Exhibit 10.21


 


EMPLOYMENT AGREEMENT


 


THIS AGREEMENT, made and entered into as of the 10th day of December,
2008, by and between Vital Images, Inc. (“Company”) and Reza A. Ghanbari (“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 Employee Agreement and
Executive acknowledges that this Employment Agreement, including the
non-disclosure agreement set forth herein, 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 subject to the conditions
herein contained, Company hereby employs Executive as Executive Vice President,
Strategy and Products, and Executive hereby accepts such employment, subject to
the supervision of the President and Chief Executive Officer of the
Company.  Executive shall devote his best
skill and efforts (reasonable sick leave and vacations excepted) to the
performance of his duties under this Agreement.


 


1.2           TERM.  This Agreement shall take effect upon the
date first above written, and shall remain in effect as “at-will” employment
until terminated in accordance with Article IV.  Upon termination of this Agreement, except as
otherwise provided herein, neither the Company nor Executive shall have any
further 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 
 


	RG
	  Executive

	MC
	  Company




 















 
under this Agreement do not and will not violate or conflict with any agreement relating 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 copy of which is enclosed.


 


ARTICLE II.


 


COMPENSATION


 


2.1           BASE
SALARY.  In exchange for
the provision of services, Company agrees that it will pay Executive commencing
December 10, 2008, at the rate of $250,000 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 initiative
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 2008 shall be thirty-five percent (35%) of Executive’s
base salary for calendar year 2008. 
Executive’s incentive compensation for calendar year 2008 under the
Plan, if any, will be determined as soon as practical after December 31,
2008, and will be paid to Executive in a lump sum, less any withholdings or
deductions, on or before March 31, 2009.


 


b.             The Company’s Board
of Directors has approved that Executive shall be entitled to receive (i) a
stock option grant exercisable for 150,000 shares, which shall vest as to 28%
on December 10th, 2009,
and 2% will vest each month thereafter; and (ii) 15,000 shares of
restricted stock, which shall vest as to 25% on the one-year anniversary of
grant date of December 10th,
2008, and as to additional increments of 25% on each anniversary thereafter, which
shall be more fully set forth in a Restricted Stock Agreement that you will be
provided separately.


 


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


 


2.5           BUSINESS
EXPENSES.  The Company
will reimburse Executive for all reasonable, ordinary, and necessary expenses
incurred by him in the performance of his duties 


 


	RG
	  Executive

	MC
	  Company




 


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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 President and Chief Executive 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 reach goals mutually agreed upon by Company and Executive.


 


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 work conditions as the performance of these
duties 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 reasonable 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, calculations, and
all copies of any of the foregoing which are the property 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.  To the extent Employee retains any rights of any
nature in any Work Product, Employee hereby assigns to Company all of Employee’s
right, title, and interest (including but not limited to all 


 


	RG
	  Executive

	MC
	  Company




 


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patent, copyright, trade secret,
and moral rights) in and to all Work Products prepared by Employee, whether
patentable or not, made or conceived in whole or in part by Employee within the
scope of Employee’s employment by Company, or that involve the use of
Confidential Information.  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 to hereto is not deemed to be a “work made for hire,” Executive hereby
assigns all right, title, and interest therein to Company.  Executive is
hereby notified that this assignment of Work Product does not include any
invention where (i) Executive did not use the equipment, supplies,
facility or trade secret information of Company; (ii) Executive developed
the invention on his own time; (iii) the invention does not directly
relate to the business of Company or Company’s actual or anticipated research
or development; and (iv) the invention did not result from any work
performed for 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, copy, registered design or other protection
in connection therewith.  Executive shall
at Company’s 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           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, do any of the following:


 


(1) Own, manage, operate, join, control, consult
with, participate in the ownership, operation or control of, be employed by, or
be connected in any manner with any person or entity which manufactures, sells,
solicits, offers, offers to provide, or provides any Competitive Products and
Services, unless such employment is by a large diversified entity and on a
basis such that Executive will have no involvement whatsoever with the
provision of Competitive Products and Services during the Restricted
Period.  For purposes of this Agreement,
Competitive Products and Services shall include all products and services
similar to or the same as those offered by Company to its customers involving
advanced medical visualization and analysis software technologies beyond MIP
(Minimum Intensity Projection) and MPR (Multi Planar Reformation) that allow
for 


 


	RG
	  Executive

	MC
	  Company




 


