EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of July 1, 1996,
between Image Guided Technologies, Inc., a Colorado corporation (the "Company"),
and Jeffrey J. Hiller ("Hiller").
In consideration of the mutual covenants and conditions set forth herein,
the parties hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs Hiller in the capacity of Vice
President of Finance and Chief Financial Officer. Hiller 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 Chairman of the Board,
the President or the Board of Directors.
2. TERM. Subject to earlier termination as provided in Section 5, the
employment hereunder shall be for a period of eighteen months, commencing on
July 1, 1996 (the "Commencement Date") and ending on December 31, 1997.
Hiller'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 Hiller's duties hereunder, the
Company shall pay Hiller an annual salary of $85,000, payable (less required
withholdings) no less frequently than twice monthly.
3.2 BENEFITS. Hiller 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. Hiller shall be entitled to be
reimbursed for all reasonable expenses, including but not limited to expenses
for travel, meals and entertainment, incurred by Hiller in connection with and
reasonably related to the furtherance of the Company's business.
3.4 ANNUAL REVIEW. On the anniversary of the Commencement Date, the
Board of Directors will review Hiller'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 Hiller.
4. CHANGE OF CONTROL. In the event of a Change of Control of the Company
(as defined below), all options then granted to Hiller which are unvested at the
date of the Change of Control will be immediately vested. In addition, in the
event of a termination of Hiller'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 Hiller, 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
(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) Hiller dies;
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(b) The Company, by written notice to Hiller or his personal
representative, discharges Hiller 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 Hiller
due to such disability, the Company shall give a written statement of findings
to Hiller or his personal representative setting forth specifically the nature
of the disability and the resulting performance failures, and Hiller shall have
a period of ten (10) days thereafter to respond in writing to the Board of
Directors' findings;
(c) Hiller is discharged by the Board of Directors of the Company for
cause. As used in this Agreement, the term "cause" shall mean:
(i) Hiller'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 Hiller 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 Hiller has not substantially performed his
duties, or (b) Hiller 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 Hiller's part shall be considered "willful"
unless done, or omitted to be done, by Hiller not in good faith and without
reasonable belief that Hiller'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 Hiller has been provided with specific information as to the
acts or omissions which form the basis of the allegation of cause, and Hiller
has had an opportunity to be heard, with counsel if he so desired, before the
Board of Directors and such Board determines in good faith that Hiller was
guilty of conduct constituting "cause" as herein defined, specifying the
particulars thereof in detail;
(d) Hiller is discharged by the Board of Directors of the Company
without cause, which the Company may do at any time upon notice to Hiller;
(e) Hiller 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
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Duties remains unremedied by the Company for a period of ten days following its
receipt of written notice thereof from Hiller; or
(f) Hiller voluntarily terminates his employment for any reason other
than the Company's default or an Adverse Change in Duties, which Hiller may do
at any time with at least 30 days advance notice.
As used herein, "Adverse Change in Duties" means an action or series of
actions taken by the Company, without Hiller's prior written consent, which
results in:
(1) A change in Hiller's reporting responsibilities, titles, job
responsibilities or offices which, in Hiller's reasonable judgment, results in a
diminution of his status, control or authority; or
(2) The assignment to Hiller of any positions, duties or
responsibilities which, in Hiller's reasonable judgment, are inconsistent with
Hiller's positions, duties and responsibilities or status with the Company; or
(3) A requirement by the Company that Hiller 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.
5.2 EFFECTS OF TERMINATION.
(a) Upon termination of Hiller's employment hereunder for any reason,
the Company will promptly pay Hiller all compensation owed to Hiller 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 Hiller's employment is terminated under Sections
5.1(a), (b), (d) or (e), the Company shall also pay Hiller, immediately upon
such termination of employment, a lump sum severance amount equal to one-half of
his then annual salary.
(c) Upon termination of Hiller's employment hereunder for any reason,
Hiller agrees that for the six (6) month period following the Termination Event:
(i) Hiller will not directly or indirectly, whether for his own
account or as an individual, employee, director, consultant or advisor, or in
any other capacity
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whatsoever, provide services to any person, firm, corporation or other business
enterprise which is involved in the design, development or marketing of optical
localizers or image guided surgery products unless he obtains the prior written
consent of the Board of Directors.
(ii) Hiller 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) Hiller 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.
Hiller 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 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 Hiller from continuing to engage in such breach.
If any restriction set forth in this paragraph is held to be unreasonable,
then Hiller 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, except that the Company may assign its rights and obligations
hereunder to a successor by merger or an assignee of all or substantially all of
the Company's assets.
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.
6.3 MODIFICATIONS. This Agreement may be changed or modified only by
an agreement in writing signed by both parties hereto.
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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 Hiller and Hiller'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; COMMITTEES OF BOARD. 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. The term "Board
of Directors" shall include any committee of the Board.
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 5710-B Flatiron Parkway, Boulder,
CO 80301, and in the case of Hiller, to the address shown for Hiller 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.
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IN WITNESS WHEREOF, the Company and Hiller have executed this Agreement
effective as of the date first above written.
COMPANY HILLER
Image Guided Technologies, Inc.
By:/S/ PAUL L. RAY /S/ JEFFREY J. HILLER
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Paul L. Ray Jeffrey J. Hiller
President Address: 111 Mine Lane
Boulder, CO 80302
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