Exhibit 10.1

 

SEPARATION AGREEMENT

 

In exchange for the promises and covenants contained herein, Vital Images, Inc.
(“Company”) and Gregory Furness (“Employee”) hereby agree as follows:

 

1.                                       Definitions.  We intend all words used
in this Separation Agreement (“Agreement”) to have their plain meanings in
ordinary English.  Specific terms we use in this Agreement have the following
meanings:

 

A.                                   Employee, as used herein, shall include the
undersigned Employee and anyone who has obtained any legal rights or claims
through the undersigned Employee.

 

B.                                     Company, as used herein, shall at all
times mean Vital Images, Inc., its parent company, its subsidiaries, successors
and assigns, its affiliated and predecessor companies, their successors and
assigns, their affiliated and predecessor companies and the present or former
directors, officers, employees, representatives and agents (including, without
limitation, its accountants and attorneys) of any of them, whether in their
individual or official capacities, and the current and former trustees or
administrators of any pension or other benefit plan applicable to employees or
former employees of Company, in their official or individual capacities.

 

C.                                     Employee’s Claims, as used herein, means
all of the rights Employee has now to any relief of any kind from Company
whether or not Employee now knows about those rights, arising out of his
employment with Company, and his employment termination, including, but not
limited to, claims arising under the Age Discrimination in Employment Act, as
amended by the Older Worker Benefit Protection Act; the Minnesota Human Rights
Act; the Americans with Disabilities Act; Title VII of the Civil Rights Act of
1964, as amended; claims under the Family Medical Leave Act; or other federal,
state or local civil rights laws; claims under that certain Offer Letter dated
January 30, 1997; claims under that certain Change in Control Agreement between
Company and Employee dated May 11, 2000; claims for breach of contract; fraud or
misrepresentation; defamation, intentional or negligent infliction of emotional
distress; breach of covenant of good faith and fair dealing; promissory
estoppel; negligence; wrongful termination of employment; and any other claims
for unlawful employment practices.  Excluded from Employee’s Claims are any
rights or obligations Employee may have under those certain Non-Statutory Stock
Option Agreements and Incentive Stock Option Agreements (collectively “Stock
Option Agreements”), as set forth in Exhibit A to this Agreement.

 

2.                                       Separation Date.  Company and Employee
mutually agreed that Employee’s last day of employment with Company shall be
February 8, 2005 (“Separation Date”).

 

3.                                       Company’s Obligations and Separation
Agreements.  In consideration for Employee’s promises contained herein,
specifically including, but not limited to, the release of all claims by

 

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Employee and Employee’s promises to refrain from disclosing confidential
information and trade secrets of Company, Company agrees to pay Employee a
separation payment of $105,333.28 (“Separation Payment”) which is equal to eight
(8) months of Employee’s salary calculated at Employee’s regular rate of pay as
of the date of this Agreement.

 

The above payment will be payable in a lump sum payment on the next regularly
scheduled Company payroll cycle after the expiration of the Rescission Periods,
as hereinafter defined.  The payment shall be direct deposited into your account
on record, unless otherwise specified by you.  The payment shall be subject to
federal and state withholding taxes and FICA.

 

A.                                   Incentive Compensation Payment.  Company
shall pay Employee any earned payments for calendar year 2004 under that certain
2004 Incentive Compensation Plan.  Any payments to which Employee is entitled
under the 2004 Incentive Compensation Plan shall be payable to Employee after a
determination by Company that the applicable Company, team and personal
performance goals have been achieved for calendar year 2004.  Any payments to
which Employee is entitled under the 2004 Incentive Compensation Plan shall be
paid to Employee at the same time as the Company makes payment to the other
participants of the 2004 Incentive Compensation Plan, but in any event payment,
if applicable, shall be made to Employee no later than March 31, 2005.  Any
payment shall be subject to federal and state withholding taxes and FICA.

 

B.                                     Medical Insurance Benefits.  Company,
pursuant to federal and state law, will provide, for a period of eighteen (18)
months following the effective date of Employee’s termination (“COBRA Period”),
a continuation of the group medical and dental insurance coverage previously
provided to Employee by Company.  Through December 31, 2005 or the date upon
which Employee becomes covered under any other group health plan (as an employee
or otherwise which does not contain any exclusion or limitation with respect to
any preexisting condition of such beneficiary), whichever is earlier
(hereinafter “COBRA Payment Termination Date”), Company will pay Employee’s
entire portion of the premium for group medical and dental insurance for
coverage maintained by Employee during Employee’s employment.  After the COBRA
Payment Termination Date, Employee will be required to pay for the entire amount
of such benefits for the remainder of the COBRA Period should Employee elect to
continue COBRA coverage.