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analysis,
manipulation, and distribution of images, such as radiological studies, in 2D,
3D and 4D.  This restriction applies
worldwide, and Executive agrees and acknowledges a worldwide restriction is
reasonable in scope given the Company’s worldwide territory;


 


(2) Solicit
customers or the business of any person, firm, corporation or other entity who
is or who was a customer or account of Company or any of Company’s affiliates
and subsidiaries while Employee was employed by Company, including but not
limited to resellers or distributors of Company products or services, or accept
business from any person, firm, corporation or other entity who is or who was a
customer or account of Company or any of Company’s affiliates and subsidiaries
while Executive was employed by Company, for the purpose of selling to such
customer or account any Competitive Product or Service; and


 


(3)           Induce or seek to
induce any person employed with Company or its affiliates as of the Separation
Date to discontinue that person’s employment with Company and/or solicit,
recruit, hire or participate in any other person’s or entity’s effort to hire
an employee of Company.


 


3.8           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 President and Chief Executive Officer.  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 receipt of severance
pay.  For purposes of the 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;


 


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	  Executive

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	  Company




 


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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 the 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 in prior to the date of this
Agreement or 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,
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 that Minneapolis/St. Paul,
Minnesota metropolitan statistical area or the location Executive has chosen to
be based out of, 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 nine (9) months of severance pay based on Executive’s
base salary at the time of termination and nine months of continuation of
benefits, provided Executive agrees to release any claims he may have against
the company, pursuant to Company’s standard release agreement for such
circumstances, 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 expirations of any applicable rescission
periods.  If Company terminates Executive’s
employment with Cause, Executive shall not receive severance pay.


 


Notwithstanding anything in this Agreement to the contrary, if all or
any portion of the severance pay described in this Section 4.2 is subject
to the requirements of Code Section 409A and the Company determines that
Executive is a “specified employee” as defined in Code Section 409A as of
the date of Executive’s termination of employment, such payments shall not be
paid or commence earlier than the first day of the seventh month following the
date of Executive’s termination of employment.


 


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;


 


	RG
	  Executive

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	  Company




 


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b.             Executive shall
inexcusably violate or willfully refuse to obey the lawful and reasonable
instructions of the President and Chief Executive Officer or the Board of
Directors of the 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
in 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 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 have reasonably known the 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 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 the 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.          COOPERATION
AND NON-DISPARAGEMENT.   
Executive agrees that, during the term of this Agreement and for three (3) years
following the termination of his employment, Executive will (i) assist and
cooperate with the Company regarding any claims or disputes involving matters
within the knowledge or responsibilities of Executive; and (ii) not in any
way or by any means disparage the Company, the members of the Company’s Board
of Directors or the Company’s officers and employees. During 


 


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	  Executive

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	  Company




 


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the same period, Company agrees to not in any
way or by any means disparage the Executive.


 


4.6.          DISCLOSURE.    Executive agrees that, during the term of
this Agreement and for three (3) years following the termination of his
employment, Executive will inform any new employer or other person or entity
with whom he enters into a business relationship, before accepting employment
or entering into a business relationship, of the post-employment restrictions
and obligations contained in this Agreement, including but not limited to the
existence of Articles 3.4, 3.5, 3.7 and 4.5 above.


 


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, or certified or registered, postage
prepaid, return receipt requested, addressed to the proper party at its address
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.

  
	
   

  	
   

  	
  5850 Opus Parkway, Suite 300

  
	
   

  	
   

  	
  Minnetonka, MN 55343

  
	
   

  	
   

  	
  Attention: President and CEO

  
	
   

  	
   

  	
   

  
	
  b.

  	
  If to Executive, to:

  	
  Ray A. Ghanbari

  
	
   

  	
   

  	
  3144 Northview Road

  
	
   

  	
   

  	
  Wayzata, MN 55391

  



 


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.  Notwithstanding anything in this Agreement to
the contrary, the Company expressly reserves the right to amend this Agreement
to the extent necessary to comply with Code Section 409A, as it may be
amended from time to time, and the regulations, notices and other guidance of
general applicability issued thereunder.


 


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.


 


	RG
	  Executive

	MC
	  Company




 


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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 by signature below and initialization
of each page.


 


 


	
   

  	
  VITAL IMAGES, INC.:

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Michael H. Carrel

  
	
   

  	
   

  	
  Michael H. Carrel

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Reza Ghanbari

  
	
   

  	
   

  	
  Reza A. Ghanbari

  



 


	RG
	  Executive

	MC
	  Company




 


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