Document:

Exhibit 10.15

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT (this “Employment Agreement”)  dated
as of July 17, 2007 (“Effective Date”), between
UNIVERSAL HOSPITAL  SERVICES, INC.,  a
Delaware corporation (the “Company”)  and
Walter T. Chesley (the “Executive”).

 

The Company wishes to employ the Executive, and the Executive wishes to
accept employment 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.

 

2.             Term
of Employment Agreement. The term of the Executive’s employment hereunder
will begin as of the date hereof and end as of the close of business on the
Date of Termination (as defined in Section 4(h)) (the “Term”).

 

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3.             Compensation
and Benefits.

 

(a)  Base Salary. The
Executive’s base salary will be 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 fiscal 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 fiscal 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.

 

(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) months
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 hereof, paid to
the Executive in equal monthly installments for twelve (12) months 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 

 

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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
fiscal year in which the Date of Termination occurs had the
Company achieved 100% of the then applicable EBITDA Target for such fiscal 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) months following
the Date of Termination and any bonus amount under clause (iii) above shall, subject
to Section 19 hereof, be paid within ten (10) days 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
fiscal year in which the Date of Termination occurs had the
Company achieved 100% of the then applicable EBITDA Target for such fiscal 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) months following
the Date of Termination and any bonus amount under clause (iii) above shall,
subject to Section 19 hereof, be paid within ten (10) days 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:

 

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(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 fiscal year in
which the Date of Termination
occurs had the Company achieved 100%
of the then applicable EBITDA Target
for such fiscal 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) months following
the Date of Termination and any bonus amount under clause (iii) above shall,
subject to Section 19 hereof, be paid within ten (10) days 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 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 

 

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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 lump sum payment no later than ten (10) business days following
the date of the Change of Control.

 

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. 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 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.

 

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(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 provide for in this Section, if and only
if the Executive has executed and delivered the Release attached as Annex A
within forty-five (45) days of Executive’s termination of employment 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 “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 

 

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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 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 

 

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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 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 

 

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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. 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 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 

 

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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. 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. 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 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.

 

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.

 

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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.

 

 

	
   

  	
  UNIVERSAL HOSPITAL SERVICES, INC.

  
	
   

  	
   

  
	
  DATE: July 17, 2007

  	
  By:

  	
  /s/ Rex Clevenger

  	
   

  
	
   

  	
  Name

  	
  Rex Clevenger

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Walter T. Chesley

  	
   

  
	
   

  	
  Walter T. Chesley

  
	
   

  	
   

  
					

 

 

 

 

11

 

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 July 17,
2007 (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-3Exhibit 10.16

 

Universal Hospital Services, Inc.

Executive Severance Pay Plan

 

June 1, 2007

 

I.      Purpose

 

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

 

II.    Definitions.

 

A.    “Cause” means:

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

F.     “Resignation for Good Reason” means:

 

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

 

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

 

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

 

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

 

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

 

III.   Severance
Pay

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

3

 

IV.     General
Release and Other Agreements.

 

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

 

V.      Section 409A.

 

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

 

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

 

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

 

4

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