Exhibit 10.28
EMPLOYMENT
AGREEMENT
This Agreement, dated as of
January 8, 2007 (the “ Effective Date ”),
is by and between NightHawk Radiology Holdings, Inc., a Delaware
corporation (“ Employer ”), and Timothy M.
Mayleben (“ Executive ”).
1. PERIOD OF EMPLOYMENT .
Employer shall employ Executive to render services to Employer in
the position and with the duties and responsibilities described in
Section 2 for the period (the “ Period of
Employment ”) commencing on the date of this Agreement
and ending on the date upon which the Period of Employment is
terminated in accordance with Section 4 .
2. POSITION AND
RESPONSIBILITIES .
(a) Position . Executive
accepts employment with Employer as Executive Vice President and
Chief Operating Officer and shall perform all services appropriate
to that position, as well as such other services as may be assigned
by Employer’s Chief Executive Officer (the “ CEO
”). All other officers of the Employer (other than Medical
Directors and radiologist consultants) shall report to Executive.
Executive shall devote his best efforts and full-time attention to
the performance of his duties. Employer acknowledges that Executive
intends to maintain his primary residence in Ann Arbor,
Michigan.
(b) Other Activity . During
the Period of Employment, and except upon the prior written consent
of the CEO, Executive shall not (i) accept any other
employment or (ii) engage in, manage, control, participate in,
consult with, or render services for, directly or indirectly, any
other business, commercial, or professional activity (whether or
not pursued for pecuniary advantage) that is competitive with
Employer, creates a conflict of interest with Employer, or
otherwise materially interferes with his duties to Employer or the
business of Employer or any Affiliate (as such businesses exist or
are in development during the Period of Employment) (and shall
immediately cease any such ongoing activity that becomes so
competitive, begins to create such a conflict or begins to
materially interfere with his duties to Employer or the business of
Employer or any Affiliate). An “ Affiliate ”
shall mean any person or entity that directly or indirectly
controls, is controlled by, or is under common control with
Employer. Executive may engage in civic and charitable activities
that do not interfere with Executive’s employment under this
Agreement and that do not conflict with Employer’s
interests.
(c) Directorship . Subject to
the requirements of Employer’s certificate of incorporation
and bylaws, the Delaware General Corporation Law, as amended, and
the Securities Exchange Act of 1934, as amended, Employer shall
take such steps as are necessary to nominate Executive for election
as a member of the Board. Executive agrees that while Executive
remains an employee of Employer, Executive will serve as a member
of the Board, if so elected, for no additional
compensation.
3. COMPENSATION AND BENEFITS
.
(a) Salary . In consideration
of the services to be rendered under this Agreement, Employer shall
pay Executive $425,000 per year (as it may be adjusted from time to
time by the Compensation Committee of the Board, the “
Base Salary ”), payable in regular installments in
accordance with Employer’s general payroll policies for
salaried employees, in effect from time
to time. Within thirty (30) days of the
beginning of each calendar year during the Period of Employment,
the Compensation Committee of the Board shall review
Executive’s Base Salary for the purpose of making market and
performance increases, shall make a determination of any such
increase and give notice thereof to Executive. It is understood
that any such increase so determined may or may not apply
retroactively to the beginning of such calendar year, which shall
be determined by the Compensation Committee of the Board in its
sole discretion.
(b) Bonus . In addition to
the Base Salary, Executive shall, subject to such performance
criteria as shall be determined by the Compensation Committee of
the Board, be entitled to an annual bonus in an amount up to
$375,000, or such additional amounts as shall be established from
time to time by the Compensation Committee of the Board in
connection with its calendar-year market and performance
assessments described in Section 3(a), less applicable
withholding (the “ Bonus ”). Within thirty
(30) days of the beginning of each calendar year during the
Period of Employment (or such other period of time as shall be
reasonably established by the Compensation Committee of the Board),
the Compensation Committee of the Board and Executive shall agree
upon performance criteria upon which the Bonus shall be based. The
Employer shall pay the Bonus, if so earned by satisfaction of such
criteria, on or after January 1 of the following calendar
year, but in no event later than January 30
th
of such year.
(c) Equity Grants . Employer
will recommend at the first meeting of the Board following the
Effective Date that Employer grant Executive (i) 25,000
restricted stock units and (ii) an option to purchase 325,000
shares of the Employer’s Common Stock at a price per share
equal to the fair market value per share of the Common Stock on the
effective date of grant (which shall be established in accordance
with the Board’s policies) (collectively, the “
Grants ”). The restricted stock units will vest over
three (3) years, with one-third of the restricted stock units
vesting on each of the three anniversaries following the Effective
Date. One-third (33.34%) of the shares subject to the option
shall vest on the one (1) year anniversary of the Effective
Date, and the remaining shares shall vest monthly over the next 24
months in equal monthly amounts subject to Executive’s
continuing employment with Employer. The Grants shall be subject to
the terms and conditions of Employer’s 2006 Equity Incentive
Plan. Except as described herein, no right to any stock is earned
or accrued until such time that vesting occurs, nor does the grant
confer any right to continue vesting or employment. Notwithstanding
the foregoing, nothing contained herein shall affect or change the
vesting provisions applicable to stock options or other rights to
acquire capital stock in Employer held by Executive prior to the
Effective Date.
