SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
UNIVERSAL HOSPITAL SERVICES, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
91359L109
(CUSIP Number)
Steven G. Segal
J.W. Childs Associates, L.P.
One Federal Street, 21st Floor
Boston, Massachusetts 02110
(617) 753-1100
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Louis A. Goodman
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street, 31st Floor
Boston, Massachusetts 02108-3194
(617) 573-4800
November 25, 1997
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this Schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to
whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of
the Act (however, see the Notes).
CUSIP No. 91359L109
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
J. W. Childs Equity Partners, L.P.
IRS Identification No. 04-3290201
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (X)
(3) SEC USE ONLY _______________________________________________
(4) SOURCE OF FUNDS (See Instructions)
(5) (CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
(7) SOLE VOTING POWER
NUMBER OF - 0 -
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY - 0 -
EACH
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON - 0 -
WITH
(10) SHARED DISPOSITIVE POWER
- 0 -
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
- 0 -
(12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions)
[ ]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
(14) TYPE OF REPORTING PERSON (See Instructions)
PN
CUSIP No. 91359L109
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
UHS Acquisition Corp.
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) (X)
(3) SEC USE ONLY _______________________________________________
(4) SOURCE OF FUNDS (See Instructions)
(CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[ ]
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Minnesota
(7) SOLE VOTING POWER
NUMBER OF - 0 -
SHARES
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY - 0 -
EACH
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON - 0 -
WITH
(10) SHARED DISPOSITIVE POWER
- 0 -
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
- 0 -
(12) CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES (See Instructions)
[ ]
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
(14) TYPE OF REPORTING PERSON (See Instructions)
CO
This Schedule 13D (the "Statement") is being filed as an
original filing with the Securities and Exchange Commission (the
"Commission") by J.W. Childs Equity Partners, L.P., a Delaware limited
partnership ("Parent"), and UHS Acquisition Corp., a Minnesota corpo-
ration and wholly owned subsidiary of Parent ("Acquiror"), in connection
with certain Support/Voting Agreements, dated November 25, 1997 among
Parent, Acquiror, Universal Hospital Services, Inc., a Minnesota
corporation (the "Company"), and each of Thomas A. Minner, Michael W.
Bohman, Paul W. Larsen and Duane R. Wenell (the "Officer Voting
Agreements") and a Support/Voting Agreement, dated November 25, 1997
among Parent, Acquiror, the Company, and David E. Dovenberg and Jean
Dovenberg (the "Dovenberg Voting Agreement" and, collectively with the
Officer Voting Agreements, the "Voting Agreements"). Based on infor-
mation contained in the Company's filings with the Commission, Mr. Minner
is the Chief Executive Officer and Chairman of the Board of Directors of
the Company; Mr. Bohman is the Vice President of Customer Service and
Sales and a director of the Company; Mr. Larsen is the Vice President of
Administrative Services, Secretary, Treasurer and a director of the
Company; Mr. Wennell is the Vice President of Marketing of the Company;
and Mr. Dovenberg is the Vice President of Finance and Chief Financial
Officer of the Company. Ms. Dovenberg is the wife of Mr. Dovenberg. Based
on representations made in the Voting Agreements, Parent and Acquiror
believe that Messrs. Minner, Bohman, Larsen, Wenell, Dovenberg and Ms.
Dovenberg beneficially own an aggregate of 1,008,678 shares of common
stock, par value $.01 per share, of the Company (the "Common Stock") (or
approximately 18% of the total outstanding shares of Common Stock, based
on the total number of shares of Common Stock represented by the Company
in the Merger Agreement (as defined below) to have been outstanding as of
November 25, 1997). The Voting Agreements were entered into in connection
with the signing of an Agreement and Plan of Merger dated as of November
25, 1997 by and among Acquiror, Parent and the Company (the "Merger
Agreement") providing for the proposed merger (the "Merger") of Acquiror
with and into the Company.
Item 1. Security and Issuer.
This Statement on Schedule 13D relates to shares of Common
Stock. The Company's filings with the Commission state that the Company's
principal executive offices are located at 1250 Northland Plaza, 3800
West 80th Street, Bloomington, Minnesota 55431-4442.
Item 2. Identity and Background.
(a) - (c) and (f)
This Statement is being jointly filed by Parent and Acquiror,
which are hereinafter collectively referred to as the "Reporting
Persons." The Reporting Persons have entered into a Joint Filing
Agreement, dated December 4, 1997, a copy of which is filed with
this Statement as Exhibit 1 (which is hereby incorporated by reference
herein), pursuant to which the Reporting Persons have agreed to file this
Statement jointly in accordance with the provisions of Rule 13d-1(f)(1)
under the Act.
Parent is a private investment firm based in Boston, princi-
pally engaged in the business of investing and managing its investments.
Acquiror is a wholly owned subsidiary of Parent organized on November 13,
1997 solely for the purpose of effecting the transactions described in
Item 4 below and has not engaged in any activities other than in
connection with such transactions. The principal business and principal
office of each of the Reporting Persons is located at One Federal Street,
21st Floor, Boston, Massachusetts 02110. Certain information required by
this Item 2 and Instruction C to Schedule 13D concerning the Reporting
Persons and other persons and entities is set forth on Schedule A hereto
which is hereby incorporated by reference herein.
The Reporting Persons and certain directors and executive
officers of the Company and others may be deemed to have formed a "group"
for purposes of Section 13(d)(3) of the Act as a result of certain
transactions described in Item 4 below. Each of the Reporting Persons
expressly declares that the filing of this Statement shall not be
construed as an admission by it, for purposes of the Act, that it has
formed a group, that it is the beneficial owner of, or that it has any
shared voting or dispositive power over any shares of Common Stock.
(d) and (e)
During the last five years, neither of the Reporting Persons
nor, to their knowledge, any of the persons named in Schedule A hereto
has been convicted in a criminal proceeding (excluding traffic viola-
tions or similar misdemeanors).
During the last five years, neither of the Reporting Persons
nor, to their knowledge, any of the persons named in Schedule A hereto
has been party to a civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which any such person was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As of the date of this Statement, the Reporting Persons have
not paid any funds or other consideration for purchases of Common Stock.
If the Merger is consummated, the total amount required to
pay the merger consideration to the Company's stockholders, cash out
certain options to purchase Common Stock held by certain directors and
employees of the Company, refinance indebtedness of the Company and pay
transaction-related fees and expenses is estimated to be approximately
$133,000,000. Such funds are expected to be obtained from capital
contributions from investors, including Parent, and external borrowings.
Pursuant to a letter agreement (the "BTCo Commitment Letter") dated
November 25, 1997 between Parent and Bankers Trust Company ("BTCo"),
Parent has received a commitment from BTCo with respect to $95 million in
the form of a term loan facility in an aggregate principal amount of up
to $80 million and a revolving credit facility in an aggregate principal
amount of $15 million, upon the terms and conditions set forth in such
letter agreement (collectively, the "Bank Facilities"). Funding of the
Bank Facilities would be subject to the satisfaction of certain customary
conditions. Parent has also entered into an engagement letter with BT
Alex. Brown Incorporated dated November 25, 1997 (the "BT Alex. Brown
Engagement Letter"), pursuant to which Parent has engaged BT Alex. Brown
Incorpo rated in connection with the possible sale of debt securities of
the Company. Parent currently intends to seek to effect a private place-
ment of debt securities of the Company, the definitive terms of which
have not yet been established, in lieu of borrowings under the Bank
Facilities. However, there can be no assurance that such a transaction
will be consummated or as to the timing or terms of any such transaction.
Acquiror's obligation to consummate the Merger is conditional upon, among
other things, receipt of sufficient financing.
The foregoing summary of the BTCo Commitment Letter and the
BT Alex. Brown Engagement Letter do not purport to be complete and are
qualified in their entirety by reference to the BTCo Commitment Letter
and the BT Alex. Brown Engagement Letter, copies of which are filed as
Exhibits 2 and 3, respectively, to this Statement.
Item 4. Purpose of Transaction.
The purpose of the Voting Agreements is to secure the support
of certain significant holders of Common Stock for the proposed Merger
pursuant to the Merger Agreement. There can be no assurance, however,
that the proposed Merger will be consummated or as to the timing or terms
thereof.
Pursuant to the Merger Agreement, and subject to the condi-
tions set forth therein (including approval by shareholders of the
Company), at the effective time of the Merger (the "Effective Time"), (i)
Acquiror will be merged with and into the Company, (ii) the directors and
officers of Acquiror will become the directors and officers of the
Company in its capacity as the surviving corporation of the Merger (the
"Surviving Corporation"), in each case until their respective successors
are elected or appointed and qualified, (iii) except as set forth in the
Dovenberg Voting Agreement, and except for shares of Common Stock as to
which dissenters' rights are perfected or which are owned by the Company,
Parent, Acquiror or any direct or indirect wholly owned subsidiary of the
Company, Parent or Acquiror, each share of the Common Stock, together
with the associated preferred stock purchase rights, issued and
outstanding immediately prior to the Effective Time shall be cancelled,
extinguished and converted into and become a right to receive $15.50 in
net cash per share (the "Merger Consideration"), subject to adjustment
for any stock split, subdivision, reclassification, recapitalization,
combination or exchange prior to the consummation of the Merger, (iv)
each share of Acquiror's common stock issued and outstanding immediately
prior to the Effective Time shall be converted into one share of Common
Stock of the Surviving Corporation, and (v) the articles of
incorporation and bylaws of Acquiror immediately prior to the Effective
Time will be the articles of incorporation of the Surviving Corporation,
except that the name of the Surviving Corporation shall be "Universal
Hospital Services, Inc." Upon consummation of the Merger, the
registration of the Common Stock under the Act will be terminated, and
the Common Stock will cease to be reported on The Nasdaq Stock Market,
Inc.
Pursuant to the Officer Voting Agreements, each of Thomas A.
Minner, Michael W. Bohman, Paul W. Larsen and Duane R. Wenell has agreed,
and pursuant to the Dovenberg Voting Agreement, David E. Dovenberg and
Jean Dovenberg have each agreed, (i) to vote certain shares of Common
Stock beneficially owned or controlled by him, her or them (the "Shares")
at any meeting of shareholders of the Company at which the Merger, the
Merger Agreement and/or the transactions contemplated thereby are
considered in favor of the Merger, the Merger Agreement and the
transactions contemplated thereby, (ii) not to vote the Shares in favor
of any recapitalization, merger, consolidation or other business
combination involving the Company, or acquisition of any capital stock or
any material portion of the assets of the Company, or any combination of
the foregoing (a "Competing Transaction"), or solicit, initiate,
encourage or facilitate, or furnish or disclose non-public information in
furtherance of any inquiries or the making of any proposal with respect
to any Competing Transaction, or negotiate, explore or otherwise engage
in discussions with any person (other than the Reporting Persons or their
respective directors, officers, employees, agents and representatives)
with respect to any Competing Transaction, or enter into any agreement,
arrangement or understanding with respect to any Competing Transaction or
agree to or otherwise assist in the effectuation of any Competing
Transaction, and (iii) not to, and not to permit any company, trust or
other entity controlled by him or her, to contract to sell, sell or
otherwise transfer or dispose of any of the Shares or any interest
therein or any options or securities convertible thereinto or any voting
rights with respect thereto, other than pursuant to the Merger. The
Voting Agreements may be terminated at the option of any party at any
time upon the earlier of termination of the Merger Agreement or the
Effective Time.
In addition, pursuant to the Dovenberg Voting Agreement,
David E. Dovenberg and Jean Dovenberg have agreed that (i) at the
Effective Time, certain shares of Common Stock set forth on Schedule I
thereto and any shares of Common Stock acquired by them after the date of
the Dovenberg Voting Agreement and prior to the Effective Time (together
with the associated preferred stock purchase rights) will not be
cancelled, extinguished or converted into the right to receive the Merger
Consideration, but instead each such share of Common Stock will remain
issued and outstanding as one fully paid and nonassessable share of
common stock of the Surviving Corporation, and (ii) upon consummation of
the Merger, all options to purchase Common Stock held by David E.
Dovenberg as of the date of the Merger Agreement will not be cancelled in
exchange for the Option Consideration (as defined in the Merger
Agreement), but instead all such options will remain issued and
outstanding options to purchase shares of common stock of the Surviving
Corporation. Acquiror may, but has no obligation to, offer certain other
employees of the Company the opportunity to "roll over" their shares of
Common Stock and/or stock options on terms identical or substantially
similar to those in the Dovenberg Voting Agreement.
Pursuant to a letter agreement dated November 25, 1997
between Acquiror and David E. Dovenberg (the "Employment Agreement"),
from and after the date of the Merger, the Surviving Corporation has
agreed to employ Mr. Dovenberg, and Mr. Dovenberg has agreed to serve, as
President and Chief Executive Officer of the Surviving Corporation for a
term of three years from the Effective Time, subject to earlier
termination pursuant to the terms thereof (the "Term"). The Employment
Agreement provides that during the Term, Mr. Dovenberg will be a member
of the Board of Directors of the Surviving Corporation. The Employment
Agreement also provides that Mr. Dovenberg will enter into a
stockholders' agreement with the other equity investors in the Surviving
Corporation, substantially in the form attached to the Employment
Agreement as Exhibit B.
The foregoing summaries of the Merger Agreement, the Voting
Agreements and the Employment Agreement do not purport to be complete and
are qualified in their entirety by reference to the Merger Agreement, the
Dovenberg Voting Agreement, the form of Officer Voting Agreement and the
Employment Agreement, copies of which are filed with this Statement as
Exhibits 5, 6, 7 and 8, respectively, to this Statement. Each of Thomas
A. Minner, Michael W. Bohman, Paul W. Larsen and Duane R. Wenell has
entered into an Officer Voting Agreement in the form of the Officer
Voting Agreement included as Exhibit 7.
Other than as set forth above, none of the Reporting Persons
has any plans or proposals which relate to or would result in any of the
actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) - (e)
Neither of the Reporting Persons nor, to their knowledge, any
of the persons named in Schedule A hereto beneficially owns any shares of
Common Stock or has effected any purchase or sale transaction in shares
of Common Stock in the 60-day period preceding the date of this
Statement. The Reporting Persons are filing this Statement only in
connection with their entering into the Voting Agreements described in
Item 4 above.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
The second through sixth paragraphs of the Reporting Per-
sons' response to Item 4 of this Statement are hereby incorporated by
reference herein.
Item 7. Material to be Filed as Exhibits.
1. Agreement Regarding Joint Filing of Schedule 13D dated
December 4, 1997 by and between J.W. Childs Equity
Partners, L.P. and UHS Acquisition Corp.
2. Letter Agreement dated November 25, 1997 by and between
Bankers Trust Company and J.W. Childs Equity Partners,
L.P.
3. Engagement Letter dated November 25, 1997 by and be-
tween BT Alex. Brown Incorporated and J.W. Childs
Equity Partners, L.P.
4. Letter Agreement dated November 25, 1997 by and between
BT Alex. Brown Incorporated and J.W. Childs Equity
Partners, L.P.
5. Agreement and Plan of Merger dated as of November 25,
1997 by and among UHS Acquisition Corp., J.W. Childs
Equity Partners, L.P. and Universal Hospital Services,
Inc. (incorporated by reference to Exhibit 2 to the
Company's Current Report on Form 8-K filed with the
Commission on November 26, 1997)
6. Support/Voting Agreement dated November 25, 1997 among
J.W. Childs Equity Partners, L.P., UHS Acquisition
Corp., Universal Hospital Services, Inc., David E.
Dovenberg and Jean Dovenberg
7. Form of Support/Voting Agreement dated November 25,
1997
8. Letter agreement dated November 25, 1997 between UHS
Acquisition Corp. and David E. Dovenberg
9. Press release dated November 26, 1997 (incorporated by
reference to Exhibit 99 to the Company's Current Report
on Form 8-K filed with the Commission on November 26,
1997)
SIGNATURE
After reasonable inquiry and to the best of their knowledge
and belief, J.W. Childs Equity Partners, L.P. and UHS Acquisition
Corp. certify that the information set forth in this Statement is
true, complete and correct.
Date: December 4, 1997
J.W. CHILDS EQUITY PARTNERS, L.P.
By: J.W. Childs Advisors, L.P.
General Partner
By: J.W. Childs Associates, L.P.
General Partner
By: J.W. Childs Associates, Inc.
General Partner
By /s/ Steven G. Segal
Name: Steven G. Segal
Title: Vice President
UHS ACQUISITION CORP.
By /s/ Steven G. Segal
Name: Steven G. Segal
Title: President
Schedule A
I. J.W. Childs Equity Partners, L.P.
The general partner of J.W. Childs Equity Partners, L.P. is
J.W. Childs Advisors, L.P., a Delaware limited partnership. The
general partner of J.W. Childs Advisors, L.P. is J.W. Childs Associates,
L.P., a Delaware limited partnership. The general partner of
J.W. Childs Associates, L.P. is J.W. Childs Associates, Inc., a
Delaware corporation. Each of J.W. Childs Advisors, L.P., J.W. Childs
Associates, L.P. and J.W. Childs Associates, Inc. is principally
engaged in the business of investing and managing the investments, in
a general partner capacity, of J.W. Childs Equity Partners, L.P., and
each has its principal business and principal office located at One
Federal Street, 21st Floor, Boston, Massachusetts 02110. The directors
and executive officers of J.W. Childs Associates, Inc. are as
follows:
Sole Director
- -------------
John W. Childs
Executive Officers
- ------------------
John W. Childs President
Steven G. SeVice President
Adam L. Suttin Vice President
Glenn A. Hopkins Vice President
John W. Childs Treasurer
Steven G. Segal Secretary
Each of the above-named directors and executive officers of
J.W. Childs Associates, Inc. is a United States citizen and is
employed by J.W. Childs Associates, L.P. The business address of each
of such persons is c/o J.W. Childs Associates, L.P., One Federal
Street, 21st Floor, Boston, Massachusetts 02110.
II. UHS Acquisition Corp.
The directors and executive officers of UHS Acquisition Corp. are
as follows:
Directors
- ---------
Steven G. Segal
Allan A. Dowds IV
Executive Officers
- ------------------
Steven G. Se President and Chief Executive Officer
Edward D. Yun Vice President, Treasurer, Assistant Secretary
Adam L. Suttin Vice President, Secretary, Assistant Treasurer
Allan A. Dowds IV Vice President, Assistant Secretary, Assistant
Treasurer
Each of the above-named directors and executive officers of
UHS Acquisition Corp. is a United States citizen and is employed by
J.W. Childs Associates, L.P. The business address of each of such
persons is c/o J.W. Childs Associates, L.P., One Federal Street, 21st
Floor, Boston, Massachusetts 02110.
Exhibit 1
AGREEMENT REGARDING THE JOINT FILING OF
SCHEDULE 13D
The undersigned hereby agree as follows:
(i) Each of them is individually eligible to use the Schedule
13D to which this Exhibit is attached, and such Schedule 13D is filed on
behalf of each of them; and
(ii) Each of them is responsible for the timely filing of
such Schedule 13D and any amendments thereto, and for the completeness
and accuracy of the information concerning such person contained therein;
but none of them is responsible for the completeness or accuracy of the
information concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is
inaccurate.
Date: December 4, 1997
J.W. CHILDS EQUITY PARTNERS, L.P.
By: J.W. Childs Advisors, L.P.
General Partner
By: J.W. Childs Associates, L.P.
General Partner
By: J.W. Childs Associates, Inc.
General Partner
By /s/ Steven G. Segal
Name: Steven G. Segal
Title: Vice President
UHS ACQUISITION CORP.
By /s/ Steven G. Segal
Name: Steven G. Segal
Title: President
EXHIBIT 2
BANKERS TRUST COMPANY
130 LIBERTY STREET
NEW YORK, NEW YORK 10006
November 25, 1997
J.W. Childs Equity Partners, L.P.
1 Federal Street
21st Floor
Boston, MA 02110
Attention: Steven G. Segal
re Senior Secured Financing
Dear Steve:
You have advised Bankers Trust Company ("BTCo") that you, your
affiliates and other investors satisfactory to BTCo intend to sponsor a
recapitalization transaction (the "Recapitalization") of Universal Hospital
Services, Inc. (the "Borrower") pursuant to which the Borrower will
repurchase with the proceeds of the Equity Financing described below and
the Senior Secured Financing described below all of the issued and
outstanding shares of capital stock (the "Shares") of the Borrower
(calculated on a fully-diluted basis except for rollover shares of capital
stock held by certain members of senior management of the Borrower (the
"Rollover Shares")). You have advised BTCo that the price per share to be
paid for each outstanding share of the Borrower pursuant to the
Recapitalization shall be $15.50. To the extent you effectuate the
Recapitalization through a holding company, such holding company shall
provide guaranties, pledges and other support consistent with the structure
described below.
BTCo further understands that, in order to consummate the
Recapitalization, (i) common equity financing (the "Equity Financing")
generating at least $49.1 million from investors satisfactory to BTCo (at
least $45 million of which shall be in cash with the remainder to be
Rollover Shares) is required by the Borrower and (ii) senior secured bank
financing (the "Senior Secured Financing") is required by the Borrower in
the form of (a) a term loan facility in an aggregate principal amount of up
to $80 million (the "Term Loan Facility") and (b) a revolving credit
facility in an aggregate principal amount of $15 million (the "Revolving
Loan Facility" and together with the Term Loan Facility, the "Credit
Facilities"). A summary of certain of the terms and conditions of the
Credit Facilities are set forth in the attached Summary of Certain Terms
and Conditions (the "Term Sheet") attached hereto as Exhibit A. An
additional component of the Recapitalization will be a reduction, on or
prior to the closing of the Recapitalization, of at least $3.3 million in
the aggregate amount of cash necessary to effectuate the Recapitalization
associated with the exercise price of outstanding options. BTCo also
understands that the proceeds from the Credit Facilities shall be used to
finance the acquisition of Shares pursuant to the Recapitalization, to
refinance existing indebtedness of the Borrower, to pay related fees and
expenses in connection with the Recapitalization and to provide for the
working capital and general corporate needs of the Borrower and its
subsidiaries.
BTCo is pleased to advise you of its commitment to provide,
subject to the terms and conditions contained in this letter and in the
Term Sheet, 100% of the Credit Facilities. In connection with the Senior
Secured Financing, BTCo shall act as sole administrative agent. BTCo
reserves the right, prior to or after execution of the definitive credit
documentation for the Credit Facilities, to syndicate all or part of its
commitments to one or more financial institutions or other "accredited
investors" (as defined in Regulation D of the Securities Act of 1933, as
amended) (collectively, the "Lenders" and each a "Lender") that will become
parties to such definitive credit documentation pursuant to a syndication
to be managed by BTCo. Initial Lenders in the syndicate will be acceptable
to the Agent and the Borrower in their reasonable discretion. You agree
actively to assist BTCo in achieving a syndication that is satisfactory to
BTCo and to you. Such syndication will be accomplished by a variety of
means, including direct contact during the syndication between your senior
management and advisors and the proposed Lenders. Without limiting our
commitment as set forth above, your assistance in connection with the
syndication will also include, if BTCo so requests, your restructuring, in
a manner mutually acceptable to BTCo and you, the component facilities of
the Senior Secured Financing if, in our judgment, such restructuring would
result in a successful syndication, provided that in no event will the
aggregate amount of the Credit Facilities be reduced. To assist BTCo in its
syndication efforts, you hereby agree (i) to provide and cause your
advisors to provide BTCo and the other Lenders upon request with all
reasonable information deemed necessary by us to complete syndication,
including but not limited to, information and evaluations prepared by you
and (ii) to assist BTCo upon request in the preparation of an Information
Memorandum to be used in connection with the syndication of the Senior
Secured Financing, including making available your officers from time to
time to attend and make presentations regarding the business and prospects
of the Borrower and its subsidiaries, as appropriate, at a meeting or
meetings of Lenders or prospective Lenders.
