Exhibit 10.21
Vital Images, Inc.
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
February 13, 1998
Xx. Xxxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxx
Xxxxx, XX 00000
Dear Andy:
This letter is intended to set forth our agreement regarding your resignation
from employment with Vital Images, Inc. ("Vital Images"). As discussed, the
effective date of your resignation as an officer and director of Vital Images
will be January 31, 1998. In accordance with the terms expressed in Xxxx
Xxxxxxxx' letter to you dated October 19, 1995 (the "October 19th letter"), you
will receive a lump sum payment of One Hundred Fifty Thousand Dollars ($150,000)
which is equal to twelve (12) months of your current base salary (the "Severance
Pay"). You will also receive a bonus for 1997 in the amount of Sixty-two
Thousand Nine Hundred Eighty-two and 85/100 Dollars ($62,982.85) (the "1997
Bonus"). You will not be paid any bonus for 1998. In addition, you will be paid
your vacation accrued through January 31, 1998. You will receive the Severance
Pay and 1997 Bonus within sixteen (16) days of the date that you sign this
Letter Agreement (assuming that you do not rescind the Release discussed below).
Your accrued vacation pay will be paid no later than February 13, 1998. All
payments made to you pursuant to this Letter Agreement will be subject to
federal and state tax withholding and FICA.
With respect to your Vital Images stock options, the following chart illustrates
the status of your options.
---------------------------------------------------- -------------------- ------------------------ -----------------------------
Stock Option Shares Total Vested as of Total Vested in Accordance
Termination Date with October 19th letter
---------------------------------------------------- -------------------- ------------------------ -----------------------------
Vital Images Stock Option Adjustment Agreement.
(mirror of Bio-Vascular non-plan option)
("Non-Plan Mirror Option") 100,000 100,000 (1) 100,000
---------------------------------------------------- -------------------- ------------------------ -----------------------------
Vital Images Incentive (1988) Stock Option
Adjustment Plan ("ISO Mirror Options") 15,532 7,766 15,532
---------------------------------------------------- -------------------- ------------------------ -----------------------------
Vital Images 1997 Stock Option and Incentive Plan
("ISO 1997 Options") 84,468 0 84,468
---------------------------------------------------- -------------------- ------------------------ -----------------------------
(1) Vested as of 12/31/97
The Board of Directors approved the vesting of 100% of the "Non-Plan Mirror
Option" shares as of December 31, 1997. In accordance with the October 19th
letter, the vesting of the unvested Vital Images shares under the ISO Mirror
Options and the ISO 1997 Options will be accelerated so that you will be fully
vested in said shares as of January 31, 1998. The right to exercise these
options shall expire on the expiration date provided in such options (as if you
continued to be employed by Vital Images).
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Xx. Xxxxxx X. Xxxxx
February 13, 1998
Page 2
You should be aware, of course, that failure to exercise these options within 90
days of actual termination of employment (January 31, 1998) will result in these
options no longer being classified as incentive stock options under the Internal
Revenue Code.
With respect to the Bio-Vascular, Inc. ("Bio-Vascular") stock options granted to
you in accordance with the Bio-Vascular Stock Option Agreement, dated December
18, 1995, and the Bio-Vascular Incentive Stock Option Agreement, dated December
18, 1995 (collectively, the "Bio-Vascular Option Agreements"), there may be an
ambiguity resulting from the Bio-Vascular Option Agreements, the October 19th
letter or otherwise relating to whether the vesting of these options is
accelerated upon the termination of your employment with Vital Images. As you
are aware, Bio-Vascular takes the position that the right to accelerate the
vesting of your Bio-Vascular options as provided in the October 19th letter
expired on the date that the Vital Images was spun-off from Bio-Vascular. In
consideration for the obligations of Vital Images provided in this Letter
Agreement, you agree that the unvested options of Bio-Vascular Option Agreements
shall neither vest nor be accelerated. With respect to the vested portion of the
Bio-Vascular, Inc. options, it is our understanding that you will be entitled to
exercise such options in accordance with the terms of the applicable option
agreements between you and Bio-Vascular, but this is an issue between you and
Bio-Vascular and we assume no liability with respect to such options.
