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Exhibit 10.34
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of December 1, 2005, by and between Alliance Imaging, Inc., a Delaware corporation (hereinafter called the “Corporation”), and Howard K. Aihara (hereinafter called the “Executive”). For purposes of this Agreement, employment with the Corporation shall include employment with any of its affiliated companies.
WITNESSETH THAT:
The Corporation desires to employ the Executive as an Executive Vice President and Chief Financial Officer (collectively, the “CFO”), and the Executive desires to accept such employment;
NOW, THEREFORE, the Corporation and the Executive, each intending to be legally bound, hereby mutually covenant and agree as follows:
1. Employment and Term.
(a) Employment. The Corporation shall employ the Executive as the CFO of the Corporation, and the Executive shall so serve, for the term set forth in Paragraph 1(b).
(b) Term. The term of the Executive’s employment under this Agreement shall commence on the date hereof (the “Effective Time”) and shall end on the nine month anniversary of the Effective Time, subject to the extension of such term as hereinafter provided and subject to earlier termination as provided in Paragraph 8. The expiration of the term of this Agreement shall be extended automatically by an additional three months as of the last day of each quarterly period following the Effective Time unless either party desires to modify or terminate this Agreement and notifies the other party of its desire to modify or terminate this Agreement at least 30 days prior to any such quarterly renewal date. The period of employment as provided in this Paragraph 1(b) is sometimes referred to herein as the “Term”.
2. Duties.
During the Term, the Executive shall serve as the CFO of the Corporation and have all powers and duties consistent with such position. The Executive shall devote substantially his entire time during reasonable business hours (reasonable sick leave and vacations excepted) and use diligent efforts to fulfill faithfully, responsibly and to the best of his ability his duties hereunder; provided, however, that Executive may engage in and devote time to other non-competitive activities such as serving as an expert witness to the extent that such time spent is immaterial and does not interfere with Executive’s obligations hereunder. During the Term, Executive shall report to the Chief Executive Officer of the Corporation. Executive’s duties shall be performed, initially, principally at the Corporation’s current offices located in Anaheim, California, or such other locations agreed upon by the parties. Notwithstanding, the foregoing, Executive may be required
to travel in the conduct of the Corporation’s business and to discharge his duties hereunder, provided that the amount and nature of such travel is reasonably consistent with the amount and nature of travel engaged in by other executive officers of the Corporation during the twelve-month period immediately preceding the date of this Agreement.
3. Salary.
The Corporation shall pay to the Executive as compensation for his services a salary of not less than $210,000.00 per year effective December 1, 2005 through December 31, 2006, payable in accordance with the Corporation’s payroll procedures. From time to time, the Board of Directors of the Corporation or a committee thereof (the “Board”) will review the Executive’s performance and compensation, and will consider adjustments thereto.
4. Bonuses.
(a) Annual. For calendar year 2006 and each calendar year thereafter during the term of employment, the Executive shall be eligible to receive a cash bonus based on the Corporation’s achievement of certain operating and/or financial or other goals established by the Board in its sole discretion, with an initial annual target bonus amount equal to 75% (the “Target Bonus”) of the Executive’s then current annual base salary. The bonus plan shall be adopted and administered by the Compensation Committee of the Board. Subsequent to 2006, bonuses, if any, will be paid to Executive in accordance with the terms and conditions of the Corporation’s Executive Incentive Plan.
5. Equity Incentive Compensation.
During the term of employment hereunder the Executive shall be eligible to participate in the Corporation’s Stock Option Plan in effect as of the date hereof. Executive shall be entitled to a stock option grant of one hundred fifty thousand shares to be granted as of the Effective Time.
6. Other Benefits.
In addition to the compensation described in Paragraphs 3 through 5, above, the Executive shall also be entitled to the following:
(a) Expense Reimbursement. Executive will be reimbursed all reasonable, ordinary and necessary business expenses, including expenses for entertainment, travel and similar items that are approved by the Corporation in accordance with its regular policy(ies) for business expense reimbursement. The Corporation will reimburse Executive for all expenses upon presentation by Executive of itemized accounts of such expenditures in accordance and in the manner and on a form reasonably prescribed by the Corporation.