In addition, BTCo understands that concurrently with the
execution and delivery of this letter you are engaging one or more
investment banks (collectively, the "Investment Bank") to publicly sell or
privately place senior debt securities of the Borrower (the "Senior Debt
Securities"), the proceeds of which are intended to be used (in lieu of the
Senior Secured Financing) to fund the Recapitalization. BTCo's commitments
in respect of the Senior Secured Financing are expressly subject to the
documentation of such engagement remaining in full force and effect and the
parties thereto complying with all material agreements thereunder. The
successful placement of the Senior Debt Securities shall not be a condition
to BTCo's commitments hereunder.
You hereby represent and covenant that (i) all information,
other than the Projections (as defined below), which has been or is
hereafter made available to BTCo or the other Lenders by you or any of your
representatives in connection with the transactions contemplated hereby
(the "Information") is and will be complete and correct in all material
respects taken as a whole and does not and will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements contained therein not materially misleading (it being
understood by BTCo that any representation by you as to any information
relating to the Borrower and its subsidiaries is made to your best
knowledge and is based solely on the information provided by you to us) and
(ii) all financial projections concerning the Borrower and its subsidiaries
that have been or are hereafter made available to BTCo or the other Lenders
by you in connection with the transactions contemplated hereby (the
"Projections") have been or will be prepared in good faith based upon
reasonable assumptions. You agree to supplement the Information and the
Projections from time to time until the closing date of the Credit
Facilities so that the representation and warranty in the preceding
sentence is true and correct on such closing date. You acknowledge that in
arranging and syndicating the Senior Secured Financing, BTCo will be using
and relying on the Information and Projections without independent
verification thereof. In issuing this commitment and undertaking BTCo is
relying on the accuracy of the information furnished by you or on your
behalf.
Whether or not the transactions contemplated by this letter are
consummated, you hereby agree to indemnify and hold harmless BTCo and each
of its affiliates (collectively, "BT") and each of the other Lenders, each
affiliate thereof and each director, officer, employee, agent or
representative thereof (each an "indemnified person") in connection with
any losses, claims, damages, liabilities or other expenses to which such
indemnified persons may become subject, insofar as such losses, claims,
damages, liabilities (or actions or other proceedings commenced or
threatened in respect thereof) or other expenses arise out of or in any way
relate to or result from the Recapitalization, this letter (as used in this
and the following paragraphs, "this letter" shall include any previous
letter or letters dealing with the subject matter hereof), or the extension
of the Senior Secured Financing contemplated by this letter, or in any way
arise from any use or intended use of this letter or the proceeds of any of
the Senior Secured Financing contemplated by this letter, and you agree to
reimburse each indemnified person for any legal or other expenses incurred
in connection with investigating, defending or participating in any such
loss, claim, damage, liability or action or other proceeding (whether or
not such indemnified person is a party to any action or proceeding out of
which indemnified expenses arise), provided that you shall have no
obligation hereunder to indemnify any indemnified person for any loss,
claim, damage, liability or expense which resulted primarily from the gross
negligence or willful misconduct of such indemnified person. This letter is
furnished for your benefit, and may not be relied upon by any other person
or entity. Neither BT nor any other Lender shall be responsible or liable
to you or any other person for consequential damages which may be alleged
as a result of this letter.
In addition, whether or not the transactions contemplated by
this letter are consummated, you hereby agree to pay upon request, all
out-of-pocket costs and expenses (including the reasonable fees and
expenses of White & Case and such local counsel as may be retained by BT in
connection with the transactions contemplated hereby) incurred by BT in
connection with the preparation, execution and delivery of this letter and
the Credit Facilities and our due diligence and syndication efforts in
connection therewith (which costs and expenses shall include, but not be
limited to, printing, distribution, transportation, computer, duplication,
audit, insurance, third party consultants (which, if retained, shall be
done in consultation with you), bank meetings, UCC, judgment, tax lien and
similar searches and recording and filing fees).
BTCo reserves the right to employ the services of its
affiliates (including BT Alex Incorporated and BT Commercial Corporation)
in providing the services contemplated by this letter and to allocate, in
whole or in part, to such affiliates certain fees payable to BTCo in such
manner as BTCo and its affiliates may agree in their sole discretion. You
acknowledge that BTCo may share with any of its affiliates, and such
affiliates may share with BTCo, any information relating to you and your
affiliates and subsidiaries or the Borrower and its affiliates and
subsidiaries (including, without limitation, any non-public customer
information regarding the creditworthiness of such entities) or the
Recapitalization, subject to BTCo's customary treatment of customer
confidential information. You should also be aware that BTCo or its
respective affiliates may be providing financing or other services to
parties whose interests may conflict with yours. However, be assured that,
consistent with its long-standing policies to hold in confidence the
affairs of our customers, BTCo and its affiliates will not furnish
information obtained from you to any of our other customers.
BTCo's willingness to provide the Senior Secured Financing as
set forth above will terminate on April 30, 1998, if definitive
documentation evidencing the Senior Secured Financing, satisfactory in form
and substance to BTCo, shall not have been entered into prior to such date
and the Recapitalization shall not have been consummated. You shall have
the right, at any time upon written notice to BTCo, to terminate the
commitments of BTCo under this letter. The provisions of the immediately
preceding three paragraphs and the immediately succeeding two paragraphs
shall survive any termination of this letter.
You are not authorized to disclose this letter or its contents
to any other person or entity other than your legal and financial advisors
in connection with your evaluation of this letter until such time as you
have accepted this letter and the accompanying fee letter as provided in
the immediately succeeding paragraph. You agree that this letter is for
your confidential use only and will not be disclosed by you to any person
or entity other than your accountants, attorneys and other advisors, and
then only in connection with the Credit Facilities and on a confidential
basis, except that, following your acceptance of this letter and the fee
letter, you may make public disclosure of the existence and amount of
BTCo's commitment, you may file a copy of this letter in any public record
in which it is required by law to be filed, you may disclose this letter to
the Board of Directors of the Borrower and their advisors and you may make
such other public disclosures of the terms and conditions hereof as you are
required by law, in the opinion of your counsel, to make.
This letter and the rights and obligations of the parties
hereunder shall be construed in accordance with and governed by the law of
the State of New York. Each party hereto hereby irrevocably waives all
right to trial by jury of any actions, proceedings or counterclaims
(whether based on contract, tort or otherwise) arising out of or relating
to this letter, the transactions contemplated hereby or the actions of BTCo
in negotiation, performance or enforcement hereof. If you are in agreement
with the foregoing, please sign and return to us (including by way of
facsimile) the enclosed copy of this letter, together with a copy of the
fee letter enclosed herewith, no later than 5:30 p.m. (New York time) on
November 26, 1997. If you decide not to take the foregoing actions, you are
to return all copies of this letter and such fee letter to BTCo as promptly
as possible and in such event you are not authorized to disclose this
letter or the contents thereof to any other party (except as may be
required by applicable law or an order of a court of competent
jurisdiction).
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ Victoria T. Page
_________________________
Title: Managing Director
Agreed to and Accepted this
___ day of November, 1997
J.W. CHILDS EQUITY PARTNERS, L.P.
By: J.W. Childs Advisors, L.P.,
its General Partner
By: J.W. Childs Associates, L.P.,
its General Partner
By: J.W. Childs Associates, Inc.,
its General Partner
By: /s/ Steven G. Segal
_______________________
Title: Vice President
EXHIBIT A
SUMMARY OF CERTAIN TERMS
AND CONDITIONS
I. Description of the Credit Facilities
A. Description of the Term Loan Facility
Borrower: Universal Hospital Services, Inc.
Amount: $80 million.
Maturity: The sixth anniversary of the initial funding date
(the "Closing Date") under the Term Loan Facility
(the "Final Maturity Date"). The loans under the
Term Loan Facility ("Term Loans") shall amortize
quarterly on dates, and in amounts, satisfactory to
BTCo and the Borrower.
Use of Proceeds: Term Loans shall be used to (i) finance the
Recapitalization, (ii) refinance existing
indebtedness of the Borrower and its subsidiaries
and (iii) pay fees and expenses incurred in
connection with the Recapitalization.
Availability: Term Loans may only be incurred, subject to the
conditions set forth herein, on the Closing Date.
No amount of Term Loans once repaid may be
reborrowed.
B. Description of the Revolving Loan Facility
Amount: $15 million. A portion (to be determined) of the
Revolving Loan Facility may be utilized to issue
commercial and standby letters of credit
(collectively, the "Letters of Credit") to support
specified obligations of the Borrower and its
subsidiaries reasonably acceptable to BTCo. No more
than $8.5 million of the Revolving Loan Facility
may be utilized on the Closing Date (no more than
(x) $3.0 million of which shall be attributable to
the repayment of indebtedness incurred after the
date hereof and prior to the closing of the
Recapitalization and (y) $3.3 million of which
shall be attributable to severance and pension
related payments).
Maturity: The Final Maturity Date, with all loans made under
the Revolving Loan Facility (the "Revolving Loans",
and together with the Term Loans, the "Loans"), to
be repaid in full on such date and all Letters of
Credit to expire on or before such date.
Use of Proceeds: The proceeds of the Revolving Loans shall be
utilized for the Borrower's and its subsidiaries'
general corporate and working capital requirements.
Availability: Revolving Loans may, subject to the conditions set
forth herein, be borrowed, repaid and reborrowed on
and after the Closing Date.
II. Terms Applicable to all Credit Facilities
Administrative Bankers Trust Company ("BTCo").
Agent:
Lenders: A syndicate of lenders (the "Lenders") formed by BTCo.
Guaranties: All of the direct and indirect subsidiaries of the
Borrower (each a "Guarantor" and, collectively, the
"Guarantors") shall be required to provide an
unconditional guaranty of all amounts owing under
the Credit Facilities (the "Guaranties"), subject
to exceptions satisfactory to the Administrative
Agent. The Guaranties shall contain terms and
conditions satisfactory to the Administrative
Agent.
Security: All amounts owing under the Credit Facilities (and
all obligations under the Guaranties) will be
secured by (x) a first priority perfected pledge of
all capital stock and notes owned by the Borrower
and its subsidiaries and (y) a first priority
perfected security interest in substantially all
other assets (including receivables, contracts,
contract rights, securities, patents, trademarks,
other intellectual property, inventory, equipment
and real estate (excluding leaseholds)) owned by
the Borrower and its subsidiaries, subject (in each
case) to exceptions satisfactory to the
Administrative Agent.
All documentation evidencing the security required
pursuant to the immediately preceding paragraph
shall be in form and substance satisfactory to the
Administrative Agent, and shall effectively create
first priority security interests in the property
purported to be covered thereby, with such
exceptions as are acceptable to the Administrative
Agent in its sole discretion.
Interest Rates: At the option of the Borrower, Loans under the
Credit Facilities may be maintained from time to
time as (x) Base Rate Loans which shall bear
interest at the Applicable Margin in excess of the
Base Rate in effect from time to time or (y)
Eurodollar Loans which shall bear interest at the
Applicable Margin in excess of the Eurodollar Rate
as determined by the Administrative Agent for the
respective interest period.
"Base Rate" shall mean the higher of (x) 1/2 of 1%
in excess of the Federal Reserve reported
certificate of deposit rate and (y) the rate that
the Administrative Agent announces from time to
time as its base rate, as in effect from time to
time.
"Applicable Margin" for the Loans shall mean a
percentage per annum equal to (x) in the case of
Base Rate Loans, 1.25% and (y) in the case of
Eurodollar Loans, 2.25% with reductions based on
leverage to be negotiated.
Interest periods of 1, 2, 3, 6 and, subject to
availability by all Lenders, 9 and 12 months shall
be available in the case of Eurodollar Loans.
The Credit Facilities shall include the standard
protective provisions for such matters as
defaulting banks, capital adequacy, increased
costs, funding losses, illegality and withholding
taxes.
Interest in respect of Base Rate Loans shall be
payable quarterly in arrears on the last business
day of each calendar quarter. Interest in respect
of Eurodollar Loans shall be payable in arrears at
the end of the applicable interest period and every
three months in the case of interest periods in
excess of three months. Interest will also be
payable at the time of repayment of any Loans and
at maturity. All interest, commitment fee and other
fee calculations shall be based on a 360/365-day
year and actual days elapsed.
Default Interest: Overdue principal, interest and other amounts
shall bear interest at a rate per annum equal
to the greater of (i) the rate which is 2% in
excess of the rate otherwise applicable to Base
Rate Loans from time to time and (ii) the rate
which is 2% in excess of the rate then borne by
such borrowings. Such interest shall be payable on
demand.
Voluntary
Prepayments: Voluntary prepayments may be made at any time
without premium or penalty, provided that voluntary
prepayments of Eurodollar Loans made on a date
other than the last day of an interest period
applicable thereto shall be subject to customary
breakage costs. Voluntary prepayments of Term Loans
shall be applied to reduce future scheduled
amortization payments on a pro rata basis or other
basis satisfactory to BTCo and the Borrower.
Mandatory Repayments: Mandatory repayments of Term Loans to be required
from (a) 100% of the net proceeds from asset sales
by the Borrower or any of its subsidiaries (other
than certain ordinary course of business exceptions
to be mutually agreed upon), (b) 100% of the net
proceeds from issuances of debt (with appropriate
exceptions to be mutually agreed upon) by the
Borrower or any of its subsidiaries, (c) 100% of
the net proceeds from equity issuances by or
capital contributions to the Borrower or any of its
subsidiaries (with appropriate exceptions to be
mutually agreed upon), (d) 75% (or 50% provided
that the Leverage Ratio (to be defined as the ratio
of total debt of the Borrower and its subsidiaries
to consolidated EBITDA for the then most recently
ended 12-month period) at the end of the relevant
test period is less than 2.5 times EBITDA) of
annual excess cash flow of the Borrower or any of
its subsidiaries (the definition of which will be
mutually agreed upon) and (e) 100% of the net
proceeds from insurance recovery events by the
Borrower or any of its subsidiaries (subject to
certain rights of replacement). The Credit
Agreement will contain a mechanism whereby, in the
event that a mandatory repayment is required
pursuant to clause (a), (b), (c) or (e) above
during an interest period with respect to a
Eurodollar Loan, the Borrower will be able to cash
collateralize the amount of such mandatory
repayment until the end of such interest period.
All mandatory repayments of Term Loans will be
applied to reduce future scheduled amortization
payments on a pro rata basis or other basis
satisfactory to BTCo and the Borrower. After the
Term Loans have been repaid in full, the amounts
referred to in clauses (a)-(e) above shall apply to
permanently reduce the commitments under the
Revolving Loan Facility.
Commitment Fees: 1/2 of 1% per annum of the unutilized total
commitment under the Revolving Loan Facility, as in
effect from time to time, commencing on the Closing
Date to and including the termination of the
Revolving Loan Facility, payable quarterly in
arrears and upon the termination of the Revolving
Loan Facility.
Letter of Credit
Fees: The equivalent of the Applicable Margin (as in
effect from time to time) for Eurodollar Loans on
the aggregate outstanding stated amount of Letters
of Credit.
Administrative
Agent/Lender Fees: The Administrative Agent and the Lenders shall
receive such fees as have been separately agreed
upon.
Conditions
Precedent to
Loans on the
Closing Date: Those conditions precedent which are usual and
customary for these types of facilities, and such
additional conditions precedent as are appropriate
under the circumstances, including, but not limited
to:
(i) The definitive Agreement and Plan of Merger
providing for the Recapitalization (the
"Recapitalization Agreement") shall be in the
form delivered to the Administrative Agent on
or prior to the date hereof, and all
conditions precedent thereunder to the
consummation of the Recapitalization shall
have been satisfied (and not waived without
the consent of the Required Lenders), and any
amendment to such Recapitalization Agreement
shall be reasonably satisfactory in form and
substance to the Administrative Agent and the
Required Lenders. The Recapitalization shall
have been consummated after the receipt of
all necessary governmental, regulatory, third
party and shareholders approvals in
accordance with all applicable laws and the
terms set forth in such Recapitalization
Agreement. Any state anti-takeover law
regulating the Recapitalization shall have
been complied with or shall have been
reasonably determined by the Administrative
Agent and the Required Lenders to be invalid
or inapplicable to the Recapitalization.
(ii) All agreements effectuating the Equity
Financing shall have been entered into, shall
be reasonably satisfactory in form and
substance to the Administrative Agent and the
Required Lenders and shall be in full force
and effect. All conditions precedent set
forth in such agreements shall have been
satisfied (and not waived without the consent
of the Required Lenders). The Equity
Financing shall have been consummated
generating at least $49.1 million in common
equity financing for the Borrower. The
Borrower shall have received net cash
proceeds from the Equity Financing of not
less than $45 million which net cash proceeds
shall have been used to finance, in part, as
well as to pay fees and expenses in
connection with, the Recapitalization (with
existing investments representing the
remainder of the $49.1 million of Equity
Financing having been rolled over in
connection with the Recapitalization).
(iii) The aggregate amount of cash necessary to
effectuate the Recapitalization shall have
been reduced, on or prior to the closing of
the Recapitalization, by at least $3.3
million in connection with the exercise price
of outstanding options.
(iv) The documentation evidencing the Credit
Facilities (the "Credit Documents") shall
have been executed and delivered reflecting
the terms and conditions set forth in this
Term Sheet and shall otherwise be in form and
substance satisfactory to the Administrative
Agent and the Required Lenders and all
conditions to the making of the Loans set
forth therein shall have been satisfied or
waived on or prior to the Closing Date.
(v) No litigation by any entity (private or
governmental) shall be pending or threatened
with respect to the Recapitalization, the
Senior Secured Financing or any documentation
executed in connection therewith or which the
Administrative Agent or the Required Lenders
shall reasonably determine is reasonably
likely to have a materially adverse effect on
the Recapitalization or on the business,
operations, property, assets, liabilities,
condition (financial or otherwise) of the
Borrower and its subsidiaries taken as a
whole.
(vi) All necessary governmental, regulatory and
third party approvals in connection with the
Recapitalization, the transactions
contemplated by the Credit Facilities and
otherwise referred to herein shall have been
obtained and remain in effect, and all
applicable waiting periods shall have expired
without any action being taken by any
competent authority which restrains,
prevents, or imposes materially adverse
conditions upon, the consummation of the
Recapitalization or the incurrence of Loans.
Additionally, there shall not exist any
judgment, order, injunction or other
restraint prohibiting or imposing materially
adverse conditions upon, or materially
delaying, or making economically unfeasible,
the consummation of the Recapitalization.
(vii) There shall not have occurred after the date
hereof any change, event, loss or development
in the business of the Borrower and/or any of
its subsidiaries (including the incurrence of
any liability of any nature, whether accrued,
contingent or otherwise) that, taken together
with other changes, events, losses or
developments with respect to such business,
has had or would be reasonably expected to
have a Material Adverse Effect on the
Borrower and its subsidiaries taken as a
whole. For purposes of this paragraph (vii),
"Material Adverse Effect" shall mean any
effect, change or event, which is not
disclosed on Schedule 5.8 to the
Recapitalization Agreement that individually
or in the aggregate, when taken together with
all similar effects, (i) is or is reasonably
likely to be material and adverse to the
assets, liabilities, condition (financial or
otherwise), results of operations, cash flows
or business of the Borrower and its
subsidiaries taken as a whole, or (ii) does
or is reasonably likely to impair materially
the ability of the Borrower or any Guarantor,
to perform its obligations under the Credit
Documents or otherwise to threaten materially
or to impede materially the consummation of
the Recapitalization, the Senior Secured
Financing and/or the other transactions
contemplated hereby or thereby.
(viii) The Administrative Agent and the Lenders
shall have received legal opinions from
counsel, and in form and substance and
covering matters, reasonably acceptable to
the Administrative Agent and the Required
Lenders, including opinions of local counsel
as to the security interests under the
relevant jurisdictions. The Administrative
Agent and the Lenders shall have received a
certificate of the Borrower's chief financial
officer, with respect to the solvency of the
Borrower and the Guarantors taken as a whole
acceptable to the Administrative Agent and
the Required Lenders. The Administrative
Agent also shall have received equipment
appraisals, in scope, and in form and
substance satisfactory to the Administrative
Agent and the Required Lenders.
(ix) The corporate and capital structure of the
Borrower and its subsidiaries and all
organizational documents of such entities and
all material agreements related to such
corporate and capital structure, shall be
reasonably satisfactory to the Administrative
Agent and the Required Lenders.
(x) The Guaranties required above under the
heading "Guaranties" shall have been executed
and delivered and the security interests
required as described above under the heading
"Security" shall have been granted and
perfected.
(xi) All Loans and other financing to the Borrower
shall be in full compliance with all
requirements of Regulations G, T, U and X of
the Board of Governors of the Federal Reserve
System.
(xii) The Administrative Agent shall also have
received, as soon as possible, (i) to the
extent available, audited and unaudited
financial statements for the fiscal year of
the Borrower ended December 31, 1997, which
shall have been prepared in accordance with
GAAP and (ii) unaudited monthly financial
statements of the Borrower for each month
ended after September 1997.
(xiii) After giving effect to the Recapitalization
and the other transactions contemplated
hereby, the Borrower and its subsidiaries
shall have no other indebtedness outstanding
except (x) indebtedness under the Credit
Facilities and (y) such other indebtedness,
if any, as shall be permitted to remain
outstanding by the Agent.
(xiv) All costs, fees, expenses (including, without
limitations, legal fees and expenses) and
other compensation contemplated hereby
payable to the Administative Agent and the
Lenders shall have been paid to the extent
due.
Conditions to All Loans: Absence of material adverse change,
absence of default or event of default
under the Senior Secured Financing, continued
accuracy of representations and warranties and
receipt of such documentation as shall be
reasonably required by the Administrative Agent.
Representations
and Warranties: Those representations and warranties which are
usual and customary for these types of facilities,
and such additional representations and warranties
as are appropriate under the circumstances,
including, but not limited to:
(i) Corporate existence.
(ii) Corporate power and authority/enforceability.
(iii) No violation of law or organizational
documents or material contracts.
(iv) No material litigation.
(v) Correctness of specified financial statements
and other financial information and no
material adverse change.
(vi) No required governmental or third party
approvals (except as have been obtained and
which are in full force and effect).
(vii) Use of proceeds/compliance with margin
regulations.
(viii) Material environmental matters.
(ix) Perfected security interests.
(x) Payment of taxes.
(xi) Not an investment company or public utility
holding company.
(xii) Solvency.
(xiii) Compliance with laws (including ERISA).
Covenants: Those covenants usual and customary for these types
of facilities, and such additional covenants as are
appropriate under the circumstances, with customary
exceptions to be agreed upon. Although the
covenants have not yet been specifically
determined, we anticipate that the covenants shall
in any event include:
(i) Limitations on other indebtedness (with
appropriate baskets to be agreed upon).
(ii) Limitations on mergers, acquisitions, joint
ventures, partnerships and acquisitions and
dispositions of assets.
(iii) Limitations on sale-leaseback transactions
and lease payments.
(iv) Limitations on dividends.
(v) Limitations on voluntary prepayments of other
indebtedness and amendments thereto, and
amendments to organizational documents.
(vi) Limitations on transactions with affiliates
and formation of subsidiaries.
(vii) Limitations on investments (with appropriate
baskets to be agreed upon, but in any event,
existing investments shall be permitted).
(viii) Maintenance of existence and properties.
(ix) Limitations on liens.
(x) Various financial covenants customary for a
transaction of this type, including a maximum
Debt/EBITDA, a minimum EBITDA/Interest
Expense and a minimum EBITDA/Fixed Charges.
(xi) Limitations on capital expenditures.
(xii) Adequate insurance coverage.
(xiii) ERISA covenants.
(xiv) Financial reporting and visitation and
inspection rights.
(xv) Compliance with laws. including environmental
and ERISA.
(xvi) Payment of taxes.
(xvii) Lines of business.
Events of Default: Those events of default usual and customary for
these types of facilities, and such additional
events of default as are appropriate under the
circumstances, including but not limited to:
(i) Failure to pay principal and, subject to
appropriate grace periods, interest, fees and
other amounts under the Credit Documents when
due.
(ii) Violation of covenants under the Credit
Documents (with grace periods, where
appropriate).
(iii) Representations and warranties not true and
correct in any material respect.
(iv) Cross payment defaults, cross non-payment
defaults permitting acceleration and cross
acceleration to indebtedness, in each case in
excess of a certain dollar threshold.
