**EXHIBIT 10.31**

 

June 29, 2005

 

 

Re:                               Retentionand Severance Benefits

 

 

Dear Steve:

 

This letter agreement (this “Agreement”) sets forthcertain benefits payable if you remain in the employ of Fischer ImagingCorporation (the “Company”) from and after July 1, 2005 (the “EffectiveDate”) 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 thedate six (6) months after the Effective Date, you will be paid a retentionbonus equal to six (6) months of your base salary as in effect on suchdate, payable within ten (10) days in a lump sum on such date (the “FirstPayment Date”) and (ii) if you remain employed by the Company on the datetwelve (12) months after the Effective Date, you will be paid an additionalretention bonus equal to six (6) months of your base salary as in effecton 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 InvoluntaryTermination prior to such First Payment Date or Second Payment Date, as thecase may be, you shall receive a portion of the applicable retention bonus prorated for each full month of service completed prior to the date of InvoluntaryTermination, payable in a lump sum on such date.

 

In addition, in the event of your InvoluntaryTermination 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 terminationpayable either in a lump within ten (10) days or monthly, at thediscretion of the Company and (b) all of your accrued and unpaid vacationthrough the date of termination, payable within ten (10) days of the dateof termination.  In addition, you will beentitled to continued participation, at the Company’s cost,  in each of the Company’s benefit plans to theextent participation is permitted for former employees or in the case of healthinsurance and to the extent not so permitted, to reimbursement of your monthlypremium 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 reasonsother than Cause; or

 

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

 

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effect as of the date of thisAgreement; (b) areduction by the Company in your annual base salary as in effect on the datehereof or as the same may be increased from time to time, except foracross-the-board salary reductions similarly affecting all senior executives ofthe 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 orlevel of employee benefits to which you are entitled with the result that youroverall benefits package is significantly reduced, unless such reduction ismade in connection with a reduction in the kind or level of employee benefitsof employees of the Company generally.

 

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

 

In all other situations other than InvoluntaryTermination (i.e., you terminate employment or the Company terminates youremployment for Cause), you will not be entitled to the above referenced severancepay.

 

It is theCompany’s intent that payments or benefits payable under this Agreement not besubject to the additional tax imposed pursuant to Section 409A of theInternal Revenue Code of 1986, as amended. To the extent such potential payments or benefits could become subjectto this provision, this Agreement may need to be amended, with yourcooperation, to ensure that you receive the economic benefits described abovein a manner that does not result in such tax being imposed.  In addition, if additional guidance changes the application of Section 409Ato potential payments under this Agreement, the Company will modify thisAgreement to the extent allowable without incurring Section 409A liabilityto provide that severance payments described above will be made in equalmonthly installments or, if not allowed, to make such payments as soon afterthe Involuntary Termination as is allowed.

 

This letter supplements the policies and procedures ofthe Company, and supersedes any and all prior agreements or arrangements inrespect 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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