**Exhibit 10.32**

 

**EMPLOYMENTAGREEMENT**

 

THIS AGREEMENT, made and entered into as of the 24th day of October,2005, by and between Vital Images, Inc. (“Company”) and Jeremy Abbs (“Executive”).

 

**W I T N ES S E T H:**

 

WHEREAS, Company desires to retain the services of Executive for and onbehalf of Company on the terms and subject to the conditions set forth herein.

 

WHEREAS, each of the parties acknowledge that they are receiving goodand valuable consideration for entering into this Employee Agreement and Executiveacknowledges that this Employment Agreement, including the non-disclosureagreement set forth herein, was negotiated between the parties hereto and thatExecutive received bargained for consideration in the form of benefitsresulting to Executive from the terms and conditions of such employment, inexchange for entering into this Employment Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants containedherein, the sufficiency of which is hereby acknowledged, the parties heretoagree as follows:

 

**ARTICLE I.**

 

**EMPLOYMENTAND TERM**

 

1.1                                 **EMPLOYMENT**.  Upon the terms subject to the conditionsherein contained, Company hereby employs Executive as Vice President, Qualityand Customer Satisfaction, and Executive hereby accepts such employment, subjectto the supervision of the Chief Financial Officer and Chief Operating Officer. Executiveshall devote his best skill and efforts (reasonable sick leave and vacationsexcepted) to the performance of his duties under this Agreement.

 

1.2                                 **TERM.**  This Agreement shall take effect upon thedate first above written, and shall remain in effect as “at-will” employmentuntil terminated in accordance with Article IV.  Upon termination of this Agreement, except asotherwise provided herein, neither the Company nor Executive shall have anyfurther rights, duties, privileges, or obligations hereunder.

 

1.3                                 **COMPLIANCE WITH COMMITMENTS AND OBLIGATIONS****.**    Executive represents and warrants as follows: (i) he is not a party to any other agreement or obligation for personal services; (ii) there exist no impediments or restraints, contractual or otherwise on Executive’s power, right or ability to enter into this Agreement and to perform his duties and obligations hereunder; and (iii) the performance of his obligations under this Agreement do not and will not violate or conflict with any agreement relating 

 

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to confidentiality, non-competition or exclusive employment to which Executive is or was subject.

 

1.4                                 **INSIDER TRADING POLICY**.  Executive will be required, as a condition of employment with the Company, to sign and comply in every respect with the Company’s Insider Trading Policy, a signed copy of which is in your personnel file.

 

**ARTICLE II.**

 

**COMPENSATION**

 

2.1                                 **BASE SALARY.**  In exchange for the provision of services,Company agrees that it will pay Executive commencing October 24th, 2005,at the rate of $144,000 per year, payable in accordance with standard paypractices of Company, less any applicable withholdings or deductions.

 

2.2                                 **BENEFITS**.  In addition to the compensation set forthunder Section 2.1, Executive shall be entitled to participate in any ofCompany’s standard benefit policies or plans, including its Employee StockPurchase 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, butnot retroactively.  The written terms ofthe policies shall govern any questions of eligibility, coverage, or durationof coverage.

 

2.3                                 **INCENTIVE COMPENSATION**.  As an incentive to performance, Executiveshall be eligible to receive initiative compensation and/or benefits asfollows:

 

a.                                       Executiveshall 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 incentivetarget for calendar year 2005 shall be fifty percent (50%) of Executive’s basesalary for calendar year 2005.  Executive’sincentive compensation for calendar year 2005 under the Plan, if any, will bedetermined as soon as practical after December 31, 2005, and will be paidto Executive in a lump sum, less any withholdings or deductions, on or before March 15,2006.

 

2.4                                 **VACATION.**  Executive shall initially receive twenty (20)days of vacation per year.

 

2.5                                 **BUSINESS EXPENSES.**  The Company will reimburse Executive for allreasonable, ordinary, and necessary expenses incurred by him in the performanceof his duties hereunder, provided that Executive accounts to Company for suchexpenses in a manner normally prescribed by Company for reimbursement ofexpenses.  Such reimbursement requestsmust be accompanied by the appropriate documentation and shall be subject toreview by Company’s Chief Financial Officer and Chief Operating Officer.

 

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**ARTICLE III.**

 

**DUTIES OFEXECUTIVE**

 

3.1                                 **SERVICES.**  Executive shall perform all duties andobligations charged to Executive by the Company’s Chief Financial Officer andChief Operating Officer of Company, as the same may be determined from time totime.  The Chief Financial Officer andChief Operating Officer shall assure adequate time, resources, and authorityfor Executive to reach goals mutually agreed upon with Executive.

 

3.2                                 **TIME AND EFFORT**.  Executive shall devote his full time andeffort to the business of Company. Executive shall perform the duties and obligations required of Executivehereunder in a competent, efficient, and satisfactory manner at such hours andwork conditions as the performance of these duties may require.