(b) Car Allowance. The Corporation shall pay to the Executive a monthly automobile allowance (the “Automobile Allowance”) of not less than $600, to help
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defray the costs associated with Executive’s acquisition or maintenance (by lease or otherwise) of an automobile and the related insurance and maintenance therefor.
(c) Vacation. The Executive shall be entitled to all legal holidays, and three weeks paid vacation per annum, in accordance with the Corporation’s current policies.
(d) Insurance and Benefits. The Executive and his “dependents,” to the extent eligible thereunder, shall be entitled to participate in all employee and executive benefit plans, programs and policies currently available to other Corporation employees of comparable status, title and experience, as well as any plans, programs and policies adopted by the Corporation during the Term of this Agreement.
(e) Participation in Other Benefit Plans. In addition to the foregoing, the Executive shall be entitled to participate in all of the other various retirement, welfare, fringe benefit, executive perquisite, and expense reimbursement plans, programs and arrangements of the Corporation to the same extent that employees generally of the Corporation are eligible for participation under the terms of such plans, programs and arrangements.
7. Confidentiality.
In view of the fact that Executive’s work as an executive of the Corporation will bring Executive into close contact with many confidential affairs of the Corporation, including matters of a business nature, such as information about customers (including pricing information), costs, profits, markets, sales, strategic plans for future development and any other information not readily available to the public, Executive hereby agrees:
(a) To keep secret all confidential matters of the Corporation (including without limitation such matters which the Corporation notifies Executive are confidential) learned prior to the date of this Agreement and in the course of Executive’s employment hereunder, and not to disclose them to anyone outside of the Corporation, either during or after Executive’s employment with the Corporation, or both, until such time as the Corporation gives its written consent to such disclosure;
(b) To deliver promptly to the Corporation on termination of Executive’s employment by the Corporation or at any other time the Corporation may so request, all memoranda, notes, records, reports and other documents (and all copies thereof) relating to the Corporation’s business which Executive may then possess or have under Executive’s control; and
(c) That violation of this Paragraph 7 would cause the Corporation irreparable damage for which the Corporation cannot be reasonably compensated in damages in an action at law, and therefore in the event of any breach or threatened breach by Executive of this Paragraph 7, the Corporation shall be entitled to make application to a court of competent jurisdiction for equitable relief by way of injunction or otherwise (without being required to post a bond). This provision shall not, however, be construed as a waiver of any of the rights which the Corporation may have for damages under this
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Agreement or otherwise, and all of the Corporation’s rights and remedies shall be unrestricted and cumulative.
(d) For purpose of this Paragraph 7, the term Corporation shall include Alliance Imaging, Inc., its subsidiaries and its affiliates.
(e) The foregoing provisions of this Section 7 shall not apply to information that (i) is not unique to the Corporation, (ii) is generally known to the industry or the public (other than as a result of Executive’s breach of this covenant), (iii) was known by Executive prior to his becoming employed by the Corporation, or (iii) is subsequently obtained by Executive other than in the course of performing duties for the Corporation.
8. Termination.
Unless earlier terminated in accordance with the following provisions of this Paragraph 8, the Corporation shall continue to employ the Executive and the Executive shall remain employed by the Corporation during the entire Term. Paragraph 9 hereof sets forth certain obligations of the Corporation in the event that the Executive’s employment hereunder is terminated. Certain capitalized terms used in this Paragraph 8, Paragraph 9 and Paragraph 10 hereof are defined in Paragraph 8(d), below.
(a) Death or Disability. Except to the extent otherwise provided in Paragraph 9 with respect to certain post-Date of Termination payment obligations of the Corporation, this Agreement shall terminate immediately as of the Date of Termination in the event of the Executive’s death or in the event that the Executive becomes disabled. The Executive will be deemed to be disabled upon the earlier of (i) the end of a six (6) consecutive month period during which, by reason of physical or mental injury or disease, the Executive has been unable to perform substantially all of his usual and customary duties under this Agreement or (ii) the date that a reputable physician selected by the Board, and as to whom the Executive has no reasonable objection, determines in writing that the Executive will, by reason of physical or mental injury or disease, be unable to perform substantially all of the Executive’s usual and customary duties under this Agreement for a period of at least six (6) consecutive months. If any question arises as to whether the Executive is disabled, upon reasonable request therefor by the Board, the Executive shall submit to reasonable medical examination for the purpose of determining the existence, nature and extent of any such disability. In accordance with Paragraph 14, the Board shall promptly give the Executive written notice of any such determination of the Executive’s disability and of any decision of the Board to terminate the Executive’s employment by reason thereof.
