**Exhibit 10.43**

 

**VALUE ADDED RESELLER AGREEMENT**

 

This Value Added Reseller Agreement (“***Agreement***”) is made effective as of this19th day of June, 2003 (the “***Effective Date***”), by and between ***McKesson Information Solutions**LLC****,*a Delaware limited liability company, having a principalplace of business at 5995 Windward Parkway, Alpharetta, Georgia 30005 (“***McKesson***”), and ***Vital Images, Inc.***, aMinnesota corporation, having a principal place of business at 3300 FernbrookLane N., Suite 200, Plymouth, Minnesota 55447 (“***Vital***”).

 

**RECITALS**

 

A.                                   McKessondevelops and licenses certain products and desires to increase sales of suchproducts.

 

B.                                     Vitalowns, distributes and supports certain software known and marketed as “Vitrea 23D workstation.”

 

C.                                     McKessondesires to acquire and Vital desires to grant to McKesson a license to use,market, sublicense, and distribute the Vital software together with McKessonsoftware (the “Integrated Software) and services to McKesson’s customers andprospective customers for use in the management of medical images (the “TargetMarket”) under the terms and conditions of this Agreement.

 

**NOW, THEREFORE**, theparties agree as follows:

 

 

**1.****                                      DEFINITIONS**

 

Except as otherwise stated herein, capitalized terms used in thisAgreement will have the meanings set forth in Exhibit A hereto.

 

 

**2.****                                      SOFTWARELICENSE**

 

2.1                                 SoftwareLicense Grant.  Subject to the termsand conditions of this Agreement, Vital hereby grants to McKesson anonexclusive, nontransferable (except as provided in Sub-Section 7.10.3 -Assignment), license;

 

2.1.1                        Rightto Use Vital Software.  to use theVital Software (including all Generally Available future releases, bug fixes,enhancements, Documentation, the Interfaces and, all marketing / productinformation and materials used in the sales process including any standardboilerplate RFP responses) on any computer system operated by McKesson, for thepurposes of interfacing and/or integrating the Vital Software with McKessonSoftware, testing, quality assurance, providing end user customer support,training of internal employees and Customers, and performing salesdemonstrations to Customers;

 

2.1.2                        Rightto Use Documentation.  to use andIncorporated all or any portion of the Documentation into documentation createdby McKesson, provided that McKesson identifies such Documentation, or portionsthereof as being proprietary to Vital, where applicable; and McKesson’s use ofsuch Documentation or portions thereof shall not be in any manner likely tomislead or confuse Customers or contain any material inaccuracies;

 

2.1.3                        Rightto Sublicense.  to market,sublicense, and distribute the Vital Software (including all GenerallyAvailable future releases, bug fixes, enhancements, Interfaces Documentation,and all marketing / product information and other materials used in the salesprocess) in the Territory to the Target Market, provided McKesson first obtainsa written Sublicense Agreement (the license term of which may be perpetual)with the Customer.  The right to market,sublicense, and distribute the Vital Software to Customers includes the rightto offer the Vital Software to McKesson Customers only as integrated withMcKesson Software.  All SublicenseAgreements shall include language substantially similar to the terms set forthin Section 2.2.

 

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2.1.4                        Rightto Copy.  to copy the Vital Softwareonly as reasonably necessary to exercise the license rights granted inSub-Sections 2.1.1–2.1.3 above, including making a reasonable number of copiesfor testing, backup and archival purposes.

 

2.2.                              LicenseRestrictions.  The following LicenseRestrictions apply to the license granted to McKesson pursuant to thisAgreement, and McKesson acknowledges and agrees that each Sublicense granted toMcKesson Customers pursuant to a Sublicense Agreement shall include languagesubstantially similar to the license restrictions below and such otherprotections for McKesson’s intellectual property as would be customary toinclude in license agreements for similar software.

 

2.2.1                        Copyingand Modification.  McKesson will notmodify or copy the Vital Software, in whole or in part, except as expresslyauthorized in this Agreement; and will not grant such rights to a Customerunder a Sublicense Agreement.  McKessonshall not remove or alter any trademark, copyright notice or other proprietarynotice incorporated in, marked on or affixed to any Vital Software orDocumentation by Vital or its licensors, and shall duplicate each suchtrademark or notice on each copy of such Vital Software or Documentation; andMcKesson will not grant any rights to remove any such notices or trademarks toa Customer under a Sublicense Agreement. McKesson shall reference Vital’s copyrights in strategic locations inthe Integrated version of the McKesson software, such as the “About” box  and any other locations as mutually agreedto by the parties, for the purpose of protecting Vital’s copyrights and otherproprietary rights in the Vital Software.

 

2.3.2                        ReverseEngineering.  McKesson acknowledgesand agrees that the Vital Software contains trade secrets of Vital and itslicensors, and, in order to protect such trade secrets and other interests thatVital and its licensors may have in the Vital Software, as permitted byapplicable law, McKesson shall not disassemble, decompile or reverse engineerthe Vital Software nor permit any third party to do so including any Customerpursuant to a Sublicense Agreement.

 

2.3.3                        FacilityUse Limitation.  McKessonacknowledges and agrees that it will not grant to Customers the right to usethe Vital Software at any facility other than at a McKesson Customer Facilityas defined and agreed to in each Sublicense Agreement, Section 1, exceptthat McKesson may grant to Customer the right to use the Vital Software on atemporary basis at an alternate location if a Customer is unable to use theVital Software at such Facility or facility of Service Provider due toequipment malfunction or any cause beyond Customer’s or its Service Provider’sreasonable control.

 

2.3.4                        DispositionLimitation.  McKesson acknowledgesand agrees that it will not transfer, rent, loan, lease, sublicense orotherwise distribute the Vital Software to any third party, except as otherwise expressly granted herein; andMcKesson will not grant such rights to any Customer in a Sublicense Agreement.

 

2.3.5                        ServicesLimitation.  McKesson acknowledgesthat it will not grant the right to Customers in any Sublicense Agreement touse the Vital Software in any manner to provide service bureau, timesharing orother computer services to third parties.

 

2.4                                 LimitedRights.  McKesson acknowledges thatits rights in the Vital Software will be limited to those expressly granted inthis Section 2 and McKesson shall similarly limit any rights granted to aCustomer pursuant to a Sublicense Agreement. Vital reserves all Intellectual Property Rights and any other rights andlicenses in and to the Vital Software not expressly granted to McKessonhereunder.

 

2.5                                 SoftwareTesting by McKesson.  McKesson willhave the right to test any Vital Software delivered by Vital hereunder(including the initial and subsequent New and Major New Releases) to ensurethat when properly installed in accordance with McKesson’s written installationinstructions, configured and implemented on a system that meets the minimumrecommended system requirements set forth in the applicable VitalDocumentation, it performs in all material respects in accordance with theapplicable Documentation prior to offering such Vital Software for licensing toMcKesson Customers.  The initial testingof the Vital Software may be performed by McKesson with assistance from Vitalduring pilots at Customer Facilities as the parties may agree (the “Pilots”).  In the event that McKesson identifies anyproblems with the Vital Software during the Pilots and any subsequent testing,McKesson shall provide Vital with a reasonably detailed written report thatidentifies any Defect.  In such event,Vital will use commercially reasonable efforts to correct such Defect or “bugs”to the extent necessary in order for the Vital Software to perform in allmaterial respects in accordance with the applicable Documentation.

 

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2.6                                 VitalSoftware Warranties.

 

2.6.1                        Performance.  Provided that the Vital Software has beenproperly installed in accordance with Vital’s written installationinstructions, configured and implemented on a system that meets the minimumrecommended system requirements set forth in the Documentation, Vital warrantsthat the Vital Software, and all subsequent modifications, Corrections,enhancements, and New Releases (including Major New Releases) of VitalSoftware, will perform in all material respects in accordance with thefunctional specifications set forth in the Documentation.

 

2.6.2                        Compliance.  The Vital Software will meet and comply withall applicable, Federal, state and local laws, statutes, and regulations.

