Exhibit 10.17


 


AMENDED AND RESTATED


EMPLOYMENT AGREEMENT


 


This AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (this “Employment Agreement”)
dated as of December 31, 2008, is between
UNIVERSAL HOSPITAL SERVICES, INC., a Delaware corporation (the “Company”), and Gary D. Blackford
(the “Executive”).  This Employment Agreement amends and restates
the employment agreement between the Executive and the Company dated May 31,
2007, as amended by letter dated July 27, 2007, but has no effect on the
supplemental letter between the parties dated May 31, 2007, which remains
in full effect.


 


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 under Section 4(g) of the
Employment Agreement, dated as of June 25, 2002, between the Company and
the Executive, as amended on or prior to the date hereof (the “Original
Agreement”), and (iv) under
the letter of June 25, 2002 with regarding the retention by the Executive
of certain property upon termination of his employment.


 


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 Chairman and Chief Executive Officer of the Company,
as Chairman and a member of the Board of Directors (the “Board”) of UHS
Holdco, Inc., the parent of the Company (the “Parent”), and as a
member of the Board of Directors of the Company, subject, in his capacity as
Chief Executive Officer, to the direction and control of the Board, and, in
connection therewith, to reside in the Minneapolis, Minnesota area, to oversee
and direct the operations of the Company and to perform such other duties
commensurate with his position as the Board may from time to time reasonably
direct.  The Executive shall also be
appointed as Chairman and Chief Executive Officer of any parent holding or
operating company other than any non-public company that solely holds equity or
debt of the Company.  The Executive’s
place of employment will be in the Minneapolis, Minnesota area.  The Executive shall have all of the
authorities, duties and responsibilities commensurate with his position.  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.  The Executive shall be
entitled to engage in other business activities of a material nature, as a
director, consultant or in any similar capacity, whether or not the Executive
receives any compensation therefor; provided, that the Executive
notifies the Board of such other business activities and the Board determines
in good faith that such other business activities do not unreasonably conflict
with the Executive’s duties and responsibilities to the Company pursuant to this
Employment Agreement.  The Executive


 


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will not be given duties inconsistent with his executive position.  The parties acknowledge that the Executive is
a member of the Board of Directors of Wright Medical Group, Inc.


 


2.             Term
of Employment Agreement.  The term of
the Executive’s employment hereunder began May 31, 2007, and ends as of
the close of business on May 31, 2010, subject to earlier termination
pursuant to the terms hereof (including the Renewal Term, as defined in the
next sentence, the “Term”). 
Following the initial Term, this Employment Agreement will automatically
be renewed for successive one-year terms (each a “Renewal Term”) unless
notice of termination is given by either party upon not less than sixty (60) days’ written notice prior
to the date on which such renewal would otherwise occur.  In the event that the Executive’s employment
is not renewed by the Company in accordance with this Section 2 upon the
expiration of the Term or any Renewal Term, the Executive’s employment shall
terminate as of the date of such expiration, and such termination shall be
deemed a termination without “Cause” for purposes of this Employment Agreement.


 


3.             Compensation
and Benefits.


 


(a)           Base
Salary.  The Executive’s base salary
as of May 31, 2007, is an annual rate of $432,000, payable in equal
bi-weekly installments.  The Board will
review the Executive’s base salary annually and make such increases as it deems
appropriate.  Any decrease may only be
made in connection with an across-the-board reduction (of approximately the
same percentage but no more than five percent (5%) of the then-base salary) in
executive compensation to executive employees imposed by the Board in response
to materially negative financial results or other materially adverse
circumstances affecting the Company. 
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,
but subject to the other provisions of this Employment Agreement, the Executive
will be entitled to receive a bonus based on the achievement of the annual
EBITDA target established by the Board (or any compensation committee thereof)
for each calendar year, which shall be paid in the calendar year following the
calendar year in which it is earned; provided, that the 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 made after the date hereof.  The amount of such bonus, if any, will
correspond to achievement of target EBITDA in accordance with the following:


 


	
  Percentage

  Achievement of Target

  EBITDA

  	
   

  	
  Percentage of Base Salary

  	
   

  
	
  90% or less

  	
   

  	
  0

  	
  %

  
	
  100%

  	
   

  	
  85

  	
  %

  
	
  110% or more

  	
   

  	
  170

  	
  %

  



 


Bonus amounts between the above  amounts will
be determined by straight line interpolation (e.g.,
if percentage achievement is 95%, the bonus shall be 42.5% of base
salary).  For


 


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computational purposes, “base salary” shall equal the
amount received pursuant to Section 3(a) for the calendar year.


