Document:

Exhibit 10.13

 

EMPLOYMENT AGREEMENT

 

THIS
AGREEMENT, made and entered into as of the 21st day of January 2008, by
and between Vital Images, Inc. (“Company”) and Michael H. Carrel (“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 President and Chief
Executive Officer, and Executive hereby accepts such employment, subject to the
supervision of the Board of Directors 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 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 January 9, 2008, at
the rate of $310,000 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 sixty-five percent (65%) of Executive’s
base salary for calendar year 2008, pro-rated to start date of January 9,
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 15, 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 become
exercisable as to 28% of the underlying shares beginning one year after the
grant date and shall vest as to an additional 2% of the shares each month
thereafter until fully vested; and shall expire five years after the grant
date.

 

2.4                                 VACATION.  Executive shall 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 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 the Chair of the Company’s
Board of Directors.

 

 

2

 

 

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 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 

 

 

3

 

 

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.  In connection with this
promotion and the consideration described in this offer, which
Executive acknowledges are adequate consideration for Executive’s obligations
described below, Executive agree that Executive shall not, directly or
indirectly, on behalf of himself or a third party, for a period of eighteen
(18) months following Executive’s separation from employment with Company (the “Separation
Date”), 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.  This
restriction applies worldwide, and Executive agrees and acknowledges a
worldwide restriction is reasonable in scope given Executive’s responsibilities
and 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 Executive was employed by Company 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 were employed by Company for the 

 

 

4

 

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.

 

“Competitive
Products and Services”, as used herein, 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 analysis, manipulation, and distribution of images, such as radiological
studies, in 2D, 3D and 4D.

 

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 Chairman of the Board.  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
and medical insurance benefits 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 and medical insurance benefits.  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;

 

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 

 

 

5

 

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, 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 and medical insurance benefits.  Executive’s severance pay, if any, shall be
payable in one lump sum, less any applicable withholdings or deductions, on the
first business day of the seventh sequential month after Executive’s date of
termination, provided that any applicable rescission periods have expired by
such date.  If Company terminates
Executive’s employment with Cause, Executive shall not receive severance pay or
medical insurance benefits.

 

Medical Insurance Benefits.  If Executive is eligible for severance pay
hereunder, Company, pursuant to federal and state law, will also provide, for a
period of twelve (12) months following Executive’s termination date (“Benefits
Period”), a continuation of the group medical and dental insurance coverage on
the same basis as it was previously provided to Executive by Company.  Through the earlier of (i) Executive’s
participation in equivalent group medical and dental insurance benefits with a
new employer or (ii) the end of the Benefits Period, Company will pay that
portion of the premium for group medical and dental insurance that it paid
during Executive’s employment, with the remainder to be paid by Executive.  After such conclusion, Executive will be
required to pay for all such benefits for the remainder of the period in which
Executive is eligible for COBRA, if any, should Executive elect to continue
COBRA coverage.

 

 

 

6

 

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 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 

 

 

7

 

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.

 

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 3.7, 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:
  Chairman of the Board

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.

  	
   

  	
  If
  to Executive, to:

  	
   

  	
  Michael
  H. Carrel

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

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.

 

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 

 

 

8

 

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/
  Douglas M. Pihl

  
	
   

  	
   

  	
  Douglas
  M. Pihl

  
	
   

  	
   

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Michael H. Carrel

  
	
   

  	
   

  	
  Michael
  H. Carrel

  

 

9Exhibit 10.14

 

EMPLOYMENT AGREEMENT

 

THIS
AGREEMENT, made and entered into as of the 21st day of January 2008, by
and between Vital Images, Inc. (“Company”) and Peter J. Goepfrich (“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 Chief Financial Officer,
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 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 January 9, 2008, at
the rate of $210,000 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 President and Chief Executive
Officer.  Pursuant to the Plan, Executive’s
incentive target for calendar year 2008 shall be fifty (50%) of Executive’s
base salary for calendar year 2008, pro-rated to start date of January 9,
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 15, 2009.

 

b.                                      The Company’s
Board of Directors has approved that Executive shall be entitled to receive (i) a
stock option grant exercisable for 75,000 shares, which shall become
exercisable as to 28% of the underlying shares beginning one year after the
grant date and shall vest as to an additional 2% of the shares each month thereafter
until fully vested; and shall expire five years after the grant date.

 

2.4                                 VACATION.  Executive shall 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 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.

 

 

 

2

 

 

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 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 

 

 

3

 

 

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.  In connection with this
promotion and the consideration described in this offer, which
Executive acknowledges are adequate consideration for Executive’s obligations
described below, Executive agree that Executive shall not, directly or
indirectly, on behalf of himself or a third party, for a period of eighteen
(18) months following Executive’s separation from employment with Company (the “Separation
Date”), 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.  This
restriction applies worldwide, and Executive agrees and acknowledges a
worldwide restriction is reasonable in scope given Executive’s responsibilities
and 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 Executive was employed by Company 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 were employed by Company for the 

 

 

4

 

 

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.

 

“Competitive
Products and Services”, as used herein, 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 analysis, manipulation, and distribution of images, such as radiological
studies, in 2D, 3D and 4D.

 

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
and medical insurance benefits 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 and medical insurance benefits.  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;

 

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 

 

 

5

 

 

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, 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 six (6) 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 and medical insurance benefits.  Executive’s severance pay, if any, shall be
payable in one lump sum, less any applicable withholdings or deductions, on the
first business day of the seventh sequential month after Executive’s date of
termination, provided that any applicable rescission periods have expired by
such date.  If Company terminates
Executive’s employment with Cause, Executive shall not receive severance pay or
medical insurance benefits.

 

Medical Insurance Benefits.  Company, pursuant to federal and state law,
will provide, for a period of six (6) months following Executive’s
termination date (“Benefits Period”), a continuation of the group medical and
dental insurance coverage on the same basis as it was previously provided to
Executive by Company.  Through the
earlier of (i) Executive’s participation in equivalent group medical and
dental insurance benefits with a new employer or (ii) the end of the
Benefits Period, Company will pay that portion of the premium for group medical
and dental insurance that it paid during Executive’s employment, with the
remainder to be paid by Executive.  After
such conclusion, Executive will be required to pay for all such benefits for
the remainder of the period in which Executive is eligible for COBRA, if any,
should Executive elect to continue COBRA coverage.

 

 

 

6

 

 

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 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 

 

 

7

 

 

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.

 

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 3.7, 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

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.

  	
   

  	
  If
  to Executive, to:

  	
   

  	
  Peter
  J. Goepfrich

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

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.

 

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.

 

 

8

 

 

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/
  Michael H. Carrel

  
	
   

  	
   

  	
  Michael
  H. Carrel

  
	
   

  	
   

  	
  President
  and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Peter J. Goepfrich

  
	
   

  	
   

  	
  Peter
  J. Goepfrich

  

 

 

9

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