EXHIBIT 10.19
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Employment Agreement") dated as of February
25, 2003 ("Effective Date"), between UNIVERSAL HOSPITAL SERVICES, INC., a
Delaware corporation (the "Company"), and XXXXXX X. XXXXXXX (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 Agreement.
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, however,
that Executive shall be permitted to serve as a member of the Board of Directors
of the entities listed on Annex 1; provided, further, that the 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 15th day of March, 2003, and end as of the close
of business on the Date of Termination (as defined in Section 4(h)) (the
"Term").
3. Compensation and Benefits.
(a) Base Salary. The Executive's base salary will be an annual rate of
$170,000, 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.
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(b) Bonus. In addition to the Executive's base salary, the Executive
will be entitled to receive a bonus under the Company's Executive Bonus Plan
based on the Company's achievement of the annual EBITDA target established by
the Board for each fiscal year (each an "EBITDA Target"), on the same basis as
other executives of the Company, as such plan has been described to the
Executive and may be amended from time to time by the Board. Any bonus
respecting fiscal year 2003 shall be prorated as of the date of the beginning of
the Executive's term of employment, March 15, 2003. The EBITDA Target for any
fiscal year will be subject to adjustment by the Board, in good faith, to
reflect any acquisitions, dispositions and material changes to capital spending.
(c) Options. As of the Effective Date, the Company will grant to the
Executive options to purchase a total of 100,000 shares of the Company's common
stock, $.01 par value (the "Common Stock"), at an exercise price of $13.64 per
share, which options shall be granted under the Company's 1998 Stock Option Plan
(the "Plan"). A copy of the Plan has been provided to the Executive. Such
options will vest in accordance with, and will have such other terms as provided
in, the Stock Option Agreement attached hereto as Exhibit A.
(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. 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 Executive's base salary in monthly
installments and continue to provide the benefits provided hereunder, in each
case for twelve months following such 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 90 consecutive days or for 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 his base salary
in monthly installments and continue to provide the benefits provided hereunder,
in each case for twelve months following such termination.
(c) Cause. The Executive's employment hereunder may be terminated at
any time by the Company for Cause (as defined herein) by written notice to the
Executive. In the event of such termination, all of the Executive's rights to
payments (other than payment for services already rendered) and any other
benefits otherwise due hereunder will cease
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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 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
(i) continue to pay the Executive the Executive's base salary
and provide the Executive continued group health plan benefits at the
active employee rate and in accordance with the Executive's group
health plan elections on the date of termination through the date that
is twelve months following the Date of Termination and
(ii) pay to Executive within 10 days following the Date of
Termination, a lump sum payment equal to the amount of Executive's
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.
(e) Resignation Without Good Reason. The Executive may terminate the
Executive's employment hereunder upon sixty 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 days' written notice to
the Company, for Good Reason. In the event of such termination, the Company
shall (i) continue to pay the Executive the Executive's base salary and provide
the Executive the benefits provided in Section 3(d) hereunder through the date
that is twelve months following the Date of Termination and (ii) pay to
Executive within 10 days following the Date of Termination, a lump sum payment
equal to the amount of Executive's 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.
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 months prior to, or twenty-four
months following, a Change of Control, or the Executive terminates employment
for any reason during the thirty (30) day period following the six 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
(i) continue to pay the Executive the Executive's base salary
and provide the Executive the benefits provided in Section 3(d)
hereunder through the date that is twelve months following the Date of
Termination and
(ii) pay to Executive within 10 days following the Date of
Termination, a lump sum payment equal to the amount of Executive's
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.
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
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that, after payment by Executive of all taxes, including but not
limited to income taxes (and any interest and penalties imposed with
respect thereto) and the Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed on the parachute payments.
For purposes of this Section 4(g), "Change of Control" shall mean when any
"person" (as defined in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934), other than the Company, X.X. Childs Equity Partners, L.P. or any of
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 (i) "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 (ii) substantially all of the assets of
the Company. 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.
(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 (in each case, the "Date of 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. Upon any termination of the Executive's
employment hereunder 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 in accordance
with Section 3(b) hereof, or as may be required by law.
(i) Terminations Not a Breach. The termination of the Executive's
employment pursuant to this Section 4 shall not constitute a breach of this
Employment Agreement by the party responsible for the termination, and the
rights and responsibilities of the parties under this Employment Agreement as a
result of such termination shall be as described in this Section 4.
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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
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. Modification. The Executive agrees and acknowledges that the
perpetual duration and scope of the covenants described in Section 6 are fair,
reasonable and necessary in order to protect the good will and other legitimate
interests of the Company and its subsidiaries, that adequate consideration has
been received by the Executive for such obligations, and that these obligations
do not prevent the Executive from earning a livelihood. If, however, for any
reason any court of competent jurisdiction determines that any restriction
contained in Section 6 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 Section 6 as will render such
restrictions valid and enforceable.
8. 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
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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.
9. 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
10. 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.
11. 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.
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12. 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.
13. 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.
14. 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.
15. 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.