 


(c)           Equity
Grant.  As soon as practicable
following May 31, 2007, the Executive shall be granted options to purchase
Parent’s common stock, $.01 par value per share, under Parent’s stock option
plan pursuant to terms mutually agreed upon by the parties in accordance with
the terms set forth on Exhibit A attached hereto.


 


(d)           Other. 
The Executive will be entitled to such health, life, disability, pension,  sick
leave and other benefits as are generally made available by the Company to its
executive employees.  If the Executive
elects not to participate in the Company’s group health plan, but rather obtains
health coverage directly through Minnesota Blue Cross Blue Shield, or such
other insurer as the Board may approve, the Company shall reimburse the
Executive for the reasonable cost of such coverage on a monthly basis, but in
no event later than March 15th of the calendar year following the calendar
year to which such premium expenses relate. 
The Executive will also accrue five weeks paid vacation during each year during the Term in accordance with
and subject to the Company’s vacation policy.


 


4.             Termination.


 


(a)           Death.  This Employment Agreement will automatically
terminate upon the Executive’s death.  In
the event of such termination, the Company will pay to the Executive’s legal
representatives the sum of (i) 100% of the Executive’s annual base salary
(as in effect on the Date of Termination (as defined below)), (ii) $11,350,
and (iii) any earned but unpaid bonus for a calendar year ending prior to
the Date of Termination.  Such amount
shall be paid to Executive’s estate in a single lump sum payment the 61st day following the
Date of Termination.  Additionally, the
Company will pay to the Executive’s legal representatives a pro rata bonus for
the calendar year in which such termination occurs (based on the number of days
elapsed in such calendar year prior to the Date of Termination), at the time
during the next calendar year that the Company pays bonuses to other senior
executives for the calendar year in question, to the extent such bonus would be
payable based on actual results of the Company, as calculated in accordance
with Section 3(b) above (the “Pro-Rata Bonus”).  Additionally, upon any termination hereunder,
the Executive’s estate shall be entitled to receive any accrued but unpaid
salary and unused vacation pay through the Date of Termination in accordance
with Section 3(a) of this Agreement and the terms of the Company’s
vacation plan or policy then in effect, and any accrued vested benefits through
any benefit plan, program or arrangement of the Company at the times specified
therein (collectively, the “Accrued Obligations”).


 


(b)           Disability.  If during the Term the Executive becomes
physically or mentally disabled whether totally or partially, either
permanently or so that the Executive has been unable substantially and competently
to perform his duties hereunder for one hundred eighty (180)
days during any twelve-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 or his legal
representative the sum of (i) 100% of the Executive’s annual base salary
(as in effect on the Date of Termination), (ii) $11,350 and (iii) any
earned but unpaid bonus for a calendar year ending prior to the Date of
Termination.  Such amounts under clauses
(i), (ii) and (iii) above shall,


 


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subject to Section 15 hereof, be paid to the Executive or his
legal representative in a single lump sum payment on the 61st day following the
Date of Termination.  Additionally, the
Executive or his legal representative shall be entitled to receive the Accrued
Obligations and the Pro-Rata Bonus, if any, at the time specified therefor in
Sections 3(a) and 4(a), respectively.


 


(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 any payments (other than the
Accrued Obligations, which shall be paid at the time specified therefor in Section 4(a))
will cease immediately.  The Company will
have “Cause” for termination of the Executive’s employment hereunder if any of
the following has occurred:


 


(i)            the commission by
the Executive of a felony for which he is convicted; or


 


(ii)           the
material breach by the Executive of
his agreements or obligations under
this 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 will pay, subject to Section 4(j), to the
Executive the sum of (i) 185% of the Executive’s annual base salary (as in
effect on the Date of Termination), (ii) $11,350 and (iii) any earned
but unpaid bonus for a calendar year ending prior to the Date of
Termination.  Such amounts under clauses
(i), (ii) and (iii) above shall, subject to Section 15 hereof, be
paid to the Executive or his legal representative in a single lump sum payment
on the 61st day following the Date of Termination.  Additionally, the Executive shall be entitled
to receive the Accrued Obligations and the Pro-Rata Bonus, if any, at the time
specified therefor in Sections 3(a) and 4(a), respectively.