 

2.6.3                        Obstructions.  Vital warrants that the Vital Software, asdelivered to McKesson (or a McKesson Customer if sent directly from Vital tosuch Customer), does not contain any virus, worm, trap door, back door or otherdevice that would interfere with or disrupt the use of the Vital Software inaccordance with the Documentation, or that would corrupt or erase any data.

 

2.7                                 ComprehensiveSupport; Correction of Defects.

 

2.7.1                        Obligationsto Provide Comprehensive Support. Except as otherwise provided in Sub-Section 2.7.2 below, Vitalshall provide to McKesson reasonable Software Support and Maintenance Servicesas defined in **Exhibit F**commencing on the Effective Date of this Agreement and, subject toSection 2.7.2. continuing thereafter for the Term of this Agreement.  Regardless of whether such services are performed during theInitial Term, any Renewal Term or thereafter, Vital will be compensated forrendering Software Support and Maintenance Services in accordance withSub-Section 6.2 and **Exhibit C**hereto.

 

2.7.2                        Correctionof Defects; Comprehensive Support Period. Vital agrees to provide Comprehensive Support for each New Releaseincluding Correction of Defects for a period of six (6) months following theGeneral Availability of a Major New Release (“Comprehensive SupportPeriod”).  Notwithstanding anything hereinto the contrary, after the Comprehensive Support Period, Vital will be nolonger obligated to provide Corrections for Defects prioritized as High, Mediumor Low but will provide Corrections for Critical Defects and all other supportobligations of Comprehensive Support. Notwithstanding the above, Vital shall be obligated to support only thethen-current Release of the Vital Software and the immediately prior Release.

 

2.7.3                        Vital’sInability or Unwillingness to Correct Defects.  Upon notification in writing to Vital’s Hotline manager of a Defect,Vital shall evaluate the feasibility of providing a Correction within thepre-approved time frames depending on the priority level of such Defect(Critical, High, Medium, or Low) as defined in **Exhibit A** hereto. Vital shall then commence to use the appropriate level of effort toprovide such Correction within the corresponding time frame as defined in **Exhibit A**.  If Vital, in its sole discretion, determines that it is unwillingor unable to provide such Correction within the required timeframe; or if Vitalcommences to provide a Correction to such Defect, but McKesson, in its solediscretion, does not believe that such Correction can be, or has been, providedwithin a commercially reasonable time frame, then, McKesson shall notify Vitalin writing.

 

2.8                                 TrademarkRights.

 

2.8.1                        VitalTrademarks.  Vital grants McKesson,a non-exclusive, non-transferable (except as set forth inSub-Section 7.10.3) limited right to use and display Vital’s trademarks,to advertise and promote the Vital Software. McKesson shall use such trademarks in accordance with the guidelinesestablished by Vital (as amended from time to time), a current copy of which isattached to this agreement as Exhibit H. McKesson shall not receive any ownership in or to Vital’s trademarks asa result of such use.  McKesson shallnot use any of Vital’s trademarks, service marks, logos, or slogans in anymanner likely to confuse, mislead, or deceive the public, or to be adverse tothe best interests of Vital.

 

2.9                                 SourceCode Rights.

 

2.9.1                        Escrow.  Vital agrees that it will deposit with itsescrow agent the Source Code for the Vital Software and all futureenhancements, bug fixes, corrections, New Releases and Major New Releases madeGenerally Available during the Term and that the same will be consideredDeposit Materials under Vital’s current

 

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escrow agreement for purposes of this Agreement.  Such deposits shall be made within sixty(60) days of the date such Deposit Material is made Generally Available.  Within thirty (30) days following theexecution of this Agreement, Vital shall enroll McKesson as a beneficiary ofthe escrow agreement.  McKesson shall beresponsible for all costs incurred in connection with the naming of McKesson asa beneficiary under the escrow agreement.

 

2.9.2                        Releaseof Deposit Materials from Escrow Account. In the event that a “Release Condition” has occurred pursuant to theescrow agreement, McKesson shall file for release of the Deposit Materials fromthe escrow agent pursuant to the procedures set forth in the escrow agreement.

 

2.9.3                        Licenseto Deposit Materials.  If McKessonobtains the Deposit Materials in accordance with the escrow agreement then,subject to the terms and conditions of this Agreement, Vital hereby grantsMcKesson a nonexclusive, nontransferable (except as provided inSub-Section 7.10.3 of this Agreement), perpetual license to use and modifythe Source Code and Documentation for the sole purpose of correcting errors andbugs in the Vital Software in order for McKesson to continue to provideSoftware Maintenance Services to Customers under Sublicense Agreements and forno other purpose; provided that this license to the Source Code shall not limitthe license granted to McKesson pursuant to Section 2.1 hereof.  Any such rights to correct errors and bugswill be limited to such individuals in McKesson’s organization to whom accessis necessary to accomplish said permitted use of the Source Code,Documentation, and any other materials that comprise the Deposit Materialspursuant to this Sub-Section, and McKesson shall keep the Source Code andDocumentation no less secure as the source code and documentation forMcKesson’s Software.  In the event thatMcKesson makes any modifications to the Source Code in-accordance with itsrights under this Agreement, Vital shall not be required to incorporate anysuch changes to the Generally Available Vital Software.

 

2.9.4                        ConfidentialTreatment.  Vital shall retain allright, title and interest in and to the Deposit Materials, and accordinglyMcKesson will treat the Deposit Materials as Vital’s Confidential Informationunder Sub-Section 7.3.  McKessonshall maintain a log of the individuals who have access to the Deposit Materialsand where the Deposit Materials are located. Upon reasonable advance written notice to McKesson, McKesson shallprovide Vital with access to such log.

 

2.10                           PhasedIntegration.  McKesson and Vitalagree to follow a phased integration plan, as outlined in Exhibit G, in thedevelopment of the Integrated Software.

 

**3.****                                      MARKETINGACTIVITIES.**

 

3.1                                 MarketingActivities.

 

3.1.1                        PressReleases.  Subject to each party’sprior written approval, either party may issue a press release from time totime to publicize other significant events regarding joint businessdevelopments.

 

3.1.2                        MarketingCollateral.  Vital shall provideMcKesson with a single electronic copy of any marketing and promotionalmaterials that Vital uses in its own efforts to market the Vital Softwareoutside the Target Market so that McKesson may modify these materials for thepurpose of marketing its version of the Integrated Software in the TargetMarket.  Additionally, the parties willwork together based on mutual agreement to develop articles or materialregarding the Vital Software for McKesson marketing publications, and any othermarketing publications released by McKesson from time to time during the termof this Agreement.  At McKesson’s solediscretion, McKesson shall include references to the Vital Software inpresentations, and shall be responsible for the design and development ofmarketing collateral for the Vital Software when such software is integratedwith McKesson Software.

 

3.1.3                        RFPResponses.  Vital shall provideassistance, as reasonably necessary and agreed upon, to support McKesson’sefforts to formulate “stock” responses to requests for proposals (“RFP’s”) fromMcKesson Customers in which such responses shall recommend the Vital Softwareas a McKesson recommended solution, or a component thereof.  Such cooperation to include, withoutlimitation, providing McKesson with Vital’s standard RFP responses, andproviding any other reasonable assistance as needed to ensure the accuracy ofMcKesson’s responses to questions regarding Vital Software, the development andmaintenance of standard information to use in RFP responses, and clarificationsof such responses.

 

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3.1.4                        Representatives.  Each party shall assign a representative whoshall serve as that party’s point-of-contact or facilitator between the partieson all matters arising under this Agreement. The representatives shall meet on a mutually agreed upon basis to reviewand coordinate all activities under this Agreement, including development,support, marketing, and sales, and to amicably resolve any disputes which mayarise under this Agreement.

 

3.1.5                        TradeShow Attendance.  Vital shallparticipate with McKesson as mutually agreed at vendor fairs and healthcareinformatics industry trade shows, seminars and selected user group events.

 

 

**4.****                                      MCKESSONRESPONSIBILITIES.**

 

4.1                                 Marketing.  McKesson shall use commercially reasonableefforts to activety market the Vital Software.

