EXHIBIT 10.28
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 27th day of December 1999, by and
between Vital Images, Inc. ("Company") and Xxxxxx Xxxxx ("Executive").
W I T N E S S E T H :
WHEREAS, Company desires to retain the services of Executive for and on behalf
of Company on the terms and subject to the conditions set forth herein.
WHEREAS, each of the parties acknowledge that they are receiving good and
valuable consideration for entering into this Employment Agreement and Executive
acknowledges that this Employment Agreement, including the non-disclosure
agreement set forth hereinbelow, was negotiated between the parties hereto and
that Executive received bargained for consideration in the form of benefits
resulting to Executive from the terms and conditions of such employment, in
exchange for entering into this Employment Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
EMPLOYMENT AND TERM
1.1 EMPLOYMENT. Upon the terms and subject to the conditions herein contained,
Company hereby employs Executive as President and Chief Executive Officer, and
Executive hereby accepts such employment, subject to the supervision of the
Board of Directors of Company.
1.2. TERM. This Agreement shall take effect upon the date first above written,
and shall remain in effect until terminated in accordance with Article IV. Upon
termination of this Agreement, except as otherwise provided herein, neither
Company nor Executive shall have any further rights, duties, privileges or
obligations hereunder.
ARTICLE II.
COMPENSATION
2.1 BASE SALARY. In exchange for the provision of services, Company agrees that
it will pay Executive effective January 1, 2000 at the rate of $180,000 per
year, payable in accordance with standard pay practices of Company, less any
applicable withholdings or deductions.
2.2 BENEFITS. In addition to the compensation set forth under Section 2.1,
Executive shall be entitled to participate in any of Company's standard benefit
policies or plans, including its Employee Stock Purchase Plan, according to
their terms. Subject to the provisions of Section 4.1(d) of this Agreement,
these policies may be modified or terminated from time to time by Company, but
not retroactively. The written terms of the policies shall govern any questions
of eligibility, coverage, or duration of coverage.
2.3 INCENTIVE COMPENSATION. As an incentive to performance, Executive shall be
eligible to receive incentive compensation and/or benefits as follows:
a. Executive shall be eligible to participate in Company's
Management Incentive Plan (the "Plan") as it is established
annually by the Board of Directors. Pursuant to the Plan,
Executive's incentive target for calendar year 2000 shall be
fifty percent (50%) of Executive's base salary for calendar
year 2000. Executive's incentive compensation for calendar
year 2000 under the Plan, if any, will be determined as soon
as practical after December 31, 2000, and will be paid to
Executive in a lump sum, less any withholdings or deductions,
on or before March 15, 2001.
b. Upon approval by Company's Board of Directors, Executive shall
be entitled to enter into Stock Option Agreements, attached
hereto as EXHIBIT A AND EXHIBIT B, with Company.
2.4 VACATION. Executive shall initially receive twenty (20) days of vacation per
year.
2.5. BOARD OF DIRECTORS. Upon Executive's employment by Company, he shall be
elected to Company's Board of Directors.
2.6. BUSINESS EXPENSES. The Company will reimburse Executive for all reasonable,
ordinary and necessary expenses incurred by him in the performance of his duties
hereunder, provided that Executive accounts to Company for such expenses in a
manner normally prescribed by Company for reimbursement of expenses. Such
reimbursement requests must be accompanied by the appropriate documentation and
shall be subject to review by Company's Chief Financial Officer.
ARTICLE III.
DUTIES OF EXECUTIVE
3.1 SERVICES. Executive shall perform all duties and obligations charged to
Executive by the Board of Directors of Company, as the same may be determined
from time to time. The Board shall assure adequate time, resources and authority
for Executive to achieve goals mutually agreed upon by Company and Executive.
-2-
3.2 TIME AND EFFORT. Executive shall devote his full time and effort to the
business of Company. Executive shall perform the duties and obligations required
of Executive hereunder in a competent, efficient and satisfactory manner at such
hours and under such conditions as the performance of such duties and
obligations may require.
3.3 ARTICLES AND BY-LAWS. Executive shall act in accordance with so as to abide
by the Articles of Incorporation of Company, the Bylaws of Company and all
decisions of the Board of Directors of Company.
3.4 CONFIDENTIALITY AND LOYALTY. Executive acknowledges that during the course
of his employment he has produced and may produce and have access to material,
records, data and information not generally available to the public
("Confidential Information") regarding Company, its customers and affiliates.