(v) Judgment defaults (not paid or fully paid or
covered by insurance) in excess of a certain
dollar threshold.
(vi) Bankruptcy and insolvency.
(vii) Change of ownership or control.
(viii) ERISA.
Assignments and
obligations under
Participations: The Borrower may not assign its rights or the
Senior Secured Financing without the prior written
consent of the Lenders. Any Lender may assign, and
may sell participations in, its rights and
obligations under the Senior Secured Financing,
subject (x) in the case of participations, to
customary restrictions on the voting rights of the
participants and (y) in the case of assignments, to
such limitations as may be established by the
Administrative Agent, including the consent of the
Administrative Agent, the payment of a fee equal to
$3,500 to the Administrative Agent by the assignor
or assignee Lender (other than in connection with
an assignment to another existing Lender, an
existing Lender's affiliate or to a Federal Reserve
Bank) and a minimum assignment amount of $5 million
(other than in connection with an assignment to
another existing Lender, an existing Lender's
affiliate or to a Federal Reserve Bank). The Senior
Secured Financing shall provide for a mechanism
which will allow for each assignee to become a
direct signatory to the Senior Secured Financing
and will relieve the assigning Lender of its
obligations with respect to the assigned portion of
its commitment.
Governing Law;
Documentation: The rights and obligations of the parties under the
Credit Documents shall be construed in accordance
with and governed by the law of the State of New
York. The Borrower and the Guarantors will submit
to the non-exclusive jurisdiction and venue of the
federal and state courts of the State of New York
and will waive their right to a trial by jury.
Indemnification: The Credit Documents will contain customary
indemnities for the Administrative Agent and the
Lenders.
Required
Lenders: Lenders holding a majority of the commitments
and/or outstanding Loans under the Credit
Facilities.
EXHIBIT 3
BT ALEX. BROWN INCORPORATED
130 LIBERTY STREET
NEW YORK, NEW YORK 10006
November 25, 1997
J.W. Childs Equity Partners, L.P.
1 Federal Street
21st Floor
Boston, MA 02110
Attention : Steven Segal
Re: Universal Hospital Services, Inc.
Recapitalization Financing
Gentlemen:
You have advised BT Alex. Brown Incorporated ("BTAB") that you,
your affiliates and other investors reasonably satisfactory to BTAB
(collectively, the "Investors") intend to sponsor a recapitalization (the
"Transaction") of Universal Hospital Services, Inc. ("Universal"), whereby
Universal will purchase all of the issued and outstanding shares of capital
stock (other than rollover equity held by certain senior management of
Universal) with equity financing provided by the Investors, senior secured
bank financing provided by Bankers Trust Company and senior debt financing
as described below. You have also advised us that the Transaction will be
effected through a merger of a corporation formed by the Investors
("Newco") with Universal.
You have asked us to assist Newco and, from and after the
effectiveness of the merger, Universal (collectively, the "Company") in
raising a portion of the funds required to consummate the Transaction
through the sale or placement of up to $105 million aggregate principal
amount of senior debt securities of Universal, as the company surviving the
Merger (the "Securities"). A preliminary summary term sheet is attached
hereto as Exhibit A.
The purpose of this letter agreement (this "Agreement") is to
confirm the engagement of BTAB by you and the Company in connection with
the issuance or sale (whether pursuant to a public offering or a private
placement) of debt securities of the Company in connection with the
Transaction, which is likely to be in the form of, but not necessarily
limited to, the issuance of the Securities.
Section 1. Engagement of BTAB in Connection with Proposed Issuance. The
Company hereby retains BTAB on an exclusive basis, and BTAB agrees to act
as exclusive underwriter or placement agent in connection with any public
or private debt financing or issuance by the Company or any of its
subsidiaries to finance the Transaction during the term of this Agreement.
The Company will not, directly or indirectly (except through
BTAB or as otherwise approved by BTAB), sell or offer to sell any of the
Securities or other high yield debt securities during the term of this
Agreement. Any such offer, sale or other disposition of the Securities or
any other high yield debt securities during the term of this Agreement will
be treated for purposes of Section 2 as if such sale or disposition were
undertaken by BTAB directly.
Section 2. Fees. As compensation for BTAB's services in connection
with the issuance of the Securities, the Company shall pay BTAB the
following non-refundable fees:
(a) an underwriting or placement fee of 3.0% of the gross proceeds
received by the Company from the issuance of the Securities
placed or underwritten by BTAB, payable at the closing of such
issuance; and
(b) in the event that a merger agreement relating to the
Transaction is signed and that either (i) the Transaction does
not close and the Securities are not issued or (ii) the
Securities are issued other than pursuant to a registered
public offering or an offering under Rule 144A of the
Securities Act of 1933, as amended, all reasonable
out-of-pocket expenses (including reasonable legal fees and
expenses) incurred in connection with the Transaction.
Section 3. Other Agreements.
(a) Term. BTAB's engagement hereunder may be terminated by BTAB at any
time or, after the date which is 270 days from the execution of this
letter, by the Company by prior written notice thereof to the other
party; provided that BTAB agrees that at such time as it determines
that it is no longer willing to proceed with its engagement
hereunder, BTAB will promptly terminate this Agreement pursuant to
this Section 3(a); provided, further, that the provisions of Sections
2, 3(c), 3(d) and 3(f) shall survive such termination.
(b) Information. During the course of the term, the Company agrees to
furnish BTAB with such information about the Company as BTAB
reasonably requests, including information to be included in a
private placement memorandum or other disclosure document ("Company
Information"). The Company represents and warrants to BTAB that all
Company Information in the aggregate will be accurate and complete in
all material respects at the time it is furnished and will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in light of the circumstances under which such statements
are made, and agrees to advise BTAB during the period of the
engagement of all developments materially affecting the Company or
the accuracy of Company Information previously furnished to BTAB or
prospective purchasers of the Securities. The Company recognizes and
confirms that BTAB (i) will be relying solely on such information and
other information available from generally recognized public sources
in performing the services contemplated hereunder, (ii) does not
assume responsibility for the accuracy or completeness thereof, and
(iii) will make appropriate disclaimers consistent with the
foregoing. In addition, any representations and warranties made by
the Company to purchasers of the Securities shall be deemed to be
incorporated into this Agreement and any opinions delivered by or on
behalf of the Company to the purchasers of the Securities shall
expressly provide that BTAB may rely upon such opinions.
(c) Indemnification. The Company agrees to indemnify BTAB and its
affiliates and each person in control of BTAB and its affiliates and
their respective officers, directors, employees, agents and
representatives as provided in the indemnity letter dated the date
hereof and attached hereto.
(d) No Shareholder Rights. The Company acknowledges and agrees that BTAB
has been retained only by the Company and that the Company's
engagement of BTAB is not deemed to be on behalf of and is not
intended to confer rights upon any shareholder, owner or partner of
the Company or any other person not a party hereto as against BTAB or
any of its affiliates or the respective directors, officers,
employees, agents and representatives of BTAB or its affiliates.
Unless otherwise expressly agreed, no one other than the Company is
authorized to rely upon the Company's engagement of BTAB or any
statements, advice, opinions, or conduct by BTAB.
(e) Miscellaneous. This Agreement may be executed in two or more
counterparts, all of which together shall be considered a single
instrument. The term "affiliate" as used herein shall have the
meaning ascribed to such term in the rules and regulations
promulgated under the Securities Exchange Act of 1934, as amended.
The Company confirms that it will rely on its own counsel,
accountants and other similar expert advice. This Agreement
constitutes the entire agreement among the parties with respect to
the subject matter hereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties hereto
with respect to the subject matter hereof and cannot be amended or
otherwise modified except in writing executed by the parties hereto.
BTAB may transfer or assign, in whole or from time to time in part,
to one or more of its affiliates its rights and obligations
hereunder, but no such transfer or assignment will relieve BTAB of
its obligations hereunder without the prior written consent of the
Company. The provisions hereof shall inure to the benefit of and be
binding upon the successors and assignees of the Company and BTAB.
This letter is not intended to be and should not be construed as a
commitment with respect to the underwriting, sale or placement of the
Securities and creates no obligation or liability on our part in
connection therewith.
(f) Confidentiality. Except as required by law and except with respect to
any information that otherwise becomes publicly available, BTAB
agrees that its officers, employees, affiliates and agents will treat
confidentially any and all information furnished to BTAB pursuant to
the terms of this Agreement and will not use any of such information
for any purpose other than as set forth herein. In connection with
the services to be provided hereunder, BTAB may employ the services
of its affiliates. Subject to compliance with applicable law, the
first sentence of this Section 3(f) and any other confidentiality
agreements which BTAB or its affiliates may be subject to, the
Company hereby consents to BTAB and its affiliates sharing amongst
each other any information related to the Company and its
subsidiaries (including information relating to the creditworthiness
of the Acquired Business) or any matters contemplated hereby.
(g) Use of Name; Disclosure; BTAB Advice, Role, etc. The Company agrees
that except as required by law any references to BTAB and/or its
affiliates made in connection with the Transaction are subject to (i)
restrictions set forth in documents delivered by BTAB and/or its
affiliates to the Company relating to the Transaction and (ii) BTAB's
prior approval, which approval shall not be unreasonably withheld.
The Company acknowledges that all analyses, evaluation and advice
(whether written or oral, formal or informal) given by BTAB to the
Company in connection with its engagement hereunder are intended
solely for the benefit and use of the Company (including its
management, directors and attorneys) in considering the transaction
to which they relate and the Company agrees that no such opinion or
advice shall be used for any other purpose or reproduced,
disseminated, quoted or referred to at any time, in any manner or for
any purpose, without BTAB's prior written consent, which consent
shall not be unreasonably withheld. Following the expiration of the
terms of this Agreement, BTAB may also publicize its services in
connection with the Transaction contemplated hereby, including,
without limitation, granting interviews with and providing
information to the financial press and other media. BTAB is
authorized upon consummation of the Transaction contemplated hereby
to place the customary "tombstone" advertisement in publications of
its choice at BTAB's expense. Nothing in this Agreement is intended
to obligate or commit BTAB or any of its affiliates to provide any
services other than as set out herein.
(h) GOVERNING LAW, ETC. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF). ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR
ARISING OUT OF THE TRANSACTION, AND BTAB'S ACTIVITIES PURSUANT TO, OR
THE PERFORMANCE BY BTAB OF THE SERVICES CONTEMPLATED BY, THIS
AGREEMENT IS HEREBY WAIVED. THE COMPANY HEREBY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS
LOCATED IN THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE
RELATED TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY.
THE COMPANY AGREES THAT ANY LEGAL SUIT, ACTION OR PROCEEDING BROUGHT
BY BTAB, ANY OF ITS AFFILIATES OR ANY INDEMNIFIED PARTY TO ENFORCE
ANY RIGHTS UNDER OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTION
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT IN THE CITY OF NEW
YORK, STATE OF NEW YORK, WAIVES TO THE FULLEST EXTENT PERMITTED BY
LAW ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING AND IRREVOCABLY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT,
ACTION OR PROCEEDING. NOTHING IN THIS SECTION 3(h) SHALL AFFECT THE
RIGHT OF BTAB, ANY OF ITS AFFILIATES OR ANY INDEMNIFIED PARTY TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW OR LIMIT THE RIGHT OF
BTAB, ANY OF ITS AFFILIATES OR ANY INDEMNIFIED PARTY TO BRING
PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY JURISDICTION OR
JURISDICTIONS.
Section 4. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be mailed or delivered or faxed (a)
to the Company, at the address listed on the front of this Agreement and
(b) to BTAB, at the offices of BT Alex. Brown Incorporated, 130 Liberty
Street, New York, New York 10006, (212) 250-7200, Attention: Alan Freedman.
We are delighted to accept this engagement and look forward to
working with you on this assignment. Please confirm that the foregoing is
in accordance with your understanding by signing and returning to us the
enclosed duplicate of this letter.
Very truly yours,
BT ALEX. BROWN INCORPORATED
By: /s/ Mitchell Goldstein
Name: Mitchell Goldstein
Title: Vice President
AGREED TO AND ACCEPTED as of the date first written above:
J.W. CHILDS EQUITY PARTNERS, L.P.
By: J.W. Childs Advisors, L.P.,
its General Partner
By: J.W. Childs Associates, L.P.,
its General Partner
By: J.W. Childs Associates, Inc.,
its General Partner
By: /s/ Steven G. Segal
_________________________
Title: Vice President
EXHIBIT A
SENIOR NOTES TERM SHEET
ISSUER: Universal, as the survivor of the
merger of Newco and Universal.
SECURITIES OFFERED: $105,000,000 aggregate principal
amount of [ ]% Senior Notes.
MATURITY DATE: 10 years.
INTEREST PAYMENT DATES: Semi-annually.
OPTIONAL REDEMPTION: The Notes will be redeemable, in
whole or in part, at the option of
the Company after the fifth
anniversary of issuance at the
negotiated redemption price plus
accrued interest to the date of
redemption. In addition, at any time
before the third anniversary of
issuance, the Company, at its option,
may redeem up to 35% of the
originally issued principal amount of
Notes with the net proceeds of one or
more Public Equity Offerings, at a
negotiated price plus accrued
interest to the date of redemption;
provided, however, that after any
such redemption at least 65% of the
originally issued aggregate principal
amount of the Notes must remain
outstanding.
CHANGE OF CONTROL: Upon the occurrence of a Change of
Control (as defined), each holder of
Notes will have the right to require
the Company to offer to repurchase
all or a portion of such holder's
Notes at a price equal to 101% of
their principal amount plus accrued
interest, if any, to the date of
repurchase. In addition, the Company
may, at its option, redeem the Notes
for an amount equal to their
principal amount plus accrued
interest, if any, to the redemption
date, plus a Make Whole Payment (as
defined) to be based on the excess of
(i) the present value of the
remaining required interest and
principal payments due on each Note
(exclusive of accrued and unpaid
interest), computed using a discount
rate equal to the rate on Comparable
Treasury Securities (as defined) plus
[ ] basis points over (ii) the then
outstanding principal amount of a
Note.
OFFERS TO PURCHASE: In the event of certain asset sales,
the Company will be required to offer
to repurchase the Notes at 100% of
their principal amount plus accrued
interest, if any, to the date of
repurchase with the net proceeds of
such asset sales.
RANKING: The Notes will be general unsecured
senior obligations of the Company and
will rank pari passu in right of
payment with all senior unsecured
indebtedness of the Company and
senior in right of payment with all
existing and future subordinated
indebtedness of the Company.
CERTAIN COVENANTS: The Indenture governing the Notes
(the "Indenture") will impose certain
limitations on the ability of the
Company and certain of its
subsidiaries to, among other things,
incur additional indebtedness, pay
dividends or make certain other
restricted payments, consummate
certain asset sales, enter into
certain transactions with affiliates,
incur liens, impose restrictions on
the ability of a subsidiary to pay
dividends or make certain payments to
the Company, merge or consolidate
with any other person, incur
indebtedness which is subordinate to
any senior debt and not subordinated
to the Notes or sell, assign,
transfer, lease, convey or otherwise
dispose of all or substantially all
of the assets of the Company.
EXHIBIT 4
BT ALEX. BROWN INCORPORATED
130 LIBERTY STREET
NEW YORK, NEW YORK 10006
November 25, 1997
J.W. Childs Equity Partners, L.P.
1 Federal Street
21st Floor
Boston, MA 02110
Attention : Steven Segal
Re: Universal Hospital Services, Inc.
Recapitalization Financing
Gentlemen:
In connection with our engagement letter dated the date hereof
(the "Agreement"):
You hereby agree to indemnify and hold harmless us and our
affiliates and our and their respective directors, officers, partners,
agents, employees, representatives and control persons (collectively, the
"Indemnified Persons") from and against any losses, claims, damages,
liabilities or expenses incurred by them (including reasonable fees and
disbursements of counsel) which (i) are related to or arise out of (A)
actions taken or omitted to be taken (including any untrue statements made
or any statements omitted to be made) by you or (B) actions taken or
omitted to be taken by an Indemnified Person with your consent or in
conformity with your actions or omissions or (ii) are otherwise related to
or arise out of or in connection with, in each case, the proposed
transactions giving rise to or contemplated by the Agreement, including
modifications or future additions to the Agreement, or execution of letter
agreements or other related activities, and to promptly reimburse us and
any other Indemnified Person for all expenses (including reasonable fees
and disbursements of counsel) as incurred by us or any such Indemnified
Person in connection with investigating, preparing or defending any such
action or claim, whether or not in connection with pending or threatened
litigation in which we or any other Indemnified Person is a party. You will
not, however, be responsible for any losses, claims, damages, liabilities
or expenses of any Indemnified Person pursuant to clause (ii) of the
preceding sentence to the extent same have resulted from the gross
negligence, bad faith or recklessness of such Indemnified Person. You also
agree that if any indemnification sought by an Indemnified Person pursuant
to the Agreement is for any reason held by a court to be unavailable, then
(whether or not we are the Indemnified Person) you and we will contribute
to the losses, claims, liabilities, damages and expenses for which such
indemnification is held unavailable in such proportion as is appropriate to
reflect the relative benefits received by you on the one hand and by us on
the other hand from the actual or proposed transactions giving rise to or
contemplated by the Agreement, and also the relative fault of you, on the
one hand, and of us and the Indemnified Person, on the other. For purposes
of determining the relative benefits to you on the one hand, and us on the
other hand under the proposed transactions giving rise to or contemplated
by the Agreement, such benefits shall be deemed to be in the same
proportion as (i) the total value paid or proposed to be paid by you
pursuant to the transactions, whether or not consummated, for which we are
providing services as provided in the Agreement bears to (ii) the fees paid
or proposed to be paid by you or on your behalf to us in connection with
the proposed transactions giving rise to or contemplated by the Agreement.
No person found liable for a fraudulent misrepresentation shall be entitled
to contribution from any person who is not also found liable for such
fraudulent misrepresentation. Your indemnity, reimbursement and
contribution obligations under this agreement shall be in addition to any
rights that we or any other Indemnified Person may have at common law or
otherwise.
If any action, suit, proceeding or investigation is commenced,
as to which an Indemnified Person proposes to demand indemnification, it
shall notify you with reasonable promptness; provided, however, that any
failure by such Indemnified Person to notify you shall not relieve you from
your obligations hereunder (except to the extent that you are materially
prejudiced by such failure to promptly notify). You shall be entitled to
assume the defense of any such action, suit, proceeding or investigation,
including the employment of counsel reasonably satisfactory to the
Indemnified Person. The Indemnified Person shall have the right to counsel
of its own choice to represent it, but the fees and expenses of such
counsel shall be at the expenses of such Indemnified Person unless (i) you
have failed promptly to assume the defense and employ counsel reasonably
satisfactory to the Indemnified Person in accordance with the preceding
sentence or (ii) the Indemnified Person shall have been advised by counsel
that there exists actual or potential conflicting interests between you and
such Indemnified Person, including situations in which one or more legal
defenses may be available to such Indemnified Person that are different
from or additional to those available to you; provided, however, that you
shall not, in connection with any one such action or proceeding or separate
but substantially similar actions or proceedings arising out of the same
general allegations be liable for fees and expenses of more than one
separate firm of attorneys at any time for all Indemnified Persons; and
such counsel shall, to the extent consistent with its professional
responsibilities, cooperate with you and any counsel designated by you.
You further agree that you will not, without our prior written
consent, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not we or any
other Indemnified Person is an actual or potential party to such claim,
action, suit or proceeding) unless such settlement, compromise or consent
includes an unconditional release of us and each other Indemnified Person
from all liability and obligations arising therefrom. You further agree
that neither we, nor any of our affiliates, nor any directors, officers,
partners, agents, employees, representatives or control persons of us or
any of our affiliates shall have any liability to you arising out of or in
connection with the proposed transactions giving rise to or contemplated by
the Agreement except for such liability for losses, claims, damages,
liabilities, or expenses to the extent they have resulted from our or their
gross negligence, bad faith or recklessness. This agreement may not be
amended or modified except in writing. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, AND ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO ANY CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR
CONTEMPLATED BY THE AGREEMENT IS HEREBY WAIVED. YOU HEREBY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND NEW YORK STATE COURTS LOCATED
IN THE CITY OF NEW YORK IN CONNECTION WITH ANY DISPUTE RELATED TO THE
AGREEMENT OR ANY MATTERS CONTEMPLATED HEREBY.
The parties hereto acknowledge that, to the extent that
Securities (as defined in the Agreement) are issued, the indemnification
provisions contained in the underwriting or purchase agreement relating to
such issuance entered into by BTAB and the Company (each as defined in the
Agreement) shall govern the rights of the parties relating to
indemnification arising from such issuance and this agreement shall not be
applicable to such situation.
These provisions shall remain in full force and effect
following the expiration or termination of the Agreement. The provisions
hereof shall inure to the benefit of and be binding upon our successors and
assigns, and the successors and assigns of each other Indemnified Person.
Very truly yours,
BT ALEX. BROWN INCORPORATED
By: /s/ Mitchell Goldstein
_______________________
Name: Mitchell Goldstein
Title: Vice President
AGREED TO AND ACCEPTED as of the date first written above:
J.W. CHILDS EQUITY PARTNERS, L.P.
By: J.W. Childs Advisors, L.P.,
its General Partner
By: J.W. Childs Associates, L.P.,
its General Partner
By: J.W. Childs Associates, Inc.,
its General Partner
By: /s/ Steven G. Segal
_________________________
Title: Vice President
J.W. Childs Equity Partners, L.P.
UHS Acquisition Corp.
November 25, 1997
Page 1
Exhibit 6
November 25, 1997
J.W. Childs Equity Partners, L.P.
c/o J.W. Childs Associates, L.P.
One Federal Street
Boston, MA 02110
Attention: President
UHS Acquisition Corp.
c/o J.W. Childs Associates, L.P.
One Federal Street
Boston, MA 02110
Attention: President
Re: Support/Voting Agreement
Gentlemen:
The undersigned understand that J.W. Childs Equity Partners,
L.P. ("Holdings"), UHS Acquisition Corp., a wholly owned subsidiary of
Holdings ("Merger Sub"), and Universal Hospital Services, Inc., a
Minnesota corporation ("UHS"), are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), providing
for, among other things, the merger of Merger Sub with and into UHS (the
"Merger"). Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the Merger Agreement. The
undersigned are entering into this letter agreement at the request of
Holdings and Merger Sub, as a condition to their willingness to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby.
Section 1. The undersigned confirm and agree with you as
follows:
A. He or she is the beneficial and, record owner of the
number of shares of common stock, par value $.01 per share, of UHS ("UHS
Common Stock") set forth opposite his or her name on Schedule I hereto
(together with the associated preferred stock purchase rights, the
"Shares"), free and clear of all liens, charges, encumbrances, adverse
claims, voting agreements and commitments of every kind, except as
disclosed on Schedule I. Except as set forth on Schedule I and except for
Options held by him as set forth in Schedule 2.2 to the Merger Agreement,
none of he, she or any company, trust or other entity controlled by him,
her or them owns any additional shares of the capital stock of UHS or any
interest therein or has any voting rights with respect to any additional
shares of capital stock of UHS.
B. They will not, and will not permit any company, trust or
other entity controlled by them or either of them, to (i) contract to
sell, sell or otherwise transfer or dispose of any of the Shares or any
interest therein or options or securities convertible thereinto or any
voting rights with respect thereto, other than as contemplated hereby, or
(ii) take any action which would make any representation or warranty made
by them in this Agreement untrue or incorrect.
C. They will, and will cause any company, trust or other
entity controlled by them or either of them to, cooperate fully with you
in connection with the Merger Agreement and the transactions contemplated
thereby. They will not, and will not permit any such company, trust or
other entity to, directly or indirectly (including through its officers,
directors, employees or other representatives) solicit, initiate,
encourage or facilitate, or furnish or disclose non-public information in
furtherance of, any inquiries or the making of any proposal with respect
to any recapitalization, merger, consolidation or other business
combination involving UHS, or acquisition of any capital stock or any
material portion of the assets of UHS, or any combination of the
foregoing (a "Competing Transaction"), or negotiate, explore or otherwise
engage in discussions with any person (other than Holdings, Merger Sub or
their respective directors, officers, employees, agents and
representatives) with respect to any Competing Transaction or enter into
any agreement, arrangement or understanding with respect to any Competing
Transaction or agree to or otherwise assist in the effectuation of any
Competing Transaction; provided, however, that nothing herein shall
restrict him from taking any action in his capacity as an officer or
director of UHS that he is permitted to take in such capacity under the
Merger Agreement.