 

C.                                     Outplacement.  Company will pay for 12
months of outplacement assistance provided by Right Management Consultants
Executive Program as described in Exhibit B priced at $10,000.

 

D.                                    Non-Disparagement.  Company agrees that
its senior officers, directors and management shall not disparage or defame
Employee in any respect.

 

E.                                      Remedies.  Company acknowledges that any
breach of its promise set forth in Section 3.D. will cause Employee irreparable
harm for which there is no adequate remedy at law and Company therefore consents
to the issuance of any injunction in favor of Employee enjoining the breach of
the promise set forth in Section 3.D.

 

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4.                                       Employee Obligations.  As material
inducement to Company in entering into this Agreement and providing the
consideration described in Section 3, Employee hereby agrees as follows:

 

A.                                   Release.  Employee agrees to release all
Employee’s Claims.  Employee acknowledges that the money and promises received
and to be received by Employee are in exchange for the release of Employee’s
Claims.

 

B.                                     Covenant Not To Sue.  Employee agrees
that he will not initiate any litigation to pursue claims which Employee
released in this Section 4.A.  This covenant does not apply to litigation
challenging the validity of this Section 4.A.  Further, Employee agrees to pay
Company’s attorneys fees if Employee breaches the covenant not to sue contained
in this Section 4.B. 

 

C.                                     Company Property.  Employee will return
all property belonging to Company no later than the Separation Date, whether
such property is currently on or off the premises of Company, including, without
limitation, any and all computer hardware or computer software, unless otherwise
set forth herein.  Employee shall be allowed to retain the Company’s laptop
computer issued to him after all of the Company’s confidential and proprietary
information and software contained on the laptop computer has been removed from
the laptop computer and returned to the Company, through the direction of the
Company’s Director of Information Technology, to take place no later
than                                 . Employee shall be allowed to retain the
Company’s cellular telephone issued to Employee upon proof that all financial
responsibility for service to the cellular telephone has been transferred
directly to Employee, no later than                                        .

 

D.                                    Confidentiality.  Employee acknowledges
and reaffirms his continuing obligations to Company pursuant to that certain
Employee Patent and Confidential Information Agreement and Attachment dated
February 4, 1997 by and between Employee and Company, a copy of which is
attached hereto as Exhibit C to this Agreement.

 

E.                                      Non-Disparagement.  Employee agrees that
he shall not disparage or defame Company in any respect.

 

F.                                      Cooperation.  Employee agrees to
cooperate fully with Company and assist Company through the Separation Date with
the Company’s reasonable requests of Employee, including without limitation,
providing Company with requested information related to Employee’s performance
of his job duties as Chief Financial Officer and assisting Company in its
compliance with Section 404 of the Sarbanes Oxley Act of 2002.

 

G.                                     Expense Reimbursement.  Employee shall
have until February 15, 2005 to submit Employee’s last expense report.  Company
reserves its rights to review and deny payment

 

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on any expenses submitted by Employee that do not comply with Company policies
and procedures regarding expense reimbursement.

 

H.                                    Remedies.  Employee acknowledges that any
breach of any of the promises set forth in Sections 4.C, 4.D. and 4.E will cause
Company irreparable harm for which there is no adequate remedy at law and
Employee therefore consents to the issuance of any injunction in favor of
Company enjoining the breach of any of those promises by any court of competent
jurisdiction.  If any promise made by Employee in this Section 4 should be held
to be unenforceable because of its scope or duration, or the area or subject
matter covered thereby, Employee agrees that the court making such determination
shall have the power to reduce or modify the scope, duration, subject matter or
area of that promise to the extent that allows the maximum scope, duration,
subject matter or area permitted by applicable law.  Employee further agrees
that the remedies provided for herein are in addition to, and are not to be
construed as replacements for, or a limitation of, rights and remedies otherwise
available to Company.

 

5.                                       Employee’s Understandings. Employee
acknowledges and represents that:

 

A.                                   Employee understands that he has the right
to consult with an attorney regarding the meaning and effect of this Agreement.

 

B.                                     Employee also understands that he has a
period of at least twenty-one (21) calendar days from the date on which he
receives an unsigned copy of this Agreement in which to consider whether or not
to sign this Agreement and that, having been advised of that entitlement, he may
elect to sign this Agreement between February 8, 2005 and February 15, 2005,
which is more than twenty-one (21) calendar days from the date on which he
received an unsigned copy of this Agreement.  Any revisions to this Agreement
after January 11, 2005 shall not alter Employee’s twenty-one (21) calendar days
in which to consider whether or not to sign this Agreement.