By: Xxxxx X. Xxxxxxxxx
------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Chairman
/s/ Xxxxxx X. Xxxxxxx
---------------------
Xxxxxx X. Xxxxxxx
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ANNEX 1
ACKNOWLEDGED BOARD POSITIONS
Community Health Charities - Minnesota
Minnesota Dollars for Scholars
Human Resources Planning Society
Xxxxxxxx Partnership
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EXHIBIT A
UNIVERSAL HOSPITAL SERVICES, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of this 12th day of February, 2003, by and
between UNIVERSAL HOSPITAL SERVICES, INC., a Delaware corporation (the
"Company"), and XXXXXX X. XXXXXXX ("Optionee").
WHEREAS, in consideration of Optionee executing and delivering to the
Company an Employment Agreement, dated of even date herewith, and pursuant to
the Universal Hospital Services, Inc. 1998 Stock Option Plan (the "Plan"), the
Company wishes to grant this stock option to Optionee.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall be defined as set forth below:
(a) "Affiliate" shall mean any Person that directly or
indirectly controls, is controlled by, or is under common control with,
another Person.
(b) "Board" shall mean the Board of Directors of the
Company.
(c) "Cause" shall have the meaning set forth in the
Employment Agreement.
(d) "Change of Control" shall have the meaning set forth
in the Employment Agreement.
(e) "Common Stock" shall mean shares of Common Stock, par
value $.01 per share, of the Company.
(f) "Company" shall mean Universal Hospital Services,
Inc., a corporation organized under the laws of the State of Delaware,
or any successor corporation.
(g) "Disability" shall have the meaning set forth in the
Employment Agreement.
(h) "EBITDA" shall have the meaning set forth in the
Stockholders' Agreement.
(i) "Employment Agreement" shall mean that Employment
Agreement dated , 2003 between Optionee and the Company.
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(j) "Good Reason" shall have the meaning set forth in the
Employment Agreement.
(k) "Person" has the meaning ascribed to it in Section
13(d)(3) or Rule 14(d)(2) of the Securities Exchange Act of 1934.
(l) "Per Share Value" shall mean:
(1) If the Company's Common Stock is not publicly
traded, the greater of: (i) the quotient of (A) 6.5 multiplied by
Adjusted EBITDA for the twelve months preceding the end of the most
recently completed fiscal quarter ending at least 45 days prior to such
date, less (I) the total value of the Consolidated Indebtedness (as
defined in Section 1.1 of the Stockholders' Agreement) and (II)
distributions made on any preferred equity of the Company, including
without limitation, the Company's Series B 13% Cumulative Accruing
Pay-In-Kind Stock, divided by (B) the total number of all shares of
Common Stock outstanding, including all warrants and options to
purchase Common Stock vested and exercisable at such time; and (ii) the
price of one share of Common Stock based on an arm's length sale of at
least five percent (5%) of the Common Stock; or
(2) If the Company's Common Stock is publicly traded,
the average closing price as listed on a nationally recognized exchange
or as quoted on the Nasdaq National Market for the ninety (90) trading
days immediately preceding the date upon which such value is being
determined.
(m) "Plan" shall mean the Universal Hospital Services,
Inc. 1998 Stock Option Plan, as amended from time to time.
(n) "Stockholders' Agreement" shall mean the Universal
Hospital Services, Inc. Stockholders' Agreement dated as of February
28, 1998, by and among the Company and each of its stockholders, as
amended.
(o) "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if, at the
time of granting of an Option, 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.
2. Grant of Option. The Company hereby grants to Optionee the
right and option (the "Option") to purchase all or any part of an aggregate of
100,000 shares (the "Option Shares") of the Common Stock of the Company at the
price of $13.64 per Option Share (the "Exercise Price") on the terms and
conditions set forth herein. It is understood and agreed that the Exercise Price
is equal to 100% of the fair market value of each such Option Share on the date
of this Agreement. Except as otherwise provided in
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Section 8 hereof, the Option is intended to be entitled to treatment as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
3. Vesting of Option. The Option shall vest in accordance with
this Section 3, based on the Company's achievement of certain Per Share Values
set forth below on or prior to the target dates set forth below. Upon the
achievement of a specified Per Share Value prior to the target date, a
percentage of the Option Shares shall vest and become exercisable, and such
vested Option Shares shall not become unvested due to a subsequent reduction in
the Per Share Value.
Percentage of Option
Per Share Value Target Date Shares Vested and Exercisable
--------------- ----------------- -----------------------------
$17.07 December 31, 2003 12.5%
$22.19 December 31, 2004 37.5%
$28.85 December 31, 2005 62.5%
$______ December 31, 2006 100.0%
Notwithstanding the foregoing, the Option shall vest with respect to 100% of the
total number of Option Shares, five years following the effective date of the
Employment Agreement, provided that the Optionee has been continuously employed
by the Company through such date.
4. Manner of Exercise.
(a) The Option can be exercised only by Optionee or other
proper party by delivering within the option period written notice to
the Company at its principal office. The notice shall state the number
of shares as to which the option is being exercised and be accompanied
by payment in full of the option price for all shares designated in the
notice.