D. They will, and will cause any company, trust or other
entity controlled by them or either of them to, vote all of the Shares in
favor of the Merger, the Merger Agreement and the transactions
contemplated thereby, and none of he, she or any company, trust or other
entity controlled by them or either of them will vote any of the Shares
(or grant any proxy with respect to any of the Shares) in favor of any
Competing Transaction at any meeting of the shareholders of UHS.
E. They agree that (i) at the Effective Time, the Shares
will not be cancelled, extinguished or converted into the right to
receive the Merger Consideration, but instead each Share will remain
issued and outstanding as one fully paid and nonassessable share of
common stock of the Surviving Corporation, and (ii) upon consummation of
the Merger, all Options held by him as set forth in Schedule 2.2 to the
Merger Agreement will not be cancelled in exchange for the Option
Consideration in accordance with Section 1.8(a) of the Merger Agreement,
but instead all such Options will remain issued and outstanding options
to purchase shares of common stock of the Surviving Corporation. Holdings
agrees that its capital contributions to Merger Sub (and thus to the
Surviving Corporation) in connection with the Merger will be made in cash
on the basis of $15.50 per share of common stock. For purposes of this
Section 1(E) only, "Shares" includes any shares of UHS Common Stock
acquired by the undersigned after the date hereof and prior to the
Effective Time pursuant to employee benefit plans of UHS. Holdings
further agrees that David Dovenberg shall be entitled to designate other
members of management of the Surviving Corporation, subject to the
approval of the Board of Directors of the Surviving Corporation, who
shall be given the right to purchase shares of common stock of the
Surviving Corporation for cash on the basis of $15.50 per share of common
stock.
F. They represent and warrant that they have all necessary
power and authority to enter into this letter agreement and that this
letter agreement is the legal, valid and binding agreement of each of
them, and is enforceable against each of them in accordance with its
terms.
G. They agree that they will, from time to time, execute
and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other
instruments as Holdings or Merger Sub may reasonably request for the
purpose of effectively carrying out the transactions contemplated by this
Agreement and to vest the power to vote the Shares as contemplated by
Section 1(D).
Section 2. UHS agrees with and covenants to Holdings and
Merger Sub that UHS shall not register the transfer of any of the
undersigned's Shares without the prior written consent of Holdings.
Section 3. UHS and the undersigned agree that damages are
an inadequate remedy for the breach of any term or condition of this
letter agreement and that you shall be entitled to a temporary
restraining order and preliminary and permanent injunctive relief in
order to enforce the terms of this letter agreement.
Section 4. This letter agreement may be terminated at the
option of any party at any time upon the earlier of (i) termination of
the Merger Agreement, or (ii) the Effective Time (as defined in the
Merger Agreement).
Section 5. Holdings and Merger Sub hereby agree that the
obligations of the undersigned hereunder, including without limitation,
the agreements of the undersigned contained in Section 1(D) and (E)
hereof, are expressly conditioned upon the observance and performance by
Holdings and Merger Sub of their respective obligations hereunder in all
material respects.
Section 6. Holdings and Merger Sub hereby agree to pay or
reimburse, or cause UHS to pay or reimburse, the undersigned for legal
fees reasonably incurred by them, or either of them, in connection with
the negotiation, execution and delivery of this Agreement, the related
Employment Agreement of even date herewith between David E. Dovenberg and
Merger Sub and any other agreements that Holdings or Merger Sub requests
you to enter into in connection with the Merger Agreement and the
transactions contemplated thereby.
Please confirm that the foregoing correctly states the
understanding between us by signing and returning to me a counterpart
hereof.
Very truly yours,
/s/ David E. Dovenberg
Name: David E. Dovenberg
/s/ Jean Marie Dovenberg
Name: Jean Marie Dovenberg
Acknowledged and agreed to as to Sections 2 and 3:
Universal Hospital Services, Inc.
By: /s/ Thomas A. Minner
Name:
Title:
Confirmed on the date first above written:
J.W. Childs Equity Partners, L.P.
By: J.W. Childs Advisors, L.P.
General Partner
By: J.W. Childs Associates, L.P.
General Partner
By: J.W. Childs Associates, Inc.
General Partner
By: /s/ Steven G. Segal
Name: Steven G. Segal
Title: Vice President
UHS Acquisition Corp.
By: /s/ Steven G. Segal
Name: Steven G. Segal
Title: President
SCHEDULE I
Number of Shares Owned
Shareholder Beneficially or of Record
David E. Dovenberg and
Jean Dovenberg 170,613
170,613 total above represents Shares owned individually or jointly. For
purposes of this letter agreement, "Shares" excludes 1,158 shares of
common stock owned by the Dovenberg's daughter, Kirsten; such shares
would not be "rolled over" but would be converted into the right to
receive the Merger Consideration.
Certain of the Shares are pledged to secure a margin loan containing
customary terms in the amount of approximately $97,000. To the extent
that such margin loan is required to be repaid, Holdings will, or will
cause the Company to, loan Mr. Dovenberg (on terms reasonably
satisfactory to Holdings and Mr. Dovenberg) an amount sufficient to repay
the margin loan (or portion thereof that is required to be repaid).
Exhibit 7
[Form of Support/
Voting Agreement]
November 25, 1997
J.W. Childs Equity Partners, L.P.
c/o J.W. Childs Associates, L.P.
One Federal Street
Boston, MA 02110
Attention: President
UHS Acquisition Corp.
c/o J.W. Childs Associates, L.P.
One Federal Street
Boston, MA 02110
Attention: President
Re: Support/Voting Agreement
Gentlemen:
The undersigned understands that J.W. Childs Equity Partners,
L.P. ("Holdings"), UHS Acquisition Corp., a wholly owned subsidiary of
Holdings ("Merger Sub"), and Universal Hospital Services, Inc., a
Minnesota corporation ("UHS"), are entering into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), providing
for, among other things, the merger of Merger Sub with and into UHS (the
"Merger"). Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the Merger Agreement. The
undersigned is entering into this letter agreement at the request of
Holdings and Merger Sub, as a condition to their willingness to enter
into the Merger Agreement and to consummate the transactions contemplated
thereby.
Section 1. The undersigned confirms and agrees with you as
follows:
A. He is the beneficial or record owner of the number of
shares of common stock, par value $.01 per share, of UHS ("UHS Common
Stock") set forth opposite his name on Schedule I hereto (the "Shares"),
free and clear of all liens, charges, encumbrances, adverse claims,
voting agreements and commitments of every kind, except as disclosed on
Schedule I. Except as set forth on Schedule I and except for Options held
by him as set forth in Schedule 2.2 to the Merger Agreement, neither he
nor any company, trust or other entity controlled by him owns any
additional shares of the capital stock of UHS or any interest therein or
has any voting rights with respect to any additional shares of capital
stock of UHS.
B. He will not, and will not permit any company, trust or
other entity controlled by him, to (i) contract to sell, sell or
otherwise transfer or dispose of any of the Shares or any interest
therein or options or securities convertible thereinto or any voting
rights with respect thereto, other than pursuant to the Merger, unless
the proposed transferee and UHS enter into a letter agreement with
Holdings and Merger Sub identical to this letter agreement concurrently
with such proposed transfer, or (ii) take any action which would make any
representation or warranty made by him in this Agreement untrue or
incorrect.
C. He will, and will cause any company, trust or other
entity controlled by him to, cooperate fully with you in connection with
the Merger Agreement and the transactions contemplated thereby. He will
not, and will not permit any such company, trust or other entity to,
directly or indirectly (including through its officers, directors,
employees or other representatives) solicit, initiate, encourage or
facilitate, or furnish or disclose non-public information in furtherance
of, any inquiries or the making of any proposal with respect to any
recapitalization, merger, consolidation or other business combination
involving UHS, or acquisition of any capital stock or any material
portion of the assets of UHS, or any combination of the foregoing (a
"Competing Transaction"), or negotiate, explore or otherwise engage in
discussions with any person (other than Holdings, Merger Sub or their
respective directors, officers, employees, agents and representatives)
with respect to any Competing Transaction or enter into any agreement,
arrangement or understanding with respect to any Competing Transaction or
agree to or otherwise assist in the effectuation of any Competing
Transaction; provided, however, that nothing herein shall restrict him
from taking any action in his capacity as an officer or director of UHS
that he is permitted to take in such capacity under the Merger Agreement.
D. He will, and will cause any company, trust or other
entity controlled by him to, vote all of the Shares beneficially owned or
controlled by him at the record date for any meeting of shareholders of
UHS at which the Merger, the Merger Agreement and/or the transactions
contemplated thereby are considered, in favor of the Merger, the Merger
Agreement and the transactions contemplated thereby, and neither he nor
any company, trust or other entity controlled by him will vote any of the
Shares (or grant any proxy with respect to any of the Shares) in favor of
any Competing Transaction at any meeting of the shareholders of UHS.
E. He represents and warrants that he has all necessary
power and authority to enter into this letter agreement and that this
letter agreement is the legal, valid and binding agreement of him, and is
enforceable against him in accordance with its terms.
F. He agrees that he will, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other
instruments as Holdings or Merger Sub may reasonably request for the
purpose of effectively carrying out the transactions contemplated by this
Agreement and to vest the power to vote the Shares as contemplated by
Section 1(D).
Section 2. UHS agrees with and covenants to Holdings and
Merger Sub that UHS shall not register the transfer of any of the
undersigned's Shares without the prior written consent of Holdings.
Section 3. UHS and the undersigned agree that damages are
an inadequate remedy for the breach by it of any term or condition of
this letter agreement and that you shall be entitled to a temporary
restraining order and preliminary and permanent injunctive relief in
order to enforce the terms of this letter agreement.
Section 4. This letter agreement may be terminated at the
option of any party at any time upon the earlier of (i) termination of
the Merger Agreement, or (ii) the Effective Time (as defined in the
Merger Agreement).
Please confirm that the foregoing correctly states the
understanding between us by signing and returning to me a counterpart
hereof.
Very truly yours,
*
Name:
Acknowledged and agreed to as to Sections 2 and 3:
Universal Hospital Services, Inc.
By:
Name:
Title:
Confirmed on the date first above written:
J.W. Childs Equity Partners, L.P.
By: J.W. Childs Advisors, L.P.,
its general partner
By: J.W. Childs Associates, L.P.,
its general partner
By: J.W. Childs Associates, Inc.,
its general partner
By:
Name:
Title:
UHS Acquisition Corp.
By:
Name:
Title:
* An agreement in this form was executed among Universal Hospital
Services, Inc., J.W. Childs Equity Partners, L.P., UHS Acquisition Corp.
and each of the following individuals: Paul W. Larsen, Thomas A. Minner,
Michael W. Bohman and Duane R. Wenell.
SCHEDULE I
Number of Shares Owned
Shareholder Beneficially or of Record
Thomas A. Minner 295,551
Michael W. Bohman 226,835
Paul W. Larsen 171,223
Duane R. Wenell 143,298
Exhibit 8
UHS Acquisition Corp.
c/o J.W. Childs Associates, L.P.
One Federal Street
Boston, Massachusetts 02110
(617) 753-1100
Facsimile: (617) 753-1101
November 25, 1997
Mr. David E. Dovenberg
Universal Hospital Services, Inc.
1250 Northland Plaza
3800 West 80th Street
Bloomington, Minnesota 55431
Dear Mr. Dovenberg:
Reference is made to the Agreement and Plan of Merger
of even date herewith (the "Merger Agreement"), by and among J.W. Childs
Equity Partners, L.P. ("Holdings"), UHS Acquisition Corp., a Minnesota
corporation and a wholly owned subsidiary of Holdings ("Merger Sub"), and
Universal Hospital Services, Inc., a Minnesota corpora tion ("UHS"). As
you know, subject to the terms and conditions of the Merger Agreement,
Merger Sub will merge with and into UHS (the "Merger"), with UHS to be
the surviving entity (UHS, in its capacity as the corporation surviving
the Merger, is sometimes hereinafter referred to as the "Company").
You currently serve as Vice President of Finance and
Chief Financial Officer of UHS, and this Employment Agreement is being
entered into as inducement for Holdings and Merger Sub to enter into the
Merger Agreement and to consummate the Merger and the other transactions
contemplated by the Merger Agreement, for other good and valuable
consideration and to provide for your services to the Company following
the Merger as follows:
1. Position; Duties. From and after the date of the
Merger, the Company shall employ you, and you agree to serve and accept
employment, for the Term (as defined herein), as President and Chief
Executive Officer of the Company, subject to the direction and control of
the Board of Directors of the Company (the "Board"), and, in connection
therewith, to reside in the United States, to oversee and direct the
operations of the Company and to perform such other duties as the Board
may from time to time reasonably direct. Your place of employment shall
be in the Minneapolis, Minnesota area. During the Term, you shall also be
a member of the Board of Directors of the Company. During the Term, you
agree to devote all of your time, energy, experience and talents during
regular business hours, and as otherwise reason ably necessary, to such
employment, to devote your 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 (except as a director of Lund
International Holdings), consultant or in any other capacity, whether or
not you receive any compensation therefor, without the prior written
consent of the Board. You shall not be given duties inconsistent with
your executive position.
2. Term of Employment Agreement. The term of your
employment hereunder shall begin as of the Effective Time (as defined in
the Merger Agreement) and end as of the close of business on the date
which is three years from the Effective Time, subject to earlier
termination pursuant to the terms hereof (the "Term"). Following the
Term, this Agreement shall 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 30 days' written notice prior to
the date on which such renewal would otherwise occur. In the event that
your employment is not renewed following the expiration of the Term or
following the expiration of the first Renewal Term immediately succeeding
the Term, the Company shall pay to you your base salary and provide you
with the benefits provided hereunder for eighteen months following such
non-renewal.
3. Compensation and Benefits.
(a) Base Salary. Your base salary shall
be at the annual rate of $200,000, payable in equal bi-weekly
installments. Such base salary shall be adjusted annually based on
changes in the consumer price index (all urban consumers, U.S. city
average). The Board will annually review your base salary beginning in
1999. Necessary withholding taxes, FICA contributions and the like shall
be deducted from your base salary.
(b) Bonus; Options. In addition to your
base salary, you shall be entitled to receive a bonus of up to 100% of
your base salary, based on the achievement of the annual EBITDA targets
contained in Exhibit A (such targets to be subject to adjustment by the
Board of Directors of the Company, in good faith, to reflect any
acquisitions, dispositions and material changes to capital spending).
The amount of such bonus would rise linearly from 0% of base salary to
100% of base salary based on achievement of EBITDA of 90% to 110% of
target EBITDA. No bonus shall be payable if EBITDA is 90% or less of
target EBITDA. You will also be entitled to receive certain stock options
pursuant to one or more executive or employee stock option plans to be
adopted by the Company; the basic terms of such stock options are
contained in Exhibit A attached hereto.
(c) Other. You shall be entitled to such
health, life, disability, vacation, pension, sick leave and other
benefits as are generally made available by the Company to its executive
employees. Your benefits will also consist of five weeks paid vacation
time, club membership, an annual physical exam and reimbursement for tax
preparation costs.
4. Termination.
(a) Death. This Employment Agreement
shall automatically terminate upon your death. In the event of such
termination, the Company shall pay to your legal representatives your
base salary in monthly installments and continue to provide the benefits
provided hereunder, in each case for eighteen months following such
termination.
(b) Disability. If during the Term you
become physically or mentally disabled, whether totally or partially,
either permanently or so that you are unable substantially and
competently to perform your 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 your employment
hereunder by written notice to you. In the event of such termination, the
Company shall pay to you your base salary in monthly installments and
continue to provide the benefits provided hereunder, in each case for
eighteen months following such termination.
(c) Cause. Your employment hereunder may
be terminated at any time by the Company for Cause (as defined herein) by
written notice to you. In the event of such termination, all of your
rights to payments (other than payment for services already rendered) and
any other benefits otherwise due hereunder shall cease immediately. The
Company shall have "Cause" for termination of your employment hereunder
if any of the following has occurred:
(i) your continued failure,
whether willful, intentional or grossly negligent, after written notice,
to perform substantially your duties hereunder (other than as a result of
a Disability);
(ii) dishonesty in the perfor-
mance of your duties hereunder;
(iii) conviction or confession of
an act or acts on your part constituting a felony under the laws of the United
States or any state thereof;
(iv) any other willful act or
omission on your part which is materially injurious to the financial
condition or business reputation of the Company or any of its subsidiaries;
or
(v) you have breached any
provision of this Employment Agreement contained in Paragraphs 6, 7 or 8
hereof; or
(vi) you have breached any
provision of this Employment Agreement (other than Paragraph 6, 7, or 8
hereof) and such breach shall not have been cured within sixty (60) days
after notice thereof from the Company to you.
(d) Without Cause. Your employment
hereunder may be terminated at any time by the Company without Cause by
written notice to you. In the event of such termination, the Company
shall continue to pay you your base salary through the date which is
eighteen months from the Date of Termination (as defined herein). It is
acknowledged and agreed that termination of your employment upon
expiration of the Term, or any Renewal Term, shall not be deemed to
constitute a termination without Cause for purposes of this Employment
Agreement or for any other purpose.
(e) Resignation Without Good Reason. You
may terminate your employment hereunder upon sixty days' written notice
to the Company, without Good Reason (as defined herein). In the event of
such termination, all of your rights to payment (other than payment for
services already rendered) and any other benefits otherwise due
hereunder shall cease immediately. It is acknowledged and agreed that
termination of your employment upon expiration of the Term or any Renewal
Term shall not be deemed to constitute resignation without Good Reason
for purposes of this Employment Agreement or any other purpose.
(f) Resignation For Good Reason. You may
terminate your 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 continue to pay you your base salary through the date
which is eighteen months from the Date of Termination.
You shall have "Good Reason" for termination of your
employment hereunder if, other than for Cause, any of the following has
occurred:
(i) your base salary has been
reduced other than in connection with an across-the-board reduction of
executive compensation imposed by the Board in response to negative
financial results or other adverse circumstances affecting the Company;
or
(ii) the Company has reduced or
reassigned a material portion of your duties hereunder or has required
you to relocate outside the greater Minneapolis, Minnesota area; or
(iii) your illness, that in the
good faith determination of the Board of Directors of the Company is
likely to result in you becoming disabled and unable to continue your
employment with the Company; or
(iv) the Company has breached
this Employment Agreement in any material respect.
(g) Date and Effect of Termination. The
date of termination of your employment hereunder, pursuant to this
Paragraph 4, shall be, (i) in the case of Paragraph 4(a), the date of
your death, (ii) in the case of Paragraphs 4(b), (c) or (d), the date
specified in the Company's notice to you of such termination or (iii) in
the case of Paragraph 4(e) or 4(f), the date specified in your notice to
the Company of such termination (in each case, the "Date of
Termination"). Upon any termination of your employment hereunder pursuant
to this Paragraph 4, you shall 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, in any stock option plans adopted by the Company in
accordance with Paragraph 3(b) hereof, or as may be required by law.
(h) Other Employment. Notwithstanding
anything in this Employment Agreement to the contrary, if your employment
hereunder is terminated pursuant to Paragraph 4(d) or (f), and if prior
to the date which is eighteen months after the Date of Termination you
find other employment, the amount of payments or benefits payable to you
after such termination in accordance with the terms of this Employment
Agreement shall be reduced by the value of your compensation in your new
employment through the date which is eighteen months after the Date of
Termination.
5. Acknowledgment. You agree and acknowledge that in
the course of rendering services to the Company and its clients and
customers, you will have access to and become acquainted with
confidential information about the professional, business and financial
affairs of the Company and its affiliates. You acknowledge 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. You agree and
acknowledge that reasonable limits on your ability to engage in
activities competitive with the Company are warranted to protect its
substantial investment in developing and maintaining its status in the
marketplace, reputation and good will. You recognize 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 you against the Company
shall not constitute and shall not be asserted as a defense to the
enforcement by the Company of this Employment Agreement. You further
agree that your obligations under Paragraphs 6, 7 and 8 hereof shall be
absolute and unconditional.
6. Confidentiality. You agree that during and at all
times after the Term, you 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 (including its subsidiaries and affiliates) (collectively, the
"Confidential Information"), to which you had or may have access and will
not disclose such Confidential Information to any person other than
Holdings or the Company, their respective authorized employees and such
other persons to whom you have been instructed to make disclosure by the
Board, in each case only to the extent required in the course of your
service to the Company hereunder or as otherwise expressly required in
connection with court process. "Confidential Information" shall 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 conse-
quence of disclosure by you in violation of this Employment Agreement.
7. Non-competition. During the Prohibition Period (as
hereinafter defined), you will not, in any capacity, whether for your own
account or for any other person or organization, directly or indirectly,
(i) within the United States and Canada (a) own, operate, manage or
control, (b) serve as an officer, director, partner, employee, agent,
consultant, advisor or developer or in any similar capacity to, or (c)
have any financial interest in, or aid or assist anyone else in the
conduct of, any person or enterprise which is engaged in the moveable
medical equipment rental business. As used herein, "Prohibition Period"
means the period from and after the Effective Time to and including (i)
the date which is eighteen months from the Date of Termination, if your
employment hereunder is terminated by the Company without Cause or by you
for Good Reason or (ii) the date which is twelve months from the Date of
Termination, if your employment hereunder is terminated other than as
set forth in the preceding clause (i).
8. Non-solicitation. During the Prohibition Period, you
will not, directly or indirectly, hire, recruit, solicit, call upon,
divert, take away, entice or in any other manner persuade or attempt to
do any of the foregoing with respect to, any employee, independent
contractor, dealer, supplier, client, customer or business contact of
the Company or any of its subsidiaries to discontinue his or her position
or relationship, or violate any agreement, with the Company or any of
its subsidiaries as employee, independent contractor, dealer, supplier,
client, customer or business contact, except with the prior written
consent of the Board, which consent shall be given at the sole
discretion of the Board.
9. Modification. You agree and acknowledge that the
duration, scope and geographic area of the covenants described in
Paragraphs 6, 7 and 8 are fair, reasonable and necessary in order to
protect the good will and other legitimate interests of the Company and
its subsidiaries, that adequate consideration has been received by you
for such obligations, and that these obligations do not prevent you from
earning a livelihood. If, however, for any reason any court of competent
jurisdiction determines that any restriction contained in Paragraphs 6,
7 or 8 are not reasonable, that consideration is inadequate or that you
have been prevented unlawfully from earning a livelihood, such
restriction shall be interpreted, modified or rewritten to include as
much of the duration, scope and geographic area identified in such
Paragraph 6, 7 or 8 as will render such restrictions valid and
enforceable.
10. Equitable Relief. You acknowledge that Merger Sub or
the Company will suffer irreparable harm as a result of a breach of this
Employment Agreement by you 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 you of any provision of this
Employment Agreement, Merger Sub or the Company shall, 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 you, and you
hereby consent to the entry of such relief against you and agree not to
contest such entry. Such relief shall be in addition to and not in
substitution of any other remedies available to Merger Sub or the Company.
The existence of any claim or cause of action by you against Merger Sub or
the Company or any of its subsidiaries, whether predicated on this
Employment Agreement or otherwise, shall not constitute a defense to the
enforcement by Merger Sub or the Company of this Employment Agreement. You
agree not to defend on the basis that there is an adequate remedy at law.
11. Stockholders' Agreement. In connection with the
acquisition of any equity securities, or options therefor, of the
Company, you and your spouse will be expected to enter, and you agree to
enter and cause your spouse to enter, into a stockholders' agreement with
the other equity investors in the Company, substantially in the form
attached hereto as Exhibit B.
12. Life Insurance. Either Merger Sub or the Company,
as the case may be, 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 your life,
in such amount and in such form or forms Merger Sub or the Company may
determine. You shall have no right or interest whatsoever in such policy
or policies, but you agree that you will, at the request of Merger Sub or
the Company, submit yourself 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 Merger Sub or the Company or
any such subsidiary has applied for such insurance.
