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 61st 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 61st 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 61st 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 61st 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 61st 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 61st 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 61st 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
61st 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 termination without
Cause (in  each case, the “Date
of Termination”).  Upon any termination of the Executive’s
employment 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, 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.


 


(j)  Release.  The
Executive agrees that the Executive shall be entitled to the payments and
services provided for in this Section 4, if and only if the Executive has
executed and delivered the Release attached as Annex A within forty-five (45)
days of the Date of Termination and fifteen (15) days have elapsed since such
execution without any revocation thereof by the Executive.


 


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 financia1 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


 


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“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.             Non-Compete,
Non-Solicitation.


 


(a)           In
further consideration of the compensation to be paid to the Executive
hereunder, the Executive acknowledges that, during the course of his employment
with the Company and its subsidiaries, he shall become familiar with the
Company’s trade secrets and with other Confidential Information concerning the
Company and its subsidiaries (and their respective predecessor companies) and
that his services have been and shall be of special, unique and extraordinary
value to the Company and its subsidiaries, and therefor, the Executive agrees
that during the Term and thereafter until the end of the first anniversary of
the Date of Termination, he shall not directly or indirectly own any interest
in, manage, control, participate in, consult with, render services for, or in
any manner engage in any Competing Business (as defined below) in the United
States; provided, that the foregoing shall not prohibit the
Executive from owning stock as a passive investor in any publicly traded
corporation so long as the Executive’s ownership in such corporation, directly
or indirectly, is less than 2% of the voting stock of such corporation.  For purposes of this paragraph, “Competing Business” means any business activity involving
the outsourcing or rental of movable medical equipment and related services to
the health care industry.


 


(b)           During
the Term and thereafter until the end of the second anniversary of the Date of
Termination, the Executive shall not directly or indirectly through another
person or entity (i) induce or attempt to induce any employee of the
Company or any subsidiary to leave the employ of the Company or such
subsidiary, or in any way interfere with the relationship between the Company
or any subsidiary and any employee thereof, (ii) hire any person who was
an employee of the Company or any subsidiary at any time within the one year
period before Employee’s termination from employment or (iii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any subsidiary to cease doing
business with the Company or such subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any subsidiary, except with the prior written consent of the
Board, which consent will be given at the sole discretion of the Board.


 


8.             Intellectual
Property, Inventions and Patents. 
The Executive acknowledges that all discoveries, concepts, ideas, inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports, patent applications, copyrightable work and mask work (whether or not
including any confidential information) and all registrations or applications
related thereto, all other


 


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proprietary information and all similar or related
information (whether or not patentable) which relate to the Company’s or any of
its subsidiaries’ actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by the Executive (whether above or jointly with others) while employed by
the Company or its predecessors and its subsidiaries (“Work Product”),
belong to the Company or such subsidiary. 
The Executive shall promptly disclose such Work Product to the Board
and, at the Company’s expense, perform all actions reasonably requested by the
Board (whether during or after the Term) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).


 


9.             Modification.  The Executive agrees and acknowledges that
the perpetual duration and scope of the covenants described in Sections 6, 7
and 8 are fair, reasonable and necessary in order to protect the good will and
other legitimate interests of the Company and its subsidiaries, that adequate
consideration has been received by 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 Sections 6,
7 or 8 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 Sections 6, 7 and 8 as
will render such restrictions valid and enforceable.


 


10.           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.


 


11.           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


 


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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.


 


12.           Cooperation.  During the Term and thereafter, the Executive
shall reasonably cooperate with the Company and its Subsidiaries in any
internal investigation or administrative, regulatory or judicial proceeding as
reasonably requested by the Company (including, without limitation, being
available to the Company upon reasonable notice for interviews and factual
investigations, appearing at the Company’s request to give testimony without
requiring service of a subpoena or other legal process, making available to the
Company all pertinent information requested by the Company and all relevant
documents requested by the Company which are or may come into the Executive’s
possession, all at times and on schedules that are reasonably consistent with
the Executive’s other activities and commitments, with due regard for such
activities and commitments).  In the
event the Company requires the Executive’s cooperation in accordance with this Section after
the termination of the Term, the Company shall reimburse the Executive for all
of his reasonable costs and expenses incurred, in connection therewith,
including legal fees, plus pay the Executive a reasonable amount per day for
his time spent and such payments shall be made by Company on a monthly basis,
but in no event later than March 15th of
the calendar year following the calendar year to which such amounts
relate.  The Company shall indemnify the
Executive and hold him harmless from any claim, loss or damage as a result of
his cooperation hereunder.


