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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 provided herein, all of Executive’s
rights to salary,
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