13. Successors; Assigns; Amendment; Notice. This
Employment Agreement shall be binding upon and shall inure to the benefit
of Merger Sub and its successors (including, after the Effective Time, the
Company). This Employment Agreement shall be binding upon you and shall
inure to the benefit of your heirs, executors, administrators and legal
representatives, but shall not be assignable by you. This Employment
Agreement may be amended or altered only by the written agreement of Merger
Sub (or, after the Effective Time, the Company) and you. All notices or
other communications permitted or required under this Employment Agreement
shall be in writing and shall be deemed to have been duly given if
delivered by hand, by facsimile transmission (if confirmed) or mailed
(certified or registered mail, postage prepaid, return receipt requested)
to you or Merger Sub (or, after the Effective Time, the Company) at the
respective addresses on the first page of this Employment Agreement, or
such other address as shall be furnished in writing by like notice by you
or Merger Sub (or, after the Effective Time, the Company) to the other.
14. Entire Agreement. This Employment Agreement,
together with the Stockholders' Agreement as executed in accordance with
Paragraph 11 hereof, embodies the entire agreement and understanding
between you and Merger Sub (and, after the Effective Time, the Company)
with respect to the subject matter hereof and supersedes all such prior
agreements and understandings.
15. 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 shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
16. Governing Law. This Employment Agreement shall 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.
17. Counterparts. This Employment Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
18. Headings. All headings in this Employment
Agreement are for purposes of reference only and shall
not be construed to limit or affect the substance of this
Employment Agreement.
If you accept and agree to the foregoing, please sign and
return a counterpart of this letter to Merger Sub at the above address,
whereupon this letter will become a binding Employment Agreement between
you and the Company as of the Effective Time.
Very truly yours,
UHS Acquisition Corp.
By:/s/ Ted Yun
______________________
Name: Ted Yun
Title: Vice President
Accepted and agreed to:
/s/ David E. Dovenberg
_________________________
David E. Dovenberg
EXHIBIT A
NON-QUALIFIED STOCK OPTIONS
KEY PROVISIONS
I. Options Subject to EBITDA Target Vesting.
Effective at the date of execution of the Employment Agreement,
Executive will be granted non-qualified options to acquire, at
"buy-in-price"(1), an aggregate number of shares of common stock of the
Company equal to the percentage specified in Schedule A out of the total
numbers of shares allocated to the management incentive option plan which
in the aggregate equals 7.5% of the outstanding common stock and common
stock equivalents of the Company, on a fully diluted basis.
The above options will vest according to the schedule hereinbelow
based on the Company's achievement of the annual EBITDA targets set forth
in the Management LBO Plan (subject to audited results), as may be amended
or revised in good faith by the Board for acquisitions, divestitures,
material increases in annual projected capital expenditures (described in
Section III below) or other circumstances. Such annual EBITDA targets are
referred to herein respectively as the "Management Target" and are
described in Section III below.
a. Options to acquire between 0% and 20% of the total number of
option shares shall vest in each fiscal year beginning with
the fiscal year ending on December 31, 1998 in which the
Company meets or exceeds 90% of the Management Target, on a
linear basis such that, if, for example, the Company achieves
95% of the Management Target, 10% of the total number of
option shares would vest.
b. Options to acquire 20% of the total number of option shares
shall vest in each fiscal year beginning with the fiscal year
ending on December 31, 1998 in which the Company meets or
exceeds the Management Target. No more than 20% of the total
number of option shares shall vest in any fiscal year, except
as noted in Section I.c. below.
c. Irrespective of the foregoing, if at the end of the fifth
fiscal year the company: (i) on a cumulative basis meets the
cumulative Management Target for such period; and (ii) meets
or exceeds the annual Management Target for the fifth fiscal
year, additional options will then vest such that the total
number of vested options under the management incentive
option plan will be no less than 100% of the total number of
options allocated to such plan.
- --------------
1 i.e., the price per share, as adjusted to reflect subsequent
changes in capitalization, at which J.W. Childs acquired its
original shares of common stock of the Company.
In the event of a Change of Control(2) transaction, the
unvested portion of the options will become vested in a proportion
equal to the ratio of options which have actually vested at such
time to the total number of options as would have vested had the
Company achieved the Management Target for all periods prior to
the change of control. Irrespective of the foregoing, if at the
end of the last fiscal year ending prior to the Change of Control,
the company: (i) on a cumulative basis meets the cumulative
Management Target for such period; and (ii) meets or exceeds the
annual Management Target for such fiscal year, additional options
will then vest such that the total number of vested options under
the management incentive option plan will be no less than 100% of
the total number of options allocated to such plan.
Each option shall expire, unless earlier exercised or
terminated, ten years and six months from the date of grant.
In the case of termination of Executive's employment for
Cause or Resignation Without Good Reason, as defined in the
Employment Agreement, each option shall terminate at the time of
termination of employment.
In the case of termination of Executive's employment
without Cause or his resignation for Good Reason, again as defined
in the Employment Agreement, options which have vested at the time
of termination/resignation shall terminate on the 91st day after
the date of employment termination or resignation, and options
which have not vested shall terminate immediately.
If Executive's employment is terminated due to death or
disability pursuant to the Employment Agreement, options which
have vested at the time of termination/resignation shall terminate
on the 181st day after the date of employment termination or death
and may be exercised during such period by the Executive or his
legal representative or estate, as the case may be, and options
which have not vested shall terminate immediately.
II. Additional Options
Certain eligible members of management will be granted options for
an additional 3.0% of the Company as outlined in Schedule B, which options
shall vest, if within five years of the effective date of the Merger, the
original common stock investors of the Company in the Merger achieve a
realized value(3) of the multiple specified in the table below for the
corresponding time period, or more on their original investment.
- ------------------
2 A "Change of Control" means, generally, a sale of the business of
the Company to any person, firm, entity or group which, together
with its affiliates, prior to such transaction, did not own more
than 50% of the outstanding common equity of the Company.
3 For purpose hereof, "realized value" will mean, in general, the
cash or market value of registered, publicly traded and tradeable
securities not subject to transfer or Rule 144 restrictions
received in a Change of Control.
Additional Options Pursuant to Section II
Realized value achieved prior to Minimum multiple of realized value
the following years after closing to original common stock investors
- ----------------------------------------------------------------------------
Year 3 4.0x
Year 4 4.5x
Year 5 5.0x
III. Management Target
Fiscal Year Ended EBITDA Target ($000)(4) Capital Expenditures ($1000)
- ----------------------------------------------------------------------------
December 31, 1998 $29,709 $21,100
December 31, 1999 32,977 22,600
December 31, 2000 36,445 22,700
December 31, 2001 40,314 25,000
December 31, 2002 44,635 31,200
IV. Forfeited Options
Provision shall be made in the Stock Option Plan for options
forfeited to be available for grant at fair market value to management
employees in the discretion of the Board.
- --------------------
4 Calculation of EBITDA will exclude expenses related to: (i) any
payments to J.W. Childs; (ii) annual bank fees related to Merger
related debt financing; (iii) Bazooka bed asset impairment
write-downs; (iv) all severance payments incurred prior to December
31, 1998; and (v) compensation incurred during fiscal 1998 for certain
senior executives who are terminated in connection with the Merger
(the amount of which will be net of a pro forma adjustment for the
pre-Merger time period for raises given to senior executives who
receive promotions and raises in connection with the Merger). 1
Closing of the Merger.
Schedule A
Initial Allocation of Management Incentive Option Plan
Employee % of total number of shares of common
stock issued at closing(1)
- ----------------------------------------------------------------------------
David Dovenberg 1.500%
Gerry Brandt 0.625%
Michael Johnson 0.625%
Robert Braun 0.625%
Gary Preston 0.625%
Other Employees(2) 3.000%
Reserved 0.500%
Total 7.500%
- -----------------------
1 Closing of the Merger.
2 To be allocated by David Dovenberg with the approval of
the board of directors.
Schedule B
Allocation of Additional Options
Employee % of total number of shares of
common stock issued at closing(1)
- ---------------------------------------------------------------------------
David Dovenberg 1.0%
Gerry Brandt 0.5%
Michael Johnson 0.5%
Robert Braun 0.5%
Gary Preston 0.5%
Total 3.0%
- -----------------------
1 Closing of the Merger.
Exhibit B
UNIVERSAL HOSPITAL SERVICES, INC.
STOCKHOLDERS' AGREEMENT
Dated as of [ ], 1997
TABLE OF CONTENTS
ARTICLE I
Definitions
1.1 Definitions...................................................2
ARTICLE II
Transfer Provisions
2.1 Restrictions on Transfers....................................11
2.2 Call by the Company..........................................11
2.3 Put By Management Holders....................................15
2.4 Tagalong.....................................................18
2.5 Dragalong....................................................20
2.6 Corporate Governance.........................................21
2.7 Restrictions on Other Agreements.............................21
2.8 Stockholder Action...........................................22
ARTICLE III
Registration Rights
3.1 General......................................................22
3.2 Piggyback Registration.......................................22
3.3 Obligations of the Company...................................23
3.4 Furnish Information..........................................27
3.5 Expenses of Registration.....................................27
3.6 Underwriting Requirements....................................27
3.7 Indemnification..............................................28
3.8 Rule 144.....................................................31
3.9 Market Stand-Off Agreement...................................32
ARTICLE IV
Certain Miscellaneous Other Provisions
4.1 Remedies.....................................................32
4.2 Entire Agreement; Amendment; Termination.....................33
4.3 Severability.................................................33
4.4 Notices......................................................33
4.5 Binding Effect; Assignment...................................34
4.6 Termination..................................................34
4.7 Recapitalization, Exchanges, etc.............................35
4.8 JWC Representative...........................................35
4.9 Action Necessary to Effectuate the Agreement.................36
4.10 Purchase for Investment; Legend on Certificate...............36
4.11 Effectiveness of Transfers...................................37
4.12 Additional Stockholders......................................37
4.13 No Waiver....................................................37
4.14 Counterparts.................................................38
4.15 Headings, etc................................................38
4.16 Governing Law................................................38
4.17 Effective Time...............................................38
Exhibits
Exhibit A - - Schedule of Stockholders...............................A-1
Exhibit B - - Form of Promissory Note................................B-1
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT (this "AGREEMENT") is
entered into as of [ ], 1997, by and among Universal Hospital Services,
Inc., a Minnesota corporation (the "COMPANY"), those persons listed as
the Management Holders on the signature pages hereof (the "MANAGEMENT
HOLDERS") and those persons listed as the JWC Holders on the signature
pages hereof (the "JWC HOLDERS").
RECITALS
A. Upon consummation of the transactions contemplated
by the Agreement and Plan of Merger, dated as of [ ], 1997 by and among
J.W. Childs Equity Partners, L.P., a Delaware limited partnership, UHS
Acquisition Corp., a Minnesota corporation, and Universal Hospital
Services, Inc., a Minnesota corporation (the "ACQUISITION AGREEMENT"),
and of certain related transactions to be consummated concurrently
therewith, the Stockholders (as hereinafter defined) will own (and may
hereafter acquire) certain shares of Common Stock (as hereinafter
defined) and certain options, warrants, securities and other rights to
acquire from the Company, by exercise, conversion, exchange or otherwise,
shares of Common Stock or securities convertible into Common Stock.
B. All of the Stockholders desire to enter into this
Agreement for the purpose of regulating certain aspects of the
Stockholders' relationships with one another and with the Company.
AGREEMENT
In consideration of the premises and the mutual
promises, representations, warranties, covenants and conditions set forth
in this Agreement, the parties to this Agreement mutually agree as
follows:
ARTICLE I
Definitions
1.1 Definitions. For the purposes of this Agreement,
the following terms shall be defined as follows:
The "1933 ACT" shall mean the Securities Act of 1933,
as amended, or any successor federal statute thereto, and the rules and
regulations of the SEC promulgated thereunder, all as the same shall be
in effect from time to time.
The "1934 ACT" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute thereto, and the
rules and regulations of the SEC promulgated thereunder, all as the same
shall be in effect from time to time.
An "AFFILIATE" of a specified Person shall mean a
Person who, directly or indirectly, through one or more intermediaries,
controls or is controlled by or is under common control with the
specified Person and, when used with respect to the Company or any
Subsidiary of the Company, shall include any holder of at least 5% of the
capital stock, or any officer or director, of the Company or any
Subsidiary of the Company.
"BUSINESS DAY" shall mean any day, other than a
Saturday, Sunday or a day on which commercial banking institutions in New
York, New York or Boston, Massachusetts are authorized or required by
law to be closed.
"CALL EVENT" shall have the meaning set forth
in Section 2.2(a).
"CALL GROUP" shall have the meaning set forth
in Section 2.2(a).
"CALL NOTICE" shall have the meaning set forth
in Section 2.2(a).
"CALL OPTION" shall have the meaning set forth
in Section 2.2(a).
"CALL PRICE" shall mean, as of any date, a per share
price equal to the remainder of (a) (i) the excess of (A) the product of
4.75 times EBITDA, over (B) the aggregate amount of the Consolidated
Indebtedness as of the date of the most recently prepared consolidated
balance sheet of the Company and its Subsidiaries, divided by (ii) the
aggregate number of Common Stock Equivalents at the time outstanding,
minus, (b) in the case of Vested Options, the per share exercise price
payable in connection with such Vested Options.
"CALL SECURITIES" shall have the meaning set forth in
Section 2.2(a).
"CAUSE" shall mean, with respect to any Management
Holder, such Management Holder's (a) continued failure, whether willful,
intentional or grossly negligent, after written notice, to perform
substantially his duties as an employee of the Company or any of its Sub-
sidiaries, other than as a result of a "Disability" as defined (if
applicable) in any Employment Agreement by and between the Company and
the Management Holder; (b) dishonesty in the performance of such
Management Holder's duties as an employee of the Company; (c) conviction
or confession of an act or acts on such Management Holder's part
constituting a felony under the laws of the United States or any state
thereof; (d) other willful act or omission on such Management Holder's
part which is materially injurious to the financial condition or business
reputation of the Company or any of its Subsidiaries; (e) breach of any
duty or obligation of noncompetition or confidentiality owed by such
Management Holder to the Company or any of its Subsidiaries; or (f)
breach of any provision or covenant contained in any employment agreement
between such Management Holder and the Company or any of its
Subsidiaries, which breach shall not have been cured within sixty (60)
days after notice thereof from the Company to the Management Holder.
"COMMON STOCK" shall mean shares of Common Stock, par
value $.01 per share, of the Company.
"COMMON STOCK EQUIVALENTS" shall mean, as of any date,
(a) all shares of Common Stock outstanding as of such date and (b) all
shares of Common Stock that may be acquired as of such date pursuant to
Vested Options.
The "COMPANY" shall mean Universal Hospital Services,
Inc., a Minnesota corporation, and its successors and assigns.
"COMPANY CALL PERIOD" shall have the meaning
set forth in Section 2.2(a).
"CONSOLIDATED INDEBTEDNESS" shall mean, as of any date,
the aggregate amount outstanding, on a consolidated basis, of (a) all
indebtedness of the Company and its Subsidiaries for borrowed money
(other than intercompany debt), (b) those letters of credit that would be
required to be honored upon liquidation of the Company and/or its
Subsidiaries (c) all notes payable, drafts accepted and other obligations
(including, without limitation, any amounts representing deferred sign-
ing bonuses payable to various employees of the Company in accordance
with the terms of their respective employment agreements with the
Company and any Promissory Note (as hereinafter defined) of the Company
issued pursuant to Section 2.3(e) hereof) representing extensions of
credit to the Company and/or its Subsidiaries, whether or not
representing obligations for borrowed money, and (d) that portion of
obligations with respect to capital leases which is reflected as a
liability on the most recently prepared consolidated balance sheet of the
Company and its Subsidiaries.
"COST PRICE" shall mean, with respect to any Subject
Securities, the purchase price, if any, per share of Common Stock or per
Vested Option, as the case may be, paid to the Company for such Subject
Securities by the original holder thereof; provided, however, that in the
event that any such Subject Securities were obtained by the holder thereof
pursuant to the terms of an agreement in writing between JWC Equity
Partners and/or UHS Acquisition Corp., a Minnesota corporation, and the
holder of such Subject Securities, as referenced in the first clause of
Section 1.6(a) or the first clause of Section 1.8(a) of the Acquisition
Agreement, then the Cost Price of such Subject Securities shall be (a) in
the case of Common Stock, the Merger Consideration (as defined in the
Acquisition Agreement), and (b) in the case of Vested Options, the Option
Consideration (as defined in the Acquisition Agreement). If at any time the
number of shares of Common Stock outstanding is (a) increased by a stock
dividend payable in shares of Common Stock or by a subdivision or split-up
of shares of Common Stock or (b) decreased by a combination of shares of
such Common Stock, following the record date for such stock dividend,
subdivision, split-up or combination, the Cost Price per share of Common
Stock shall be adjusted upward or downward, as appropriate, to reflect the
decrease or increase in shares of Common Stock outstanding.
"DESIGNATED EMPLOYEE" and "DESIGNATED EMPLOYEES" shall
have the meanings set forth in Section 2.2(e).
"DRAGALONG GROUP" shall have the meaning set forth in
Section 2.5(a).
"EBITDA" shall mean, as of any date for which it is to
be determined, the consolidated earnings of the Company and its
Subsidiaries before interest, taxes, depreciation and amortization and
after deduction of all operating expenses, all as calculated in
accordance with generally accepted accounting principles consistently
applied, as reflected in the Company's consolidated financial statements
for the four (4) most recent consecutive fiscal quarters of the Company
ending at least 45 days prior to such date.
"EQUITY PARTNERS AGREEMENT" shall have the meaning set
forth in Section 4.8.
"GOOD REASON" shall mean, with respect to any
Management Holder, such Management Holder's resignation from his
employment with the Company or any of its Subsidiaries following and
because of (a) the Company's reducing or reassigning a material portion
of the Management Holder's duties under his employment agreement, if
any, without Cause or, in the case of David E. Dovenberg only, the
Company's requiring Mr. Dovenberg to relocate outside the greater
Minneapolis, Minnesota area; (b) a reduction of the Management Holder's
base salary other than in connection with an across-the-board reduction
of executive compensation imposed by the Board of Directors of the
Company in response to negative financial results or other adverse
circumstances affecting the Company; (c) an illness of the Management
Holder, that, in the good faith determination of the Board of Directors
of the Company, is likely to result in the Management Holder becoming
disabled and unable to continue his employment with the Company; or (d) a
material breach by the Company of any Employment Agreement by and
between the Company and the Management Holder.
"HOLDER" shall have the meaning set forth in Section 3.1.
"INITIATING STOCKHOLDER" shall have the meaning set
forth in Section 2.4(a).
"JWC EQUITY PARTNERS" shall mean J.W. Childs Equity
Partners, L.P., a Delaware limited partnership.
"JWC HOLDERS" shall have the meaning set forth in the
preamble preceding the Recitals to this Agreement and shall also include
Permitted Transferees of the JWC Holders and other transferees of the JWC
Holders unless immediately prior to such Transfer such transferee was a
Management Holder.
"JWC INC." shall mean J.W. Childs Associates, Inc., a
Delaware corporation.
"JWC REPRESENTATIVE" shall have the meaning set forth in
Section 4.8.
"MANAGEMENT HOLDERS" shall have the meaning set forth
in the preamble preceding the Recitals to this Agreement and shall also
include (a) any director, officer or management employee of the Company
or any of its Subsidiaries (other than JWC Holders) who, with the written
consent of the Company and the JWC Representative, hereafter becomes a
party to this Agreement and (b) Permitted Transferees of the Management
Holders, unless immediately prior to such Transfer such transferee was a
JWC Holder.
"NON-INITIATING MANAGEMENT HOLDERS" shall have the
meaning set forth in Section 2.3(c).
"PARTICIPATING NOTICE" shall have the meaning set forth
in Section 2.4(a).
"PARTICIPATING OFFEREES" shall have the meaning set
forth in Section 2.4(a).
"PARTICIPATING SECURITIES" shall have the meaning set
forth in Section 2.4(a).
"PERMITTED TRANSFER" shall mean:
(a) a Transfer of any Subject Securities between any
JWC Holder or Management Holder who is a natural person and such
Stockholder's spouse, children, parents or siblings (whether natural,
step or by adoption) or to a trust solely for the benefit of one or
more of any of such Persons; provided that with respect to any such
Transfer, the Stockholder retains, as trustee or by some other means, the
sole authority to vote such Subject Securities (including any Common
Stock that may be acquired pursuant to any Vested Options);
(b) a Transfer of Subject Securities by a JWC Holder to
JWC Inc. or to an officer, employee or consultant of JWC Inc. or to a
corporation or to a partnership (or other entity for collective
investment, such as a fund) which is (and continues to be) controlled by,
controlling or under common control with JWC Inc.;
(c) a Transfer of Subject Securities (i) by a
Management Holder to another Management Holder or (ii) from a JWC Holder
to another JWC Holder;
(d) a Transfer of Subject Securities between any
Stockholder who is a natural person and such Stockholder's guardian or
conservator; or
(e) (i) a bona fide pledge of Subject Securities by a
JWC Holder to a bank or financial institution [or (ii) any pledge
existing at the date hereof of Subject Securities by a Management
Holder].
No Permitted Transfer shall be effective unless and until the transferee
of the Subject Securities so transferred executes and delivers to the
Company an executed counterpart of this Agreement in accordance with
Section 4.13 hereof.
"PERMITTED TRANSFEREE" shall mean any Person who shall
have acquired and who shall hold any Subject Securities pursuant to a
Permitted Transfer.
"PERSON" means an individual, corporation, partnership,
limited liability company, trust, unincorporated association, government
or any agency or political subdivision thereof, or other entity.
"PROMISSORY NOTE" shall have the meaning set
forth in Section 2.3(e).
"PUBLIC FLOAT DATE" shall mean the first date on which
shares of Common Stock shall have been sold pursuant to one or more
Public Offerings in which the aggregate proceeds (before deducting
underwriter discounts and commissions) to the Company and the selling
stockholders, if any, of such shares equal or exceed $25 million.
A "PUBLIC OFFERING" shall mean the completion of a sale
of shares of Common Stock pursuant to a registration statement which has
become effective under the 1933 Act, excluding registration statements on
Form S-4 or Form S-8 or similar limited purpose forms.
"PUT EVENT" shall have the meaning set forth in Section
2.3(a).
"PUT NOTICE" shall have the meaning set forth in Section
2.3(a).
"PUT OPTION" shall have the meaning set forth in Section
2.3(a).
"PUT PERIOD" shall have the meaning set forth in Section
2.3(a).
"PUT PRICE" shall mean, as of any date, a per share
price equal to the remainder of (a) (i) the excess of (A) the product of
4.5 times EBITDA, over (B) the aggregate amount of the Consolidated
Indebtedness as of the date of the most recently prepared consolidated
balance sheet of the Company and its Subsidiaries, divided by (ii) the
aggregate number of Common Stock Equivalents at the time outstanding,
minus, (b) in the case of Vested Options, the per share exercise price
payable in connection with such Vested Options.
"PUT SECURITIES" shall have the meaning set forth in
Section 2.3(a).
"REGISTRABLE SECURITIES" shall mean, as of any date,
with respect to any Stockholder, (a) all shares of Common Stock held by
such Stockholder as of such date and (b) all shares of Common Stock that
may be acquired as of such date by such Stockholder upon exercise of
Vested Options; provided that, as to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when
(i) a registration statement (other than a registration statement on
Form S-8) with respect to the sale or exchange of such securities shall
have become effective under the 1933 Act and such securities shall have
been disposed of in accordance with such registration statement, (ii) a
registration statement on Form S-8 with respect to such securities
shall have become effective under the 1933 Act, (iii) such securities
shall have been sold or acquired under a Rule 144 Transaction, or (iv)
such securities have ceased to be outstanding.