 

C.                                     Employee understands that he may rescind
(that is, cancel) within seven (7) calendar days of signing the Agreement the
provisions of Section 4.A. of this Agreement with respect to claims arising
under the Age Discrimination in Employment Act (“ADEA Rescission Period”) and
that he may rescind within fifteen (15) calendar days of signing the Agreement
the provisions of Section 4.A. of this Agreement with respect to claims arising
under the Minnesota Human Rights Act (“MHRA Rescission Period”) (collectively,
“Rescission Periods”).  To be effective, rescission must be in writing,
delivered to Company at 3300 Fernbrook Lane North, Suite 200, Plymouth, MN 
55447, ATTN:  Cindy Edwards, within the applicable rescission period, or sent to
Company, at such address, by certified mail, return receipt requested,
postmarked within the applicable rescission period.

 

6.                                       Disclosure of Terms and Conditions of
Agreement.  Company retains the right to disclose the terms and conditions of
this Agreement, including without limitation, payment of severance, to third
parties, as required by applicable law.

 

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7.                                       Cancellation of Agreement By Company. 
If Employee exercises his right of rescission under Section 5.C. of this
Agreement, Company will have the right, exercisable by written notice delivered
to Employee, to terminate this Agreement in its entirety, in which event Company
will have no obligation whatsoever to Employee hereunder.  If Employee exercises
his right of rescission under Section 5.C. of this Agreement, and Company does
not exercise its right to terminate this Agreement hereunder, the remaining
provisions of this Agreement (including specifically the remaining provisions of
Section 4 of this Agreement) shall remain valid and continue in full force and
effect.

 

8.                                       Performance By Employee.  Nothing
contained herein shall operate as a waiver or an election of remedies by Company
should Employee fail to perform any duty or obligation imposed upon him
hereunder.  Notwithstanding anything contained herein to the contrary, this
Agreement and the duties and obligations of Employee hereunder shall continue in
full force and effect irrespective of any violation of any term or provision of
this Agreement by Employee.

 

9.                                       No Admission Of Liability.  The parties
agree that this Agreement shall not be considered an admission of liability by
Company.  Company expressly denies that it is in any way liable to Employee or
that it has engaged in any wrongdoing with respect to Employee.

 

10.                                 Employee Acknowledgments.  Employee
acknowledges and represents that:  (a) he has read this Agreement and
understands its consequences; (b) he has received adequate opportunity to read
and consider this Agreement; (c) he has determined to execute this Agreement of
his own free will and acknowledges that he has not relied upon any statements or
explanations made by Company regarding this Agreement; and (d) the promises of
Company made in this Agreement constitute fair and adequate consideration for
the promises, releases and agreements made by Employee in this Agreement.

 

11.                                 Entire Agreement.  This Agreement, including
any exhibits attached hereto or documents expressly referred to herein, contains
the entire agreement between Company and Employee and supersedes and cancels any
and all other agreements, whether oral or in writing, between Company and
Employee with respect to the matters referred to herein, including without
limitation, the termination of that certain Offer Letter dated January 30, 1997
and that certain Change in Control Agreement dated May 11, 2000.

 

12.                                 Governing Law.  This Agreement shall be
construed and enforced in accordance with the laws of the State of Minnesota.

 

13.                                 Effective Date.  This Agreement was
originally offered to Employee on or about January 11, 2005.  Employee shall
have until the close of business on February 15, 2005 to accept this Agreement
but in no event can Employee accept the Agreement prior to February 8, 2005.  If
Employee desires to accept this Agreement, Employee shall execute the Agreement
between February 8, 2005 and February 15, 2005 and return the same to Company at
the address set forth in Section 4.C. hereof.  If Employee does not so accept
this Agreement, this Agreement, and the offer contained herein, shall be null
and void as of the close of business on February 15 2005.

 

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14.                                 Counterparts.  This Agreement may be
executed in counterparts with an executed counterpart to be delivered to the
other party.  Each such executed counterpart shall be deemed an original but
shall constitute one and the same instrument.

 

 

 

VITAL IMAGES, INC.