Accordingly, during and subsequent to the termination of this Agreement,
Executive shall hold in confidence and not directly or indirectly disclose, use,
copy or make lists of any such confidential information, except to the extent
authorized in writing by Company, or as required by law or any competent
administrative agency or as otherwise is reasonably necessary or appropriate in
connection with the performance by Executive of his duties pursuant to this
Agreement. Upon termination of his employment under this Agreement, Executive
shall promptly deliver to Company (i) all records, manuals, books, documents,
letters, reports, data, tables, calculations and all copies of any of the
foregoing which are the property of Company or which relate in any way to the
customers, business, practices or techniques of Company and (ii) all other
property of Company and Confidential Information which in any of these cases are
in his possession or under his control. Executive agrees to abide by Company's
reasonable policies as in effect from time to time, respecting avoidance of
interests conflicting with those of Company.
3.5 WORKS MADE FOR HIRE. Executive acknowledges and agrees that any and all
works of authorship by Executive made pursuant to this Agreement or any prior
agreements are within the scope of services to be provided to Company and shall
constitute "works made for hire" as defined by the Copyright Act of 1976, Title
17 of the United States Code, as now enacted or hereinafter amended.
Accordingly, Executive acknowledges and agrees that Company shall be the sole
and exclusive owner of any and all copyright(s) with respect to such works of
authorship and that Executive shall not be entitled to any additional
compensation over and above the compensation set forth herein or otherwise
already received by Executive unless otherwise agreed in writing by Company. If
any work of authorship created hereunder or prior hereto is not deemed to be a
"work made for hire," Executive hereby assigns all right, title and interest
therein to Company.
3.6 COMPANY TO HOLD PROPRIETARY RIGHTS. Furthermore, and without limiting the
foregoing, Executive acknowledges and agrees that all proprietary rights
including, without limitation, all patent, trademark, trade secret, copyright
and other rights, which may exist in connection with any and all inventions,
ideas, and works created or conceived by Executive for Company, either before or
after the date hereof, shall be the sole and exclusive property of Company and
Executive shall have no further rights therein and, to the extent necessary,
assigns all such rights to Company. All patent, copyright and other rights in
such inventions, ideas and works shall be the property of Company, who shall
have the sole right to seek patent, copyright, registered design or other
protection in connection therewith. Executive shall at Company's
-3-
reasonable expense do all things and execute all such documents as Company may
reasonably require to vest in Company the rights and protection herein
described.
3.7 REMEDIES. Executive agrees and understands that any breach of any of the
covenants or agreements set forth in this ARTICLE III of this Agreement will
cause Company irreparable harm for which there is no adequate remedy at law,
and, without limiting whatever other rights and remedies Company may have under
this paragraph, Executive consents to the issuance of an injunction in favor of
Company enjoining the breach of any of the aforesaid covenants or agreements by
any court of competent jurisdiction. If any or all of the aforesaid covenants or
agreements are held to be unenforceable because of the scope or duration of such
covenant or agreement or the area covered thereby, the parties agree that the
court making such determination shall have the power to reduce or modify the
scope, duration and/or area of such covenant to the extent that allows the
maximum scope, duration and/or area permitted by applicable law.
ARTICLE IV.
TERMINATION
4.1 RESIGNATION OF EXECUTIVE. Executive may resign his employment at any time
for any reason upon fifteen (15) days advance written notice to the Board of
Directors. If Executive resigns his employment without Good Reason (as that term
is defined below), he shall not be entitled to severance pay. If Executive
resigns his employment for Good Reason, the Company shall pay Executive the
severance pay set forth in Section 4.2 below provided Executive agrees to
release any claims he may have against the Company in exchange for the receipt
of severance pay. For purposes of this Agreement, Good Reason shall mean the
occurrence of any of the following events, which the Company has not cured
within thirty (30) days of notice thereof:
a. A material breach of this Agreement by the Company;
b. A material adverse change in Executive's status or
position as an executive officer of the Company as a
result of a material diminution in Executive's
duties, responsibilities or authority as of the date
of this Agreement (except in connection with the
termination of Executive's employment in accordance
with Section 4.3 hereof);
c. A reduction by the Company of Executive's Base Salary
as the same may be increased from time to time;
d. Without replacement by a plan providing benefits to
Executive equal to or greater than those discontinued
or by payment of cash in lieu of such benefits, the
failure by the Company to continue in effect, within
its maximum stated term, any employee benefit plan in
which Executive is participating immediately prior to
the date of this Agreement or the taking of any
action by the Company that would adversely affect
Executive's participation or materially reduce
Executive's benefits under all such plans; provided,
however, that Good Reason shall not include changes,
-4-
modifications and terminations of the Company's
standard benefit policies and plans which are
generally applicable to the Company's officers and
employees; or
e. The Company's requiring Executive to be based
anywhere other than the Minneapolis/St. Xxxx,
Minnesota metropolitan statistical area, except for
required travel on the Company's business.