 

4.2                                 Installation,Training, and Software Maintenance Services.  Unless otherwise agreed to by the parties, the intent is forMcKesson to provide services directly to Customers for Installation of theIntegrated Software at the Customer’s site, training of Customer personnel, andSoftware Maintenance Services.  McKessonhas the option of requesting installation support from Vital for any of thecustomer installations, provided that McKesson gives reasonable advance noticeto Vital of its intention to use Vital support for an installation.  Vital shall provide such support on a besteffort basis under rates specified in Exhibit C.

 

4.3                                 Deploymentof New Releases.  McKesson shall usereasonable efforts to evaluate New Releases of the Vital Software for thepurpose of integrating, sublicensing and distributing such New Releases toMcKesson Customers that have purchased Software Maintenance Services fromMcKesson for the Integrated Software, or to future Customers.  While it is the parties’ desire thatMcKesson certify such New Releases as ready for resale and/or distribution toMcKesson Customers, they acknowledge that the integration of McKesson Softwarewith Vital Software (and not sublicensed as a stand-alone product), is acomplex process and that such changes may require substantial developmentefforts on behalf of McKesson, third parties and McKesson Customers, and thatwhether the New Releases are incorporated into or integrated with any McKessonSoftware and offered for resale / sublicense to McKesson Customers is in thesole discretion of McKesson.

 

4.4                                 Enforcementof Sublicense Agreements.  Pursuantto Sub-Section 2.1.3, McKesson shall obtain a written Sublicense Agreement(the license term of which may be perpetual) with the Customer prior todistribution of the Vital Software to any Customer.  The Sublicense Agreement shall be as protective of Vital’s rightsand intellectual property as McKesson’s rights and intellectual property.  In the event McKesson becomes aware of abreach of a Sublicense Agreement by a McKesson Customer which affects Vital’srights, It shall use commercially reasonable efforts to enforce the terms ofthe Sublicense Agreement, using no less efforts that Vital would use to protectits own rights under similar circumstances.

 

4.5                                 Reporting.  McKesson shall furnish Vital with thefollowing reports.

 

4.5.1                        RoyaltyReports.  McKesson shall provideVital with quarterly reports setting forth (i) the names and addresses ofCustomers to whom the Vital Software has been sublicensed and shipped in theprior calendar quarter, (ii) the McKesson list price for the Vital Software,(iii) the license fee actually charged to each Customer by McKesson (or itsAffiliates or Distributors) pursuant to a Sublicense Agreement, and (iv) anyother pertinent information agreed to by the parties for the purpose ofdocumenting the basis for payment of Royalties and Fees for SoftwareMaintenance Services by McKesson to Vital as set forth in Section 6 ofthis Agreement, and **Exhibit C**attachedhereto and incorporated herein by reference (“Royalty Reports”).  Such Royalty Reports shall be supplied toVital within thirty (30) days following the last day of the calendar quarterfor such calendar quarter (e.g. the report for the calendar quarterbeginning January 1 and ending March 31 shall be due on or beforeApril 30).

 

4.5.2                        Estimateof Total Revenue from Customers. Within ten (10) business days following the end of each calendarquarter, McKesson shall provide Vital with an estimate of the total revenuegenerated by sales to Customers for such prior calendar quarter of the VitalSoftware.

 

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4.5.3                        Reportingof Problems with Vital Software. McKesson shall promptly inform Vital of any problems with the VitalSoftware that have come to its attention, and shall assist Vital in remedyingany such problems as required to ensure Customer satisfaction.

 

4.5.4                        Costof 3rd Party Software Licenses. Vital Software license fee does not include any 3rd partysoftware licenses.  If McKesson does notlicense such 3rd party software from other sources, then such 3rdparty software licenses required by the Vital Software, that is utilized byMcKesson, will be acquired through Vital. The same discount specified in Exhibit C for Vital Software will beapplied to the markup of such 3rd party software licenses.

 

 

**5.****                                      VITALRESPONSIBILITIES.**

 

During the term of this Agreement, Vital shall provide the followingsupport and resources to McKesson:

 

5.1                                 Deliveryof Vital Software.  Vital shalldeliver to McKesson the Vital Software both for its internal use solely inconnection with the obligations of McKesson set forth in Section 2.1, andfor marketing, sublicensing, and distribution of such Vital Software toCustomers.  The specific procedures forthe initial delivery of the Vital Software, delivery of subsequent NewReleases, upgrades, Enhancements and Documentation, and the delivery of theVital Software to Customers are set forth in **Exhibit D** attached hereto and incorporated herein byreference.

 

5.2                                 Marketing.  Vital shall provide McKesson with all suchassistance in marketing of the Vital Software as set forth in Section 3 ofthis Agreement.

 

5.3                                 Assistanceto McKesson.  Following execution ofthis Agreement, Vital shall provide McKesson with the training, integrationwork, testing and Pilot of the Vital Software, and all other related activitiesas may be mutually agreed upon by the parties.

 

5.4                                 Documentation.  Vital will supply McKesson, at no charge,with an electronic copy of the Documentation for the Vital Software to be usedand distributed by McKesson Customers, and McKesson may reproduce suchDocumentation at no additional charge as necessary to provide suchDocumentation to Customers.

 

5.5                                 TechnicalSupport and Software Maintenance Services. Vital shall provide McKesson with Technical Support and SoftwareMaintenance Services as defined in **ExhibitF** attached hereto and incorporated herein by reference, and asmore fully set forth in Sub-Section 2.7.

 

5.6                                 Pre-releases.  Upon McKesson’s reasonable request, Vitalshall provide newly developed or beta versions (“Pre-releases”) of VitalSoftware for review, evaluation, training and planning purposes.  Vital shall make Pre-releases available toMcKesson as soon as possible, and in no event later than when Vital makes thesame available to other value-added resellers of the Vital Software.  Notwithstanding anything herein to thecontrary, the license granted to McKesson with respect to any Pre-release shallbe a limited non-exclusive, non-transferable right and license to use theobject code version of the Pre-release for McKesson’s internal purposes solelyin connection with evaluating the Pre-release. In no event will McKesson seek to obtain source code relating to thePre-release or attempt to copy, alter, modify, reverse engineer, disassemble ordecompile any Pre-release.  All informationconcerning the Pre-release including, without limitation, its functionality andany errors, defects or malfunctions, shall be considered ConfidentialInformation of Vital.  In the event ofany such revocation or termination, McKesson shall promptly return to Vital allcopies of the Pre-release in its possession or control.  Once a Pre-release becomes GenerallyAvailable Vital Software, the license granted pursuant to thisSub-Section no longer applies.  ANYPRE-RELEASE SOFTWARE IS PROVIDED TO MCKESSON “AS IS” AND VITAL MAKES NOWARRANTIES AND SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES REGARDING THEPRE-RELEASE SOFTWARE.

 

5.7                                 Participationin Development.  McKesson and VitalProduct management groups shall meet on a agreed-upon basis for the purposes ofgathering input for the future direction and ongoing development of VitalSoftware and to product rollout schedules, release schedules, and contemplatednew releases and enhancements.

 

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**6.**                                      **FEES; PAYMENT TERMS.**

 

6.1                                 Royaltiesto Vital for Sales of Vital Software to Customers.  McKesson shall pay to Vital royalties forthe sublicense of each copy of Vital Software sublicensed to a Customerpursuant to a Sublicense Agreement (the “Royalties”).  The Royalties, and associated payment terms, are morespecifically defined in **Exhibit C**attached hereto and incorporated herein by reference.

 

6.2                                 Feesfor Software Maintenance Services. McKesson shall pay to Vital a fee for Software Maintenance Services foreach copy of the Vital Software sublicensed to a Customer pursuant to aSublicense Agreement (“Fees for Maintenance Services”).  The Fees for Maintenance Services, andassociated payment terms, are more specifically defined in **Exhibit C** attached hereto and incorporatedherein by reference.