 


(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 any payments
(other than the Accrued Obligations, which shall be paid at the time specified
therefor in Section 4(a)) will cease upon the Date of 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
will pay, subject to Section 4(j), to the Executive the sum of (i) 185%
of the Executive’s annual base salary (as in effect on the Date of
Termination), (ii) $11,350 and (iii) any earned but unpaid bonus for
a calendar year ending prior to the date of such termination.  Such amounts under clauses (i), (ii) and
(iii) above shall, subject to Section 15 hereof, be paid to the
Executive or his legal representative in a single lump sum payment on the 61st day following the
Date of Termination.  The Executive shall
be entitled to receive Accrued Obligations and the Pro-Rata Bonus, if any, at
time specified therefor in Sections 3(a) and 4(a), respectively.


 


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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 percentage of base salary to which the Executive may be
entitled as the result of the Company reaching the annual EBITDA targets as
provided in Section 3(b) of this Employment Agreement has been
reduced other than in connection with an  across-the-board reduction (of
approximately the same percentage but no more than five (5%) of the then base
salary) in executive compensation to executive employees imposed by the Board
in response to materially negative financial results or other materially
adverse circumstances affecting the Company;


 


(ii)           the Board (or any
compensation committee thereof) establishes an unachievable and commercially
unreasonable annual EBITDA target that the Company must achieve in order for
the Executive to receive a bonus under Section 3(b) of this
Employment Agreement and the Executive provides written notice of his objection
to the Board (or such compensation committee) within ten (10) business
days after such target has been established and communicated in writing to the
Executive stating that the Executive believes such target to be unachievable
and commercially unreasonable;


 


(iii)          the Executive is
not elected or re-elected to the Board;


 


(iv)          the Company 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 in each case, without the Executive’s written consent;


 


(v)           any diminution in
title, or any material diminution in responsibilities, duties or authorities,
without the Executive’s written consent; or


 


(vi)          the Company has
breached this Employment Agreement in any material respect if such breach is described in a written
notice to the Company 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.


 


(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,
then, 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 sum of (i) 285% of the Executive’s annual base salary (as in effect on
the Date of Termination), (ii) $11,350 and (iii) any earned but
unpaid bonus for a calendar year ending prior to the Date of Termination.  Such amounts under clauses (i), (ii) and
(iii) above shall, subject to Section 15 hereof, be paid to the Executive or
his legal representative in a single lump sum payment on the 61st day following the Date of Termination, except
that in the event the Executive’s employment terminates within six (6) months
prior to a


 


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Change in Control due to
termination by the Company without Cause or due to termination by the Executive
for Good Reason, then on the Date of Termination, the Executive shall be
entitled to receive payment in accordance with the terms of Section 4(d),
and within thirty (30) days following a Change in Control, the Executive shall
receive a single lump sum payment in an amount equal to the difference between
the amount paid in accordance with Section 4(d) and the amount to be
paid in accordance with this Section 4(g). 
The Executive shall be entitled to receive the Accrued Obligations and
the Pro-Rata Bonus, if any, at the time specified therefor in Sections 3(a) and
4(a), respectively.  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 of Control of the Company or termination of the 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 the
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


 


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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 specified
as the Executive’s 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 notice to the Company for resignation for Good Reason 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 hereunder pursuant to this Section 4,
the Executive will not be entitled to, and hereby irrevocably waives, 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, the Stockholders Agreement between Parent and
certain of the equityholders of Parent (the “Stockholders Agreement”) or
in any stock option plans adopted by Parent. 
Notwithstanding the foregoing, upon any termination of the Executive’s
employment hereunder, the Executive shall continue to be entitled to (i) the
rights to indemnification pursuant to the Company’s charter or by-laws or any
written agreement between the Executive and the Company, (ii) rights with
respect to any directors and officers insurance policy of the Company, and (iii) rights
with respect to the Gross-Up Payment.