4.2 TERMINATION BY COMPANY. Company shall have the right to terminate
Executive's employment without notice and with or without Cause, as that term is
defined below. If Company terminates Executive's employment without Cause,
Company shall pay Executive twelve (12) months of severance pay based on
Executive's base salary at the time of termination provided Executive agrees to
release any claims he may have against the Company in exchange for the receipt
of severance pay. Executive's severance pay, if any, shall be payable in one
lump sum, less any applicable withholdings or deductions, within ten (10) days
after the expiration of any applicable rescission periods. If Company terminates
Executive's employment with Cause, Executive shall not receive severance pay.
4.3 TERMINATION FOR CAUSE. Notwithstanding anything contained in this Agreement
to the contrary, Company shall have the right to terminate the employment of
Executive for Cause. Cause means:
a. Executive's gross misconduct;
b. Executive shall inexcusably violate or willfully refuse to
obey the lawful and reasonable instructions of the Board of
Directors of Company; or
c. Executive's conviction (including a plea of nolo contendere)
of willfully engaging in illegal conduct constituting a felony
or gross misdemeanor under federal or state law which is
materially and demonstrably injurious to the Company or which
impairs Executive's ability to perform substantially his
duties for the Company.
An act or failure to act will be considered "gross" or "willful" for
this purpose only if done, or omitted to be done, by Executive in bad
faith and without reasonable belief that it was in, or not opposed to,
the best interests of the Company. Any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the
Company's board of directors (or a committee thereof) or based upon the
advice of counsel for the Company will be conclusively presumed to be
done, or omitted to be done, by Executive in good faith and in the best
interests of the Company. It is also expressly understood that
Executive's attention to matters not directly related to the business
of the Company will not provide a basis for termination for Cause so
long as the Board did not expressly disapprove in writing of
Executive's engagement in such activities either before or within a
reasonable period of time after the Board knew or could reasonably have
known that Executive engaged in those activities. Notwithstanding the
foregoing, Executive may not be terminated for Cause unless and until
there has been delivered to him a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the entire
-5-
membership of the Board at a meeting of the Board called and held for
the purpose (after reasonable notice to Executive and an opportunity
for him, together with his counsel, to be heard before the Board),
finding that in the good faith opinion of the Board Executive was
guilty of the conduct set forth above in clauses a., b. or c. of this
definition and specifying the particulars thereof in detail.
Where the employment of Executive is terminated pursuant to this Article IV,
Section 4.3 of this Agreement, such termination shall be effective upon the
delivery of notice thereof to Executive.
4.4 SURVIVING RIGHTS. Notwithstanding the termination of Executive's employment,
the parties shall be required to carry out any provisions hereof which
contemplate performance subsequent to such termination; and such termination
shall not affect any liability or other obligation which shall have accrued
prior to such termination, including, but not limited to, any liability for loss
or damage on account of a prior default.
4.5 CHANGE IN CONTROL BENEFITS.
a. The Company and Executive shall enter into a Change in Control
Agreement which shall provide that if Executive's employment
with the Company is terminated for any reason other than
death, cause, disability, or retirement, or if executive
terminates his employment with the Company for good reason,
and such termination occurs within 12 months following a
"change in control", executive shall be entitled to receive a
lump sum cash payment equal to his average monthly salary
multiplied by 24, as well as employee welfare benefits then in
effect for a period of 24 months following such termination.