"RULE 144 TRANSACTION" means a transfer of Common Stock
(a) complying with Rule 144 under the 1933 Act as such rule or a
successor thereto is in effect on the date of such transfer (but only a
sale pursuant to a "brokers transaction" as defined in clauses (i) and
(ii) of paragraph (g) of Rule 144 as in effect on the date hereof) and
(b) occurring at a time when the Common Stock is registered pursuant to
Section 12 of the 1934 Act.
"SALE REQUEST" shall have the meaning set forth in
Section 2.5(a).
"SCHEDULE OF STOCKHOLDERS" shall refer to the Schedule
of Stockholders attached hereto as EXHIBIT A as from time to time amended
pursuant to Section 4.2.
"SEC" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the 1933 Act.
"STOCKHOLDER" shall mean any party hereto other than
the Company, including any Person who hereafter becomes a party to this
Agreement pursuant to Section 4.13 hereof.
"STOCKHOLDER GROUP" shall mean any of (a) the JWC
Holders taken as a group or (b) the Management Holders taken as a group.
The Company shall not in any case be deemed to be a member of any
Stockholder Group (whether or not the Company holds or repurchases any
Common Stock Equivalents).
"SUBJECT SECURITIES" shall mean any Common Stock or
Vested Options now or hereafter held by any Stockholder.
"SUBSIDIARY" with respect to any Person (the "parent")
shall mean any Person of which such parent, at the time in respect of which
such term is used, (a) owns directly or indirectly more than fifty percent
(50%) of the equity or beneficial interest, on a consolidated basis, or (b)
owns directly or controls with power to vote, indirectly through one or
more Subsidiaries, shares of capital stock or beneficial interest having
the power to cast at least a majority of the votes entitled to be cast for
the election of directors, trustees, managers or other officials having
powers analogous to those of directors of a corporation. Unless otherwise
specifically indicated, when used herein the term Subsidiary shall refer
to a direct or indirect Subsidiary of the Company.
"THIRD PARTY" means any Person other than the Company.
"TRANSFER" shall mean to transfer, sell, assign,
pledge, hypothecate, give, grant or create a security interest in or
lien on, place in trust (voting or otherwise), assign an interest in or
in any other way encumber or dispose of, directly or indirectly and
whether or not by operation of law or for value, any of the Subject
Securities.
"VESTED OPTIONS" shall mean, as of any date, options,
warrants, securities and other rights to acquire from the Company, by
exercise, conversion, exchange or otherwise, shares of Common Stock or
securities convertible into Common Stock, but only to the extent that
such options, warrants, securities and other rights are both, as of such
date, (a) vested under the terms thereof or under any plan, agreement or
instrument pursuant to which such options, warrants, securities and other
rights were issued, and (b) so exchangeable, exercisable or convertible.
ARTICLE II
Transfer Provisions
2.1 Restrictions on Transfers.
(a) Without the prior written consent of the holders of
a majority of the Common Stock Equivalents at the time held by the JWC
Holders, no Stockholder shall Transfer all or any part of the Subject
Securities at the time held by such Stockholder to any Person.
(b) The provisions of this Section 2.1 shall not apply
to a Transfer which is (i) a Permitted Transfer, (ii) pursuant to a
Public Offering, or (iii) after a Public Offering, pursuant to a Rule 144
Transaction.
2.2 Call by the Company.
(a) (i) If the employment of a Management Holder by
the Company or any of its Subsidiaries shall terminate (a "CALL
EVENT") for any reason prior to the Public Float Date, then,
subject to Section 2.2(a)(ii), the Company shall have the right
to purchase (the "CALL OPTION"), by delivery of a written no-
tice (the "CALL NOTICE") to such terminated Management Holder
(with a copy thereof to the JWC Representative) no later than 90
days after the date of the Call Event (the "COMPANY CALL
PERIOD"), and such Management Holder and such Management
Holder's direct and indirect transferees (a "CALL GROUP") shall
be required to sell, all or any portion of the Subject
Securities which are held by the members of the Call Group on
the date of such Call Event that (A) were originally issued by
the Company to such Management Holder, and (B) were owned by
such Management Holder or his direct or indirect transferees on
the date of the Call Event (such Subject Securities to be
purchased hereunder being referred to collectively as the "CALL
SECURITIES") at, except as otherwise provided in Section
2.2(a)(ii) hereof, a price per share equal to the greater of (x)
the Call Price of such Call Securities as of the date of the
Call Event and (y) the Cost Price of such Call Securities.
(ii) Notwithstanding anything set forth in this
Section 2.2 to the contrary, in the event a Management Holder
resigns without Good Reason from his employment with the Company
or any of its Subsidiaries, or his employment is terminated for
Cause by the Company or a Subsidiary, then the purchase price per
share payable for the Call Securities shall be an amount equal to
the Cost Price of such Call Securities.
(b) The closing of any purchase of Call Securities by
the Company from a Call Group pursuant to this Section 2.2 shall take
place at the principal office of the Company on such date within 30 days
after the expiration of the Company Call Period with respect to such
Call Group as the Company shall specify to the members of such Call Group
in writing. At such closing, the members of the Call Group shall deliver,
against payment for the Call Securities in accordance with Section 2.2(f)
hereof, to the Company certificates and/or other instruments
representing, together with stock or other appropriate powers duly
endorsed with respect to, the Call Securities, free and clear of all
claims, liens and encumbrances. All of the foregoing deliveries will be
deemed to be made simultaneously and none shall be deemed completed until
all have been completed.
(c) Notwithstanding anything set forth in this Section
2.2 to the contrary, prior to the exercise by the Company of its Call
Option to purchase Call Securities pursuant to this Section 2.2, one or
more prospective or existing employees of the Company or any Subsidiary
may be designated by the Chief Executive Officer of the Company, subject
to the approval of the Board of Directors of the Company (individually, a
"DESIGNATED EMPLOYEE" and, collectively, "DESIGNATED EMPLOYEES"), who
shall have the right, but not the obligation, to exercise the Call Option
and to acquire, in lieu of the Company, some or all (as determined by the
Company) of the Call Securities that the Company is entitled to purchase
from the Call Group hereunder, for cash and otherwise on the same terms
and conditions as set forth in Section 2.2(b) which apply to the
repurchase of Call Securities by the Company. Concurrently with any such
purchase of Call Securities by any such Designated Employee, such
Designated Employee shall execute a counterpart of this Agreement
whereupon such Designated Employee shall be deemed a "Management Holder"
and shall have the same rights and be bound by the same obligations as
the other Management Holders hereunder. Payment under this Section
2.2(c) and under Section 2.2(d) below shall be made by a certified check
or checks payable to the respective members of the Call Group, in an
amount equal to the purchase price for such Call Securities under
Section 2.2(a) hereof.
(d) If and to the extent that, subsequent to a Call
Event, (i) neither the Company nor any Designated Employee elects to
exercise the Call Option by delivery of a Call Notice prior to the
expiration of the Company Call Period with respect to such Management
Holder in accordance with this Section 2.2 and (ii) if applicable, the
Management Holder has not delivered a Put Notice to the Company prior to
the expiration of the Put Period with respect to such Management Holder in
accordance with Section 2.3(a), then the JWC Holders, pro rata in
accordance with the respective Common Stock Equivalents at the time held by
the JWC Holders so exercising their rights under this Section 2.2(d), may
exercise the Call Option in lieu of the Company and such Designated Em-
ployees by delivery of a Call Notice to such terminated Management Holder
no later than 30 days after the expiration of the Company Call Period with
respect to such Management Holder. The closing of any purchase of Call
Securities by such JWC Holders shall take place on such date within 60 days
after the expiration of the Company Call Period with respect to such
Management Holder as the holders of a majority of the Common Stock Equiva-
lents at the time held by the JWC Holders so exercising their rights under
this Section 2.2(d) shall specify to the members of such Call Group in
writing, provided that if any such JWC Holder fails to purchase all or a
portion of the number of Call Securities which such JWC Holder may
purchase pursuant to this Section 2.2(d), then the other JWC Holders so
exercising their rights under this Section 2.2(d) shall be entitled to
purchase such Call Securities (pro rata based upon their respective Common
Stock Equivalents at the time held, or as otherwise agreed, by such JWC
Holders).
(e) If none of the Company, any Designated Employees or
any JWC Holders elects to exercise the Call Option and deliver a Call
Notice within 120 days after the date of the Call Event, then the Call
Option provided for in this Section 2.2 shall terminate, but such
Management Holder and his direct and indirect transferees shall continue
to hold such Call Securities pursuant to all of the other provisions of
this Agreement, including Sections 2.1 and 2.5 hereof.
(f) At each closing for the purchase of Call Securities
to be purchased pursuant to Section 2.2(a) above, the Company shall
repurchase such Call Securities for cash (by delivery of a certified check
or checks payable to the Management Holder or his direct or indirect
transferees, as the case may be). If an agreement or indenture governing
indebtedness for borrowed money of the Company or any Subsidiary contains a
restriction on the amount of Call Securities that can be repurchased from
any terminated Management Holder or his direct or indirect transferees in
any given fiscal year of the Company, the maximum amount which the Company
shall be permitted to pay in such fiscal year for the repurchase of Call
Securities pursuant to Section 2.2 hereof from a terminated Management
Holder or his transferees shall be, in the aggregate, (x) the maximum
amount permitted by such agreement or indenture for the fiscal year of the
Company in which such Management Holder terminates his employment with the
Company, less (y) the aggregate amount previously paid by the Company to
repurchase Call Securities from any other Management Holder whose em-
ployment with the Company terminated in such fiscal year.
2.3 Put by Management Holders.
(a) (i) If the employment of any Management Holder by
the Company or any Subsidiary shall be terminated for any reason
(other than for Cause or upon a resignation without Good Reason)
prior to the Public Float Date (any such termination being
hereinafter referred to as a "PUT EVENT"), any such terminated
or resigning Management Holder and his direct and indirect
transferees shall have the right (the "PUT OPTION"), subject to
Section 2.3(a)(ii) below, by delivery of one or more written no-
tices to the Company (with copies to each Non-Initiating
Management Holder and JWC Holder) (the "PUT NOTICE") during the
30-day period beginning on the date of the Put Event (the "PUT
PERIOD"), to cause the Company to purchase, and the Company
shall purchase, all of the Subject Securities that (x) were
originally issued by the Company to such Management Holder, and
(y) were owned by such Management Holder or his direct or
indirect transferees on the date of the Put Event (such Subject
Securities to be purchased hereunder being referred to
collectively as the "PUT SECURITIES"), at the Put Price of such
Put Securities as of the date of the Put Event. Neither
termination for Cause nor resignation without Good Reason shall
constitute a Put Event.
(ii) If and to the extent
that, subsequent to a Put Event and prior to the expiration of
the Put Period with respect to such Management Holder, the
Management Holder and his direct and indirect transferees
do not elect to exercise the Put Option by delivery of a Put
Notice to the Company in accordance with this Section 2.3, all
of the Management Holder's and such transferees' rights to sell
Put Securities to the Company pursuant to this Section 2.3 shall
terminate.
(b) The closing of the purchase of any Put Securities
from a Management Holder or his direct and indirect transferees pursuant
to this Section 2.3 shall take place at the principal office of the
Company on such date within 30 days after the expiration of the Put
Period with respect to such Management Holder as the Company shall
specify to such Management Holder and his direct and indirect transferees
in writing. At any closing pursuant to this Section 2.3, the Company
shall deliver the payment for the Put Securities in accordance with
Section 2.3(e) hereof against delivery of certificates and/or other
instruments representing, together with stock or other appropriate powers
duly endorsed with respect to, the Put Securities specified in the Put
Notice, free and clear of all claims, liens and encumbrances.
(c) The Company shall have the right, but not in any
case the obligation, to satisfy its obligations pursuant to this Section
2.3 by allowing the Management Holders other than the Management Holder
and his direct and indirect transferees, if any, exercising his rights
under this Section 2.3 (the "NON-INITIATING MANAGEMENT HOLDERS"), to
purchase all or any portion of the Put Securities, pro rata in accordance
with the Common Stock Equivalents at the time held by such Non-Initiating
Management Holders (with rights to over-allotment to the other
Non-Initiating Management Holders should any Non-Initiating Management
Holder choose to purchase none (or less than its pro rata share) of such
Put Securities under this Section 2.3(c)). Each Non-Initiating Manage-
ment Holder shall, within 30 days after the receipt of the Put Notice by
it, notify the Company if such Non-Initiating Management Holder wishes to
purchase all or any portion of its pro rata share of the Put Securities
at the Put Price. At the closing of the purchase of the Put Securities in
accordance with Section 2.3(b) above, each Non-Initiating Management
Holder purchasing Put Securities shall deliver a certified check or
checks payable to the Management Holder or his direct or indirect
transferees, as the case may be, selling Put Securities as specified in
the Put Notice, in an aggregate amount equal to the Put Price for such
Put Securities, against delivery of certificates and/or other instru-
ments representing the Put Securities to be purchased by it in accordance
with this Section 2.3(c), free and clear of all claims, liens and
encumbrances, together with stock or other appropriate powers therefor
duly endorsed.
(d) If and to the extent that, subsequent to a Put
Event, the Non-Initiating Management Holders elect to purchase fewer than
all of the Put Securities by delivery of written notice to the Company
pursuant to Section 2.3(c), the Company shall have the right, but not in
any case the obligation, to satisfy its obligations pursuant to this
Section 2.3 by allowing the JWC Holders to purchase all or any portion of
the Put Securities, pro rata in accordance with the Common Stock
Equivalents at the time held by such JWC Holders (with rights to
over-allotment to the JWC Holders should any JWC Holder choose to
purchase none (or less than its pro rata share) of such Put Securities
under this Section 2.3(c)). The procedures by which such JWC Holders
shall notify the Company and purchase the Put Securities shall be
identical in all respects to the procedures provided for in Section
2.3(c) for the Non-Initiating Management Holders.
(e) Notwithstanding anything to the contrary set forth
herein, the Company shall not be required to purchase Put Securities
pursuant to this Section 2.3 (i) after the Public Float Date, (ii) if,
after giving effect to such purchase, the Company would be (or with the
lapse of time or the giving of notice would be) in default under any of
the agreements and indentures governing indebtedness for borrowed money
of the Company or any Subsidiary or (iii) if the Company does not at the
time have sufficient funds legally available for such purchase.
(f) At each closing for the purchase of Put Securities
to be purchased pursuant to Section 2.3(a)(i) above, such Subject
Securities shall, subject to Section 2.3(f) below, be purchased as
follows: to the extent (and only to the extent) that (i) funds are
legally available for the repurchase of equity securities of the Company
and (ii) the Company is permitted to repurchase for cash equity
securities of terminated employees pursuant to the agreements and
indentures governing indebtedness for borrowed money of the Company or
any Subsidiary, the Company shall repurchase such Put Securities for
cash (by delivery of a certified check or checks payable to the
Management Holder or his direct or indirect transferees, as the case may
be). If the Company is unable pursuant to the foregoing provisions of
this Section 2.3(e) to purchase for cash any Put Securities from any
terminated Management Holder or his direct or indirect transferees, the
purchase price therefor shall be paid by delivery of a subordinated
promissory note (each a "Promissory Note") substantially in the form
attached hereto as Exhibit B in an original principal amount equal to the
purchase price of such Put Securities not so paid in cash. If an
agreement or indenture referred to in clause (ii) above contains a
restriction on the amount of Put Securities that can be repurchased from
any terminated Management Holder or his direct or indirect transferees in
any given fiscal year of the Company, the maximum amount which the
Company shall be required to apply to the repurchase of Put Securities
pursuant to this Section 2.3 in such fiscal year shall be, in the
aggregate, (x) the maximum amount permitted by such agreement or
indenture for the fiscal year of the Company in which such Management
Holder terminates his employment with the Company, less (y) the aggregate
amount previously paid by the Company to repurchase Put Securities from
any other Management Holder whose employment with the Company terminated
in such fiscal year.
(g) Any amounts which would otherwise be available with
respect to any fiscal year of the Company for the repurchase of Put
Securities and Call Securities shall first be applied to prepayment of
outstanding Promissory Notes issued under Section 2.3(e) and any
payment-in-kind Promissory Notes issued in payment of interest, in the
order in which such Promissory Notes were issued, until all such
Promissory Notes have been prepaid in accordance herewith. Prepayments
shall be applied first to accrued and unpaid interest and second to
principal.
2.4 Tagalong. Except as provided in Section 2.2 or 2.3
hereof, no Stockholder shall Transfer (in one or a series of transactions
within any 24-month period) any Subject Securities representing more than
ten percent (10%) of the Common Stock Equivalents held by such Stockholder
on the date of execution of this Agreement by such stockholder, to a Third
Party without complying with the terms and conditions set forth in this
Section 2.4, as applicable; provided that this Section 2.4 shall not in any
way limit or affect the restrictions of Section 2.1, and any Stockholder
may be an Initiating Stockholder (as defined below) under this Section 2.4
only if such Transfer is permitted under Section 2.1:
(a) Any Stockholder (the "Initiating Stockholder")
desiring to Transfer such Subject Securities shall give not less than 10
days' prior written notice of such intended Transfer to each other
Stockholder ("Participating Offerees") and to the Company. Such notice
(the "Participation Notice") shall set forth the terms and conditions of
such proposed Transfer, including the name of the prospective
transferee, the number of Common Stock Equivalents proposed to be
transferred (the "Participation Securities") by the Initiating
Stockholder, the purchase price per share proposed to be paid therefor
and the payment terms and type of Transfer to be effectuated. Within 15
days following the delivery of the Participation Notice by the
Initiating Stockholder to each Participating Offeree and to the Company,
each Participating Offeree shall, by notice in writing to the Initiating
Stockholder and to the Company, have the opportunity and right to sell to
the purchasers in such proposed Transfer (upon the same terms and condi-
tions as the Initiating Stockholder) up to that number of Subject
Securities representing Common Stock Equivalents at the time held by
such Participating Offeree as shall equal the product of (i) a fraction,
the numerator of which is the number of Common Stock Equivalents owned by
such Participating Offeree as of the date of such proposed Transfer and
the denominator of which is the aggregate number of Common Stock
Equivalents owned as of the date of such Participation Notice by each
Initiating Stockholder and by all Participating Offerees so electing to
sell Subject Securities pursuant to this Section 2.4(a), multiplied by
(ii) the number of Participation Securities. The amount of Participation
Securities to be sold by any Initiating Stockholder shall be reduced to
the extent necessary to provide for such sales of Subject Securities by
Participating Offerees.
(b) At the closing of any proposed Transfer in respect
of which a Participation Notice has been delivered, the Initiating
Stockholder, together with all Participating Offerees so electing to sell
Subject Securities pursuant to this Section 2.4(a) shall deliver to the
proposed transferee certificates and/or other instruments representing
the Subject Securities to be sold, free and clear of all liens and
encumbrances, together with stock or other appropriate powers duly
endorsed therefor, and shall receive in exchange therefor the
consideration to be paid or delivered by the proposed transferee in
respect of such Subject Securities as described in the Participation
Notice.
(c) The provisions of this Section 2.4 shall not apply
to (i) any Transfer pursuant to a Public Offering, (ii) following a
Public Offering, pursuant to a Rule 144 Transaction or (iii) any
Transfers pursuant to Section 2.5 hereof.
2.5 Dragalong.
(a) If Stockholders holding at least a majority of
Common Stock Equivalents at the time held by the Stockholders (the
"Dragalong Group") determine to sell or exchange (in a sale or exchange of
securities of the Company or in a merger, consolidation or other business
combination or any similar transaction) in one or a series of bona fide
arms-length transactions to an unrelated and unaffiliated Third party
fifty percent (50%) or more of the Subject Securities at the time held by
them (the actual percentage of the total number of Subject Securities held
by the Dragalong Group represented by the Subject Securities determined to
be so sold or exchanged being referred to as the "Dragalong Percentage"),
then, upon 30 days' written notice from the Dragalong Group to the other
Stockholders, which notice shall include reasonable details of the proposed
sale or exchange including the proposed time and place of closing and the
consideration to be received by the Dragalong Group (such notice being
referred to as the "Sale Request"), each other Stockholder shall be obli-
gated to, and shall, (i) sell, transfer and deliver, or cause to be sold,
transferred and delivered, to such Third Party the Dragalong Percentage of
the Subject Securities at the time held by such Stockholder, in the same
transaction at the closing thereof and shall (A) execute and deliver such
agreements for the purchase of such Subject Securities and other
agreements, instruments and certificates as the members of the Dragalong
Group shall execute and deliver in connection with such proposed
transaction and (B) deliver certificates and/or other instruments
representing all of such Stockholder's Subject Securities, together with
stock or other appropriate powers therefor duly executed, at the closing,
free and clear of all claims, liens and encumbrances), and each Stockholder
shall receive upon the closing of such transaction the same per share
consideration to be paid or delivered by the proposed transferee in respect
of such Stockholder's Subject Securities as shall be payable to the members
of the Dragalong Group in respect of their Subject Securities, and (ii) if
stockholder approval of the transaction is required, vote such
Stockholder's Common Stock in favor thereof.
(b) The provisions of this Section 2.5 shall not apply
to any Transfer (i) pursuant to a Public Offering or (ii) pursuant to a
Permitted Transfer.
2.6 Corporate Governance. Until the 10th anniversary
of the date hereof, the Company and each of the JWC Holders and the
Management Holders shall take all action (including but not limited to
such Stockholder's voting, or executing proxies or written consents
with respect to, the Common Stock at the time held by such Stockholder as
may be from time to time requested by holders of a majority of the
Common Stock Equivalents at the time held by the JWC Holders) so that the
Company's Board of Directors shall include such number of members
designated by the holders of a majority of the Common Stock Equivalents
at the time held by the JWC Holders (or the JWC Representative). The hold-
ers of a majority of the Common Stock Equivalents at the time held by the
JWC Holders (or the JWC Representative) shall also be entitled to require
that any member of the Company's Board of Directors so designated
pursuant to this Section 2.6 be removed or replaced by another designee
of the holders of a majority of the Common Stock Equivalents at the time
held by the JWC Holders (or the JWC Representative), in which event the
Company and each such Stockholder shall take all action, including but
not limited to such Stockholder's voting, or executing written consents
with respect to, the Common Stock at the time held by such Stockholder as
may be necessary to effect such removal or replacement.
2.7 Restrictions on Other Agreements. Except for JWC
Holders as provided in Sections 4.8 and 4.9, no Stockholder shall grant any
proxy or enter into or agree to be bound by any voting trust with respect
to any Subject Securities nor shall any Stockholder enter into any
stockholders agreements or arrangements of any kind with any Person with
respect to any of the Subject Securities on terms which conflict with the
provisions of this Agreement (whether or not such agreements and ar-
rangements are with other Stockholders or holders of Common Stock
Equivalents that are not parties to this Agreement), including but not
limited to, agreements or arrangements with respect to the acquisition,
disposition or voting of Subject Securities inconsistent herewith.
2.8 Stockholder Action. Each Stockholder agrees that,
in such Stockholder's capacity as a stockholder of the Company, such
Stockholder shall, pursuant to Section 2.5 hereof, vote, or grant proxies
relating to the Common Stock at the time held by such Stockholder to
vote, all of such Stockholder's Common Stock in favor of any sale or
exchange of securities of the Company or any merger, consolidation or
other business combination or any similar transaction pursuant to Section
2.5 hereof if, and to the extent that, approval of the Company's
stockholders is required in order to effect such transaction.
ARTICLE III
Registration Rights
3.1 General. For purposes of this Article III: (a) the
terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement on
Form S-1, S-2 or S-3 in compliance with the 1933 Act and the declaration
or ordering of effectiveness of such registration statement; and (b) the
term "Holder" means any Stockholder.
3.2 Piggyback Registration. If, at any time, the
Company determines to register any Public Offering of any of the Common
Stock Equivalents for the account of any JWC Holder under the 1933 Act in
connection with the public offering of such securities, the Company
shall, at each such time, promptly give each Holder written notice of
such determination no later than 30 days before its intended filing with
the SEC. Upon the written request of any Holder received by the Company
within 10 days after the giving of any such notice by the Company, the
Company shall use its best efforts to cause to be registered under the
1933 Act all of the Registrable Securities of such Holder that such
Holder has requested be registered. If the total amount of Registrable
Securities that are to be included by the Company in such registration
exceeds the amount of securities that the underwriters reasonably
believe compatible with the success of the offering, then the Company
will include in such registration only the number of securities which in
the opinion of such underwriters can be sold, in the following order:
(i) first, all securities of
the Company to be offered for the account of
the Company; and
(ii) second, the Registrable
Securities, pro rata based on the number of Registrable
Securities held by each Holder seeking to have Registrable
Securities included in such registration.