With respect to the issues of indemnification of you by Vital Images and the
limitation on your personal liability as a director, Vital Images represents
that Articles IX and X of Vital Images' Articles of Incorporation, dated March
7, 1997, are in full force and effect.
You are also entitled, pursuant to federal and state law, to the continuation of
certain group medical, dental and life insurance benefits (the "COBRA Benefits")
for a period of eighteen (18) months after the effective date of your
resignation. In exchange for your promises, Vital Images will pay for the COBRA
Benefits up through the earlier of January 31, 1999 or the date that you find a
new position with comparable benefits. In the event that you do not find
employment with comparable benefits by January 31, 1999, you will be responsible
for paying for the COBRA Benefits after that date.
Vital Images will also pay for out placement services for you in an amount not
to exceed $10,000. Vital Images will make the payments for these services
directly to the out-placement firm providing these services. Finally, Vital
Images will transfer to you the laptop computer and the cellular phone that you
used while employed by Vital Images.
Except for any contract right, Vital Images agrees to release all of the rights
Vital Images now has to relief of any kind from you arising out of your
employment with Vital Images provided, however, that such release only applies
to those of your actions or inactions of which the Board of Directors of Vital
Images (other than you) has present knowledge.
In exchange for the 1997 Bonus, the extension of the exercise period for the
Vital Images stock options, Vital Images release of certain claims against you
and the other benefits set forth above, you will be required to (1) sign the
Release attached to this letter as EXHIBIT A, (2) agree to the non-disclosure of
information provision below, and (3) return all property of Vital Images other
than the laptop computer and the cellular phone that will be transferred to you.
With respect to the non-disclosure of information, you agree that you will not
disclose to anyone, any and all information which you now have regarding
confidential activities of the Company. You will not use or disclose, directly
or indirectly, to any unauthorized person without prior written permission of
the Company at any time subsequent to your employment, any knowledge which you
have acquired regarding the confidential information of the Company, including,
without limitation, inventions, technical information, designs, methods, trade
secrets, customers, contracts, bids or other confidential information acquired
in connection with your employment.
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Xx. Xxxxxx X. Xxxxx
February 13, 1998
Page 3
In the event either party violates the terms of this Letter Agreement, either
party may seek injunctive relief in addition to monetary relief.
This Letter Agreement is a contract made under the laws of the State of
Minnesota. Therefore, this Letter Agreement and any related or supplemental
documents or notices will be construed in accordance with the laws of the state
of Minnesota. In the event that any provision of this Agreement is prohibited or
is deemed invalid under applicable law, such provision will be ineffective only
to the extent of such prohibition or invalidity without invalidating the
remainder of that particular provision or the remaining provisions of this
Letter Agreement.
Should you have any questions regarding this Letter Agreement or otherwise,
please feel free to contact me.
Sincerely,
/S/ XXXXXXX X. XXXX
By: Xxxxxxx X. Xxxx
Its: President
I hereby approve and agree to the terms of this Letter Agreement.
/S/XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
Dated: February 16, 1998
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EXHIBIT A
RELEASE
1. DEFINITIONS. I intend all words used in this Release to have their plain
meanings in ordinary English. Technical legal words are not needed to
describe what I mean. Specific terms I use in this Release have the
following meanings:
A. I, ME, and MY includes both me and anyone who has or obtains any legal
rights or claims through me.
B. VITAL IMAGES, INC., as used herein, shall at all times mean Vital Images,
Inc. and Bio-Vascular, Inc. and their its subsidiaries, successors and
assigns, their affiliated and predecessor companies and partnerships, their
successors and assigns, their affiliated and predecessor companies and
partnerships and the present or former owners, directors, officers,
employees, representatives and agents (including, without limitation, its
accountants and attorneys) of any of them, whether in their individual or
official capacities, and the current and former trustees or administrators
of any pension or other benefit plan applicable to the employees or former
employees of Vital Images, Inc. in their official and individual
capacities.
