EMPLOYMENT AGREEMENT
This Employment agreement ("Agreement") is entered into as of January
1, 1996, between Pixsys, Inc., d/b/a Image Guided Technologies, Inc., a Colorado
corporation (the "Company"), and Paul L. Ray ("Ray").
In consideration of the mutual covenants and conditions set forth
herein, the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Ray in the capacity of
Chairman of the Board and Chief Executive Officer. Ray accepts such employment
and agrees to perform such services as are customary to such office and as shall
from time to time be assigned to him by the Board of Directors.
2. TERM. Subject to earlier termination as provided in Section 5,
the employment hereunder shall be for an initial period of one year, commencing
on January 1, 1996 (the "Commencement Date") and ending on December 31, 1996,
and shall be automatically renewed on the same terms and conditions for an
additional one-year period unless either party notifies the other prior to the
expiration of the initial term of its desire not to renew the Agreement. Ray's
employment will be on a full-time basis requiring the devotion of such amount of
his productive time as is necessary for the efficient operation of the business
of the Company.
3. COMPENSATION AND BENEFITS.
3.1 SALARY. For the performance of Ray's duties hereunder, the
Company shall pay Ray an annual salary of $105,000, payable (less required
withholdings) no less frequently than twice monthly.
3.2 BENEFITS. Ray shall be entitled to such medical, disability
and life insurance coverage and such vacation, sick leave and holiday benefits,
if any, as are made available to the Company's top executive personnel, all in
accordance with the Company's benefits program in effect from time to time.
3.3 REIMBURSEMENT OF EXPENSES. Ray shall be entitled to be
reimbursed for all reasonable expenses, including but not limited to expenses
for travel, meals and entertainment, incurred by Ray in connection with and
reasonably related to the furtherance of the Company's business.
3.4 ANNUAL REVIEW. On each anniversary of the Commencement
Date, the Board of Directors will review Ray's performance and compensation
hereunder (including salary, bonus and stock options and/or other equity
incentives) and will consider whether to increase such compensation, but will
not have authority, as the result of such review, to decrease any portion of
such compensation without the written consent of Ray.
3.5 OPTIONS. Notwithstanding anything to the contrary set forth
in the stock option agreements for options heretofore granted to Ray by the
Company, such options shall expire seven years from the date of grant and shall
remain exercisable during such seven year period despite his earlier termination
of employment. Options not vested on his termination of employment, shall on
termination of employment, unless the Board of Directors otherwise determines,
be deemed to have been forfeited.
4. CHANGE OF CONTROL. In the event of a Change of Control of the
Company (as defined below), all options then granted to Ray which are unvested
at the date of the Change of Control will be immediately vested. In addition,
in the event of a termination of Ray's employment hereunder for any reason
(other than as set forth in Section 5.1(f)) following a Change of Control, the
Company will promptly pay Ray, in addition to the amounts required under Section
5.2(a), a lump sum severance amount payable immediately upon such termination of
employment, equal to one-half of his then annual salary. This payout shall be
in lieu of any amount which may otherwise be due under Section 5.2(b).
As used herein, a "Change of Control" of the Company shall be deemed
to have occurred:
(a) Upon the consummation, in one transaction or a series of related
transactions, of the sale or other transfer of voting power (including voting
power exercisable on a contingent or deferred basis as well as immediately
exercisable voting power) representing effective control of the Company to a
person or group of related persons who, on the date of this Agreement, is not
affiliated (within the meaning of the Securities Act of 1933) with the Company,
whether such sale or transfer results from a tender offer or otherwise; or
(b) Upon the consummation of a merger or consolidation in which the
Company is a constituent corporation and in which the Company's shareholders
immediately prior thereto will beneficially own, immediately thereafter,
securities of the Company or any surviving or new corporation resulting
therefrom having less than a majority of the voting power of the Company or any
such surviving or new corporation; or
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(c) Upon the consummation of a sale, lease, exchange or other
transfer or disposition by the Company of all or substantially all its assets to
any person or group of related persons.