 


13.           Indemnification.  The Company shall indemnify the Executive
(including, for the avoidance of doubt, advancement of legal expenses) to the
fullest extent permitted by applicable law in the event he was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, or in the event a claim or demand for information
is made or threatened to be made against him, in each case by reason of the
fact that he is or was a director, officer, employee, fiduciary or agent of the
Company or, at the request of the Company, any other entity or benefit plan
(except with respect to the Executive’s fraud, gross negligence, or willful
misconduct).  Such obligation shall
continue after any termination of employment or directorship with regard to
actions or inactions prior thereto, and shall survive the termination of this
Agreement.  The Executive shall be
covered by the Company’s directors and officers insurance policy upon terms and
conditions no less favorable than the terms provided by the Company to any
member of the Board or other senior executive of the Company.


 


14.           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


 


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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.


 


15.           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 (including
the Original Agreement), except as
otherwise specifically provided herein.


 


16.           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.


 


17.           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.


 


18.           Withholding. All amounts payable to the
Executive as compensation hereunder shall be subject to all customary
withholding, payroll and other taxes. 
The Company shall be entitled to deduct or withhold from any amounts
payable to the Executive any federal, state, local or foreign withholding
taxes, excise tax, or employment taxes imposed with respect to the Executive’s
compensation or other payments or the Executive’s ownership interest in the
Company (including, without limitation, wages, bonuses, dividends, the receipt
or exercise of equity options and/or the receipt or vesting of restricted
equity).


 


19.           Section 409A Compliance.


 


(a)            Compliance.  It is the intention of the parties to this
Employment Agreement that no payment or entitlement pursuant to this Employment
Agreement will give rise to any adverse tax consequences to the Executive under
Section 409A of the Code.  The
Employment Agreement shall be interpreted to that end and, consistent with that
objective and notwithstanding any provision herein to the contrary, the Company
and the Executive shall, to the extent necessary to comply with Section 409A
of the Code, agree to act reasonably and in good faith to mutually reform the
provisions of this Employment Agreement to avoid the application of or excise
tax under Section 409A of the Code. 
To this end, the parties agree that the severance benefits payable under
this Employment Agreement will be paid only upon a “separation from service”
(within the meaning of Section 409A of the Code) that occurs coincident
with or following the Date of Termination. 
Notwithstanding any other provision herein, if the Executive is a
“specified employee”, as defined in, and pursuant to, Reg. Section 1.409A-1(i) or
any


 


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successor regulation, on the Date of Termination, any
payment provided hereunder that is designated as being “subject to Section 19”
shall be made to the Executive no earlier than 
(i) the date which is six (6) months from the Date of
Termination; or (ii) the date of the Executive’s death (the “Delay
Period”).  If any payment to the
Executive is delayed pursuant to the foregoing sentence all payments due during
the Delay Period will be paid to the Executive or his estate in a lump sum on
the first business day following the expiration of the six-month period
referred to in the prior sentence or the date of the Executive’s death, as
applicable, and all remaining amounts shall be paid in accordance with the
normal payment dates specified in this Employment Agreement.


 


(b)           Payment
Period.  Whenever a payment under
this Agreement specifies a payment period with reference to a number of days
(e.g., “payment shall be made within ninety (90) days following the Date of
Termination), the actual date of payment within the specified period shall be within
the sole discretion of the Company.


 


(c)           Reimbursement.  With regard to any provision herein that
provides for reimbursement of costs and expenses or in-kind benefits, except as
permitted by Section 409A of the Code, (i) the right to reimbursement
or in-kind benefits shall not be subject to liquidation or exchange for another
benefit, (ii) the amount of expenses eligible for reimbursement, of
in-kind benefits, provided during any taxable year shall not affect the
expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other taxable year, provided that the foregoing clause (ii) shall not be
violated without regard to expenses reimbursed under any arrangement covered by
Section 105(b) of the Code solely because such expenses are subject
to a limit related to the period the arrangement is in effect and (iii) such
payments shall be made on or before the last day of the Executive’s taxable
year following the taxable year in which the expense occurred.


 


(d)           Installments.  If under this Agreement, an amount is to be
paid in two or more installments, for purposes of Section 409A of the Code,
each installment shall be treated as a separate payment.


 


20.           Counterparts.  This Employment Agreement may be executed in
two (2) 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.


 


11

















 


21.           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.