3.3 Obligations of the Company.
(a) Whenever required under Section 3.2 hereof to use
its best efforts to effect the registration of any Registrable
Securities, the Company shall:
(i) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become and
remain effective, including, without limitation, filing of
post-effective amendments and supplements to any registration
statement or prospectus necessary to keep the registration
statement current;
(ii) as expeditiously as reasonably possible,
prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply
with the provisions of the 1933 Act with respect to the dis-
position of all securities covered by such registration statement
and to keep each registration and qualification under this
Agreement effective (and in compliance with the 1933 Act) by such
actions as may be necessary or appropriate for a period of 90 days
after the effective date of such registration statement (unless
all securities covered by such registration statement are sooner
disposed of), all as requested by such Holder or Holders;
(iii) as expeditiously as reasonably possible
furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, and such other documents as they may
reasonably request in order to facilitate the disposition of
Registrable Securities owned by them in accordance with the plan
of distribution provided for in such registration statement;
(iv) as expeditiously as reasonably possible use its
best efforts to register and qualify the securities covered by
such registration statement under such securities or "blue sky"
laws of such jurisdictions as shall be reasonably appropriate for
the distribution of the securities covered by the registration
statement; provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any
such jurisdiction; and further provided that (anything in this
Agreement to the contrary notwithstanding with respect to the
bearing of expenses) if any jurisdiction in which the securities
shall be qualified shall require that expenses incurred in
connection with the qualification of the securities in that
jurisdiction be borne by selling stockholders, then such expenses
shall be payable by selling stockholders pro rata, to the extent
required by such jurisdiction;
(v) notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospec-
tus relating thereto is required to be delivered under the 1933
Act, upon discovery that, or upon the happening of any event as a
result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were
made, and at the request of any such seller or Holder promptly
prepare to furnish to such seller or Holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the
circumstances under which they were made;
(vi) otherwise use its best efforts to comply with
all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
12 months but not more than 18 months, beginning with the first
full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions
of Section ll(a) of the 1933 Act, and will furnish to each such
seller at least 2 Business Days prior to the filing thereof a copy
of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which any such seller
shall have reasonably objected, except to the extent required by
law, on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the 1933
Act or of the rules or regulations thereunder;
(vii) provide and cause to be maintained a transfer
agent and registrar for all Registrable Securities covered by such
registration statement from and after a date not later than the
effective date of such registration statement; and
(viii) use its best efforts to list all Registrable
Securities covered by such registration statement on any
securities exchange on which any class of Registrable Securities
is then listed.
(b) The Company will furnish to each Holder on whose
behalf Registrable Securities have been registered pursuant to this
Agreement a signed counterpart, addressed to such Holder, of (i) an
opinion of counsel for the Company dated the effective date of such regis-
tration statement, and (ii) a so-called "cold comfort" letter signed by
the independent public accountants who have certified the Company's
financial statements included in such registration statement, and such
opinion of counsel and accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters
delivered to underwriters in connection with underwritten public
offerings of securities.
(c) If the Company at any time proposes to register any
of its securities under the Securities Act subject to the piggyback
registration rights of the Holders under Section 3.2 hereof, and such
securities are to be distributed by or through one or more underwriters,
then the Company will make reasonable efforts, if requested by any Holder
of Registrable Securities who requests registration of Registrable
Securities in connection therewith pursuant to Section 3.2 hereof, to
arrange for such underwriters to include such Registrable Securities
among the securities to be distributed by or through such underwriters.
(d) In connection with the preparation and filing of
each registration statement registering Registrable Securities under this
Agreement, the Company will give the Holders of Registrable Securities on
whose behalf such Registrable Securities are to be so registered and
their underwriters, if any, and their respective counsel and accountants
the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the SEC, and
each amendment thereof or supplement thereto, and will give each of them
such access to its books and records and such opportunities to discuss
the business of the Company with its officers, its counsel and the
independent public accountants who have certified its financial
statements, as shall be reasonably necessary, in the opinion of such
Holders or such underwriters or their respective counsel, in order to
conduct a reasonable and diligent investigation within the meaning of
the 1933 Act. Without limiting the foregoing, each registration
statement, prospectus, amendment, supplement or any other document filed
with respect to a registration under this Agreement shall be subject to
review and reasonable approval by the Holders registering Registrable
Securities in such registration and by their counsel.
3.4 Furnish Information. It shall be a condition
precedent to the obligations of the Company to take any action pursuant
to this Article III that each Holder shall furnish to the Company such
information regarding such Holder, the Registrable Securities held by
such Holder, and the intended method of disposition of such securities as
the Company shall reasonably request and as shall be required in
connection with the action to be taken by the Company.
3.5 Expenses of Registration. All expenses incurred in
connection with a registration pursuant to Section 3.2 hereof (excluding
underwriters' discounts and commissions, which shall be borne by the
sellers), including without limitation all registration and quali-
fication fees, printers' and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and disbursements of
one counsel for the selling Holders (which counsel shall be selected by
the holders of a majority in interest of such Holders based on the number
of Registrable Securities included in such registration) shall be borne
by the Company.
3.6 Underwriting Requirements. In connection with any
underwritten registration of Registrable Securities under this
Agreement, the Company shall, if requested by the Company or the
underwriters for any Registrable Securities included in such
registration, enter into an underwriting agreement with such under-
writers for such offering, such agreement to contain such representations
and warranties by the Company and such other terms and provisions as are
customarily contained in underwriting agreements with respect to sec-
ondary distributions, including, without limitation, provisions relating
to indemnification and contribution. The Holders on whose behalf
Registrable Securities are to be distributed by such underwriters shall
be parties to any such underwriting agreement, and the representations
and warranties by, and the other agreements on the part of, the Company
to and for the benefit of such underwriters shall be also made to and for
the benefit of such Holders of Registrable Securities. Such underwriting
agreement shall comply with Section 3.7.
3.7 Indemnification. In the event any Registrable
Securities are included in a registration statement pursuant to this
Article III:
(a) To the fullest extent permitted by law, the Company
will indemnify and hold harmless each Holder joining in a registration,
any underwriter (as defined in the 1933 Act) for it, and each Person, if
any, who controls such Holder or such underwriter within the meaning of
the 1933 Act, from and against any losses, claims, damages, expenses
(including reasonable attorneys' fees and expenses and reasonable costs
of investigation) or liabilities, joint or several, to which they or any
of them may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages, expenses or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based on any untrue or alleged untrue statement of any
material fact contained in such registration statement including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made therein not
misleading in light of the circumstances under which they were made or
arise out of any violation by the Company of any rule or regulation
promulgated under the 1933 Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration; provided that the indemnity agreement contained in this
Section 3.7(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable to anyone for
any such loss claim, damage, liability or action to the extent that it
arises out of or is based upon an untrue statement or omission made in
connection with such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto in reliance upon
and in conformity with written information furnished expressly for use
in connection with such registration by such Holder, underwriter or
control person. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Holder,
underwriter or control person and shall survive the transfer of such
securities by such Holder.
(b) To the fullest extent permitted by law, each Holder
joining in a registration shall indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the
registration statement, each Person, if any, who controls the Company
within the meaning of the 1933 Act, and each agent and any underwriter
for the Company and any Person who controls any such agent or
underwriter and each other Holder and any Person who controls such Holder
(within the meaning of the 1933 Act) against any losses, claims, damages
or liabilities to which the Company or any such director, officer,
control person, agent, underwriter or other Holder may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon an untrue
statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or arise out of or are
based upon the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such
untrue statement or omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by
such Holder with respect to such Holder expressly for use in connection
with such registration, and such Holder shall reimburse any legal or
other expenses reasonably incurred by the Company or any such director,
officer, control person, agent, underwriter or other Holder in connection
with investigating or defending any such loss, claim, damage, liability
or action; provided that the indemnity obligation of each such Holder
hereunder shall be limited to and shall not exceed the proceeds actually
received by such Holder upon a sale of Registrable Securities pursuant to
a registration statement hereunder; provided, further that the indemnity
agreement contained in this Section 3.7(b) shall not apply to amounts
paid in settlements effected without the consent of such Holder (which
consent shall not be unreasonably withheld). Such indemnity shall remain
in full force and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer, Holder, underwriter
or control person and shall survive the transfer of such securities by
such Holder.
(c) Any person seeking indemnification under this
Section 3.7 will (i) give prompt notice to the indemnifying party of any
claim with respect to which it seeks indemnification, but the failure to
give such notice will not affect the right to indemnification hereunder,
(except to the extent the indemnifying party is materially prejudiced by
such failure) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such indemnified and
indemnifying parties with respect to such claim, permit such indemnifying
party, and other indemnifying parties similarly situated, jointly to
assume the defense of such claim with counsel reasonably satisfactory to
the parties. In the event that the indemnifying parties cannot mutually
agree as to the selection of counsel, each indemnifying party may retain
separate counsel to act on its behalf and at its expense. The indemnified
party shall in all events be entitled to participate in such defense at
its expense through its own counsel. If such defense is not assumed by
the indemnifying party, the indemnifying party will not be subject to any
liability for any settlement made without its consent (but such consent
will not be unreasonably withheld). No indemnifying party will consent to
entry of any judgment or enter into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to,
or elects not to, assume the defense of a claim will not be obligated to
pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless
in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the reasonable fees and
expenses of such additional counsel.
(d) If for any reason the foregoing indemnification is
unavailable to any party or insufficient to hold it harmless as and to
the extent contemplated by the preceding paragraphs of this Section 3.7,
then each indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim,
damage expense or liability in such proportion as is appropriate to
reflect the relative benefits received by the applicable indemnifying
party, on the one hand, and the applicable indemnified party, as the case
may be, on the other hand, and also the relative fault of the applicable
indemnifying party and any applicable indemnified party, as the case may
be, as well as any other relevant equitable considerations.
3.8 Rule 144. With a view to making available to the
Holders and their transferees the benefits of Rule 144 and Rule 144A
under the 1933 Act and any other rule or regulation of the SEC that may
at any time permit a Holder to sell securities of the Company to the
public without registration, the Company agrees to use its best efforts
to take all action that may be required as a condition to the
availability after a public offering of Rule 144, Rule 144A or such
other rules or regulations, including without limitation to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144, at all times
subsequent to 90 days after the effective date of the first registration
statement covering an underwritten public offering filed by the Company;
(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the 1933 Act and the
1934 Act (including, without limitation, under Section 13 or Section 15
of the 1934 Act); and
(c) furnish to any Holder forthwith upon request a
written statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after 90 days after the effective
date of said first registration statement filed by the Company), and of
the 1933 Act and the 1934 Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so
filed by the Company as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC permitting the selling of any
such securities without registration.
3.9 Market Stand-Off Agreement. Each Stockholder
agrees not to sell or otherwise transfer or dispose of any Common Stock
(or other securities) of the Company at the time held by such Stockholder
(other than securities included in the applicable registration statement
or shares purchased in the public market after the effective date of
registration) or any interest or future interest therein during such
period (not to exceed 180 days) as is mutually acceptable to a majority
in interest of Stockholders and the underwriter following the effective
date of each registration statement of the Company filed under the 1933
Act which includes securities of the Company to be sold to the public in
an underwritten offer.
ARTICLE IV
Certain Miscellaneous Other Provisions
4.1 Remedies. The parties to this Agreement
acknowledge and agree that the covenants of the Company and the
Stockholders set forth in this Agreement may be enforced in equity by a
decree requiring specific performance. Without limiting the foregoing,
if any dispute arises concerning the sale or other disposition of any of
the securities of the Company subject to this Agreement or concerning any
other provisions hereof or the obligations of the parties hereunder, the
parties to this Agreement agree that an injunction may be issued in
connection therewith. Such remedies shall be cumulative and non-exclusive
and shall be in addition to any other rights and remedies the parties may
have under this Agreement or otherwise.
4.2 Entire Agreement; Amendment; Termination.
(a) This Agreement, together with the Acquisition
Agreement, sets forth the entire understanding of the parties, and
supersedes all prior agreements and all other arrangements and
communications, whether oral or written, with respect to the subject
matter hereof.
(b) The Schedule of Stockholders may be amended in
writing by the Company to reflect changes in the composition of the
Stockholders and changes in their addresses or telecopy numbers that may
occur from time to time as a result of Permitted Transfers or Transfers
permitted under Article II hereof. Amendments to the Schedule of
Stockholders reflecting Permitted Transfers or Transfers permitted under
Article II hereof shall become effective when the amended Schedule of
Stockholders, and a copy of the Agreement as executed by any new
transferee in accordance with Section 4.14, are filed with the Company.
(c) Any other amendment to this Agreement shall be in
writing and shall require the written consent of (a) the Company, (b)
either the JWC Representative or the holders of a majority of Common
Stock Equivalents at the time held by the JWC Holders, and, (c) if
adverse to the interests of a particular Stockholder or Stockholder
Group, that Stockholder or the holders of a majority of the Common Stock
Equivalents at the time held by that Stockholder Group, as the case may
be.
(d) Notwithstanding the foregoing provisions of this
Section 4.2, this Agreement may be terminated at any time upon the
written consent of (i) the Company and (ii) the holders of a majority of
the Common Stock Equivalents at the time held by the Management Holders
and the JWC Holders (or the JWC Representative), voting together as a
single group.
4.3 Severability. The invalidity or unenforceability
of any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects
as if the invalid or unenforceable provision were omitted.
4.4 Notices. All notices, consents and other
communications required, or contemplated under this Agreement shall be in
writing and shall be delivered in the manner specified herein or, in the
absence of such specification, shall be deemed to have been duly given
(i) 3 Business Days after mailing by first class certified mail, postage
prepaid, (ii) when delivered by hand, (iii) upon confirmation of receipt
by telecopy, or (iv) 1 Business Day after sending by overnight delivery
service, to the respective addresses of the parties set forth below:
(a) For notices and communications to the Company:
c/o J.W. Childs Associates, L.P.
One Federal Street
Boston, MA 02110
Attention: Steven G. Segal
Telecopy: (617) 753-1101
(b) For notices and communications to the Stockholders,
to the respective addresses set forth in the Schedule of Stockholders.
(c) With a copy in the case of the JWC Holders to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Beacon Street
Boston, MA 02108-3194
Attention: Louis A. Goodman, Esq.
Telecopy: (617) 573-4822
By notice complying with the foregoing provisions of this Section 4.4,
each party shall have the right to change the mailing address for future
notices and communications to such party.
4.5 Binding Effect; Assignment. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and to
their respective transferees, successors, assigns, heirs and
administrators; provided that the rights under this Agreement may not be
assigned except as expressly provided herein. No such assignment shall
relieve an assignor of its obligations hereunder.
4.6 Termination. Without affecting any other provision
of this Agreement requiring termination of any rights in favor of any
Stockholder, Permitted Transferee or any other transferee of Common Stock
Equivalents, the provisions of Articles II and III of this Agreement
shall terminate as to such Stockholder, Permitted Transferee or other
transferee, when, pursuant to and in accordance with this Agreement, such
Stockholder, Permitted Transferee or other transferee, as the case may
be, no longer owns any Common Stock Equivalents.
4.7 Recapitalization, Exchanges, etc. The provisions of
this Agreement shall apply, to the full extent set forth herein with
respect to Common Stock Equivalents, to any and all shares of capital stock
of the Company or any successor or assign of the Company (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in
respect of, in exchange for, or in substitution of the Common Stock
Equivalents, by reason of a stock dividend, stock split, stock issuance,
reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or otherwise. Upon the occurrence of any such events,
amounts hereunder shall be appropriately adjusted.
4.8 JWC Representative. Each JWC Holder hereby
designates and appoints (and each Permitted Transferee of each such JWC
Holder shall be deemed to have so designated and appointed) Steven G.
Segal, with full power of substitution (the "JWC Representative") the
representative of each such Person to perform all such acts as are
required, authorized or contemplated by this Agreement to be performed by
any such Person and hereby acknowledges that the JWC Representative shall
be the only Person authorized to take any action so required, authorized
or contemplated by this Agreement by each such Person. Each such Person
further acknowledges that the foregoing appointment and designation shall
be deemed to be coupled with an interest and shall survive the death or
incapacity of such Person. Each such Person hereby authorizes (and each
Permitted Transferee shall be deemed to have authorized) the other
parties hereto to disregard any notice or other action taken by such
Person pursuant to this Agreement except for the JWC Representative. The
other parties hereto are and will be entitled to rely on any action so
taken or any notice given by the JWC Representative and are and will be
entitled and authorized to give notices only to the JWC Representative
for any notice contemplated by this Agreement to be given to any such
Person. A successor to the JWC Representative may be chosen by the
holders of a majority of the Common Stock Equivalents at the time held by
the JWC Holders; provided that written notice thereof is given by the
successor JWC Representative to the Company, the Management Holders and
the other JWC Holders. Each of the JWC Holders agrees to be bound by all
of the provisions of paragraph 3.07 of the First Amended and Restated
Agreement of Limited Partnership of J.W. Childs Equity Partners, L.P.
dated as of December 20, 1995 (the "Equity Partners Agreement") including
without limitation, the provisions of paragraph 3.07(b) thereof, and
further agrees to be bound by the confidentiality provisions set forth in
paragraph 14.08 of the Equity Partners Agreement as if such JWC Holder
were a limited partner under the Equity Partners Agreement.
4.9 Action Necessary to Effectuate the Agreement. The
parties hereto agree to use their reasonable best efforts to take or
cause to be taken all such corporate and other action as may be
necessary to effect the intent and purposes of this Agreement.
4.10 Purchase for Investment; Legend on Certificate.
Each Stockholder acknowledges that all of the securities of the Company
held by such Stockholder are being (or have been) acquired for investment
and not with a view to the distribution thereof and that no transfer,
hypothecation or assignment of any such securities (including the Common
Stock for which such securities may be exercisable or exchangeable or
into which such securities may be convertible) may be made except in
compliance with applicable federal and state securities laws. All the
certificates or other instruments representing any of such securities
(including the Common Stock for which such securities may be exercisable
or exchangeable or into which such securities may be convertible) which
are now or hereafter held by any Stockholder shall be subject to the
terms of this Agreement and shall have endorsed in writing, stamped or
printed, thereon the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
THE TERMS AND CONDITIONS OF A STOCKHOLDERS AGREEMENT DATED AS OF
_____________ ___, 1997, AS AMENDED FROM TIME TO TIME, A COPY OF
WHICH IS ON FILE WITH AND AVAILABLE FROM THE SECRETARY OF THE
COMPANY."
4.11 Effectiveness of Transfers. Any Subject Securities
transferred by a Stockholder (other than pursuant to an effective
registration statement under the 1933 Act or a Rule 144 Transaction) shall
be held by the transferee thereof pursuant to this Agreement. Such
transferee shall, except as otherwise expressly stated herein, have all
the rights and be subject to all of the obligations of a Stockholder under
this Agreement automatically and without requiring any further act by such
transferee or by any parties to this Agreement. Without affecting the
preceding sentence, if such transferee is not a Stockholder on the dates of
such transfer, then such transferee, as a condition to such transfer, shall
confirm such transferee's obligations hereunder in accordance with Section
4.12 hereof. The Subject Securities shall not be transferred on the
Company's books and records, and no transfer thereof shall be otherwise
effective, unless any such transfer is made in accordance with the terms
and conditions of this Agreement, and the Company is hereby authorized by
all of the Stockholders to enter appropriate stop transfer notations on
its transfer records to give effect to this Agreement.
4.12 Additional Stockholders. Any Person acquiring any
Subject Securities (except for any acquisition thereof (a) in an offering
registered under the 1933 Act or (b) in a Rule 144 Transaction) shall on or
before the transfer or issuance to it of such Subject Securities, sign a
counterpart signature page hereto in form reasonably satisfactory to the
Company and the JWC Representative and shall thereby become a party to this
Agreement; provided that a transferee which is a pledgee and within the
definition of a Permitted Transferee shall not be obligated so to agree
until foreclosure on its pledge. The Company shall require each Person ac-
quiring an option, warrant or other right to purchase shares of Common
Stock under any option or other equity participation plan to execute a
counterpart signature page hereto.
4.13 No Waiver. No course of dealing and no delay on
the part of any party hereto in exercising any right, power or remedy
conferred by this Agreement shall operate as a waiver thereof or
otherwise prejudice such party's rights, powers and remedies. No single
or partial exercise of any rights, powers or remedies conferred by this
Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
4.14 Counterparts. This Agreement may be executed in
two or more counterparts each of which shall be deemed an original but
all of which together shall constitute one and the same instrument, and
all signatures need not appear on any one counterpart.
4.15 Headings, etc. All headings and captions in this
Agreement are for purposes of reference only and shall not be construed to
limit or affect the substance of this Agreement. Words used in this Agree-
ment, regardless of the gender and number used, will be deemed and
construed to include any other gender, masculine, feminine, or neuter, and
any other number, singular or plural, as the context requires. As used in
this Agreement, the word "including" is not limiting, and the word "or" is
not exclusive. The words "this Agreement", "hereto", "herein", "hereunder",
"hereof", and words or phrases of similar import refer to this Agreement as
a whole, together with any and all Schedules and Exhibits hereto, and not
to any particular article, section, subsection, paragraph, clause or other
portion of this Agreement.
4.16 Governing Law. This Agreement shall be construed
under and governed by the substantive and procedural laws of The
Commonwealth of Massachusetts applicable to a contract executed in and
wholly performed within Massachusetts.
4.17 Effective Time. Notwithstanding anything in this
Agreement to the contrary, this Agreement shall become binding and
effective as of the date of the Closing (as defined in the Merger
Agreement).
[Signatures on Following Pages]
UNIVERSAL HOSPITAL SERVICES, INC.
Stockholders' Agreement
Counterpart Signature Page
IN WITNESS WHEREOF, the parties have executed this
Agreement as an instrument under SEAL as of the date first set forth
above.
THE COMPANY:
UNIVERSAL HOSPITAL
SERVICES, INC.
By: ___________________________
Name:
Title:
UNIVERSAL HOSPITAL SERVICES, INC.
Stockholders' Agreement
Additional Counterpart Signature Page
THE MANAGEMENT HOLDERS:
______________________________
Print Name:
UNIVERSAL HOSPITAL SERVICES, INC.
Stockholders' Agreement
Additional Counterpart Signature Page
THE JWC HOLDERS:
J.W. CHILDS EQUITY
PARTNERS, L.P.
By: J.W. Childs Advisors,
L.P., its general
partner
By: J.W. Childs
Associates, L.P., its
general partner
By: J.W. Childs
Associates, Inc., its
general partner
_____________________________ By: __________________________
Steven G. Segal Title:
_____________________________
Print Name:
By executing above, each of the foregoing JWC Holders
acknowledges that, pursuant to Section 4.8 of this Stockholders'
Agreement, each of the foregoing JWC Holders has designated and appointed
Steven G. Segal as its sole representative to perform all acts as are re-
quired, authorized or contemplated by this Stockholders' Agreement, all
as set forth in such Section 4.8.
EXHIBIT A
UNIVERSAL HOSPITAL SERVICES, INC.
STOCKHOLDERS' AGREEMENT
SCHEDULE OF STOCKHOLDERS
EXHIBIT B
UNIVERSAL HOSPITAL SERVICES, INC.
STOCKHOLDERS' AGREEMENT
FORM OF PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH APPLICABLE STATE
LAW.
AS PROVIDED IN THIS NOTE, PAYMENT OF PRINCIPAL OF AND INTEREST ON THIS
NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO ALL "SENIOR DEBT"
(AS SUCH TERM IS DEFINED IN THIS NOTE).
UNIVERSAL HOSPITAL SERVICES, INC.