 

6.3                                 CustomerFees.  McKesson shall determine thefees to be charged to McKesson Customers for the Vital Software, including feesfor the software license, implementation, maintenance and support services,training, and any other fees for services mutually agreed upon by McKesson andCustomer(s) in a Sublicense Agreement. McKesson agrees that when Vital Software is licensed to a Customersimultaneously with McKesson’s software as set forth on a Sublicense Agreement;then, McKesson shall not discount the Vital Software any more than the discountoffered to a Customer for the McKesson software licensed to Customer under thesame agreement.  McKesson shall notifyVital of its intended list price of Vital Software and any price changethereafter.

 

7.                                       **GENERAL TERMS**

 

7.1                                 Payment.

 

7.1.1                        PaymentTerms.  The payment terms for theRoyalties and Fees for Maintenance Services payable to Vital are set forth in **Exhibit C** attached hereto andincorporated herein by reference.

 

7.1.2                        Taxes.  All amounts payable under this Agreement areexclusive of all sales, use, value-added, withholding, and other taxes andduties.  McKesson will promptly pay alltaxes and duties assessed in connection with any such amounts except for taxespayable on Vital’s net income.

 

7.1.3                        AuditRights.  During the term of thisAgreement and for a period of three (3) years following any termination orexpiration of this Agreement, the parties shall each keep complete and accuraterecords of transactions involving the Vital Software and use of such VitalSoftware by Customers, and provision of services, including development of alldeliverables pursuant to this Agreement, by each party.  During such time, McKesson shall permit anindependent third party auditor appointed by Vital and reasonably acceptable toMcKesson to examine and audit such specific records during reasonable businesshours upon fifteen (15) days prior written notice with respect to the auditedparty’s compliance with the terms of this Agreement.  If such an audit uncovers a deficiency in payment to the auditingparty of greater than five percent (5%) in reporting or payments for theaudited period, the audited party shall bear the actual and direct auditexpenses and immediately pay such deficient amount; otherwise the auditingparty shall bear the costs of such audit. Such audit rights and obligations set forth in thisSub-Section 7.1.3 extend to such Affiliate(s) or Distributor(s) that hassublicensed the Vital Software to a Customer pursuant to the terms of thisAgreement.

 

7.2                                 ProprietaryRights.  Except for license rightsexpressly granted by Vital under this Agreement, each party will retain allrights, title and interests in and to its Intellectual Property Rights. 

 

7.3                                 Confidentiality.

 

7.3.1                        Obligationsof the Parties.  McKesson and Vitalacknowledge that in the course of testing, installing, utilizing andmaintaining the Vital Software, each party will become familiar with certainnon-public proprietary or trade secret information of the other party concerningthe other’s business affairs and financial data (including the terms andconditions of this Agreement), property, methods of operation, processingsystem or other information (collectively, ***“Confidential Information”***).  Each party may use and disclose ConfidentialInformation (a) only as permitted under this Agreement (b) only to the extentrequired to fulfill that party’s obligation under this Agreement (c) only tothe extent required for the proper management and administration of each respectiveparty and (d) only in accordance with applicable law.  McKesson and Vital hereby agree to maintain 

 

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Confidential information in its possession using at least the degree ofcare and security as each use to maintain the confidentiality of its ownConfidential Information, but in no event shall the parties use less thancommercially reasonable efforts to protect such Confidential Information.  Upon becoming aware of any use or disclosureof Confidential Information not provided in this Agreement, a party shallpromptly report such use or disclosure to the other party and a party willpromptly notify the other party of the Institution of any proceedings to obtainsuch Confidential Information.  Theprovisions of this Sub-Section 7.3 shall survive termination or expirationof this Agreement.

 

7.3.2                        Remedies.  A breach of the provisions of thisSub-Section shall be considered a material breach of this Agreement.  McKesson and Vital acknowledge that their disclosureof any of the other party’s Confidential information not in accordance withthis Agreement without the other’s prior written consent may give rise tocontinuing irreparable injury to the non-disclosing party, that, therefore willbe inadequately compensable in damages at law. Accordingly, the non-disclosing party shall be entitled to seekinjunctive relief against the breach or threatened breach by the disclosingparty of any of the foregoing undertakings, in addition to any other legalremedies which may be available, and the disclosing party hereby consents tothe obtaining of such injunctive relief.

 

7.3.3                        Exceptions.  Information shall not be consideredConfidential Information under this Section that: (i) is publicly knownprior to or after disclosure hereunder other than through acts or omissionsattributable to the recipient or its employees or representatives in violationhereof; (ii) as demonstrated by prior written records, is already known to therecipient at the time of disclosure hereunder; (iii) is disclosed in good faithto the recipient by a third party having a lawful right to do so; or (iv) isthe subject of written consent of the party which supplied such informationauthorizing disclosure.

 

7.4                                 GeneralWarranties and Disclaimers.

 

7.4.1                        CorporateAuthority.  Each party warrants thatit is a duly organized and validly existing corporation and has complete andunrestricted corporate power and authority to enter into this Agreement.

 

7.4.2                        Disclaimer.  THE WARRANTIES EXPRESSLY PROVIDED IN THISAGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDINGBUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR APARTICULAR PURPOSE, WHICH WARRANTIES ARE HEREBY SPECIFICALLY DISCLAIMED.

 

7.5                                 IntellectualProperty Infringement.

 

7.5.1                                                InfringementIndemnity by Vital.  Vital willdefend or settle at Vital’s own expense, any action or other proceeding broughtagainst McKesson or a McKesson Customer to the extent that it is based on aclaim that the use of the Vital Software delivered under this Agreementinfringes any copyright or that the Vital Software incorporates anymisappropriated trade secrets.

 

7.5.1.1                                       Conditions.  Vital will have no obligation under thisSub-Section 7.5 as to any action, proceeding, or claim unless: (i) Vitalis notified of the action, proceeding, or claim promptly and in any eventwithin ten (10) business days (excluding national holidays); (ii) Vital hassole control of the defense and settlement of the action, proceeding, or claim;and (iii) McKesson provides Vital with reasonable assistance, at Vital’sexpense (excluding McKesson’s personnel expense) in connection with the defenseand settlement of the action, proceeding, or claim.

 

7.5.1.2                                       Exclusions.  Vital will have no obligations under thisSub-Section 7.5 with respect to infringement or misappropriation claimsarising from: (i) modifications to Vital Software that were not performed byVital or authorized by Vital in writing; or (ii) the use or integration of theVital Software delivered under this Agreement in combination with products,software or other technologies not provided by Vital, if the claim would nothave arisen but for the particular combination.

 

7.5.1.3                                       Injunctions.  If McKesson’s and/or any Customers’ use ofthe Vital Software is, or in McKesson’s opinion is likely to be, enjoined dueto a claim of infringement or misappropriation as specified inSection 7.5.1, then Vital may, at its sole option and expense: (i) obtainfor McKesson and McKesson Customers the right to continue using such VitalSoftware under this Agreement and any Sublicense Agreement; (ii) replace ormodify such Vital Software to avoid such a claim, provided that the replaced ormodified Vital Software is substantially

 

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equivalent in function tothe affected Vital Software; or (iii) if options (i) and (ii) above are notpractical in McKesson’s reasonable opinion, then Vital may take possession ofthe affected Vital Software and terminate McKesson’s rights andMcKesson’s obligations under this Agreement in respect of such Vital Software,and upon any such termination Vital will refund to McKesson a portion of theRoyalties paid for that Vital Software based upon five (5) year straight-linedepreciation, with depreciation deemed to have commenced on the correspondingdate of delivery to McKesson and/or the specific Customer(s).

 

7.5.1.4                                       ExclusiveRemedy.  THE FOREGOING ARE VITAL’SSOLE AND EXCLUSIVE OBLIGATIONS, AND MCKESSON’S SOLE AND EXCLUSIVE REMEDIES,WITH RESPECT TO INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL PROPERTYRIGHTS.

 

7.5.2                                                InfringementIndemnity by McKesson.  McKessonwill defend or settle at McKesson’s own expense, any action or other proceedingbrought against Vital to the extent that it is based on a claim that the use orintegration of the McKesson Software with the Vital Software and use of theIntegrated Software infringes any copyright or that the Integrated Softwareincorporates any misappropriated trade secrets.