 


(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
(other than the Accrued Obligations), if any, 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.


 


(k)           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).


 


5.             Acknowledgment.  The
Executive agrees and acknowledges that in the course of rendering services to the Company and its clients and customers,
the Executive will have access
to and become acquainted with
confidential information about the professional, business and financial affairs of the Company and its affiliates. 
The Executive acknowledges that the Company is engaged and
will be engaged in a  highly competitive
business, and the success of


 


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the Company in the marketplace depends upon
its good will and reputation for
quality and dependability.  The
Executive recognizes that in order to
guard the legitimate interests of the Company and its affiliates, it is necessary for the Company to protect all
confidential information.  The existence of any claim or cause of action by the Executive
against the Company shall not
constitute and shall not be asserted as a defense to the enforcement by the Company of Section 6.  The Executive further agrees that the
Executive’s obligations under Section 6
shall be absolute and unconditional.


 


6.             Confidentiality.  The Executive agrees that during and at all
times after the Term, the Executive will keep secret all confidential matters
and materials of the Company (including its subsidiaries and affiliates),
including, without limitation, know-how, trade secrets, real estate plans and
practices, individual office results, customer lists, pricing policies,
operational methods, any information relating to the Company (including any of
its subsidiaries and affiliates) products, processes, customers and services
and other business and financial affairs of the Company (collectively, the “Confidential
Information”), to which the Executive had or may have access and will not
disclose such Confidential Information to any person, other than (i) the
Company, its respective authorized employees and such other persons to whom the
Executive has been instructed to make disclosure by the Board, (ii) as
appropriate (as determined by the Executive in good faith) to perform his
duties hereunder, or (iii) in compliance with legal process or regulatory
requirements.  “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.             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 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).


 


8.             Modification. 
The Executive agrees and acknowledges that the duration and scope of the
covenants described in Sections 6 and 7 are fair, reasonable and necessary in
order to protect the goodwill 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 Section 6 or 7 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


 


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much of the duration, scope and geographic area
identified in Section 6 or 7 as will render such restrictions valid and
enforceable.


 


9.             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 Section 6, 7 or 13 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.  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.


 


10.           Representations.  The Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Employment Agreement by the Executive do not and shall not conflict with,
breach, violate or cause a default under any contract, agreement, instrument,
order, judgment or decree to which the Executive is a party or by which he is
bound, (ii) the Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity and (iii) upon the execution and delivery of this
Employment Agreement by the Company, this Employment Agreement shall be the
valid and binding obligation of the Executive, enforceable in accordance with
its terms.  THE EXECUTIVE HEREBY
ACKNOWLEDGES AND REPRESENTS THAT HE HAS CONSULTED WITH INDEPENDENT LEGAL
COUNSEL REGARDING HIS RIGHTS AND OBLIGATIONS UNDER THIS EMPLOYMENT AGREEMENT
AND THE TERMS OF THE RELEASE ATTACHED AS ANNEX A AND THAT HE FULLY
UNDERSTANDS THE TERMS AND CONDITIONS CONTAINED HEREIN AND THEREIN.


 


11.           Survival.  This Employment Agreement survives and
continues in full force in accordance with its terms notwithstanding the
expiration or termination of the Term.


 


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


 


9





















 


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.           Life
Insurance.  The Company may, at its
discretion and at any time after the execution of this Employment Agreement,
apply for and procure, as owner and for its own benefit, and at its own
expense, insurance on the Executive’s life, in such amount and in such form or
forms as the Company may determine.  The
Executive will have no right or interest whatsoever in such policy or policies,
but the Executive agrees that the Executive will, at the request of the
Company, submit himself to such medical examinations, supply such information
and execute and deliver such documents as may be required by the insurance
company or companies to which the Company or any such subsidiary has applied
for such insurance.


 


14.           No
Mitigation.  The Executive shall be
under no obligation to seek other employment or otherwise mitigate the
obligations of the Company under this Agreement upon termination of this
Agreement, and any payments or benefits paid by the Company hereunder shall not
be offset by any remuneration or benefits received from a subsequent employer.