(b) Optionee may pay the option price in cash, by check
(bank check, certified check or personal check), by money order or with
the approval of the Company (i) by delivering to the Company for
cancellation shares of Common Stock of the Company with a fair market
value as of the date of exercise equal to the option price of the
portion thereof being paid by tendering such shares, or (ii) by
delivering to the Company a combination of cash and shares of Common
Stock of the Company with an aggregate fair market value and a
principal amount equal to the option price. For these purposes, the
fair market value of the Company's shares of Common Stock as of any
date shall be determined pursuant to the Plan.
(c) Until such time as the occurrence of a Public
Offering, as such term is defined in the Stockholders' Agreement, upon
exercise of the Option, the Company shall not issue any Option Shares
until Optionee signs and assents to
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the Stockholders' Agreement, unless at such time Optionee is already a
party to the Stockholders' Agreement.
5. Change of Control. In the event of a Change of Control, the
vesting schedule contained in Section 3 shall accelerate and the Optionee shall
have the right to acquire the total number of the Option Shares upon exercise of
the Option immediately prior to such Change of Control.
6. Expiration. The Option shall expire, unless earlier exercised
or terminated, ten years from the date of grant.
7. Effect of Termination of Relationship with the Company.
(a) In the case of termination of Optionee's employment
for Cause or resignation without Good Reason, the Option shall
terminate on the 30th day following the date of termination of
employment.
(b) In the case of termination of Optionee's employment
without Cause or the Optionee's resignation for Good Reason, the
portion of the Option that has vested at the time of termination or
resignation shall terminate three months after the date of employment
termination or resignation, and the portion of the Option that has not
vested shall terminate immediately.
(c) If the Optionee's employment is terminated due to
death or Disability, the portion of the Option that has vested at the
time of termination or resignation shall terminate six months after the
date of employment termination or death and may be exercised during
such period by the Optionee or his or her legal representative or
estate, as the case may be, and the portion of the Option that has not
vested shall terminate immediately.
8. Limitation on Treatment as Incentive Stock Option. Optionee
understands that to the extent that the aggregate fair market value (determined
at the time the option was granted) of the shares of Common Stock of the Company
with respect to which all options that are incentive stock options within the
meaning of Section 422 of the Code are exercisable for the first time by
Optionee during any calendar year exceed $100,000, in accordance with Section
422(d) of the Code, such options shall be treated as options that do not qualify
as incentive stock options.
9. Miscellaneous.
(a) The Option is issued pursuant to the Plan and is
subject to its terms. The Company hereby agrees that the Plan shall be
available for inspection during business hours at the principal office
of the Company.
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(b) Prior to execution of this Agreement and in
consideration of the covenants made herein by the Company, Optionee
shall have executed and delivered to the Company the Employment
Agreement.
(c) This Agreement shall not confer upon Optionee any
right with respect to continuance of employment by the Company or any
of its subsidiaries, nor will it interfere in any way with the right of
the Company to terminate such employment at any time. Optionee shall
have none of the rights of a shareholder with respect to shares subject
to the Option until such shares shall have been issued to Optionee upon
exercise of the Option.
(d) The exercise of all or any parts of the Option shall
only be effective at such time that the sale of shares of Common Stock
pursuant to such exercise will not violate any state or federal
securities or other laws.
(e) The Option may not be transferred, except by will or
the laws of descent and distribution to the extent provided in Section
7(c) hereto, and during Optionee's lifetime the Option is exercisable
only by Optionee.
(f) If there shall be any change in the shares of Common
Stock of the Company through merger, consolidation, reorganization,
recapitalization, dividend in the form of stock (of whatever amount),
stock split or other change in the corporate structure of the Company,
and all or any portion of the Option shall then be unexercised and not
yet expired, then appropriate adjustments in the outstanding Option
shall be made by the Company, in order to prevent dilution or
enlargement of option rights. Such adjustments shall include, where
appropriate, changes in the number of Option Shares and the Exercise
Price.
(g) If Optionee shall dispose of any of the Option Shares
acquired by Optionee pursuant to the exercise of the Option within two
years from the date the Option was granted or within one year after the
transfer of any such shares to Optionee upon exercise of the Option,
then, in order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it under
the circumstances, Optionee shall promptly notify the Company of the
dates of acquisition and disposition of such shares, the number of
shares so disposed of, and the consideration, if any, received for such
shares. In order to comply with all applicable federal or state income
tax laws or regulations, the Company may take such action as it deems
appropriate to insure (i) notice to the Company of any disposition of
the Option Shares within the time periods described above and (ii)
that, if necessary, all applicable federal or state payroll,
withholding, income or other taxes are withheld or collected from
Optionee.
5
IN WITNESS WHEREOF, the parties hereto have caused this Incentive Stock Option
Agreement to be executed on the day and year first above written.
UNIVERSAL HOSPITAL SERVICES, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
____________________________________
Xxxxxx X. Xxxxxxx, Optionee
6