 

7.5.2.1                                       Conditions.  McKesson will have no obligation under thisSub-Section 7.5 as to any action, proceeding, or claim unless: (i)McKesson is notified of the action, proceeding, or claim promptly and in anyevent within ten (10) business days (excluding national holidays); (ii)McKessonhas sole control of the defense and settlement of the action, proceeding, orclaim; and (iii) Vital provides McKesson with reasonable assistance, atMcKesson’s expense (excluding Vital’s personnel expense) in connection with thedefense and settlement of the action, proceeding, or claim.

 

7.5.2.2                                       Exclusions.  McKesson will have no obligations under thisSub-Section 7.5 with respect to infringement or misappropriation claimsarising from: (i) modifications to McKesson Software that were not performed byMcKesson or authorized by McKesson in writing; or (ii) the use or integrationof the McKesson Software delivered under this Agreement in combination withproducts, software or other technologies not provided by McKesson, if the claimwould not have arisen but for the particular combination.

 

7.5.2.3                                       ExclusiveRemedy.  THE FOREGOING AREMCKESSON’S SOLE AND EXCLUSIVE OBLIGATIONS, AND VITAL’S SOLE AND EXCLUSIVEREMEDIES, WITH RESPECT TO INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUALPROPERTY RIGHTS.

 

7.6                                 Limitationsof Liability.

 

7.6.1                        TotalDamages.  EXCEPT FOR ANY LIABILITYUNDER SUB-SECTION 7.5 (INTELLECTUAL PROPERTY INFRINGEMENT) ANDSUB-SECTION 7.3 (CONFIDENTIALITY), VITAL’S TOTAL LIABILITY UNDER THISAGREEMENT WITH RESPECT TO THE VITAL SOFTWARE OR ANY SERVICES DELIVERED WILL BELIMITED TO THE TOTAL ROYALTIES, FEES FOR MAINTENANCE SERVICES, AND ANY OTHERFEES PAID BY MCKESSON TO VITAL UNDER THIS AGREEMENT.

 

7.6.2                        Exclusionof Damages.  EXCEPT FOR ANYLIABILITY UNDER SUB-SECTION 7.5 (INTELLECTUAL PROPERTY INFRINGEMENT) ANDSUB-SECTION 7.3 (CONFIDENTIALITY), IN NO EVENT WILL EITHER PARTY BE LIABLETO THE OTHER UNDER, IN CONNECTION WITH, OR RELATED TO THIS AGREEMENT FOR ANYSPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES,WHETHER BASED ON BREACH OF CONTRACT, WARRANTY, TORT, PRODUCT LIABILITY, OROTHERWISE, AND WHETHER OR NOT THE OTHER PARTY HAS BEEN ADVISED OF THEPOSSIBILITY OF SUCH DAMAGE.

 

7.6.3                        MaterialConsideration.  THE PARTIESACKNOWLEDGE AND AGREE THAT THE FOREGOING LIMITATIONS OF LIABILITY ARE ACONDITION AND MATERIAL CONSIDERATION FOR THEIR ENTRY INTO THIS AGREEMENT.

 

7.6.4                        Limitationof McKesson’s Obligations.  McKessonreserves the right to withhold service or otherwise cease performance of itsdevelopment, marketing, maintenance and support obligations hereunder withrespect to any McKesson Customer which is found by McKesson to be in default orbreach of any agreement with McKesson with respect to the Vital Software.  Upon such cessation of services, McKessonshall be relieved of 

 

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its performance obligations contained in this Agreement with respect tosuch McKesson Customer, and shall not be found to be in breach of thisAgreement by Vital.

 

7.7                                 Termand Termination.

 

7.7.1                        Term.  This Agreement will commence on theEffective Date and will continue in full force and effect for three (3) years(“Initial Term”), unless earlier terminated as provided for below inSub-Section 7.7.2.  Thereafter,this Agreement will automatically renew for successive one (1) year terms(“Renewal Terms”).  Either party mayterminate this Agreement without cause at the end of the Initial Term or anyRenewal Term by providing at least six (6) months advance written notice to theother party of its intent not to renew. In the event that either party is acquired by or falls under thecontrolling interest of a 3rd party, which shall mean ownership orrights to vote 40% or more of the voting shares, then this agreement may be terminatedwithout cause by providing at least six (6) months advance written notice tothe other party, as long as the notice is given within six (6) months of suchevent.

 

7.7.2                        Terminationof Agreement.  A party may terminatethis Agreement in its entirety immediately upon notice to the other party ifthe other party:  (a) materiallybreaches this Agreement and fails to remedy, or fails to commence reasonableefforts to remedy, that breach within sixty (60) days after receiving notice ofthe breach from the terminating party requiring it to do so; (b) infringes theIntellectual Property Rights and fails to remedy, or fails to commencereasonable efforts to remedy, that breach within thirty (30) days afterreceiving notice of the breach from the terminating party requiring it to doso; (c) materially breaches this Agreement in a manner that cannot be remedied;or (d) commences dissolution proceedings or ceases to operate in the ordinarycourse of business.  Termination of thisAgreement does not automatically terminate the license rights granted toCustomers for the Vital Software (which may be perpetual) pursuant toSublicense Agreements.  A Customer’slicense rights may only be terminated if terminated in accordance with theapplicable terms and conditions of the specific Sublicense Agreement in effectfor the license of such Vital Software to Customer by McKesson.  In the event that McKesson commencesdissolution proceedings or ceases to operate in the ordinary course of businessand therefore can no longer provide Software Maintenance Services of the VitalSoftware to Customers pursuant to the Sublicense Agreements then in effect,Vital shall have the option to assume the obligations to provide the SoftwareMaintenance Services provided that Vital is not in bankruptcy or otherwiseunable to fulfill such Maintenance Services obligations to Customers.

 

7.7.3                        Survivalof Provisions.  The followingprovisions of this Agreement will survive termination or expiration of thisAgreement in perpetuity: Sub-Section 7.3 (Confidentiality), Sub-Section 7.4.2(Disclaimer), Sub-Section 7.5 (Intellectual Property Infringement),Sub-Section 7.6 (Limitations of Liability), Sub-Section 7.7.4(Orderly Transition), Sub-Section 7.7.5 (Return of Software),Sub-Section 7.8 (Books and Records), Sub-Section 7.9 (DisputeResolution) and Sub-Section 7.10 (General Provisions).

 

7.7.4                        OrderlyTransition.  Except for terminationof this Agreement as a result of McKesson’s material breach or infringement ofVital’s Intellectual Property Rights, for a period of one (1) year after theeffective date of termination or expiration of this Agreement (i) each licensegranted by Vital to McKesson to use the Software under this Agreement willcontinue; and (ii) Vital will cooperate with McKesson in a timely manner toassist McKesson to achieve an orderly transition (the “TransitionPeriod”).  Notwithstanding anything tothe contrary and regardless of whether such services are provided during theInitial Term, any Renewal Term, or thereafter, Vital has the right to becompensated for such services as set forth in **Exhibit C,** Section III.

 

7.7.5                        Returnof Software.  At the end of theTransition Period pursuant to Sub-Section 7.7.4, or the effective date oftermination or expiration of this Agreement If no such transition periodapplies, McKesson will promptly cease using and return to Vital or (at Vital’srequest) destroy and erase all copies of the Vital Software in its possessionor control, and certify in writing to Vital that it has done so.

 

7.8                                 Booksand Records.  McKesson and Vitalagree to make available upon the written request of the Secretary of Health andHuman Services or the Comptroller General, or their representatives, thisAgreement and such books, documents and records as may be necessary to verifythe nature and extent of the costs of the services rendered hereunder to thefull extent required by the Health Care Financing Administration implementingSection 952 of the Omnibus Reconciliation Act of 1980, codified at 42U.S.C. Section 1395x(v)(1)(I), or by any other applicable federal or stateauthority.

