EXHIBIT 10.31


 


June 29, 2005


 


 


Re:                               Retention
and Severance Benefits


 


 


Dear Steve:


 


This letter agreement (this “Agreement”) sets forth
certain benefits payable if you remain in the employ of Fischer Imaging
Corporation (the “Company”) from and after July 1, 2005 (the “Effective
Date”) and in the event of an Involuntary Termination (as defined below)
occurring after the date of this Agreement and prior to December 31, 2006.


 


If you remain employed by the Company (i) on the
date six (6) months after the Effective Date, you will be paid a retention
bonus equal to six (6) months of your base salary as in effect on such
date, payable within ten (10) days in a lump sum on such date (the “First
Payment Date”) and (ii) if you remain employed by the Company on the date
twelve (12) months after the Effective Date, you will be paid an additional
retention bonus equal to six (6) months of your base salary as in effect
on such date, payable within ten (10) days in a lump sum on such date (the
“Second Payment Date”); provided however, that in the event of your Involuntary
Termination prior to such First Payment Date or Second Payment Date, as the
case may be, you shall receive a portion of the applicable retention bonus pro
rated for each full month of service completed prior to the date of Involuntary
Termination, payable in a lump sum on such date.


 


In addition, in the event of your Involuntary
Termination prior to December 31, 2006, you will be entitled to (a) twelve
(12) months of your base salary as in effect as of the date of such termination
payable either in a lump within ten (10) days or monthly, at the
discretion of the Company and (b) all of your accrued and unpaid vacation
through the date of termination, payable within ten (10) days of the date
of termination.  In addition, you will be
entitled to continued participation, at the Company’s cost,  in each of the Company’s benefit plans to the
extent participation is permitted for former employees or in the case of health
insurance and to the extent not so permitted, to reimbursement of your monthly
premium payable under COBRA for a period of 12 months.


 


For purposes of this letter, “Involuntary Termination” shall be defined as:


 


(i) the termination of your employment by the Company for reasons
other than Cause; or


 


(ii)  your voluntary resignation following (a) the assignment to you of any duties
substantially inconsistent with your current status as an executive of the
Company or a substantial adverse alteration in the nature or status of your
responsibilities from those in


 





















 


effect as of the date of this
Agreement; (b) a
reduction by the Company in your annual base salary as in effect on the date
hereof or as the same may be increased from time to time, except for
across-the-board salary reductions similarly affecting all senior executives of
the Company and all senior executives or any person in control of the Company;
(c) the failure by the Company,
without your consent, to pay to you any portion of your current compensation,
within five (5) days of the date such compensation is due, or (d) a material reduction by the Company in the kind or
level of employee benefits to which you are entitled with the result that your
overall benefits package is significantly reduced, unless such reduction is
made in connection with a reduction in the kind or level of employee benefits
of employees of the Company generally.


 


Termination by the
Company of your employment for “Cause” shall mean termination for (A) the
commission of a felony or a crime involving moral turpitude or the commission
of any other act involving dishonesty, disloyalty, or fraud with respect to the
Company, (B) conduct tending to bring the Company into substantial public
disgrace or disrepute, (C) substantial and repeated failure to perform
duties as reasonably directed by the Board 
of Directors of the Company, (D) gross negligence or willful
misconduct with respect to the Company or any of its affiliated entities, or (E) any
other material breach of any other agreement between you and the Company which
is not cured within 15 days after written notice thereof to you.


 


In all other situations other than Involuntary
Termination (i.e., you terminate employment or the Company terminates your
employment for Cause), you will not be entitled to the above referenced severance
pay.


 


It is the
Company’s intent that payments or benefits payable under this Agreement not be
subject to the additional tax imposed pursuant to Section 409A of the
Internal Revenue Code of 1986, as amended. 
To the extent such potential payments or benefits could become subject
to this provision, this Agreement may need to be amended, with your
cooperation, to ensure that you receive the economic benefits described above
in a manner that does not result in such tax being imposed.  In addition, if additional guidance changes the application of Section 409A
to potential payments under this Agreement, the Company will modify this
Agreement to the extent allowable without incurring Section 409A liability
to provide that severance payments described above will be made in equal
monthly installments or, if not allowed, to make such payments as soon after
the Involuntary Termination as is allowed.


 


This letter supplements the policies and procedures of
the Company, and supersedes any and all prior agreements or arrangements in
respect of severance.


 


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  Sincerely,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/HARRIS
  RAVINE

  	
   

  
	
   

  	
  Harris
  Ravine, President & CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  ACCEPTED AND
  AGREED as of the date first written above:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /S/STEVEN
  DURNIL

  	
   

  	
   

  
	
  Steve Durnil

  	
   

  
				



 


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