 

 

 

 

Dated:

02/07/05

 

By:

 /s/ Jay D. Miller

 

 

Its:

  CEO

 

 

 

 

 

 

Dated:

02.14/05

 

 

/s/ Gregory S. Furness

 

 

 

 

Gregory Furness

 

 

 

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Exhibit A

 

1.                                       Incentive Stock Option Agreement dated
February 5, 2004.

 

2.                                       Non-Statutory Stock Option Agreement
dated February 5, 2004.

 

3.                                       Incentive Stock Option Agreement dated
February 6, 2003.

 

4.                                       Non-Statutory Stock Option Agreement
dated February 6, 2003.

 

5.                                       Incentive Stock Option Agreement dated
March 12, 2002.

 

6.                                       Non-Statutory Stock Option Agreement
dated March 12, 2002.

 

7.                                       Incentive Stock Option Agreement dated
February 8, 2001.

 

8.                                       Non-Statutory Stock Option Agreement
dated February 8, 2001.

 

9.                                       Incentive Stock Option Agreement dated
May 11, 2000.

 

10.                                 Non-Statutory Stock Option Agreement dated
May 11, 2000.

 

11.                                 Incentive Stock Option Agreement dated May
12, 1999.

 

12.                                 Incentive Stock Option Agreement dated
August 7, 1998.

 

13.                                 Incentive Stock Option Agreement dated
February 24, 1998.

 

14.                                 Incentive Stock Option Agreement dated May
20, 1997.

 

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EXHIBIT B

 

CAREER SERVICES

 

EXECUTIVE SERVICE
Access: 12 months

 

Executive Service is a flexible program designed to help executives plan and
implement a career strategy, assess opportunities, and successfully redeploy
professional expertise and skills to achieve their career goals as quickly as
possible.

 

Consulting

•                                          Career Consulting: Access to Career
Management Consultants for guidance and advice during the job search process. 
Includes the determination of short- and long-term career objectives and an
implementation plan for a focused campaign.

 

•                                          Spouse/Partner Consulting: Limited
adult family support in consulting process, if required.

 

•                                          Leadership Development: Assessments
to help the candidate identify and develop skills to position himself or herself
for success in the next job.

 

Logistics & Support

•                  Professional Environment and Support Services: Scheduled work
space; long distance telephone and fax services; voicemail; resumé design and
production; stationery and envelopes; word processing; mailing; access to
copiers and personal computers.

 

Learning Center

•                                          Career Assessment: An effective
change process begins with the examination of motivators, strengths, interests
and values.  This module demonstrates how to identify ideal job and work
environments including occupational options and industries to consider. 
Equipped with this knowledge, participants can develop an articulate
presentation statement.

 

•                                          Resumé Development: An overview of
the elements needed to produce a professional resume including the purpose of
the resume and reasons for using different resume formats.  Discusses resume
options as well as resume supplements and professional reference listings.

 

•                                          Self-Marketing: This module
demonstrates the power of planning to target best-fit opportunities.  Candidates
learn to distinguish between proactive and reactive search strategies.  Examines
traditional job search methods, including executive recruiters, job ads and
postings, and career fairs will be examined.  Also reviews non-traditional
options such as executive temporary and interim assignments.

 

•                                          Networking Strategies: Building a
network of strategic contacts is essential to moving the job campaign forward. 
This module explains the fundamentals involved in building this network.  It
focuses on pre-meeting planning and conducting productive information and
referral meetings.

 

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•                                          Interviewing Strategies: Explores the
dynamics of the interview process, various interviewing styles and selection
techniques.  Participants learn to practice for the interview, anticipate
sensitive and difficult questions, and formulate responses.

 

•                                          Negotiating Strategies: This session
explores the various techniques for effective negotiating.  Examines verbal and
non-verbal protocols during the negotiation process in addition to the
interviewer/interviewee roles.  Candidates review the techniques for negotiating
a mutually beneficial agreement with the potential employer.

 

•                  Enrichment: Special events held in the Learning Center.  They
differ from month-to-month and office-to-office.  Offices typically offer some
regularly (i.e. financial planning, career mapping, etc.) and some as needed
(i.e. entrepreneurship, consulting networking, work/life balance, leadership,
executive recruiters, working in the not-for-profit sector, etc).

 

Job Search Communications

•                                          Research and Intelligence Resources:
Advice and guidance from the Marketplace Resource Consultant on how to
effectively use online databases and printed materials to gather information on
industry trends, company performance, wage/salary surveys, and executive
backgrounds.

 

•                                          Right-from-HomeÔ:  Our proprietary
website features complete access to assessments, online consulting, eLearning
modules, targeted market and job search links.  Candidates have access to
Right’s proprietary job bank to reach advertised positions.  Also, they can
apply, online, to various vocational sites.  This service is accessible from any
computer with an Internet connection.  Candidates also have access to Right’s
alumni website upon program completion.

 

RIGHT

MANAGEMENT CONSULTANTS

 

MANAGING THE HUMAN SIDE OF CHANGE

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Bio-Vascular, Inc.