SUBORDINATED NOTE DUE 20__
Boston, Massachusetts
U.S.$ _________ _____________ __, 19
FOR VALUE RECEIVED, the undersigned, Universal Hospital
Services, Inc., a Minnesota corporation (the "Company"), hereby promises
to pay to __________, a __________ with a business address at
_______________(facsimile number __________) (the "holder"), on [I.E. 10
YEARS AFTER THE DATE OF ISSUANCE], the principal amount of
__________United States Dollars (U.S.$__________ ) or such part thereof
as then remains unpaid, with interest (computed on the basis of a
365/6-day year and the actual number of days elapsed) on the unpaid
principal amount hereof at a rate per annum equal to the Applicable Rate
(as defined in Section 4) from the date hereof payable semiannually on
the last day of May and November in each year (each such date is
hereinafter referred to as a "Payment Date"), beginning on __________,
19__, until such principal amount shall become due and payable (whether
at maturity or a date fixed for payment or prepayment or by acceleration
or otherwise).
1. The Note. All payments of principal, interest and other
amounts payable on or in respect of this Note or the indebtedness
evidenced hereby shall be made at the address of the holder specified
herein. All payments received in respect of the indebtedness evidenced by
this Note shall, subject to the provisions of Section 5 hereof, be
applied first to interest hereon accrued to the date of payment, then to
the payment of other amounts (except principal) at the time due and
unpaid hereunder, and finally to the unpaid principal hereof.
If any payment on this Note becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day and, with respect to any payment of
principal, interest thereon shall be payable at the then Applicable Rate
during such extension.
2. Payment Provisions.
2.1 On __________ __, ____ [I.E. THE MATURITY DATE] or
on any accelerated maturity of this Note, the Company will pay to the
holder hereof the entire principal amount of this Note then outstanding,
without premium, but together with accrued and unpaid interest thereon.
The Company may at any time or from time to time prepay all or any part
of the outstanding principal amount of this Note at the principal amount
thereof, without premium, but together with accrued and unpaid interest
thereon.
2.2 Except as otherwise expressly provided herein,
payments on account of principal and interest with respect to this Note
shall be made by mailing a check or money order to the holder hereof at
the address of such holder appearing herein and without the necessity of
any presentment or notation of payment, except upon payment in full, and
the amount of principal so paid on this Note shall be regarded as having
been retired and canceled at the time of the mailing of such payment. The
holder of this Note, before any transfer thereof, shall make a notation
thereon of the date to which interest has been paid and of all principal
payments theretofore made thereon and shall in writing notify the Company
of the name and address of the transferee. Anything herein to the
contrary notwithstanding, the Company may elect to pay interest payable
on any Payment Date occurring on or before __________ __, ____, in lieu
of cash interest payments, by issuing and delivering a note (each, a
"Paid-in-Kind Interest Note") to the holder hereof having an aggregate
original principal amount equal to the accrued and unpaid interest on
this Note and otherwise containing the same terms and provisions as this
Note.
3. Defaults.
3.1 Events of Default. If any one or more Events of
Default shall occur and be continuing, then and in each and every such
case, the holder may proceed to protect and enforce his rights by suit in
equity, action at law and/or other appropriate proceeding either for
specific performance of any covenant or condition contained in this Note,
or in aid of the exercise of any power granted in this Note, and may by
notice in writing to the Company declare all or any part of the unpaid
balance of this Note then outstanding to be forthwith due and payable
without presentation, protest or further demand or notice of any kind, all
of which are hereby expressly waived, and the holder may proceed to enforce
payment of such balance or part thereof in such manner as he may elect,
except in each and every such case to the extent the foregoing rights of
the holder hereof are restricted by the provisions of Section 5 hereof.
3.2 Annulment of Defaults. An Event of Default shall
not be deemed to have occurred or to be in existence for any purpose of
this Note if the holder shall have waived such Event of Default in
writing or stated in writing that the same has been cured to such holder'
s satisfaction, but no such waiver shall extend to or affect any
subsequent Event of Default or impair any of the rights of the holder
upon the occurrence thereof.
3.3 Waivers. The Company hereby waives to the extent
not prohibited by applicable law (a) all presentments, demands for
performance, notices of nonperformance (except to the extent required by
the provisions hereof or of any instrument executed and delivered in
connection with this Note), protests, notices or protest, and notices of
dishonor in connection with this Note.
4. Definitions. For purposes of this Note:
4.1 "Applicable Rate" shall mean, for any period, the
weighted average of the daily interest rates for such period applicable
to all borrowings by the Company outstanding during such period under the
Credit Agreement, as determined by the Company in accordance with sound
financial practice; provided, however, that if the Company is not party
to any Credit Agreement during any (or any portion of any) period, the
Applicable Rate during such (or such portion of such) period shall be
equal to the Prime Rate plus one percent (1%). Notwithstanding anything
in this Note to the contrary, the interest rate hereunder shall not
exceed the maximum legal rate.
4.2 "Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et
seq., and the rules and regulations thereunder, all as from time to time
in effect, or any successor law, rules or regulations and any reference
to any statutory or regulatory provision shall be deemed to be a
reference to any successor statutory or regulatory provision.
4.3 "Business Day" shall mean any day other than a
Saturday or a Sunday or a day on which commercial banking institutions in
Boston, Massachusetts or New York, New York are authorized or required by
applicable law to be closed.
4.4 "Code" shall mean the Internal Revenue Code of
1986, as amended, or any successor federal law of similar import.
4.5 "Credit Agreement" shall mean that Credit
Agreement dated as of [ ], 1997 by and among the Company, [ ], the
lenders from time to time party thereto, __________, as administrative
agent, and [ ], as Collateral Agent, as amended and in effect from time
to time.
4.6 "Debt" shall mean (a) indebtedness for borrowed
money, (b) obligations evidenced by bonds, debentures, notes or other
similar instruments, (c) obligations to pay the deferred purchase price of
property (other than trade accounts payable), (d) obligations as lessee
under leases which shall have been or should be, in accordance with
generally accepted accounting principles, recorded as capitalized leases,
and (e) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise assure a creditor against loss in respect of, indebtedness or
obligations of the kinds referred to in clauses (a) through (d) above.
4.7 "Event of Default" shall mean the occurrence and
continuance of any of the following events:
(a) The Company shall have failed, for a period
of thirty (30) days after written notice thereof, to make any
principal, interest, fee or other payment on any of the
indebtedness evidenced by this Note or pursuant to any provision
of this Note (notwithstanding that such payment shall have been
suspended pursuant to the subordination provisions hereof); or
(b) The Company shall have failed duly to
observe or perform in any material respect any other covenant,
agreement or provision contained in this Note other than those
referred to in subdivision (a) above, and such failure shall
have continued for a period of thirty (30) days after written
notice thereof from the holder of this Note to the Company; or
(c) The Company shall:
(i) commence a voluntary case under
the Bankruptcy Code or authorize, by appropriate
proceedings of its board of directors, the commencement
of such a voluntary case;
(ii) (A) have filed against it a
petition commencing an involuntary case under the
Bankruptcy Code that shall not have been dismissed
within sixty (60) days after the date on which such
petition is filed, or (B) file an answer or other
pleading within such 60-day period admitting or failing
to deny the material allegations of such a petition or
seeking, consenting or to acquiescing in the relief
therein provided, or (C) have entered against it an
order for relief in any involuntary case commenced
under the Bankruptcy Code;
(iii) seek relief as a debtor under
any applicable law, other than the Bankruptcy Code, of
any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or
alteration of the rights of creditors, or consent to or
acquiesce in such relief;
(iv) have entered against it an
order by a court of competent jurisdiction (A) finding
it to be bankrupt or insolvent, (B) ordering or
approving its liquidation or reorganization as a
debtor or any modification or alteration of the rights
of its creditors or (C) assuming custody of, or appoint-
ing a receiver or other custodian for all or a
substantial portion of its property; or
(v) make an assignment for the
benefit of, or enter into a composition with, its
creditors, or appoint, or consent to the appointment
or, or suffer to exist a receiver or other custodian
for, all or a substantial portion of its property.
4.8 "Obligations" means any principal, interest
(including post-petition interest, whether or not allowed as a claim in
any proceeding), penalties, fees, costs, expenses, indemnifications,
reimbursements, damages and other liabilities payable under or in
connection with any Debt.
4.9 "Payment Date" shall have the meaning given such
term in the first paragraph of this Note.
4.10 "Person" shall mean any natural individual or any
corporation, firm, limited liability company, unincorporated
organization, association, partnership, a trust (inter vivos or
testamentary), an estate of a deceased individual, business trust, joint
stock company, joint venture or other organization, entity or business,
or any governmental authority.
4.11 "Prime Rate" shall mean the prime rate in effect
as announced from time to time by Chase Manhattan Bank.
4.12 "Senior Bank Debt" means all Obligations
outstanding under or in connection with the Credit Agreement.
4.13 "Senior Bank Documents" shall mean the Credit
Agreement and any note, mortgage, security agreement, pledge agreement,
guaranty or other agreement or instrument now or hereafter evidencing,
securing or executed in connection with any Senior Bank Debt, and any
credit agreement, note, mortgage, security agreement, pledge agreement,
guaranty or other agreement or instrument hereafter executed in
connection with any extension, renewal, refunding or refinancing
thereof.
4.14 "Senior Debt" means (a) the Senior Bank Debt and
(b) any other Debt, unless the instrument under which such Debt is
incurred expressly provides that it is on a parity with or subordinated
in right of payment to this Note. Notwithstanding anything to the
contrary in the foregoing, Senior Debt shall not include (i) any
liability for federal, state, local or other taxes owed or owing by the
Company, (ii) any Debt of the Company to any of its Subsidiaries or other
Affiliates or (iii) any trade payables.
4.15 "Senior Debt Default" shall have the meaning
given such term in Section 5.2 hereof.
4.16 "Subordinated Distributions" shall have the
meaning given such term in Section 5.1 hereof.
4.17 "Subordinated Payments" shall have the meaning
given such term in Section 5 hereof.
5. Subordination. The payment of principal (whether at
maturity, upon mandatory or voluntary prepayment, or upon declaration or
otherwise) of, interest on, and all fees, expenses, indemnities and other
amounts payable with respect to, this Note (collectively, the
"Subordinated Payments") are hereby subordinated and junior in right of
payment, to the extent and in the manner set forth in this Section to all
Senior Debt.
This Section shall constitute a continuing offer to all persons
who, in reliance upon such provisions, become holders of, or continue to
hold, Senior Debt, whether now outstanding or hereafter created,
incurred, assumed or guaranteed, and such provisions are made for the
benefit of the holders (which term shall include owners, if not otherwise
holders, of Senior Debt) of Senior Debt, and such holders of Senior Debt
are made obligees hereunder and beneficiaries hereof (with the same force
and effect as if named herein) and any one or more of them may enforce
such provisions. This Section is binding upon the Company and its
successors and assigns and the holders, from time to time, of this Note,
each of whom, by his acceptance of this Note, agrees to be bound by and
comply with all of the provisions of this Section. Notwithstanding any
provision of this Note to the contrary, neither this Section nor any of
its provisions may be changed or waived to adversely affect or impair in
any way whatsoever the rights of the holders of Senior Debt, except with
the prior written consent of the holders of the Senior Debt at the time
outstanding.
5.1 Subordinated Distributions. Upon any payment or
distribution of assets or securities of the Company of any kind or
character, whether in cash, property or securities, by way of set-off or
otherwise (including any collateral, whether the proceeds thereof or in
kind, at any time securing this Note and including any such payment or
distribution which may be payable or deliverable by reason of the payment
of any other indebtedness of the Company being subordinated to the
payment of this Note) of the Company (all such payments and distributions
being referred to collectively as "Subordinated Distributions"), upon any
dissolution, winding up, liquidation (partial or complete) or
reorganization of the Company (whether voluntary or involuntary and
whether in bankruptcy, insolvency, receivership or other proceedings, or
upon an assignment for the benefit of creditors or any other marshaling
of the assets and liabilities of the Company or otherwise), each of the
Company and the holder of this Note, by acceptance hereof, covenants and
agrees that:
(a) all Senior Debt shall first be paid in full,
or provision made for such payment, in accordance with the terms
of such Senior Debt, before any payment or distribution of any
Subordinated Distribution is made on account of any Subordinated
Payments and before the holder of this Note shall be entitled to
retain any amounts so paid or distributed in respect thereof;
(b) any payment or distribution of any
Subordinated Distribution to which the holder of this Note
would be entitled except for the provisions of this Section,
shall be paid or delivered by the Company or any debtor,
custodian, receiver, trustee in bankruptcy, liquidating trustee,
agent or other Person making such payment or distribution,
directly to the holders of Senior Debt or their representative
or representatives (in accordance with any certificate referred
to in this Section) or to the trustee or agent for the holders
of such Senior Debt, as their respective interests may appear,
to the extent necessary to pay in full all Senior Debt remaining
unpaid in accordance with the terms of such Senior Debt, after
giving effect to any concurrent payment or distribution to or
for the holders of such Senior Debt, before any payment or
distribution is made to the holder of this Note; and
(c) in the event that, notwithstanding the
foregoing, any payment or distribution of any Subordinated
Distribution shall be received by the holder of this Note before
all Senior Debt is paid in full, or provision made for the
payment thereof, in accordance with the terms of such Senior
Debt, such payment or distribution shall be held in trust for
the benefit of, and shall be paid over or delivered to, the
holders of such Senior Debt or their representative or
representatives, or to the trustee or agent for the holders of
such Senior Debt, as their respective interests may appear, to
the extent necessary to pay in full all Senior Debt remaining
unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
The Company shall give prompt written notice to the
holder of this Note of any declaration of any Senior Debt as due and
payable before its stated maturity and of any event which pursuant to
this Section would prevent payment or distribution of any Subordinated
Distribution or any Subordinated Payment with respect to this Note. The
holder of this Note shall be entitled to assume that no such event has
occurred and shall not at any time be charged with knowledge of the
existence of any event which would prohibit the making of any payment to
it, unless and until such holder shall have received written notice
thereof from the Company or from the holders of Senior Debt or any
trustee, agent or representative thereof; and prior to the receipt of any
such written notice the holder of this Note shall be entitled to assume
conclusively that no such event exists, without, however, limiting any
such rights of holders of Senior Debt under this Section to recover from
the holder of this Note any payment made to any such holder which it is
not entitled under this Section to retain.
Upon any payment or distribution of any Subordinated
Distribution, the holder of this Note shall be entitled to rely upon an
order or decree of any court of competent jurisdiction in which such
bankruptcy, insolvency, reorganization, liquidation, receivership or other
proceeding is pending, or a certificate of the debtor, custodian, receiver,
trustee in bankruptcy, liquidating trustee, agent or other Person making
such payment or distribution, to the holder of this Note, for the purpose
of ascertaining the Persons entitled to participate in such distribution,
the holders of the Senior Debt and other indebtedness of the Company, the
amount distributed thereon and all other facts pertinent thereto or to this
Section.
The holder of this Note shall be entitled to rely on
the delivery to it of a written notice by a Person representing himself
to be a holder of Senior Debt to establish that such notice has been
given by a holder of Senior Debt.
5.2 No Payments Under Certain Circumstances.
(a) No payment (by purchase of this Note or
otherwise) shall be made or agreed to be made, directly or
indirectly, in cash, property or securities (other than
Paid-in-Kind Interest Notes), or by way of set-off or otherwise,
by the Company of any Subordinated Payment with respect to this
Note if, at the time of such payment or immediately after giving
effect thereto,
(i) (A) the Company shall be in
default in the payment of any principal of, premium, if
any, or interest on, or any other amounts due with
respect to, any Senior Debt, and all applicable grace
or cure periods shall have expired (a "Senior Debt
Payment Default") or (B) there shall have occurred and
be continuing any default (other than a Senior Debt
Payment Default) with respect to any Senior Debt and
all applicable grace or cure periods shall have expired
(a "Senior Debt Non-Payment Default", and including any
Senior Debt Payment Default, a "Senior Debt Default"),
which Senior Debt Non-Payment Default would entitle the
holder of such Senior Debt, or any trustee therefor, to
declare the principal of such Senior Debt, if not
already due and payable, to be due and payable, unless
and until such Senior Debt Non-Payment Default shall
have been cured or waived or shall cease to exist; and
(ii) the Company shall have been
notified in writing by the holder of such Senior Debt,
or any trustee therefor, of such Senior Debt Payment
Default or Senior Debt Non-Payment Default (a "Senior
Debt Payment Default Notice" and "Senior Debt
Non-Payment Default Notice," respec tively,
collectively a "Senior Debt Default Notice").
(b) The Company shall immediately deliver to the
holder of this Note a copy of any Senior Debt Default Notice
received by the Company.
(c) If notwithstanding the foregoing provisions of
this Section 5.2, the Company shall make any Subordinated Payment
prohibited by the provisions of this Section, then, except as
hereinafter in this Section otherwise provided, unless and until
full payment of all amounts then due for principal of, sinking
fund, if any, premium, if any, and interest on, and all other
amounts payable with respect to, Senior Debt has been made or duly
provided for in accordance with the terms of such Senior Debt, or
unless and until any such default or Senior Debt Default shall
have been cured or waived or shall cease to exist, such prohibited
Subordinated Payment shall be held in trust for the benefit of,
and shall be paid over or delivered, in the form received and
without interest, to the holders of Senior Debt or their
respective representative or to the trustee or agent for the
holders of such Senior Debt, as their respective interests may
appear, to the extent necessary to pay in full all principal of,
premium, if any, and interest on, and all other amounts payable
with respect to, Senior Debt, to the extent any of the same are
then due after giving effect to any concurrent payment or
distribution to the holders of such Senior Debt.
(d) Unless and until written notice of such
event shall be given to the holder of this Note at its address
set forth on the register maintained by the Company by or on
behalf of any holder of Senior Debt or by the Company, the
holder of this Note shall be entitled to conclusively presume
that no event exists which would prohibit the making of any
payment to the holder of this Note.
5.3 Standstill.
(a) Acceleration. No holder of this Note shall
take any action to accelerate the maturity of the indebtedness
evidenced by this Note unless the Senior Debt shall have been
paid in full or all Senior Debt shall theretofore have become
due and payable.
(b) Remedies. No holder of this Note as such
will commence any action or proceeding against the Company to
recover all or any part of any indebtedness evidenced by this
Note or bring or join with any creditor in bringing, unless the
holders of the Senior Debt then outstanding shall join therein,
any proceeding against the Company under any bankruptcy, reorga-
nization, readjustment of debt, arrangement of debt,
receivership, liquidation or insolvency law or statute unless
and until all Senior Debt shall be paid in full, provided that
the foregoing shall not prohibit a holder of this Note from (x)
commencing an action against the Company to recover any amounts
owing to such holder which at the time the Company is entitled
to pay and such holder is entitled to receive under this Note,
including under Section 5.2, or (y) at any time at which the
holder of this Note shall be permitted to accelerate the
maturity of this Note as provided in Section 5.3(a), commencing
any proceeding against the Company under any bankruptcy,
reorganization, readjustment of debt, arrangement of debt,
receivership, liquidation, or insolvency law or statute,
provided further, that any amounts received by the holder of
this Note as a result of any such action or proceeding shall be
subject to the provisions of Sections 5.1 and 5.2 of this Note.
5.4 No Impairment. Nothing contained in this Section or
elsewhere in this Note is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Debt and the holder
of this Note, the obligation of the Company, which is absolute and
unconditional, to pay to the holder of this Note, subject to the rights of
the holders of Senior Debt, all Subordinated Payments with respect to this
Note, as and when the same shall become due and payable in accordance with
its terms (subject to the applicable requirements of the Code concerning
withholding of taxes), or is intended to or shall affect the relative
rights of the holders and creditors of the Company other than the holders
of Senior Debt, nor shall anything herein or therein prevent the holder of
this Note from exercising all remedies otherwise permitted by applicable
law or under the terms of this Note upon an Event of Default with respect
to this Note subject to the rights, if any, under this Section, of the
holders of Senior Debt in respect of Subordinated Distributions received
upon the exercise of any such remedy.
5.5 Subrogation. Subject to the payment in full of all
Senior Debt at the time outstanding, the holder of this Note shall be
subrogated (equally and ratably with the holders of all indebtedness of
the Company which, by its express terms, ranks on a parity with this Note
and is entitled to like rights of subrogation) to the rights of the
holders of Senior Debt (to the extent of payments or distributions
previously made to such holders of Senior Debt pursuant to the provisions
of this Section) to receive payments or distributions of assets or
securities of the Company payable or distributable to holders of the
Senior Debt until all Subordinated Payments with respect to this Note
shall be paid in full. For purposes of such subrogation, no payments or
distributions on the Senior Debt pursuant to Section 5.1 or 5.2 shall, as
between the Company and its creditors other than the holders of Senior
Debt, and the holder of this Note, be deemed to be a payment or
distribution by the Company to or on account of the Senior Debt, and no
payments or distributions to the holder of this Note of assets or
securities by virtue of the subrogation herein provided for shall, as
between the Company and its creditors other than the holders of Senior
Debt and the holder of this Note, be deemed to be a payment to or on
account of this Note. The provisions of this Section are and are intended
solely for the purpose of defining the relative rights of the holder of
this Note, on the one hand, and the holders of the Senior Debt, on the
other hand.
5.6 No Impairment of Rights. No right of any present
or future holder of any Senior Debt of the Company to enforce
subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such
holder of Senior Debt, or by any noncompliance by the Company with the
terms, provisions and covenants of this Note, regardless of any knowledge
thereof with which any such holder of Senior Debt may have or be
otherwise charged.
5.7 Waiver of Notice. The holder of this Note, by his
acceptance thereof, waives all notice of the acceptance of the
subordination provisions contained herein by each holder of Senior Debt,
whether now outstanding or hereafter incurred, and waives reliance by
each such holder upon such provisions.
5.8 Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior Debt. The holders of Senior
Debt may at any time or from time to time, and in their absolute
discretion, change the manner, place or terms of payment of, change or
extend the time of payment of, renew or alter, any Senior
Debt, or amend or supplement any agreement, instrument or document
evidencing any Senior Debt, or exercise or refrain from exercising any
other of their rights under the Senior Debt including without limitation
the waiver of default thereunder, all without notice to or assent from
the holder of this Note. No right of any present or future holders of any
Senior Debt to enforce subordination as provided herein shall at any time
in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or by any act or failure to act by any such holder or
by any noncompliance by the Company with the terms of this Note,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with.
6. Waivers; Amendments. Subject to the provisions of Section 8
hereof, amendments to and modifications of this Note may be made,
required consents and approvals may be granted, compliance with any term,
covenant, agreement, condition or other provision set forth herein may
be omitted or waived, either generally or in a particular instance and
either retroactively or prospectively with, but only with, the written
consent of the Company and the holder.
7. Notices. All notices and other communications which by any
provision of this Note are required or permitted to be given shall be
given in writing and shall be (a) mailed by first-class or express mail,
or by recognized courier service, postage prepaid, (b) sent by facsimile
or other form of rapid transmission, confirmed by mailing (by first class
or express mail, or by recognized courier service, postage prepaid)
written confirmation at substantially the same time as such rapid
transmission, or (c) personally delivered to the receiving party (which
if other than an individual shall be an officer or other responsible
party of the receiving party). All such notices and communications shall
be mailed, sent or delivered as follows: if to the holder hereof, at the
address and/or facsimile number of such holder appearing on the first
page hereof; if to the Company, c/o J.W. Childs Associates, L.P., One
Federal Street, 21st Floor, Boston, Massachusetts 02110, Attention: Mr.
John W. Childs (Facsimile No.: (617) 753-1101); or to such other
person(s), facsimile number(s) or address(es) as the party to receive any
such communication or notice may have designated by written notice to the
other party.
8. Section Headings. The headings contained in this Note are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Note.
9. Governing Law. The validity, interpretation, construction
and performance of this Note shall be governed by, and construed in
accordance with, the internal laws of the state of New York, without
giving effect to any choice or conflict of laws provision or rule that
would cause the application of domestic substantive laws of any other
jurisdiction.
IN WITNESS WHEREOF, the Company has caused this Note to
be executed as a sealed instrument as of the date first above written.
UNIVERSAL HOSPITAL
SERVICES, INC.
By:_______________________
Title:
