Exhibit 10.28

 

NATUS MEDICAL, INC.

 

JAMES B. HAWKINS EMPLOYMENT AGREEMENT

 

This Agreement is entered into as of April 12, 2004, (the “Effective Date”) by
and between Natus Medical, Inc. (the “Company”), and James B. Hawkins
(“Executive”).

 

1. Duties and Scope of Employment.

 

(a) Positions and Duties. As of the Effective Date, Executive shall be an
employee of the Company, and starting on April 19, 2004, shall serve as
President and Chief Executive Officer of the Company. Executive will render such
business and professional services in the performance of his duties, consistent
with Executive’s position within the Company, as shall reasonably be assigned to
him by the Company’s Board of Directors (“Board”). The period of Executive’s
employment under this Agreement is referred to herein as the “Employment Term.”

 

(b) Obligations. During the Employment Term, Executive will perform his duties
faithfully and to the best of his ability and will devote his full business
efforts and time to the Company. For the duration of the Employment Term,
Executive agrees not to actively engage in any other employment, occupation or
consulting activity for any direct or indirect remuneration without the prior
approval of the Board.

 

2. At-Will Employment. The parties agree that Executive’s employment with the
Company will be “at-will” employment and may be terminated at any time with or
without cause or notice. Executive understands and agrees that neither his job
performance nor promotions, commendations, bonuses or the like from the Company
give rise to or in any way serve as the basis for modification, amendment, or
extension, by implication or otherwise, of his employment with the Company.

 

3. Compensation.

 

(a) Base Salary. During the Employment Term, the Company will pay Executive an
annual salary of three-hundred-and-ten thousand dollars ($310,000.00) as
compensation for his services (the “Base Salary”). The Base Salary will be paid
periodically in accordance with the Company’s normal payroll practices and be
subject to the usual, required withholding. Executive’s salary will be subject
to review and adjustments will be made based upon the Company’s normal
performance review practices.

 

(b) Performance Bonus. Executive shall be eligible to receive an annual bonus of
a maximum of one-hundred thousand dollars ($100,000.00) less applicable
withholding taxes, upon achievement of performance objectives to be determined
by the Board in its sole discretion, which such objectives shall be established
within ninety (90) days of the Effective Date.

 

(c) Stock Options. Stock Options. Executive shall be eligible to receive options
to purchase seven-hundred-thousand (700,000) shares of Common stock of the
Company, pursuant to and governed by the terms of the Natus 2000 Supplemental
Stock Option Plan, with an exercise price at the closing market price on the day
prior to the Effective Date. Vesting begins after your first six (6) months of
employment and is retroactive to your start date. Stock vests at 1/48th per
month. Options must be exercised within ten (10) years of date of hire.
Notwithstanding any other provision of the Agreement, under no circumstances
shall Executive have any right to exercise stock options before Executive has
completed one-hundred-eighty-days of employment.

 

4. Employee Benefits. During the Employment Term, Executive will be entitled to
participate in the employee benefit plans currently and hereafter maintained by
the Company of general applicability to other senior executives of the Company,
including, without limitation, the Company’s group medical, dental, vision,
disability, life insurance, and flexible-spending account plans. The Company
reserves the right to cancel or change the benefit plans and programs it offers
to its employees at any time.

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5. Paid Time Off (“PTO”). Executive is entitled to receive PTO pursuant to
Natus’ standard benefit policy currently and hereafter maintained by the
Company, and as may be cancelled or changed from time to time.

 

6. Expenses. The Company will reimburse Executive for reasonable travel,
entertainment or other expenses incurred by Executive in the furtherance of or
in connection with the performance of Executive’s duties hereunder, in
accordance with the Company’s expense reimbursement policy as in effect from
time to time.

 

7. Severance.

 

(a) Involuntary Termination. If, after more than one hundred eighty (180) days
from commencement of employment, Executive’s employment with the Company
terminates other than for “Cause” (as defined herein), death or disability, and
Executive signs and does not revoke a standard release of claims with the
Company, then, subject to Section 11, Executive shall be entitled to (i) receive
continuing payments of severance pay (less applicable withholding taxes) at a
rate equal to his Base Salary rate, as then in effect, for a period of twelve
(12) months from the date of such termination, to be paid periodically in
accordance with the Company’s normal payroll policies; (ii) the immediate
vesting and exercisability of 100% of the shares subject to all of Executive’s
stock options to purchase Company Common Stock (whether currently outstanding or
granted in following the Effective Date) outstanding on the date of such
termination (the “Stock Options”) and (iii) continued payment by the Company of
the group health continuation coverage premiums for Executive and Executive’s
eligible dependents under Title X of the Consolidated Budget Reconciliation Act
of 1985, as amended (“COBRA”) as in effect through the lesser of (x) twelve (12)
months from the effective date of such termination, (y) the date upon which
Executive and Executive’s eligible dependents become covered under similar
plans, or (z) the date Executive no longer constitutes a “Qualified Beneficiary”
(as such term is defined in Section 4980B(g) of the Internal Revenue Code of
1986, as amended (the “Code”)); provided, however, that Executive will be solely
responsible for electing such coverage within the required time periods.

 

(b) Voluntary Termination; Termination for Cause. If Executive’s employment with
the Company terminates voluntarily by Executive (other than as described in
subsection (c) below) or for Cause by the Company or due to Executive’s death or
disability, or involuntarily for any reason within one hundred and eighty (180)
days of commencement of employment, then (i) all vesting of Stock Options will
immediately cease, (ii) all payments of compensation by the Company to Executive
hereunder will terminate immediately (except as to amounts already earned), and
(iii) Executive will only be eligible for severance benefits, if any, in
accordance with the Company’s established policies as then in effect.

 

(c) Change of Control Benefits. If within twelve (12) months following a “Change
of Control” (as defined below) (i) Executive terminates Executive’s employment
with the Company for Good Reason, or (ii) the Company or the successor
corporation terminates Executive’s employment with the Company for other than
Cause, death or disability, then Executive shall be entitled to the benefits
provided for in subsection (a). Executive shall only be permitted to receive the
benefits provided for in subsection (a) once and shall not be permitted to claim
such benefits under both subsection (a) and (c) such that Executive would
receive the benefits pursuant to subsection (a) twice.

 

8. Limitation on Payments. In the event that the severance and other benefits
provided for in this Agreement or otherwise payable to the Executive (i)
constitute “parachute payments” within the meaning of Section 280G of the Code
and (ii) but for this Section 8, would be subject to the excise tax imposed by
Section 4999 of the Code, then the Executive’s severance benefits under Section
4(a)(i) shall be either:

 

delivered in full, or

 

delivered as to such lesser extent which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,

 

whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Executive on an after-tax basis, of the greatest

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amount of severance benefits, notwithstanding that all or some portion of such
severance benefits may be taxable under Section 4999 of the Code. Unless the
Company and Executive otherwise agree in writing, any determination required
under this Section 8 shall be made in writing by the Company’s independent
public accountants immediately prior to Change of Control (the “Accountants”),
whose determination shall be conclusive and binding upon Executive and the
Company for all purposes. For purposes of making the calculations required by
this Section 8, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and Executive shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 8.

 

9. Definitions.

 

(a) Cause. For purposes of this Agreement, “Cause” shall mean (i) commission of
any act of dishonesty, fraud, misrepresentation or other act of moral turpitude
by Executive, (ii) Executive’s conviction of a felony, (iii) a willful act by
Executive which constitutes disloyalty or gross misconduct injurious to the
Company, (iv) misrepresentation or concealment by Executive of any fact for the
purpose of securing or maintaining this Agreement, or (v) continued violations
by Executive of Executive’s employment duties which are willful on Executive’s
part after Executive has been given written demand for performance from the
Board which specifically sets forth the factual basis for the Board’s belief
that Executive has not substantially performed Executive’s duties.

 

(b) Change of Control. For purposes of this Agreement, “Change of Control” of
the Company is defined as:

 

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power
represented by the Company’s then outstanding voting securities; or

 

(ii) the date of the consummation of a merger or consolidation of the Company
with any other corporation that has been approved by the stockholders of the
Company, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than forty percent (40%) of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete liquidation of the
Company; or

 

(iii) the date of the consummation of the sale or disposition by the Company of
all or substantially all the Company’s assets.

 

(c) Good Reason. For purposes of this Agreement, “Good Reason” shall mean
without the Executive’s express written consent shall mean (i) the significant
reduction of the Executive’s duties or responsibilities relative to Executive’s
duties or responsibilities in effect immediately prior to such reduction;
provided, however, that a reduction in duties or responsibilities solely by
virtue of the Company being acquired and made part of a larger entity (as, for
example, when the Chief Financial Officer remains as such following a Change of
Control and is not made the Chief Financial Officer of the acquiring
corporation) shall not constitute “Good Reason;” (ii) a reduction by the Company
in Executive’s annual Base Salary as in effect immediately prior to such
reduction; (iii) a material reduction by the Company in the kind or level of
employee benefits to which Executive is entitled immediately prior to such
reduction with the result that Executive’s overall benefits package is
significantly reduced; (iv) the relocation of Executive to a facility or a
location more than 35 miles from Executive’s then present location, without
Executive’s express written consent; or (v) the failure of the Company to obtain
the assumption of this Agreement by any successors contemplated in Section 12.

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10. Confidential Information; Representation. Executive agrees to enter into the
Company’s standard Confidential Information and Invention Assignment Agreement
(the “Confidential Information Agreement”) upon commencing employment hereunder.
Executive represents and warrants that all personal background information
provided by him, or to be provided during the term of his employment, in
response to background questions asked by the Company pertaining to Executive’s
employment, is true and accurate, and does not and will not contain any material
omissions, nor shall it omit any material information. Executive further
represents and warrants that he has not committed any act as described in
section 9(a)(i), (ii) or (iv) hereof.

 

11. Conditional Nature of Severance Payments.

 

(a) Noncompete. Executive acknowledges that the nature of the Company’s business
is such that if Executive were to become employed by, or substantially involved
in, the business of a competitor of the Company following the termination of
Executive’s employment with the Company, it would be very difficult for
Executive not to rely on or use the Company’s trade secrets and confidential
information. Thus, to avoid the inevitable disclosure of the Company’s trade
secrets and confidential information, Executive agrees and acknowledges that
Executive’s right to receive the severance payments set forth in Section 7 (to
the extent Executive is otherwise entitled to such payments) shall be
conditioned upon Executive not directly or indirectly engaging in (whether as an
employee, consultant, agent, proprietor, principal, partner, stockholder,
corporate officer, director or otherwise), nor having any ownership interest in
or participating in the financing, operation, management or control of, any
person, firm, corporation or business that competes with Company or is a
customer of the Company. Upon any breach of this section, all severance payments
pursuant to this Agreement shall immediately cease.

 

(b) Non-Solicitation. Until the date eighteen (18) months after the termination
of Executive’s employment with the Company for any reason, Executive agrees not,
either directly or indirectly, to solicit, induce, attempt to hire, recruit,
encourage, take away, hire any employee of the Company or cause an employee to
leave his or her employment either for Executive or for any other entity or
person. Additionally, Executive acknowledges that Executive’s right to receive
the severance payments set forth in Section 7 (to the extent Executive is
otherwise entitled to such payments) are contingent upon Executive complying
with this Section 10(b) and upon any breach of this section all severance
payments pursuant to this Agreement shall immediately cease.

 

(c) Understanding of Covenants. Executive represents that Executive (i) is
familiar with the foregoing covenants not to compete and not to solicit, and
(ii) is fully aware of Executive’s obligations hereunder, including, without
limitation, the reasonableness of the length of time, scope and geographic
coverage of these covenants.

 

12. Assignment. This Agreement will be binding upon and inure to the benefit of
(a) the heirs, executors and legal representatives of Executive upon Executive’s
death and (b) any successor of the Company. Any such successor of the Company
will be deemed substituted for the Company under the terms of this Agreement for
all purposes. For this purpose, “successor” means any person, firm, corporation
or other business entity which at any time, whether by purchase, merger or
otherwise, directly or indirectly acquires all or substantially all of the
assets or business of the Company. None of the rights of Executive to receive
any form of compensation payable pursuant to this Agreement may be assigned or
transferred except by will or the laws of descent and distribution. Any other
attempted assignment, transfer, conveyance or other disposition of Executive’s
right to compensation or other benefits will be null and void.

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13. Notices. All notices, requests, demands and other communications called for
hereunder shall be in writing and shall be deemed given (i) on the date of
delivery if delivered personally, (ii) one (1) day after being sent by a well
established commercial overnight service, or (iii) four (4) days after being
mailed by registered or certified mail, return receipt requested, prepaid and
addressed to the parties or their successors at the following addresses, or at
such other addresses as the parties may later designate in writing:

 

If to the Company:

 

Natus Medical, Inc.

1501 Industrial Road

San Carlos, CA 94070

Attn: Mark E. Foster, General Counsel

 

If to Executive:

 

at the last residential address known by the Company.

 

14. Severability. In the event that any provision hereof becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement will continue in full force and effect without said provision.

 

15. Arbitration.

 

(a) General. In consideration of Executive’s service to the Company, its promise
to arbitrate all employment related disputes and Executive’s receipt of the
compensation, pay raises and other benefits paid to Executive by the Company, at
present and in the future, Executive agrees that any and all controversies,
claims, or disputes with anyone (including the Company and any employee,
officer, director, shareholder or benefit plan of the Company in their capacity
as such or otherwise) arising out of, relating to, or resulting from Executive’s
service to the Company under this Agreement or otherwise or the termination of
Executive’s service with the Company, including any breach of this Agreement,
shall be subject to binding arbitration under the Arbitration Rules set forth in
California Code of Civil Procedure Section 1280 through 1294.2, including
Section 1283.05 (the “Rules”) and pursuant to California law. Disputes which
Executive agrees to arbitrate, and thereby agrees to waive any right to a trial
by jury, include any statutory claims under state or federal law, including, but
not limited to, claims under Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act of 1990, the Age Discrimination in Employment
Act of 1967, the Older Workers Benefit Protection Act, the California Fair
Employment and Housing Act, the California Labor Code, claims of harassment,
discrimination or wrongful termination and any statutory claims. Executive
further understands that this Agreement to arbitrate also applies to any
disputes that the Company may have with Executive.

 

(b) Procedure. Executive agrees that any arbitration will be administered by the
American Arbitration Association (“AAA”) and that a neutral arbitrator will be
selected in a manner consistent with its National Rules for the Resolution of
Employment Disputes. The arbitration proceedings will allow for discovery
according to the rules set forth in the National Rules for the Resolution of
Employment Disputes or California Code of Civil Procedure. Executive agrees that
the arbitrator shall have the power to decide any motions brought by any party
to the arbitration, including motions for summary judgment and/or adjudication
and motions to dismiss and demurrers, prior to any arbitration hearing.
Executive agrees that the arbitrator shall issue a written decision on the
merits. Executive also agrees that the arbitrator shall have the power to award
any remedies, including attorneys’ fees and costs, available under applicable
law. Executive understands the Company will pay for any administrative or
hearing fees charged by the arbitrator or AAA except that Executive shall pay
the first $200.00 of any filing fees associated with any arbitration Executive
initiates. Executive agrees that the arbitrator shall administer and conduct any
arbitration in a

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manner consistent with the Rules and that to the extent that the AAA’s National
Rules for the Resolution of Employment Disputes conflict with the Rules, the
Rules shall take precedence.

 

(c) Remedy. Except as provided by the Rules, arbitration shall be the sole,
exclusive and final remedy for any dispute between Executive and the Company.
Accordingly, except as provided for by the Rules, neither Executive nor the
Company will be permitted to pursue court action regarding claims that are
subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the
arbitrator shall not order or require the Company to adopt a policy not
otherwise required by law that the Company has not adopted.

 

(d) Availability of Injunctive Relief. In addition to the right under the Rules
to petition the court for provisional relief, Executive agrees that any party
may also petition the court for injunctive relief where either party alleges or
claims a violation of this Agreement or the Confidentiality Agreement or any
other agreement regarding trade secrets, confidential information,
nonsolicitation or Labor Code §2870. In the event either party seeks injunctive
relief, the prevailing party shall be entitled to recover reasonable costs and
attorneys’ fees.

 

(e) Administrative Relief. Executive understands that this Agreement does not
prohibit Executive from pursuing an administrative claim with a local, state or
federal administrative body such as the Department of Fair Employment and
Housing, the Equal Employment Opportunity Commission or the workers’
compensation board. This Agreement does, however, preclude Executive from
pursuing court action regarding any such claim.

 

(f) Voluntary Nature of Agreement. Executive acknowledges and agrees that
Executive is executing this Agreement voluntarily and without any duress or
undue influence by the Company or anyone else. Executive further acknowledges
and agrees that Executive has carefully read this Agreement and that Executive
has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and fully understand it,
including that Executive is waiving Executive’s right to a jury trial. Finally,
Executive agrees that Executive has been provided an opportunity to seek the
advice of an attorney of Executive’s choice before signing this Agreement.

 

16. Integration. This Agreement, together with the Option Plan, Option Agreement
and the Confidential Information Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements whether written or oral. No waiver,
alteration, or modification of any of the provisions of this Agreement will be
binding unless it is in writing and specifically mentions this Section 16 and it
is signed by duly authorized representatives of the parties hereto.

 

17. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, shall not operate as or be construed to be
a waiver of any other previous or subsequent breach of this Agreement.

 

18. Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

 

19. Tax Withholding. All payments made pursuant to this Agreement will be
subject to withholding of applicable taxes.

 

20. Governing Law. This Agreement will be governed by the laws of the State of
California (with the exception of its conflict of laws provisions).

 

21. Acknowledgment. Executive acknowledges that he has had the opportunity to
discuss this matter with and obtain advice from his private attorney, has had
sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement, and is knowingly and voluntarily entering into
this Agreement.

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22. Counterparts. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned. IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by their duly authorized officers, as of
the day and year first above written.

 

COMPANY:

 

NATUS MEDICAL, INC.

 

By:   /s/    WILLIAM NEW, JR.              

Date: 4/12/04

   

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Title:   Chairman of the Board            

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EXECUTIVE:         /s/    JAMES B. HAWKINS              

Date: 4/12/04

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        James B. Hawkins