b. If any of the payments or benefits to be made or provided to
Executive in connection with the Change in Control Agreement,
together with any other payments, benefits or awards which
Executive would have the right to receive from the Company
constitute an "excess parachute payment" (as defined in
Section 280G(b) of the Internal Revenue Code (the "Code")),
two calculations shall be performed. In the first calculation,
the payments, benefits or awards will be reduced by the amount
the Company deems necessary so that none of the payments or
benefits are excess parachute payments ("Calculation I"). In
the second calculation, the payments will not be reduced so as
to eliminate the excess parachute payment, but will be reduced
by an amount of the applicable excise tax payable by Executive
as imposed by Section 4999 of the Code ("Calculation II"). The
two calculations will be compared and the calculation
providing the largest net payment to Executive will be
utilized.
c. In the event that (i) payments and benefits made to Executive
are limited to the amount provided by Calculation I and the
Internal Revenue Service (the "IRS") imposes an excise tax on
such amount due to an error in making Calculation I or (ii)
payments and benefits are made to Executive in accordance with
the Calculation II and the Internal Revenue Service imposes an
excise tax on such payments (due to an error in making
Calculation II) in addition to the amount of any excise tax
used by
-6-
the Company for the purposes of making Calculation II such
that the net payment to Executive after applicable excise tax
is less than the amount Executive would have receive pursuant
to Calculation I, the Company shall make an additional payment
to Executive so that the total amount of all such payments and
benefits, net of applicable excise tax, is equal to the amount
determined pursuant to Calculation I. In addition, the Company
shall reimburse Executive for the full amount of any
penalties, interest, and legal and accounting fees reasonably
incurred by Executive in connection with the IRS action and
shall pay Executive an amount necessary to pay any additional
income tax and excise tax on the additional payments provided
by this subparagraph on a fully grossed up basis. Nothing in
this subparagraph shall require the Company to pay or
reimburse Executive for any additional excise tax imposed on
payments made pursuant to Calculation II which does not reduce
the total amount of such payments (net of excise tax) below
the amount determined pursuant to Calculation I.
ARTICLE V.
GENERAL PROVISIONS
5.1 NOTICES. All notices, requests, and other communications shall be in writing
and except as otherwise provided herein, shall be considered to have been
delivered if personally delivered or when deposited in the United States Mail,
first class, certified or registered, postage prepaid, return receipt requested,
addressed to the proper party at its address as set forth below, or to such
other address as such party may hereafter designate by written notice to the
other party:
a. If to Company, to: Vital Images, Inc.
0000 Xxxxxxxxx Xxxx X.
Xxxxx 000
Xxxxxxxx, XX 00000
Attn. Chief Financial Officer
b. If to Executive, to: Xxxxxx Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
5.2 WAIVER, MODIFICATION OR AMENDMENT. No waiver, modification or amendment of
any term, condition or provision of this Agreement shall be valid or of any
effect unless made in writing, signed by the party to be bound or its duly
authorized representative and specifying with particularity the nature and
extent of such waiver, modification or amendment. Any waiver by any party of any
default of the other shall not effect, or impair any right arising from, any
subsequent default. Nothing herein shall limit the rights and remedies of the
parties hereto under and pursuant to this Agreement, except as hereinbefore set
forth.
-7-
5.3 ENTIRE AGREEMENT. This Agreement contains the entire understanding of the
parties hereto in respect of transactions contemplated hereby and supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
5.4 INTERPRETATION AND SEVERANCE. The provisions of this Agreement shall be
applied and interpreted in a manner consistent with each other so as to carry
out the purposes and intent of the parties hereto, but if for any reason any
provision hereof is determined to be unenforceable or invalid, such provision or
such part thereof as may be unenforceable or invalid shall be deemed severed
from this Agreement and the remaining provisions shall be carried out with the
same force and effect as if the severed provision or part thereof had not been a
part of this Agreement.
5.5 GOVERNING LAW. This Agreement shall be construed and enforced in accordance
with the laws of the State of Minnesota.
5.6 ASSIGNMENT. Executive acknowledges that Executive's services are unique and
personal. Accordingly, Executive may not assign Executive's rights or delegate
Executive's duties or obligations under this Agreement. Company's rights and
obligations under this Agreement shall inure to the benefit of and shall be
binding on Company's successors and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
VITAL IMAGES, INC.
By /s/ Xxxxx X. Xxxxxx, Xx.
--------------------------------
Xxxxx X. Xxxxxx, Xx.
Director
EXECUTIVE:
/s/ Xxxxxx Xxxxx
-----------------------------------
Xxxxxx Xxxxx