 


 




	
  DATE:

  	
   

  	
   

  	
  UNIVERSAL
  HOSPITAL SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Rex Clevenger

  
	
   

  	
   

  	
  Title: Executive Vice President
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Walter
  T. Chesley

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Reviewed
  by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
  Legal
  Department

  
	
   

  	
   

  	
  on
  behalf of

  
	
   

  	
   

  	
  UHS

  
							






 


12

















 


Annex A


 


RELEASE


 


I, Walter T. Chesley, in consideration of and subject to the
performance by Universal Hospital Services, Inc., a Delaware corporation
(together with its subsidiaries, the “Company”), of
its material obligations under the Employment Agreement, dated as of December 31,
2008 (the “Agreement”), do hereby release and
forever discharge as of the date hereof the Company and all present and former
directors, officers, agents, representatives, executives, successors and
assigns of the Company and its direct or indirect owners (collectively, the “Released Parties”) to the extent provided below.


 


1.                                       Except
as provided in paragraph 2 below, I knowingly and voluntarily release and
forever discharge the Released Parties from any and all claims, controversies,
actions, causes of action, cross-claims, counter-claims, demands, debts,
compensatory damages, liquidated damages, punitive or exemplary damages, other
damages, claims for costs and attorneys’ fees, or liabilities of any nature
whatsoever in law and in equity, both past and present (through the date
hereof) and whether known or unknown, suspected, or claimed against any of the
Released Parties which I, or any of my heirs, executors, administrators or
assigns, may have, which arise out of or are connected with my employment with,
or my separation from, the Company (including, but not limited to, any
allegation, claim or violation, arising under: 
Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights
Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including
the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as
amended; the Americans with Disabilities Act of 1990; the Family and Medical
Leave Act of 1993; the Civil Rights Act of 1866, as amended; the Worker
Adjustment Retraining and Notification Act; the Employee Retirement Income
Security Act of 1974; any applicable Executive Order Programs; the Fair Labor
Standards Act; or their state or local counterparts; or under any other
federal, state or local civil or human rights law, or under any other local,
state, or federal law, regulation or ordinance; or under any public policy,
contract or tort, or under common law; or arising under any policies, practices
or procedures of the Company; or any claim for wrongful discharge, breach of contract,
infliction of emotional distress, defamation; or any claim for costs, fees, or
other expenses, including attorneys’ fees incurred in these matters), (all of
the foregoing collectively referred to herein as the “Claims”).


 


2.                                       I
agree that this Release does not waive or release any rights or claims that I
may have under:  the Age Discrimination
in Employment Act of 1967 which arise after the date I execute this Release;
claims for benefits under any employee benefit plan maintained by the Company;
rights and entitlements under the Company’s equity plans and related award
agreements; claims for indemnification and 


 


A-1

















 


coverage under any directors and officers insurance policy; or claims
or claims for unemployment or worker’s compensation as provided by law.


 


3.                                       I
acknowledge and intend that this Release shall be effective as a bar and shall
serve as a complete defense to each and every one of the Claims and that it
shall be given full force and effect according to each and all of its express
terms and provisions, including those relating to unknown and unsuspected
Claims (notwithstanding any state statute that expressly limits the
effectiveness of a release of unknown, unsuspected and unanticipated Claims),
if any, as well as those relating to any other Claims hereinabove mentioned or
implied.


 


4.                                       I
represent that I have not made any assignment or transfer of any Claim.  I agree that neither this Release, nor the
furnishing of the consideration for this Release, shall be deemed or construed
at any time to be an admission by the Company or any Released Party of any
improper or unlawful conduct.  I agree
that this Release is confidential and agree not to disclose any information
regarding the terms of this Release, except to my immediate family and any tax,
legal or other counsel I have consulted regarding the meaning or effect hereof
or as required by law, and I will instruct each of the foregoing not to
disclose the same to anyone.


 


5.                                       Each
provision of this Release shall be interpreted in such manner as to be
effective and valid under applicable law and any provision of this Release held
to be invalid, illegal or unenforceable in any respect shall be severable.  This Release cannot be amended except in a
writing duly executed by the Company and me.


 


*     *    
*    *     *


 


A-2

















 


I UNDERSTAND THAT I HAVE FIFTEEN (15) DAYS
AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL
NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED.


 


 




	
  DATE:

  	
   

  	
   

  	
  UNIVERSAL
  HOSPITAL SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Walter
  T. Chesley

  






 


A-3