 


15.           Section 409A.


 


(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 successor
regulation, on the Date of Termination, any payment provided hereunder that is
designated as being “subject to Section 15” shall be made to the Executive
no earlier than the date which is six (6) months from the Date of
Termination; provided, that such payment may be made earlier in the
event of the Executive’s death.  If any
payment to the Executive is delayed pursuant to clause (i) of the
foregoing sentence, such payment instead shall be made 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.


 


(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.


 


10
















 


(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.


 


16.                                 Attorney Fees. The Company shall pay the Executive’s
reasonable legal fees of Proskauer Rose LLP and out-of-pocket expenses incurred
in connection with the negotiation and drafting of this Employment Agreement
and any equity award agreements, and other reasonable legal fees and
out-of-pocket expenses of Proskauer Rose LLP related to the sale of the Company
consummated on or about May 31, 2007, subject, in each case, to and within
ten (10) days after his written request for such payment accompanied by
reasonably satisfactory evidence that such fees and expenses were actually
incurred in connection therewith.  If a
court of competent jurisdiction determines that this Employment Agreement was
breached by the Company, the Executive shall be entitled to recover any and all
out-of-pocket costs and expenses, including reasonable legal fees, incurred in
enforcing this Employment Agreement against the Company, subject to and within
ten (10) days after his request for reimbursement accompanied by
reasonably satisfactory evidence that the costs and expenses were incurred in
connection therewith.  The Executive
shall submit a written request for payment or reimbursement within sixty (60)
days of incurring the expense.


 


17.                                 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.


 


18.                                 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 


 


11





















 


binding upon the Executive and will inure to the benefit of the
Executive’s heirs, executors, administrators and legal representatives, but
will not be assignable by the Executive. 
This Employment Agreement may be amended or altered only by the written
agreement of the Company and the Executive. 
All  notices or other communications permitted or
required under this Employment Agreement will be in writing and will be deemed
to have been duly given if delivered by hand, by facsimile transmission to the
Company (if confirmed) or mailed (certified or registered mail, postage
prepaid, return receipt requested) to the Executive or the Company at the last
known address of the party, or such other address as will be furnished in
writing by like notice by the Executive or the Company to the other; provided,
that any notice to the Company hereunder shall also be delivered to UHS Holdco, Inc.,
c/o Irving Place Capital, 277 Park Avenue, 39th Floor, New York,
NY  10172, Attention: Robert Juneja.


 


19.                                 Entire Agreement.  This
Employment Agreement 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.


 


20.                                 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.


 


21.                                 Governing Law;
Jurisdiction.  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.  Each of
the parties agrees that any legal action or proceeding with respect to this Employment
Agreement shall be brought in the federal or state courts in the State of
Minnesota (provided, that any action that can be brought in either the
federal or state courts shall be brought in the federal courts) and, by
execution and delivery of this Employment Agreement, each party hereto hereby
irrevocably submits itself in respect of its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid court in any
legal action or proceeding arising out of this Employment Agreement.  Each of the parties hereto hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Employment Agreement brought in the court referred to in the
preceding sentence.


 


22.                                 Counterparts.  This Employment Agreement may be executed in two or more counterparts, each of
which will be deemed an original but all of which together will constitute one and the same instrument, and
all signatures need not appear on any one counterpart.


 


23.                                 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.


 


*   *   *  
*   *


 


12





















 


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


 


	
   

  	
  UNIVERSAL
  HOSPITAL SERVICES, INC.

  



 


 


	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


 


	
   

  	
   

  
	
   

  	
  Gary D. Blackford

  



 


 


	
   

  	
  Reviewed by

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
   

  
	
   

  	
  Legal Department

  
	
   

  	
  on behalf of

  
	
   

  	
  UHS

  



 

















 


Annex A


 


RELEASE


 


I, Gary D. Blackford, 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. Capitalized terms used but not otherwise defined herein
shall have the meanings set forth in the Agreement.


 


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 in connection with the Gross-Up Payment (as defined in the Agreement);
claims for indemnification and coverage under any directors and officers
insurance policy; claims or claims for unemployment or worker’s compensation as
provided by law; or rights and claims under the Original Agreement to the
extent expressly reserved in the introductory paragraph of the Agreement.


 


A-1

















 


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:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Gary
  D. Blackford