13, 13, and obligations to pay any outstanding
unpaid fees hereunder and accrued interest thereon shall survive the
termination of this Agreement.


 


2.                                       Services.
BSMB shall perform or cause to be performed such services for the Company and
its subsidiaries as mutually agreed by BSMB and the Company’s board of
directors, which may include, without limitation, the following:


 


(a)                                  general
advisory and management services;


 


(b)                                 business
development functions, including identification, support, negotiation and
analysis of acquisitions and dispositions by the Company or its subsidiaries;


 

















 


(c)                                  support,
negotiation and analysis of financing alternatives, including, without
limitation, in connection with acquisitions, capital expenditures and
refinancing of existing indebtedness;


 


(d)                                 finance
functions, including assistance in the preparation of financial projections,
and monitoring of compliance with financing agreements;


 


(e)                                  marketing
functions, including monitoring of marketing plans and strategies;


 


(f)                                    human
resource functions, including searching, identifying and hiring of executives
and directors;


 


(g)                                 other
services for the Company and its subsidiaries upon which the Company’s board of
directors and BSMB agree;


 


and, at the time and in the manner in which BSMB and the Company shall
agree, such of the following services for the Company and its subsidiaries as
agreed upon by BSMB and the Company, which services may include:


 


(h)                                 review
of the Company’s and its subsidiaries’ existing insurance, health benefits,
executive services, purchasing programs and practices; (ii) identification
of potential opportunities for the Company and its subsidiaries to achieve cost
savings in purchasing goods and services in certain common or shared
expenditure categories from third party suppliers or providers (“Suppliers”)
introduced by BSMB; (iii) negotiation on behalf of the Company and its
subsidiaries of certain service or supply agreements with Suppliers (“Supply
Agreements”) to provide such goods and services to the Company and its
subsidiaries at rates or on terms and conditions that are advantageous to the
Company and its subsidiaries; (iv) monitoring of performance by certain
Suppliers under the relevant Supply Agreements; (v) assistance to the
Company and its subsidiaries in resolving certain disputes that may arise under
any Supply Agreements; (vi) calculation and reporting to the Company
estimated annual cost savings achieved by the Company and its subsidiaries
under certain Supply Agreements; and (vii) provision to the Company on a
periodic basis of (A) updates on current and pending Merchant Banking
Strategic Services initiatives of BSMB, and (B) information regarding, and
access to, BSMB’s network of senior executives, including current and former
executives of current and former BSMB portfolio companies, Bear Stearns, BSMB
and applicable service providers and vendors.


 


The Services described in Sections 2(a) through 2(g) shall
be hereinafter referred to as “Advisory Services” and the Services described in
Section 2(h) shall hereinafter be referred to as “Merchant
Banking Strategic Services” or “MBSS.”


 


3.                                       Advisory
Fee.


 


(a)                                  In
consideration of BSMB’s undertaking to provide advisory services hereunder, the
Company shall pay BSMB an annual advisory fee (the “Advisory Fee”) in an
amount for each fiscal year equal to the greater of (x) $500,000 and (y) 0.75%
of Adjusted EBITDA of the Company and its subsidiaries for the immediately
preceding fiscal year, 


 


2

















 


calculated as provided below and payable in advance in quarterly
installments, for the period beginning on the date hereof and ending upon the
termination of this Agreement as provided in Section 1 hereof; provided,
that the annual Advisory Fee for the fiscal year ending December 31, 2007
shall be $500,000. The Advisory Fees shall be payable by the Company whether or
not the Company actually requests that BSMB provide the services described in Section 2
above. All Advisory Fees shall be fully earned when paid.


 


(b)                                 Except
as otherwise provided in Section 3(c) or 3(d) hereof,
all subsequent payments of the Advisory Fee shall be in quarterly installments,
payable on March 31, June 30, September 30 and December 31
of each year, in an amount equal to the greater of (x) $125,000 or (y) the
product of (i) 25% and (ii) 0.75% of Adjusted EBITDA of the Company
and its subsidiaries for the immediately preceding fiscal year. Each scheduled
installment of the Advisory Fee payable pursuant to this Section 3(b) will
be reduced by the amount of the corresponding scheduled installment of the MBSS
Fee (defined below), if any. Advisory Fees and MBSS Fees will be invoiced or
accounted for separately.