5. TERMINATION.
5.1 TERMINATION EVENTS. The employment hereunder will terminate
upon the occurrence of any of the following events:
(a) Ray dies;
(b) The Company, by written notice to Ray or his personal
representative, discharges Ray due to the inability to perform the duties
assigned to him hereunder for a continuous period exceeding 90 days by reason of
injury, physical or mental illness or other disability, which condition has been
certified by a physician; provided, however, that prior to discharging Ray due
to such disability, the Company shall give a written statement of findings to
Ray or his personal representative setting forth specifically the nature of the
disability and the resulting performance failures, and Ray shall have a period
of ten (10) days thereafter to respond in writing to the Board of Directors'
findings;
(c) Ray is discharged by the Board of Directors of the Company
for cause. As used in this Agreement, the term "cause" shall mean:
(i) Ray's conviction of (or pleading guilty or NOLO
CONTENDERE to) a felony or any misdemeanor involving dishonesty or moral
turpitude; or
(ii) (a) The willful and continued failure of Ray to
substantially perform his duties with the Company (other than any such failure
resulting from illness or disability) after a demand for substantial performance
is requested by the Company's Board of Directors, which specifically identifies
the manner in which it is claimed Ray has not substantially performed his
duties, or (b) Ray is willfully engaged in misconduct which has a direct and
material adverse monetary affect on the Company. For purposes of this subpart
(ii) no act or failure to act on Ray's part shall be considered "willful" unless
done, or omitted to be done, by Ray not in good faith and without reasonable
belief that Ray's action or omission was in the best interest of the Company.
No termination shall be effected for cause pursuant to this subpart (ii) unless
Ray has been provided with specific information as to the acts or omissions
which form the basis of the allegation of cause, and Ray has had an opportunity
to be heard, with counsel if he so
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desired, before the Board of Directors and such Board determines in good faith
that Ray was guilty of conduct constituting "cause" as herein defined,
specifying the particulars thereof in detail;
(d) Ray is discharged by the Board of Directors of the Company
without cause, which the Company may do at any time upon notice to Ray, or if
the Agreement is not renewed by the Company at the end of the initial one-year
period as provided in Section 2;
(e) Ray voluntarily terminates his employment due to either (i)
a default by the Company in the performance of any of its obligations hereunder,
or (ii) an Adverse Change in Duties (as defined below), which default or Adverse
Change in Duties remains unremedied by the Company for a period of ten days
following its receipt of written notice thereof from Ray; or
(f) Ray voluntarily terminates his employment for any reason
other than the Company's default or an Adverse Change in Duties, which Ray may
do at any time with at least 30 days advance notice, or if the Agreement is not
renewed by Ray at the end of the initial one-year period as provided in Section
2.
As used herein, "Adverse Change in Duties" means an action or series
of actions taken by the Company, without Ray's prior written consent, which
results in:
(1) A change in Ray's reporting responsibilities, titles, job
responsibilities or offices which, in Ray's reasonable judgment, results in a
diminution of his status, control or authority; or
(2) The assignment to Ray of any positions, duties or
responsibilities which, in Ray's reasonable judgment, are inconsistent with
Ray's positions, duties and responsibilities or status with the Company or which
require Ray to travel more than previously required; or
(3) A requirement by the Company that Ray be based or perform
his duties anywhere other than (i) at the Company's corporate office location on
the date of this Agreement, or (ii) if the Company's corporate office location
is moved after the date of this Agreement, at a new location that is no more
than 60 miles from such prior location; or
(4) A failure by the Company (i) to continue in effect any
material benefit, whether or not qualified, or other compensation, bonus or
incentive plan in effect on the date of this Agreement or subsequently adopted,
or (ii) to continue Ray's participation in such benefits or plans at the same
level or to the same extent as on the Commencement Date or, with respect to
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subsequently adopted benefits or plans, on the date of initial implementation
thereof, or (iii) to provide for Ray's participation in any newly adopted
benefits or plans at a level or to an extent commensurate, in Ray's reasonable
judgment, with that of other top executives of the Company.
5.2 EFFECTS OF TERMINATION.
(a) Upon termination of Ray's employment hereunder for any
reason, the Company will promptly pay Ray all compensation owed to Ray and
unpaid through the date of termination (including, without limitation, salary
and employee expense reimbursements).
(b) In addition (except in a situation where severance is due
pursuant to Section 4), if Ray's employment is terminated under Sections 5.1(a),
(b), (d) or (e), the Company shall also pay Ray, immediately upon such
termination of employment, a lump sum severance amount equal to one-half of his
then annual salary.
(c) Upon termination of Ray's employment hereunder for any
reason, Ray agrees that for the six (6) month period following the Termination
Event:
(i) Ray will not directly or indirectly, whether for his
own account or as an individual, employee, director, consultant or advisor, or
in any other capacity whatsoever, provide services to any person, firm,
corporation or other business enterprise which is involved in the design,
development or marketing of optical digitizers or image guided products unless
he obtains the prior written consent of the Board of Directors.