(b) Discharge for Cause. In accordance with the procedures hereinafter set forth, the Corporation may discharge the Executive from his employment hereunder for Cause. Except to the extent otherwise provided in Paragraph 9 with respect to certain post-Date of Termination obligations of the Corporation, this Agreement shall terminate immediately as of the Date of Termination in the event the Executive is discharged for Cause. Any discharge of the Executive for Cause shall be communicated by a Notice of Termination to the Executive given in accordance with Paragraph 14 of this Agreement.
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For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon and (ii) if the Date of Termination is to be other than the date of receipt of such notice, specifies the termination date (which date shall in all events be within fifteen (15) days after the giving of such notice). In the case of a discharge of the Executive for Cause, the Notice of Termination shall include a copy of a resolution duly adopted by the Board at a meeting called and held for such purpose authorizing such action. No purported termination of the Executive’s employment for Cause shall be effective without a Notice of Termination.
(c) Termination for Other Reasons. The Corporation may discharge the Executive without Cause by giving written notice to the Executive in accordance with Paragraph 14 at least thirty (30) days prior to the Date of Termination. The Executive may resign from his employment by giving written notice to the Corporation in accordance with Paragraph 14 at least thirty (30) days prior to the Date of Termination. Except to the extent otherwise provided in Paragraph 9 with respect to certain post-Date of Termination obligations of the Corporation, this Agreement shall terminate immediately as of the Date of Termination in the event the Executive is discharged without Cause or resigns.
(d) Definitions. For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below:
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(i) |
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“Accrued Obligations” shall mean, as of the Date of Termination, the sum of (A) the Executive’s base salary under Paragraph 3 through the Date of Termination to the extent not theretofore paid, (B) the amount of any bonus, incentive compensation, deferred compensation and other cash compensation earned by the Executive under the terms and conditions of the applicable bonus plan, incentive compensation plan and/or deferred compensation plan as of the Date of Termination to the extent not theretofore paid and (C) any vacation pay, expense reimbursements and other cash entitlements accrued by the Executive as of the Date of Termination to the extent not theretofore paid. |
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(ii) |
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“Cause” means that any of the following has occurred with respect to Executive: (A) Executive has been convicted of a felony (other than a motor vehicle moving violation); (B) Executive has been convicted of stealing funds or property from the Corporation or otherwise engaged in fraudulent conduct against the Corporation; (C) Executive has engaged in knowing and willful misconduct which is materially injurious to the Corporation; (D) Executive has failed or refused to comply with the directions of the Board that are reasonably consistent with Executive’s current executive employee title and the terms of this Agreement, the failure with which to comply is materially injurious to the Corporation; or (E) Executive has repeatedly failed or refused to comply with the directions of the Board that are reasonably consistent with Executive’s current executive employee title and the terms of this Agreement. Notwithstanding clause (E) of the preceding sentence, no act or omission by the Executive shall constitute Cause hereunder unless the Corporation has given detailed |
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written notice thereof to the Executive, and the Executive has failed to remedy such act or omission within a reasonable time after receiving such notice. |
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(iii) |
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“Date of Termination” shall mean (A) in the event of a discharge of the Executive by the Board for Cause, the date the Executive receives a Notice of Termination, or any later date specified in such Notice of Termination, as the case may be, (B) in the event of a discharge of the Executive without Cause or a resignation by the Executive, the date specified in the written notice to the Executive (in the case of discharge) or the Corporation (in the case of resignation), which date shall be no less than thirty (30) days from the date of such written notice, (C) in the event of the Executive’s death, the date of the Executive’s death, and (D) in the event of termination of the Executive’s employment by reason of disability pursuant to Paragraph 8(a), the date the Executive receives written notice of such termination (or, if earlier, six (6) months following the date the Executive’s disability began). |
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(iv) |
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“Good Reason” shall mean any of the following: |
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(A) |
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