 

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7.9                                 DisputeResolution.  Any claim arising outof or relating to this Agreement or its subject matter or any right orobligation created by this Agreement, irrespective of the legal theory orclaims underlying such dispute (including tort or statutory claims) (***“Dispute”***) shall beresolved in accordance with this Sub-Section 7.9.  The party asserting the Dispute will giveprompt notice to the other party describing the Dispute in reasonable detail (***“Dispute Notice”***).  Each party agrees not to commence courtproceedings against the other party relating to a Dispute, except that theprovisions of this Section will not prevent a party from commencing courtproceedings seeking injunctive relief for Disputes related to IntellectualProperty Rights or Confidential Information. Promptly after receipt of the Dispute Notice, the parties will negotiatein good faith to resolve the Dispute. If the Dispute has not been resolved within forty (40) days afterreceipt of the Dispute Notice, then either party, by notice to the other party,may refer the Dispute for exclusive, binding and final resolution byarbitration conducted by the American Arbitration Association in accordancewith its Commercial Arbitration Rules and the United States ArbitrationAct.  The arbitration will be conductedby a single arbitrator, with at least five (5) years experience in arbitratingtechnology-related legal disputes, selected jointly by the parties, or selectedby the American Arbitration Association if the parties fall to agree on anarbitrator within a reasonable period. There will be no discovery of documents under the arbitrationprocedure.  A party may enter judgmenton the award rendered by the arbitrators in any court having jurisdiction.

 

7.10                           GeneralProvisions.

 

7.10.1                  GoverningLaw.  This Agreement will begoverned by and construed in accordance with the laws of the State ofMinnesota, exclusive of its rules governing choice of law and conflict oflaws.  Any action of any kind arisingout of or in any way connected with this Agreement must be commenced within one(1) year of the date upon which the cause of action accrued.

 

7.10.2                  ExportAssurance.  Each party shall complywith the U.S. Foreign Corrupt Practices Act and all export laws andrestrictions and regulations of the United States and any country in theTerritory in which such party has the right to market, sublicense anddistribute the McKesson Software pursuant to this Agreement.  Vital hereby acknowledges and agrees that itwill first obtain any export license or approval required by the United StatesDepartment of Commerce pursuant to Section 370 of the ExportAdministrative Regulation prior to exporting the McKesson Software.

 

7.10.3                  Assignment.  This Agreement will bind and inure to thebenefit of each party’s permitted successors and assigns.  Neither party shall assign this Agreementwithout the express written consent of the other; provided, that either partymay, upon giving ten (10) days prior written notice to the other, assign thisAgreement to any (i) wholly owned subsidiary or (ii) entity resulting from thesale, combination or transfer of all or substantially all of the assets orcapital stock of such, or from any other corporate form of reorganization by orof such party; provided further, that the assigning party shall remain liablefor assignee’s performance hereunder. Notwithstanding the foregoing, if any assignment otherwise permitted underthe immediately preceding sentence by giving prior written notice is, directlyor indirectly, to a person or entity that the non-assigning party reasonablydeems to be its competitor, the non-assigning party may terminate thisAgreement upon ninety (90) days advance written notice.

 

7.10.4                  Severability.  If all or part of a provision of thisAgreement is found illegal or unenforceable, it will be enforced to the maximumextent permissible, and the legality and enforceability of the remainder ofthat provision and all other provisions of this Agreement will not be affected.

 

7.10.5                  Notices.  All notices directed to the parties’ legalrights and remedies under this Agreement will be provided in writing and willreference this Agreement.  Such noticeswill be deemed given if sent by: (i) facsimile, when complete transmission tothe recipient is confirmed by the sender’s facsimile machine; (ii) postageprepaid registered or certified U.S. Post mail, then five (5) working daysafter sending; or (iii) commercial courier, then at the time of receiptconfirmed by the recipient to the courier on delivery.  All notices to a party will be sent to itsaddress set forth below, or to such other address as may be designated by thatparty by notice to the sending party in accordance with this Section:

 

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| To Vital:                     |   | To McKesson:                        |
|-------------------------------|--------|-------------------------------------|
|                          |   |                                |
| Vital Images, Inc.            |   | McKesson Medical Imaging Company.   |
| 3300 Fernbrook Lane, N.       |   | #130-10711 Camble Road              |
| Suite 200,                    |   | Richmond, BC, Canada V6X 3G5        |
| Plymouth, MN 55447            |   | Attn: General Manager               |
| Attn: Chief Financial Officer |   | FAX: (604) 279-5468                 |
| FAX: (763) 852-4130           |   |                                |
|                          |   |                                |
|                          |   | With a copy to:                     |
|                          |   |                                |
|                          |   | McKesson Information Solutions LLC. |
|                          |   | 5995 Windward Parkway               |
|                          |   | Alpharetta, GA 30005                |
|                          |   | Attn: General Counsel               |
|                          |   | FAX: (404) 338-5138                 |

 

 

7.10.6                  Waiver.  Any failure of a party to exercise orenforce any of its rights under this Agreement will not act as a waiver of suchrights.

 

7.10.7                  ForceMajeure.  Neither party will beliable to the other party for any failure or delay in performance caused bymatters beyond the first party’s reasonable control, and such failure or delaywill not constitute a material breach of this Agreement.

 

7.10.8                  Amendment.  This Agreement may be modified, or anyrights under it waived, only by a written document executed by both parties.

 

7.10.9                  Publicity.  The parties may publicly announce that theyhave entered into this Agreement and describe their relationship in generalterms.  Neither party will make anyother public announcement or press release regarding this Agreement or anyactivities performed under this Agreement without the prior written consent ofthe other party.

 

7.10.10            Counterparts.  The parties may execute this Agreement inone or more counterparts, each of which will be an original, and which togetherwill constitute one instrument.

 

7.10.11            Relationshipof Parties.  Each party enters intoand performs this Agreement as an independent contractor of the otherparty.  This Agreement will not beconstrued as constituting a relationship of employment, agency, partnership,joint venture or any other form of legal association, except as expressly setforth in this Agreement.  Each partywill have no power, and will not represent that it has any power, to bind theother party or to assume or to create any obligation or responsibility onbehalf of the other party or in the other party’s name.

 

7.10.12            Constructionof Agreement.  This Agreement hasbeen negotiated by the parties and its provisions will not be presumptivelyconstrued for or against either party. The headings and Section titles in this Agreement are used forconvenience only, and will not affect the construction or interpretation ofthis Agreement.

 

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7.10.13            EntireAgreement.  This Agreement,including exhibits, attachments, written terms incorporated by reference, isthe complete and exclusive agreement between the parties with respect to thesubject matter hereof, superseding and replacing any and all prior agreements,communications, and understandings (both written and oral) regarding suchsubject matter.

 

Each party executes this Agreement by its duly authorizedrepresentative.

 

 
| **VITAL IMAGES, INC.** | **MCKESSON INFORMATION SOLUTIONS LLC** |
|------------------------|----------------------------------------|
|                   |                                   |
|                   |                                   |
| By:                    |  /s/ Jay D. Miller                |   | By: |   /s/ Greg Peet |   |
|                   |                                   |
| Name:                  |   Jay D. Miller              |   | Name: |  Greg Peet |   |
|                   |                                   |
| Title:                 |  President & CEO              |   | Title: | VP & GM |   |
|                   |                                   |
| Date:                  | 6/19/03                                |   | Date: | 6/20/03 |   |
|                        |                                        |  |  |  |  |  |  |  |  |  |  |

 

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**EXHIBIT A**

 

**TO THEVALUE ADDED RESELLER AGREEMENT**

 

**DEFINITIONS**

 

***“Vital Software”***means the software products, in object code form only, proprietary to Vital orfor which Vital has the right to distribute and which comprise the software setforth on **Exhibit B**,including any related Documentation, Corrections, enhancements, Interfaces andNew Releases (and Major New Releases) thereto that Vital makes available toMcKesson hereunder, including all authorized copies of the foregoing.

 

***“Confidential Information”***has the meaning set forth in Sub-Section 7.3.

 

***“Correction(s)”***means a modification, revision or supplement to the Vital Software that makessuch software perform functions it was designed to perform or corrects Defectsor “bugs”.