(ii) Ray will not directly or indirectly encourage or
solicit, or attempt to encourage or solicit, any individual to leave the
Company's employ for any reason or interfere in any other manner with the
employment relationships at the time existing between the Company and its
current or prospective employees.
(iii) Ray will not induce or attempt to induce any
customer, supplier, distributor, licensee or other business relation of the
Company to cease doing business with the Company or in any way interfere with
the existing business relationship between any such customer, supplier,
distributor, licensee or other business relation and the Company.
Ray acknowledges that monetary damages may not be sufficient to
compensate the Company for any economic loss which may be incurred by reason of
breach of the foregoing restrictive
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covenants. Accordingly, in the event of any such breach, the Company shall, in
addition to any remedies available to the Company at law, be entitled to obtain
equitable relief in the form of an injunction precluding Ray from continuing to
engage in such breach.
If any restriction set forth in this paragraph is held to be
unreasonable, then Ray and the Company agree, and hereby submit, to the
reduction and limitation of such prohibition to such area or period as shall be
deemed reasonable.
6. GENERAL PROVISIONS.
6.1 ASSIGNMENT. Neither party may assign or delegate any of his
rights or obligations under this Agreement without the prior written consent of
the other party.
6.2 ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior agreements between the parties relating to such
subject matter. Ray's employment agreement with the Company, dated as of
January 1, 1994, is hereby terminated and is of no further force and effect.
6.3 MODIFICATIONS. This Agreement may be changed or modified
only by an agreement in writing signed by both parties hereto.
6.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Company and its
successors and assigns and Ray and Ray's legal representatives, heirs, legatees,
distributees, assigns and transferees by operation of law, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join and be bound by the terms and conditions hereof.
6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of Colorado.
6.6 SEVERABILITY. If any provision of the Agreement is held by
a court of competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions shall nevertheless continue in full force and effect.
6.7 FURTHER ASSURANCES. The parties will execute such further
instruments and take such further actions as may be reasonably necessary to
carry out the intent of this Agreement.
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6.8 NOTICES. Any notices or other communications required or
permitted hereunder shall be in writing and shall be deemed received by the
recipient when delivered personally or, if mailed, five (5) days after the date
of deposit in the United States mail, certified or registered, postage prepaid
and addressed, in the case of the Company, to 5680 Central Avenue, Suite B,
Boulder, CO 80301, and in the case of Ray, to the address shown for Ray on the
signature page hereof, or to such other address as either party may later
specify by at least ten (10) days advance written notice delivered to the other
party in accordance herewith.
6.9 NO WAIVER. The failure of either party to enforce any
provision of this Agreement shall not be construed as a waiver of that
provision, nor prevent that party thereafter from enforcing that provision or
any other provision of this Agreement.
6.10 LEGAL FEES AND EXPENSES. In the event of any disputes
under this Agreement, each party shall be responsible for their own legal fees
and expenses which it may incur in resolving such dispute.
6.11 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and Ray have executed this Agreement
effective as of the date first above written.
COMPANY RAY
Pixsys, Inc., d/b/a
Image Guided Technologies, Inc.
By:/S/ DAVID SENGPIEL /S/ PAUL L. RAY
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David Sengpiel Paul L. Ray
Director Address: 2621 N. Jupiter Avenue
Boulder, Colorado 80304
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AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment ("Amendment") to the Employment Agreement ("Agreement"),
dated as of January 1, 1996, between Image Guided Technologies, Inc., a Colorado
corporation and f/k/a Pixsys, Inc. ("the Company"), and Paul L. Ray ("Ray") is
entered into as of June 1, 1996.
(a) Section 2 of the Agreement is hereby amended by changing the first
sentence thereof to read in full as follows:
Subject to earlier termination as provided in Section 5, the
employment hereunder shall be for a period of two years, commencing on
January 1, 1996 (the "Commencement Date") and ending on December 31,
1997.
(b) Paragraph (d) of Section 5 is hereby amended to read in full as
follows:
(d) Ray is discharged by the Board of Directors of the Company
without cause, which the Company may do at any time upon notice to
Ray;
(c) Paragraph (f) of Section 5 is hereby amended to read in full as
follows:
(f) Ray voluntarily terminates his employment for any reason other
than the Company's default or an Adverse Change in Duties, which Ray
may do at any time with at least 30 days advance notice.
(d) All other terms and conditions of the Agreement shall remain in full
force and effect.
IMAGE GUIDED TECHNOLOGIES, INC.
By: /S/ ROBERT SILLIGMAN
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Robert Silligman
/S/ PAUL L. RAY
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Paul L. Ray