(d) Vacation and Holidays .
Executive shall be entitled to not less than twenty (20) days
of vacation per calendar year (or such greater vacation benefits as
may be provided for by Employer’s vacation policies
applicable to its senior executives), pro rated for any partial
year. Executive may accumulate and carry over from one calendar
year to the next any unused vacation time; provided, however, that,
in accordance with Employer’s vacation policies, at no time
will Executive be allowed to accumulate a balance of greater than
twenty (20) days vacation. Upon termination of this Agreement
for any reason, Employer shall upon such termination pay Executive
in full for any accrued but unused vacation. Executive also shall
be entitled to such paid holidays as are established by Employer
for all employees.
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(e) Benefits . As Executive
becomes eligible, he shall have the right to participate in and to
receive benefits from all present and future benefit plans
specified in Employer’s policies and generally made available
to salaried employees and senior executives of Employer from time
to time. The amount and extent of benefits to which Executive is
entitled shall be governed by the specific benefit plan, as
amended. Executive also shall be entitled to any benefits or
compensation tied to termination as described in
Section 4 . Employer reserves the ability, in its sole
discretion, to adjust benefits provided to Executive in connection
with the adjustment of benefits to salaried employees. No statement
concerning benefits or compensation to which Executive is entitled
shall alter in any way the Period of Employment or the termination
thereof as provided in this Agreement.
(e) Expenses . Employer shall
reimburse Executive, or otherwise advance amounts, for reasonable
travel and other business expenses incurred or to be incurred by
Executive in the performance of his duties, subject to reasonable
documentation thereof and in accordance with Employer’s
expense reimbursement policies in effect from time to time, but in
no event more than thirty (30) days after Executive’s
submission of such documentation in accord with such
policies.
(f) Withholding . All
compensation and comparable payments to be paid to Executive under
this Agreement shall be less all applicable withholdings required
by applicable federal, state or local law, including, without
limitation, payment of withholding taxes and unemployment
compensation taxes in such state or states as shall be mutually
determined by Executive and Employer in respect of
Executive’s compensation under this Agreement..
4. TERMINATION OF EMPLOYMENT
.
(a) By Employer Without Cause
. At any time, Employer may terminate the Period of Employment
without Cause (as defined below), effective as of the date
specified in a written notice from Employer to Executive. Employer
may dismiss Executive as provided in this Section 4
notwithstanding anything to the contrary contained in or arising
from any statements, policies, or practices of Employer relating to
the employment, discipline, or termination of its employees. If the
Period of Employment is terminated by Employer without Cause,
Employer shall continue to pay Executive (A) his Base Salary,
payable in regular monthly installments as severance payments from
the date of termination for a period of twelve (12) months
thereafter (the “ Severance Period ”), and
(B) on or after January 1 of the following calendar year,
but in no event later than January 30 th of such year, such pro rata amount
of the Bonus for which Executive would have been eligible had the
Period of Employment not been terminated by Employer without Cause,
pro-rated to the date of termination based upon the actual number
of days elapsed in the calendar year in which such termination
occurs (both such payments, the “ Severance Payment
”) Notwithstanding the foregoing, the Executive shall only be
entitled to the Severance Payment if, and only if, Executive
(1) has executed and delivered to Employer the General Release
in the form attached hereto as Exhibit A , (2) only so
long as Executive has not revoked or breached the provisions of the
General Release or breached the provisions of this Agreement or the
Confidentiality and Non-Compete Agreement between Executive and
Employer dated as of the date hereof (the “ Non-Compete
Agreement ”), and (3) does not apply for
unemployment compensation chargeable to Employer during the
Severance Period. Upon such termination, Executive shall not be
entitled to any other salary, compensation or benefits
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after termination of the Period of Employment,
except as specifically provided for herein or in Employer’s
employee benefit plans or as otherwise expressly required by
applicable law (such as COBRA); provided, however, that Employer
shall pay Executive’s COBRA health insurance premiums from
the date of termination through the date that is twelve
(12) months after the date of termination. Notwithstanding
anything to the contrary contained in this Section 4(a), in
the event Executive breaches the provisions of this Agreement or
the Non-Compete Agreement, the severance amounts payable by
Employer under this Section 4(a) shall not terminate unless
and until more than fifteen (15) days have elapsed from and
after the date written notice of such breach has been delivered to
Executive without such breach having been cured during such 15-day
period, provided, however, Executive will be permitted to avail
himself of the cure rights contained in this Section 4(a) one
time only during the Period of Employment.
(b) By Employer For Cause .
At any time, and without prior notice (except as otherwise provided
in the definition of Cause set forth below), Employer may terminate
the Period of Employment for Cause. Employer shall pay Executive
all compensation then due and owing; thereafter, all of
Employer’s obligations under this Agreement shall cease.