 

***“Critical”***priority Defect means that a Defect in the Vital Software directly affects aCustomer’s delivery of patient care or significantly and materially affects thefinancial operations of such Customers and no acceptable means of “workingaround” the Defect exists.  Vital shalluse its best efforts to provide an immediate Correction, and shall be includedin a “patch” to the Vital Software.

 

***“Customer(s)”**or**“McKessonCustomer(s)”*** means the (i) current self-insured employercustomers of McKesson that have licensed Vital Software or purchased fromMcKesson services or hardware, and (ii) prospective customers to whom McKessonis marketing or with whom McKesson is negotiating for the license of VitalSoftware or the sale of hardware or McKesson services.  Any Customer that desires to acquire theVital Software from McKesson shall do so by executing a Sublicense Agreementwith McKesson pursuant to the terms of this Agreement.

 

***“Defect”***of the Vital Software occurs when those product functions and featurescontained within the generally available Vital Software and the Documentation donot perform in a material respect with the Documentation and the FunctionalRequirements set forth in **Exhibit B**,attached hereto and incorporated herein by reference and such failure toperform is replicated for Vital by McKesson or is otherwise replicated byVital.

 

***“Dispute”***has the meaning set forth in Sub-Section 7.9.

 

***“Dispute Notice”***has the meaning set forth in Sub-Section 7.9.

 

***“Documentation”***means corresponding user guides, operating manuals, on-line help, andspecifications for the Vital Software (including any Corrections, enhancements,Interfaces, New Releases, and Major New Releases); provided that Documentationshall not include any training materials.

 

***“Enhancement(s)”***means modifications, revisions, additions or supplements to the Vital Softwarewhich enables such software to provide or perform services or functions itcould not previously perform or materially improves the manner in which theVital Software performs existing functions.

 

***“Facility”***or ***“Facilities”***means the facility or facilities operated by a Customer that are identified bylocation and capacity in a Sublicense Agreement.

 

***“Generally Available”***means software that is available as a non-development product licensed by Vitalor McKesson in the general commercial marketplace, and does not include anyCustomer-specific software customizations of the Vital Software.

 

***“High”***priority Defect means that a Defect in the Vital Software affects a Customer’soperations and no acceptable means of “working around” the problem exists.  These items are important due to thefrequency of usage, or data integrity, but do not have criticalimplications.  The Correction of theseHigh priority Defects shall be included in the next release of the Vital Software.

 

***“Implementation Services”***means the implementation services specified in a Sublicense Agreement, whichmay include software loading, data conversion, software interface table andmaster file audits, software testing assistance, equipment installationservices, and training and education that McKesson will perform for a Customerpursuant to the applicable Sublicense Agreement.

 

***“Intellectual Property Rights”***means copyright rights, patent rights, trade secret rights, and any otherproprietary rights in or to intangible property recognized in any jurisdictionin the world, now or hereafter existing, whether or not registered orregisterable.

 

***“Low”***priority Defect means that a Defect is primarily cosmetic in nature or producesminimum confusion.  This includesspelling errors, screen presentation problems, or rare, inconsistentpresentations.  The Correction to suchLow priority Defects will vary by issue and shall be included in the nextrelease as appropriate.

 

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***“McKesson Software”***meansthe McKesson software products and/or third-party software in object code formonly, and related Documentation, including any corrections and enhancementsthereto that McKesson provides or otherwise makes available to Customers.

 

***“Medium”***priority means that a Customer has identified a Defect in the Vital Software,and a means of working around the reported Defect does exist within the VitalSoftware. The Correction of these Medium priority Defects shall be included inthe next Release of the Vital Software, and may include such workaround.

 

***“New Release(s)”***means all modifications, revisions, Enhancements, Corrections or replacementsfor Vital Software and related Documentation which Vital has agreed to providepursuant to this Agreement or which Vital makes Generally Available to itscustomers in general from time to time at no additional license fee.

 

***“Major New Release”***means a New Release that contains significant upgrades to the Vital Softwareincluding major changes of technical architecture and/or support forsignificant new business functions and is made Generally Available by Vital.

 

***“Royalty(ies)”***meansan amount, calculated in US Dollars, more specifically defined in Exhibit C.which is due Vital for each Sublicense of the Vital Software.

 

***“Services”***means,individually or collectively, Implementation Services, Software MaintenanceServices, and any other services that either party provides to the other partyor a McKesson Customer pursuant to this Agreement or a Sublicense Agreement.

 

***“Software MaintenanceServices”*** means corrections of Software orDocumentation due to Defects in the Vital Software or Documentation, asapplicable, improvements to existing functionality provided by Vital, as wellas the provision of verification, diagnosis, and repair of Defects or thedevelopment of effective workarounds for problems that cannot be resolvedimmediately.

 

***“Source Code”***meansthe statements that define the Vital Software functions which, when assembledor compiled become the executable code of the Vital Software and includes boththe human-readable and machine-readable form; however, it shall not include thesource code for any third party software contained in the Vital Software.

 

***“Sublicense”***meansa non-exclusive, non-transferable right granted by McKesson to a McKessonCustomer (and all permitted users) under a Sublicense Agreement to use anobject code copy of the Vital Software in conjunction with a license to use anobject code copy of McKesson Software.

 

***“SublicenseAgreement”***means the terms and conditions pursuantto which McKesson Customer(s) will be licensed to use Vital Software pursuantto this Agreement.

 

***“Technical Support”***meansall reasonable technical support and consultation from Vital’s support hotline(“Hotline”) to assist McKesson in the resolution of problems with the VitalSoftware, Defects (see Sub-Section 2.7.2 for specific obligations tocorrect Defects), and/ or bugs in the Vital Software encountered by McKesson orMcKesson Customers in the operation, configuration, implementation and supportof Vital Software.  McKesson shallcontact the Hotline in writing by email, Monday through Friday, from 8:00 am to6:00 pm EST.  Such Technical Supportshall include appropriate efforts to verify and provide a Correction forDefects in the Vital Software depending on the severity and priority of theDefect defined herein as “Critical”, “High”, “Medium” or “Low”.

 

***“Territory”***meansthe geographical area and territories in which McKesson may market, sublicenseand distribute Vital Software to the Target Market as part of an offering toCustomers of McKesson’s otherwise separate application software.  For the purposes of this Agreement, theTerritory shall be worldwide.

 

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| Value Added Reseller Agreement  |   | Vital Images, Inc. |
|---------------------------------|--------|--------------------|
| PROPRIETARY AND CONFIDENTIAL TO |   | June 16, 2003 |
| VITAL MEDICLA IMAGING COMPANY.  |   |               |

 

EXHIBIT B

 

VITAL SOFTWARE

 

Vitreaâ2 3D Software

 

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EXHIBIT C

 

ROYALTIES,

FEES FOR MAINTENANCE SERVICES, AND

OTHER SERVICES AND COSTS

 

I.                                         ROYALTIESFOR VITAL SOFTWARE

 

McKesson will pay license fees to Vital equal to *% of Vital’s listprice for software licenses.

 

Vital will continuously advise McKesson of the Vital software listprices via an electronic quotation model via an MS Excel file delivered toMcKesson electronically.

 

II.                                     FEESFOR MAINTENANCE SERVICES

 

For each Software License that McKesson receives payment formaintenance and technical support services, McKesson will pay Vital the Feesfor Maintenance Services.  The Fees forMaintenance Services in the first year is included in the softwareroyalty.  The annual Fees forMaintenance Services payable by McKesson for subsequent years of each SoftwareLicense will be payable in advance and due on April 1st of eachyear during the Agreement.

 

The annual Fees for Maintenance Services payable by McKesson for thefirst year of each Software Licensee for which McKesson is required to pay sucha fee, will be prorated based on the number of complete months remaining in theyear commencing 1st April preceding the Effective Date of theSoftware License.  For example, if theSoftware License is executed on or with effect from October 1, 2003, theannual Fees for Maintenance Services payable by McKesson for the periodOctober 1, 2004 through March 31, 2005 will be calculated bymultiplying the Fees for Maintenance Services by 0.5 (6 months/12 months) andadded onto the Fees for Maintenance Services payable on April 1st,2005.