 

3.3                                 **ARTICLES AND BY-LAWS.**  Executive shall act in accordance with so asto abide by the Articles of Incorporation of Company, the Bylaws of Company andall decisions of the Board of Directors of Company.

 

3.4                                 **CONFIDENTIALITY AND LOYALTY.**  Executive acknowledges that during the courseof his employment he has produced and may produce and have access to material,records, data, and information not generally available to the public (“ConfidentialInformation”) regarding Company, its customers and affiliates.  Accordingly, during and subsequent to thetermination of this Agreement, Executive shall hold in confidence and notdirectly or indirectly disclose, use, copy, or make lists of any such confidentialinformation, except to the extent authorized in writing by Company, or asrequired by law or any competent administrative agency or as otherwise isreasonable necessary or appropriate in connection with the performance byExecutive of his duties pursuant to this Agreement.  Upon termination of his employment under thisAgreement, Executive shall promptly deliver to Company (i) all records,manuals, books, documents, letters, reports, data, calculations, and all copiesof any of the foregoing which are the property of Company and (ii) allother property of Company and Confidential Information which in any of thesecases are in his possession or under his control.  Executive agrees to abide by Company’sreasonable policies as in effect from time to time, respecting avoidance ofinterests conflicting with those of Company.

 

3.5                                 **WORKS MADE FOR HIRE**.  Executive acknowledges and agrees that anyand all works of authorship by Executive made pursuant to this Agreement or anyprior agreements are within the scope of services to be provided to Company andshall 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.  To theextent Employee retains any rights of any nature in any Work Product, Employeehereby assigns to Company all of Employee’s right, title, and interest(including but not limited to all patent, copyright, trade secret, and moralrights) in and to all Work Products prepared by Employee, whether patentable ornot, made or conceived in whole or in part by Employee within the scope ofEmployee’s employment by Company, or that involve the use of ConfidentialInformation.  Accordingly,Executive acknowledges and agrees that Company shall be the sole and exclusiveowner of any and all copyright(s) with respect to such works of authorship andthat Executive shall not be entitled to any additional compensation over andabove the compensation set forth herein or otherwise already received byExecutive unless otherwise agreed in writing by Company.  If any work of 

 

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authorship created hereunder or prior tohereto is not deemed to be a “work made for hire,” Executive hereby assigns allright, title, and interest therein to Company. Executive is hereby notified thatthis assignment of Work Product does not include any invention where (i) Executivedid not use the equipment, supplies, facility or trade secret information ofCompany; (ii) Executive developed the invention on his own time; (iii) theinvention does not directly relate to the business of Company or Company’sactual or anticipated research or development; and (iv) the invention didnot result from any work performed for Company.

 

3.6                                 **COMPANY TO HOLD PROPRIETARY RIGHTS. **Furthermore, and without limiting theforegoing, 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 beforeor after the date hereof, shall be the sole and exclusive property of Companyand Executive shall have no further rights therein and, to the extentnecessary, assigns all such rights to Company. All patent, copyright, and other rights in such inventions, ideas, andworks shall be the property of Company, who shall have the sole right to seekpatent, copy, registered design or other protection in connectiontherewith.  Executive shall at Company’sreasonable expense do all things and execute all such documents as Company mayreasonably require to vest in Company the rights and protection hereindescribed.

 

3.7                                 **RESTRICTION ON COMPETITION****.**  Executive agrees that for a period of eighteen (18) months from the date of Executive’s termination of employment with the Company, irrespective of the reasons for termination, Executive shall not, directly or indirectly, and regardless of whether Executive is acting as owner, partner, stockholder, employee, broker, agent, principal, trustee, corporate officer, director, consultant or in any other capacity, (1) develop, market, or distribute any products competitive with the Company’s products, or (2) provide services for any person or entity that is developing, marketing or distributing products competitive with the Company’s products, or (3)  solicit or attempt to solicit the employment of any employee of the Company or any of the Company’s affiliates, whether on his own behalf or on behalf of any other person or entity, provided, however, that this Agreement will not prevent Executive from holding for passive investment purposes up to 1% of any class of stock or other securities of a publicly held company with products that are competitive with the Company’s products.  The term “employment” for purposes of this Article 3.7 means to enter into an arrangement for services as a full-time or part-time employee, independent contractor, agent or otherwise. You and the Company agree that this provision is reasonably enforced as to any geographic area in which the Company conducts its business.