 


(c)                                  Upon
a Company Sale or the consummation of a Qualified Public Offering, the Company
shall be obligated to pay to BSMB the Advisory Fee that would be payable to
BSMB pursuant to this Section 3 in respect of the next four
successive three-month periods calculated based on the Advisory Fee paid or
payable for the then current three-month period (determined pursuant to Section 3(b) without
reduction for any MBSS Fees).


 


(d)                                 Notwithstanding
anything to the contrary contained herein, the Company shall accrue but not pay
the Advisory Fee or MBSS Fee if and for so long as (i) any such payment
would constitute a default (or any event which might, with the lapse of time or
the giving of notice or both, constitute a default) under the Company’s
financing agreements (a “Default”); provided, that the Company
shall be obligated to pay any accrued Advisory Fees or MBSS Fees deferred under
this clause (i) to the extent that such payment would not constitute
a Default or (ii) BSMB instructs the Company not to pay all or any portion
of the Advisory Fee or MBSS Fee during any fiscal year. Interest will accrue on
all due and unpaid Advisory Fees or MBSS Fees not paid pursuant to clause (i) of
the preceding sentence at the Default Rate until such Advisory Fees or MBSS
Fees are paid, and such interest shall compound annually.


 


(e)                                  In
addition to the Advisory Fee and MBSS Fee, the Company shall reimburse BSMB,
promptly upon request, for all reasonable out-of-pocket expenses incurred in
the ordinary course of business by BSMB in connection with BSMB’s obligations
hereunder, including fees and expenses paid to consultants, subcontractors,
advisors and other third parties in connection with such obligations.


 


(f)                                    In
consideration for the Merchant Banking Strategic Services being provided by
BSMB, the Company will pay BSMB an annual fee (the “MBSS Fee”), equal to  an amount determined by BSMB at or prior
to the commencement of the fiscal year to represent the fair market value of
Merchant Banking Strategic Services to be provided by BSMB during the coming
fiscal year. In no event shall the MBSS Fee exceed the amount that would have
been payable by Company to BSMB as Advisory Fees under the Original Agreement
for the same period. The MBSS Fee shall be payable in advance on each day on
which as Advisory Fee is payable pursuant to Section 3(b) above for
the period beginning on the date hereof and ending on the termination of this
Agreement. All MBSS Fees shall be fully earned when paid, and shall not 


 


3

















 


be refundable, in whole or in part, regardless of whether or to what
extent actual savings are realized under any Supply Agreement or all Supply
Agreements in the aggregate. As and to the extent provided in Section 3(b),
Advisory Fees payable under this Agreement will be reduced by MBSS Fees payable
under this Agreement.


 


4.                                       Personnel.
BSMB shall provide and devote to the performance of this Agreement such
partners, employees and agents of BSMB as BSMB shall deem appropriate to the
furnishing of the services required.


 


5.                                       Liability.
None of BSMB, any of its affiliates nor their respective partners, members,
employees or agents (collectively, the “BSMB Group”) shall be liable to
the Company or its subsidiaries or affiliates for any loss, liability, damage
or expense (collectively, a “Loss”) arising out of or in connection with
the performance of services contemplated by this Agreement, unless and then
only to the extent that such Loss is determined by a court in a final order
from which no appeal can be taken, to have resulted solely from the gross
negligence or willful misconduct on the part of such member of the BSMB Group. BSMB
makes no representations or warranties, express or implied, in respect of the
services to be provided by the BSMB Group. Except as BSMB may otherwise agree
in writing on or after the date hereof:  (a) each
member of the BSMB Group shall have the right to, and shall have no duty
(contractual or otherwise) not to, directly or indirectly:  (i) engage in the same or similar
business activities or lines of business as the Company or its subsidiaries and
(ii) do business with any client, customer, supplier, lender or investor
of, to or in the Company or its subsidiaries; (b) no member of the BSMB
Group shall be liable to the Company or its subsidiaries or affiliates for
breach of any duty (contractual or otherwise) by reason of any such activities
or of such person’s participation therein; and (c) in the event that any
member of the BSMB Group acquires knowledge of a potential transaction or
matter that may be a corporate opportunity for both (A) the Company or any
of its subsidiaries, on the one hand, and (B) BSMB, on the other hand, or
any other person, no member of the BSMB Group shall have any duty (contractual
or otherwise) to communicate or present such corporate opportunity to the
Company or its subsidiaries and, notwithstanding any provision of this
Agreement to the contrary, shall not be liable to the Company, its subsidiaries
or any of their affiliates for breach of any duty (contractual or otherwise) by
reasons of the fact that any member of the BSMB Group directly or indirectly
pursues or acquires such opportunity for itself, directs such opportunity to
another person, or does not present such opportunity to the Company, its
subsidiaries or any of their affiliates. In no event will any of the parties
hereto be liable to any other party hereto for any punitive, exemplary,
indirect, special, incidental or consequential damages, including lost profits
or savings, whether or not such damages are foreseeable, or in respect of any
liabilities relating to any third party claims (whether based in contract, tort
or otherwise), other than for the Claims (as defined in Section 6)
relating to the services which may be provided by BSMB hereunder.