C. MY CLAIMS, as used herein, means all of the rights I now have to any relief
of any kind from Vital Images, Inc., or any of its employees, officers,
directors, shareholders, representatives, agents, attorneys or affiliates,
whether or not I now know about those rights, arising out of my employment
with Vital Images, Inc. and my resignation from employment, including, but
not limited to, any claims filed with the Minnesota Department of Human
Rights, and any claims for violation of the Minnesota Human Rights Act, the
Age Discrimination in Employment Act, the Americans With Disabilities Act,
Title VII of the Civil Rights Act of 1964, as amended, or other federal,
state, or local civil rights laws based on age discrimination, sex
discrimination, disability discrimination, retaliation, or other protected
class status, defamation, intentional or negligent infliction of emotional
distress, breach of contract, fraud or misrepresentation, breach of
covenant of good faith and fair dealing, promissory estoppel, negligence,
wrongful termination of employment, claims relating to or arising out of
the Bio-Vascular Stock Options and any other claims for unlawful employment
practices, whether arising by statute, common law or otherwise.
D. BIO-VASCULAR STOCK OPTIONS, as used herein, means those stock options
issued to me in accordance with that certain Bio-Vascular Stock Option
Agreement, dated December 18, 1995, and that certain Bio-Vascular Incentive
Stock Option Agreement, dated December 18, 1995 and any other options of
Bio-Vascular stock.
2. AGREEMENT TO RELEASE MY CLAIMS. I am receiving a substantial amount of
money and other benefits paid by Vital Images, Inc. I agree to give up all
My Claims against Vital Images, Inc. in exchange for those payments. I will
not bring any lawsuits, file any charges, complaints, or notices, or make
any other demands against Vital Images, Inc. based on My Claims, and I
agree that if I do so, I will pay for all costs incurred by Vital Images,
Inc. The money and benefits I am receiving is a full and fair payment for
the release of all My Claims. Vital Images, Inc. does not owe me anything
in addition to what I will be receiving.
3. ADDITIONAL AGREEMENTS AND UNDERSTANDINGS.
A. Even though Vital Images, Inc. is paying me to release My Claims, Vital
Images, Inc. does not admit that it may be responsible or legally obligated
to me. In fact, Vital Images, Inc. denies that it is responsible or legally
obligated for My Claims or that it has engaged in any wrongdoing.
B. I understand that I have the right to consult with my attorney concerning
the meaning and effect of this Release.
C. I also understand that I have a period of at least twenty-one (21) calendar
days from the date that I receive an unsigned copy of this Release in which
to consider whether to sign this Release (the "Consideration Period").
However, having been advised of the Consideration Period, I understand that
I may elect to sign this Release at any time prior to the expiration of the
Consideration Period.
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4. RESCISSION. I understand that I may rescind (that is, cancel) this Release
within seven (7) calendar days of signing it to reinstate federal claims
and within fifteen (15) days of signing it to reinstate state claims. To be
effective, my rescission must be in writing and delivered to Vital Images,
Inc. in care of Xxxxxxx X. Xxxx, Vital Images, Inc., 0000 Xxxx Xxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxxxx, XX 00000, either by hand or by mail within the
7/15-day period. If sent by mail, the rescission must be:
A. Postmarked within the 7/15-day period;
B. Properly addressed to Vital Images, Inc.; and
C. Sent by certified mail, return receipt requested.
I have read this Release carefully and understand all its terms. I have had an
opportunity to discuss this Release with my own attorney. In agreeing to sign
this Release, I have not relied on any statements or explanations made by Vital
Images, Inc. or its attorneys.
I understand and agree that this Release, the Letter Agreement to which it is
attached, the Vital Images, Inc. employee benefit plans in which I have
continuing benefits under the Letter Agreement to which this Release is
attached, and the Vital Images, Inc. stock option plans contain all the
agreements between Vital Images, Inc. and me. We have no other written or oral
agreements.
Dated: February 16, 1998
/S/ XXXXXX X. XXXXX
Xxxxxx X. Xxxxx
MPL1: 235917-1
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