 

3.8                                 **REMEDIES.**  Executive agrees and understands that anybreach of any of the covenants or agreements set forth in this ARTICLE IIIof this Agreement will cause Company irreparable harm for which there is noadequate remedy at law, and, without limiting whatever other rights andremedies Company may have under this paragraph, Executive consents to theissuance of an injunction in favor of Company enjoining the breach of any ofthe aforesaid covenants or agreements by any court of competentjurisdiction.  If any or all of theaforesaid covenants or agreements are held to be unenforceable because of 

 

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the scope or duration of such covenant oragreement or the area covered thereby, the parties agree that the court makingsuch determination shall have the power to reduce or modify the scope,duration, and/or area of such covenant to the extent that allows the maximumscope, duration, and/or area permitted by applicable law.

 

**ARTICLE IV.**

 

**TERMINATION**

 

4.1                                 **RESIGNATION OF EXECUTIVE**.  Executive may resign his employment at anytime for any reason upon fifteen (15) days advance written notice to the ChiefFinancial Officer and Chief Operating Officer. If Executive resigns his employment without Good Reason (as that term isdefined below), he shall not be entitled to severance pay.  If Executive resigns his employment for GoodReason, the Company shall pay Executive the severance pay set forth in Section 4.2below provided Executive agrees to release any claims he may have against theCompany in exchange for receipt of severance pay.  For purposes of the Agreement, Good Reasonshall mean the occurrence of any of the following events, which the Company hasnot cured within thirty (30) days of notice thereof:

 

a.                                       Amaterial breach of this Agreement by the Company;

 

b.                                      Amaterial adverse change in Executive’s status or position as an executiveofficer of the Company as a result of a material diminution in Executive’sduties, responsibilities, or authority as of the date of this Agreement (exceptin connection with the termination of Executive’s employment in accordance withSection 4.3 hereof);

 

c.                                       Areduction by the Company of the Executive’s base salary as the same may beincreased from time to time;

 

d.                                      Withoutreplacement by a plan providing benefits to Executive equal to or greater thanthose discontinued or by payment of cash in lieu of such benefits, the failureby the Company to continue in effect, within its maximum stated term, anyemployee benefit plan in which Executive is participating in prior to the dateof this Agreement or taking of any action by the Company that would adverselyaffect Executive’s participation or materially reduce Executive’s benefitsunder all such plans; provided, however, that Good Reason shall not includechanges, modifications, and terminations of the Company’s standard benefitpolicies and plans which are generally applicable to the Company’s officers andemployees; or

 

e.                                       TheCompany’s requiring Executive to be based anywhere other than thatMinneapolis/St. Paul, Minnesota metropolitan statistical area, except forrequired travel on the Company’s business.

 

4.2                                 **TERMINATION BY COMPANY**.  Company shall have the right to terminateExecutive’s employment without notice and with or without Cause, as that termis defined below.  If Company terminatesExecutive’s employment without cause, 

 

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Company shall pay Executive six (6) monthsof severance pay based on Executive’s base salary at the time of terminationprovided Executive agrees to release any claims he may have against the companyin 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 afterthe expirations of any applicable rescission periods.  If Company terminates Executive’s employmentwith Cause, Executive shall not receive severance pay.

 

4.3                                 **TERMINATION FOR CAUSE.**  Notwithstanding anything contained in thisAgreement to the contrary, Company shall have the right to terminate theemployment of Executive for Cause.  Causemeans:

 

a.                                       Executive’sgross misconduct;

 

b.                                      Executiveshall inexcusably violate or willfully refuse to obey the lawful and reasonableinstructions of the Chief Financial Officer and Chief Operating Officer or theBoard of Directors of the Company; or

 

c.                                       Executive’sconviction (including a plea of nolo contendere) of willfully engaging inillegal conduct constituting a felony or gross misdemeanor under federal orstate law which is materially and demonstrably injurious to the Company orwhich impairs Executive’s ability to perform substantially his duties for theCompany.

 

An act, or failure to act, will be considered“gross” or “willful” for this purpose only if done, or omitted to be done, byExecutive in bad faith and without reasonable belief that it was in, or notopposed to, the best interests in the Company. Any act, or failure to act, based upon authority given pursuant to aresolution duly adopted by the Company’s Board of Directors (or a committeethereof) or based upon the advice of counsel for the Company will beconclusively presumed to be done, or omitted to be done, by Executive in goodfaith and in the best interests of the Company. It is also expressly understood that Executive’s attention to mattersnot directly related to business of the Company will not provide a basis fortermination for Cause so long as the Board did not expressly disapprove inwriting of Executive’s engagement in such activities either before or within areasonable period of time after the Board knew or could have reasonably knownthe Executive engaged in those activities. Notwithstanding the foregoing, Executive may not be terminated for Causeunless and until there has been delivered to him a copy of a resolution dulyadopted by the affirmative vote of not less than a majority of the entiremembership of the Board at a meeting of the Board called and held for thepurpose (after reasonable notice to Executive and an opportunity for him,together with his counsel, to be heard before the Board), finding that in thegood faith opinion of the Board Executive was guilty of the conduct set forth abovein clauses a., b., or c. of this definition and specifying the particularsthereof in detail.