Termination shall be for “ Cause ” if Executive
(i) breaches his duty of loyalty to Employer or any of its
Affiliates or engages in any acts of dishonesty or fraud with
respect to Employer or any of its Affiliates or any of their
respective business relations, (ii) commits a felony or any
crime involving dishonesty, breach of trust, or physical or
emotional harm to any person (or enters a plea of guilty or nolo
contendere with respect thereto), (iii) breaches any
material term of this Agreement or any other agreement between
Executive and Employer or any of its Affiliates and such breach (if
capable of cure) is not cured within fifteen (15) days
following written notice thereof from Employer, (iv) reports
to work under the influence of alcohol or illegal drugs, the use of
illegal drugs (whether or not at the workplace) or other repeated
conduct causing Employer or any of its Affiliates substantial
public disgrace, disrepute or economic harm, (v) substantial
and repeated failure to perform the duties as reasonably directed
by the CEO or (vi) gross negligence or willful misconduct with
respect to the Employer or any of its Affiliates.
(c) By Executive for Good
Reason . If Executive shall resign for Good Reason, Executive
shall be entitled to the same rights, and be subject to the same
restrictions as provided in Section 4(a) upon
termination by Employer without Cause. For purposes of this
Section 4(c) , “ Good Reason ” will
mean Executive’s voluntary resignation within ninety
(90) days after the occurrence of any of the following without
the express written consent of Executive (i) a reduction in
Executive’s annualized Base Salary or (ii) without the
express written consent of Executive, a material diminution in
Executive’s supervisory responsibilities, or (iii) any
requirement that the Executive relocate to a work site that would
increase the Executive’s one-way commute distance from
Executive’s then principal residence by more than fifty
(50) miles, unless (A) the Executive accepts such
relocation opportunity or (B) Executive and the Board mutually
and in good faith make a determination that such relocation is
necessary for Executive to effectively perform his duties under
this Agreement. In addition, Employer shall pay Executive’s
COBRA health insurance premiums from the date of termination by
Executive for Good Reason through the date that is twelve
(12) months after the date of termination by Executive for
Good Reason. In the event that Executive terminates his employment
for Good Reason, the Employer shall be entitled to deliver written
notice to Executive within fifteen (15) days following such
termination demanding that the determination of the existence of
Good Reason be determined by arbitration in accordance with the
procedures set forth in Section 9
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hereof. If the arbitrator determines that Good
Reason did not exist, the termination shall be treated as a
voluntary termination by Executive and the Employer shall have no
obligations to pay or provide to Executive the compensation
payments and other benefits to which he would have otherwise been
entitled to pursuant to a termination for Good Reason. If the
arbitrator determines that Good Reason did exist, Executive shall
be entitled to the same rights, and be subject to the same
restrictions as provided in Section 4(a) upon
termination by Employer without Cause.
(d) Voluntary Termination by
Executive . At any time, Executive may terminate the Period of
Employment for any or no reason by providing Employer at least
thirty (30) days’ advance written notice. Employer shall
have the option, in its complete discretion and upon payment of all
compensation then due and owing (including any portion of the Bonus
earned for the calendar year of termination, pro rated to the date
of any such termination based upon the actual number of days
elapsed in such calendar year and paid in accordance with
Section 3(b) above) through the last day of the notice period,
to make Executive’s termination effective at any time prior
to the end of such thirty (30) day notice period and,
thereafter, all of Employer’s obligations under this
Agreement shall cease.
(e) Termination Upon Death or
Permanent Disability . Executive’s employment with
Employer shall also terminate upon Executive’s death or
permanent mental or physical disability or other incapacity (as
determined by the Board in its good faith judgment). Upon any such
termination, Employer shall pay Executive (or Executive’s
estate or legal representative or guardian) all compensation then
due and owing (including any portion of the Bonus earned for the
calendar year of termination, pro rated to the date of termination
based upon the actual number of days elapsed in such calendar year
and paid in accordance with Section 3(b) above); thereafter,
all of Employer’s obligations under this Agreement shall
cease.
(f) Acceleration . If
Executive’s employment terminates without Cause or for Good
Reason, then the vesting schedule applicable to any stock options,
restricted stock or other rights to acquire stock in Employer
(including, but not limited to, the Grants) shall automatically
accelerate by twelve (12) months and all such stock options
and other rights that would otherwise vest during such twelve
(12) month period shall, on the date of such termination,
become vested and/or immediately exercisable. In the event that
Executive is terminated by Employer (or its successor) within
twelve (12) months of a Change in Control (as hereinafter
defined), then any then-unvested stock options, restricted stock or
other rights to acquire stock in Employer (as they may be assumed
by Employer’s successor) shall automatically and fully vest
as of the date of such termination. For purposes of this Agreement,
the term “ Change of Control ” means (i) a
business combination (such as a merger or consolidation) of
Employer with any other corporation or other type of business
entity (such as a limited liability company), other than (A) a
business combination which would result in the voting securities of
Employer outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty
percent (50%) of the total voting power represented by the
voting securities of Employer or such controlling surviving entity
outstanding immediately after such business combination, and
(B) any bona fide equity financing; or (ii) the
sale, lease, exchange or other transfer or disposition by Employer
of all or substantially all of Employer’s assets.
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(g) Termination of
Compensation . Except as otherwise expressly