 


6.                                       Indemnity.
The Company and its subsidiaries shall defend, indemnify and hold harmless each
member of the BSMB Group from and against any and all Losses arising from any
claim by any person with respect to, or in any way related to, this Agreement
(including attorneys’ fees) (collectively, “Claims”) resulting from any
act or omission of any member of the BSMB Group except to the extent that such
Loss is determined by a court in a final order from which no appeal can be
taken to have resulted solely from the gross negligence or willful misconduct
of such member of the BSMB Group. The Company and its subsidiaries shall defend
at its own cost and expense any and all suits or actions (just or unjust) which
may be 


 


4

















 


brought against the Company and its subsidiaries or any member of the
BSMB Group, or in which any member of the BSMB Group may be impleaded with
others upon any Claims, or upon any matter, directly or indirectly, related to
or arising out of this Agreement or the performance of the obligations
hereunder by the BSMB Group, except that if such damage shall be proven to
result solely from gross negligence or willful misconduct by a member of the
BSMB Group, then such member of the BSMB Group shall reimburse the Company and
its subsidiaries for the costs of defense and other costs incurred by the
Company and its subsidiaries.


 


7.                                       Notices.
All notices hereunder shall be in writing and shall be delivered personally or
mailed by United States mail, postage prepaid, addressed to the parties as
follows:


 


to the Company:


 


Universal Hospital Services, Inc.

7700 France Avenue South, Suite 275

Edina, Minnesota 55435-5228

Attention:  Chief Executive Officer

Fax:  (952) 893-3227


 


with copies, which
shall not constitute notice, to:


 


Bear Stearns Merchant Banking

c/o Bear, Stearns & Co. Inc.

383 Madison Avenue, 40th Floor

New York, New York 10179-5706

Attention:  Robert Juneja

Tel.:                     212-272-1231

Fax:                       212-881-9516


 


to BSMB:


 


Bear Stearns Merchant Manager III, L.P.

c/o Bear, Stearns & Co. Inc.

383 Madison Avenue, 40th Floor

New York, New York 10179-5706

Attention:  Robert Juneja

Tel.:                     212-272-1231

Fax:                       212-881-9516


 


with a copy, which shall not constitute notice, to:


 


Kirkland & Ellis LLP

153 East 53rd Street

New York, NY  10022

Attention:  Michael T. Edsall and Jai
Agrawal

Tel.:                     212-446-4928

Fax:                       212-446-6460


 


5

















 


8.                                       Certain
Definitions. For purposes of this Agreement,


 


“Adjusted EBITDA”
means, with respect to the Company and its subsidiaries, on a consolidated
basis, for any fiscal year, the sum of: (i) the net income for such fiscal
year (before the payment of any dividends and excluding the effect of any
extraordinary gains or losses during such period and the effect of any purchase
accounting adjustments as a result of the acquisition of the Company by
Holdco), plus (ii) interest expense, federal, state, foreign and
local income, franchise, and other similar taxes, depreciation and amortization
for such fiscal year, plus (iii) the Advisory Fees paid under this
Agreement, any management
fees paid to any other institutional investor that owns shares of Common Stock
(including for fiscal year 2007 only, any management fees paid by the Company
or its subsidiaries during the period from January 1, 2007 to May 31,
2007 pursuant to (x) that certain Management Agreement, dated as of October 17,
2003, between Halifax GenPar, L.P. and the Company and (y) that certain
Management Agreement, dated as of February 28, 1998, between J.W. Childs
Associates, L.P. and the Company, as amended by that certain Amendment to
Management Agreement, dated as of October 17, 2003, between
J.W. Childs Associates, L.P. and the Company) and any director fees paid to
members of the Board, in each case, during such fiscal year, plus
(iv) for fiscal year 2007 only,
any consulting fees paid by the Company to L.E.K. Consulting during the period
from January 1, 2007 to May 31, 2007, plus (v) any
non-cash charges to the extent that such charges will not result in a cash
charge in any future period (including any non-cash expenses relating to the
options under FAS 123(R)) during such fiscal year, plus (vi) non-capitalized
transaction fees and expenses incurred in connection with the acquisition of
the Company by Holdco during such fiscal year, plus (vii) any fees paid by the Company to David
Dovenberg, but not to exceed $250,000 in any fiscal year,  plus
(or minus) (viii) any unusual and
non-recurring losses (or gains) for such fiscal year, minus (ix) any
non-cash gains during such fiscal year, in each case, as determined in
accordance with United States generally accepted accounting principles and as
set forth on the Company’s financial statements for such fiscal year which have
been approved by the board of directors of Holdco.