 

EXHIBIT C

 

EMPLOYEE PATENT AND
CONFIDENTIAL INFORMATION AGREEMENT
AND ATTACHMENT

 

In consideration of my employment by BIO-VASCULAR, INC., its successors and
assigns, hereinafter referred to as the Company, and in consideration of the
payment of salary or wages during the continuance of such employment, I hereby
agree:

 

1.                                       I shall, both during my employment and
after termination, hold in a confidential capacity any proprietary or financial
information, and will not disclose to anyone else, any and all information which
I now have or may acquire respecting confidential activities of the Company.

 

2.                                       I will disclose promptly and fully in
writing to the Company, or its nominee, all inventions, improvements, or
discoveries, whether patentable or unpatentable, made or conceived by me during
the period of my employment, either solely or jointly with others, either in the
course of such employment or with the use of the Company’s time, material, or
facilities, or directly related to the business of the Company.  I will assign
to the Company all right, title, and interest in and to all such inventions,
improvements, or discoveries, and in and to any patents resulting therefrom. 
SEE ATTACHMENT.

 

3.                                       I will assist the Company at its
expense during and subsequent to my employment in every proper way: (a) to
obtain for its own benefit patents for such inventions in any and all countries,
and (b) in any controversy or legal proceeding relating to such inventions,
improvements, or discoveries, or to the patents resulting therefrom.

 

4.                                       I will not use or disclose, directly or
indirectly, to any unauthorized person without prior written permission to the
Company at any time during or subsequent to my employment, any knowledge which I
acquire respecting the Company’s inventions, technical information, designs,
methods, trade secrets, customers, contracts, bids, or other confidential
information acquired in connection with my employment.

 

5.                                       I hereby recognize that the Company now
has and hereafter shall have and retain the exclusive right in any and all
trademarks, trade names, product names, character names and advertising material
either belonging to, prepared for or used by any of them, whether or not
originated, prepared, published or produced in whole or in part by me, and I
shall not at any time claim any right, title or interest in any thereof.

 

6.                                       Upon leaving the employment of the
Company, I will return to the Company, all written and graphical material; any
copies, abstracts, or summaries of any papers or documents,

 

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tools and equipment (other than that owned by me) in my possession or under my
control relating to the business of the Company.

 

7.                                       All inventions, improvements, or
discoveries claimed to have been made or conceived by me during the first year
following the termination of my employment by the Company and related to the
Company’s business shall be presumed to have been made or conceived during the
period of employment and shall be subject to the provisions of this Agreement
unless I can establish the contrary to the reasonable satisfaction of the
Company or of a court of competent jurisdiction.

 

8.                                       I represent that, except as stated on
the reverse of this Agreement, I have no presently effective agreements with or
obligations to others in conflict with the foregoing.  I have listed on the
reverse of this Agreement all inventions, improvements, discoveries, and patents
heretofore made, conceived, or acquired by me in which I have any right or
interest.  I hereby waive any and all rights which I may have relating to
technical information, inventions, and discoveries, except those rights based
upon valid patents listed on the reverse hereof.

 

9.                                       In the event any provisions of this
Agreement shall be held invalid by a court of law, it shall be considered to be
severable; and all other provisions shall continue in full force and effect.

 

The provisions of this Agreement shall be binding upon my heirs, executors,
administrators, or other legal representatives or assigns.

 

 

WITNESSED:

AGREED TO:

 

 

 

 

 

 

/s/ Gregory S. Furness

 

Employee

 

 

 

 

 

 

February 4, 1997

 

Date

 

 

ACCEPTED AND AGREED TO:

 

BIO-VASCULAR, INC.

 

 

 

 

 

By

 

 

 

 

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ATTACHMENT TO EMPLOYEE PATENT
AND CONFIDENTIAL INFORMATION AGREEMENT

 

NOTICE TO EMPLOYEE

 

This NOTICE is given to the Employee pursuant to Minnesota Statutes Annotated,
181.78 to further define paragraph 2 of the Agreement.

 

The Agreement of the Employee to assign all invention rights to the Company does
not apply to an invention which no equipment, supplies, facility or trade secret
information of the Employee’s own time, and (1) which does not relate (a)
directly to the business of the Company; or (b) to the Company’s actual or
demonstrably anticipated research or development; or (2) which does not result
from any work performed by the Employee for the Company.

 

A copy of this Notice will be given to Employee upon request.

 

I have read and understand this NOTICE:

 

 

/s/ Gregory S. Furness

 

EMPLOYEE

 

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