 

Where the employment of the Executive isterminated pursuant to this Article IV, Section 4.3 of thisAgreement, such termination shall be effective upon the delivery of noticethereof to Executive.

 

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4.4.                              **SURVIVING RIGHTS**.  Notwithstanding the termination of Executive’semployment, the parties shall be required to carry out any provisions hereofwhich contemplate performance subsequent to such termination; and suchtermination shall not affect any liability or other obligation which shall haveaccrued prior to such termination, including, but not limited to, any liabilityfor loss or damage on account of a prior default.

 

4.5.                              **COOPERATION AND NON-DISPARAGEMENT.**    Executive agrees that, during the term ofthis Agreement and for three (3) years following the termination of hisemployment, Executive will (i) assist and cooperate with the Companyregarding any claims or disputes involving matters within the knowledge orresponsibilities of Executive; and (ii) not in any way or by any meansdisparage the Company, the members of the Company’s Board of Directors or theCompany’s officers and employees.

 

4.6.                              **DISCLOSURE.**    Executive agrees that, during the term ofthis Agreement and for three (3) years following the termination of hisemployment, Executive will inform any new employer or other person or entitywith whom he enters into a business relationship, before accepting employmentor entering into a business relationship, of the post-employment restrictionsand obligations contained in this Agreement, including but not limited to theexistence of Articles 3.7, and 4.5 above.

 

**ARTICLE V.**

 

**GENERALPROVISIONS**

 

5.1                                 **NOTICES**.  All notices, requests, and othercommunications shall be in writing and except as otherwise provided herein,shall be considered to have been delivered if personally delivered or whendeposited in the United States mail, first class, or certified or registered,postage prepaid, return receipt requested, addressed to the proper party at itsaddress set forth below, or to such other address as such party may hereafterdesignate by written notice to the other party:

 
| a.     |   | If to  Company, to:   |   | Vital Images, Inc.                 |
|--------|--------|-----------------------|--------|-----------------------------------------|
|   |   |                  |   | 5850 Opus  Parkway, Suite 300      |
|   |   |                  |   | Minnetonka,  MN 55343                   |
|   |   |                  |   | Attention:  Chief Financial Officer and |
|   |   |                  |   | Chief  Operating Officer                |
|   |   |                  |   |                                    |
| b.     |   | If to  Executive, to: |   | Jeremy Abbs                             |
|   |   |                  |   |                                    |
|   |   |                  |   |                                    |

 

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5.2                                 **WAIVER, MODIFICATION, or AMENDMENT**.  No waiver, modification, or amendment of anyterm, condition, or provision of this Agreement shall be valid or of any effectunless made in writing, signed by the party to be bound or its duly authorizedrepresentative and specifying with particularity the nature and extent of suchwaiver, modification, or amendment.  Anywaiver by any party of any default of the other shall not effect, or impair anyright arising from, any subsequent default. Nothing herein shall limit the rights and remedies of the parties heretounder and pursuant to this Agreement, except as hereinbefore set forth.

 

5.3                                 **ENTIRE AGREEMENT**.  This Agreement contains the entireunderstanding of the parties hereto in respect of transactions contemplated herebyand supersedes all prior agreements and understandings between the parties withrespect to such subject matter.

 

5.4                                 **INTERPRETATION AND SEVERANCE**.  The provisions of this Agreement shall beapplied and interpreted in a manner consistent with each other so as to carryout the purposes and intent of the parties hereto, but if for any reason anyprovision hereof is determined to be unenforceable or invalid, such provisionor such part thereof as may be unenforceable or invalid shall be deemed severedfrom this Agreement and the remaining provisions shall be carried out with thesame force and effect as if the severed provision or part thereof had not beena part of this Agreement.

 

5.5                                 **GOVERNING LAW**.  This Agreement shall be construed andenforced in accordance with the laws of the State of Minnesota.

 

5.6                                 **ASSIGNMENT**.  Executive acknowledges that Executive’sservices are unique and personal. Accordingly, Executive may not assign Executive’s rights or delegateExecutive’s duties or obligations under this Agreement.  Company’s rights and obligations under thisAgreement shall inure to the benefit of and shall be binding on Company’ssuccessors and assigns.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement asof the day and year first above written.

 

 
|   | VITAL IMAGES, INC.: |
|--------|---------------------|
|   | By                  | /s/ Michael H. Carrel |   |
|   |                | Michael Carrel |
|   |                | Chief Financial Officer and |
|   |                | Chief Operating Officer |
|   |                |   |
|   |                |   |
|   | EXECUTIVE:          |
|   |                |   |
|   | By                  | /s/ Jeremy Abbs |   |
|   |                | Jeremy Abbs |
|        |                     |  |  |  |

 

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