 


“Company Sale”
means a transaction with an independent third party or group of independent
third parties acting in concert, pursuant to which such party or parties
acquire (i) all or substantially all of the equity securities of Holdco or
the Company or (ii) all or substantially all of the assets of Holdco or
the Company, as determined on a consolidated basis (in either case, whether by
merger, consolidation, sale, exchange, issuance, transfer or redemption of
equity securities, by sale, exchange or transfer of assets, or otherwise).


 


“Default Rate”
means 10.0% per annum.


 


“Qualified Public
Offering” means an underwritten sale to the public of Holdco’s equity
securities pursuant to an effective registration statement filed with the
Securities and Exchange Commission on Form S-1 (or any successor form)
which results in proceeds (net of underwriting discounts and selling
commissions) of an aggregate (together with proceeds from all previous Public
Offerings) of at least $100,000,000 and after which Holdco’s equity securities
are listed on a national securities exchange or the NASDAQ Stock Market; provided
that a Qualified Public Offering shall not include any issuance of equity
securities in any merger or other business combination, and shall not include
any registration of the issuance of securities to existing securityholders or
employees of Holdco and its subsidiaries on Form S-4 or Form S-8 (or
any successor form).


 


6

















 


9.                                       Assignment.
No party hereto may assign any obligations hereunder to any other party without
the prior written consent of the other parties (which consent shall not be
unreasonably withheld); provided, that BSMB may, without the consent of
the Company, assign its rights under this Agreement to any of its affiliates.


 


10.                                 No
Waiver. The failure of a party to this Agreement to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Agreement. Any waiver must be
in writing.


 


11.                                 Successors.
This Agreement and all the obligations and benefits hereunder shall inure to
the successors and permitted assigns of the parties.


 


12.                                 Counterparts.
This Agreement may be executed and delivered by each party hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which taken together shall constitute but one and the same
agreement.


 


13.                                 Entire
Agreement; Modification; Governing Law. The terms and conditions hereof
constitute the entire agreement between the parties hereto with respect to the
subject matter of this Agreement and supersede all previous communications,
either oral or written, representations or warranties of any kind whatsoever,
except as expressly set forth herein. No modifications of this Agreement nor
waiver of the terms or conditions thereof shall be binding upon either party
unless approved in writing by an authorized representative of such party. All
issues concerning this agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of the
law of any jurisdiction other than the State of New York.


 


14.                                 WAIVER
OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION, OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY TO THIS AGREEMENT HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION
SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS
AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.


 


*   
*    *    *   
*    *


 


7

















 


IN WITNESS WHEREOF, the
parties have executed this Professional Services Agreement as of the date first
written above.


 


 


	
   

  	
  UNIVERSAL HOSPITAL SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Gary D. Blackford

  
	
   

  	
   

  	
  Name: 

  	
  Gary D. Blackford

  
	
   

  	
   

  	
  Title: 

  	
  CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BEAR STEARNS MERCHANT MANAGER

  	
   

  
	
   

  	
  III, L.P.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: JDH Management LLC, its special general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
    /s/
  Robert Juneja

  
	
   

  	
   

  	
  Name:

  	
    Robert
  Juneja

  
	
   

  	
   

  	
  Title:

  	
      Senior
  Managing Director

  
								



 


Signature Page to

Amended and Restated Professional Services Agreement