 

The Fees for Maintenance Services payable to Vital shall be an amountequal to *% of the aggregate amount of Fees for Maintenance Services invoicedby McKesson for so long as McKesson is obligated to provide maintenanceservices to its Customers.

 

III.                                 OTHERSERVICES AND CHARGES

 

Initial Training For Core Vital Personnel.  Vital should make available the followingtraining sessions for McKesson employees free of charge as follows:

 

Basic Training/Immersion Training.  Vital shall make available Basic Trainingand Immersion Training in the functionality of the Vital Software available toa maximum of 3 designated McKesson employees. The initial Immersion Training shall be held on site at Vital offices inPlymouth, Minnesota.  Such BasicTraining and Immersion Training shall be provided as soon as reasonablypossible following the Effective Date of this Agreement at a mutually agreedupon time.

 

Sales Training.  Vital shall make available training sessions dedicated to salespositioning and how to perform demonstrations of the Vital Software, gearedtowards the McKesson Sales force.  SuchSales Training shall be provided as soon as reasonably possible following theEffective Date of this Agreement at a mutually agreed upon time and place.

 

Ongoing Training.  Vital will provide two additional sessions of the Basic Trainingand the Immersion Training for a maximum of 3 McKesson employees per sessionwithin six (6) months following the Effective Date of this Agreement at datesand locations to be mutually agreed. Following the Initial Training and the two additional sessions, McKessonshall pay a fee for any additional employee training or re-training at Vital’sthen-current consulting and training rates.

 

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Release Training.

Vital shall provide a training session for a maximum of 3 McKessonemployees per session at no charge for each Major New Release of the VitalSoftware at a mutually agreed upon location and time.

 

All Other Services

All other services not specified in this agreement to be provided freeof charge shall be invoiced at the current rates:

 
| Standard Labor Rate |   | (Monday-Friday, 9 to 5)               |   | US$ * per hour |
|---------------------|--------|---------------------------------------|--------|----------------|
|                |   |                                  |   |           |
| Extended Hours      |   | (beyond standard, excluding holidays) |   | US$ * per hour |
|                |   |                                  |   |           |
| Statutory Holidays  |   |                                  |   | US$ * per hour |

 

For the purpose of installation support for the first three (3)customer installations, a discount of *% will be applied to the above rates.

 

Expense Reimbursement

 

McKesson shall reimburse Vital for all travel and lodging expensesincurred by Vital under this Agreement in accordance with McKesson’s TravelPolicy as set forth in Exhibit E below.

 

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* The material has been omitted pursuant to a request for confidentialtreatment and the material has been filed separately with the Office of theSecretary of the Securities and Exchange Commission.

 

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**EXHIBIT D**

 

**DELIVERY OF VITAL SOFTWARE**

 

**For Vital Software:**

 

Initial Delivery.  Vital shall deliver to McKesson a “gold master” copy of the mostrecent version of Vital Software and Documentation (unless McKesson specifies adifferent available version) for use by McKesson in accordance with the termsand conditions of this Agreement within fifteen (15) days after the EffectiveDate.

 

New Releases. Vital shall deliver to McKesson, at no additional charge and within 10(10) business days after general availability by Vital an updated “gold master”copy of New Releases, Major New Releases, Enhancements and Documentation foruse by McKesson as permitted by Sub-Section 2.1 of this Agreement.

 

Customer Delivery.  McKesson shall deliver the Vital Software to Customers subject toa Sublicense Agreement.  McKesson shallbe responsible for installation and implementation at Customer sites.  McKesson may copy Vital Software to electronicmedia for delivery or may deliver Vital Software and Documentation viaelectronic interchange.

 

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**EXHIBIT E**

 

**2001 MCKESSON CORPORATE TRAVEL POLICYTRAVEL POLICY, PROCEDURES, AND EXPENSE REIMBURSEMENT GUIDELINES**

 

**A.****                                    AirTravel -**The Company will reimburse all business air travel as long as suchtravel is at the lowest cost available airfare, short of endangering the reasonfor the trip or the business needs dictated by a customer.  The guidelines surrounding our travel policyare as follows:

 

The lowest available airfare, regardless of penalties or restriction,must be utilized by anyone traveling at the expense of McKesson.  Any tickets being requested within 7 days oftravel requires the prior approval of the McKesson contact established pursuantto Sub-Section 3.2.5 of the Agreement.

 

**B.****                                    Lodging. **The Company will pay only actual roomrental costs supported by the hotel bill for each day that lodging away fromhome is required for business reasons. Hereafter, the standard hotel will be Marriott Courtyard-type lodgingfor all business-related travel.

 

**C.****                                    CarRentals. **The Company will reimbursecar rentals only when other means of transportation are unavailable, morecostly, or impractical.  The use of arental car must be justified as a business need and not as a matter of personalconvenience.  The use of intermediate orfull-size cars is acceptable only when two or more employees are travelingtogether and sharing the rental car, or when it is necessary to have a largervehicle for carrying clients or equipment.

 

**D.****                                    OtherTransportation**

 

**Personal Car -**TheCompany prefers travel through use of public transportation, but an employee’sautomobile should be used when other transportation is unavailable or economycan be realized.  The Company willreimburse the employee at the rate of .31 cents per mile over and above thenormal commute, plus parking and tolls, for authorized business use of personalcars.  The normal commute includes anemployee’s drive to his/her office, or FM site, if located in the same city inwhich the employee resides.

 

**Taxis and other Out of Town Transportation -**Thecost of a taxi to and from places of business, hotels, or airports inconnection with business activities is reimbursable.  Use of taxis is authorized only when more economical services(hotel vans, shuttles, etc.) are not available.  Employees are encouraged to utilize public transportationwhenever feasible.  Receipts arerequired for all transportation expenses.

 

**II.****                                     *MEALS***

 

The Company will reimburse employees for meal expenses (breakfast,lunch, and dinner) actually incurred, providing such expenses are reasonableand appropriate.  The suggested costsbelow should provide a guideline to employees as to what the Company feels isfair and reasonable, but in no event should the total exceed $40.00 per day:

 
| Breakfast |   | $      | 8.00   |   |
|-----------|--------|--------|--------|--------|
|      |   |   |   |   |
| Lunch     |   | $      | 12.00  |   |
|      |   |   |   |   |
| Dinner    |   | $      | 20.00  |   |

 

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**III.****                                 *OTHER REIMBURSABLE EXPENSES***

 

**A.****                                    TelephoneExpenses**

1.               Business - The Company will pay chargesfor local and long-distance business calls made outside a Company office,provided the calls are supported by a listing, hotel bill, or telephonebill.  All domestic long distancetelephone calls should be placed through AT&T.

 

2.               Personal - The Company will pay chargesfor personal long distance calls when the employee is away from home forbusiness reasons.  These should belimited to one ten-minute call a day. In order to maximize the savings potential employees should placepersonal calls through AT&T.

 

**B.****                                    Tipsand Gratuities. **The Company willpay for reasonable tipping and gratuities:

•                  up to 20% of thetotal restaurant bill

•                  $1 per bagporterage

•                  up to 15% of thetotal cab fare

 

**C.****                                    In-TownExpenses.**When traveling within his/her headquarters city, an employee mayexpense charges for local transportation if required for business purposes andwhen authorized.  Whenever publictransportation is not used, claims for taxis, private limousines, and personalcar mileage should be separated, claimed, and explained, showing the purpose ofthe trip and the itinerary.

 

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**EXHIBIT F**

 

**SOFTWARE SUPPORT AND MAINTENANCE SERVICES**

 

1.0                                 Software Support byMCKESSON - VITAL and MCKESSON acknowledge and agree that initially,MCKESSON shall obtain assistance from VITAL in order to provide softwareservices, including support and maintenance directly to MCKESSONcustomers.  MCKESSON shall provideproblem triage and “first call” maintenance services.

 

1.1                                 Problem Triage byMCKESSON.  MCKESSON shall accept thefirst call from Customers and triage the incoming calls in an effort todetermine whether the reported problem relates to MCKESSON products or theLicensed Products.  If MCKESSONdetermines that the reported problem relates to the MCKESSON Products, theproblem shall be handled by MCKESSON’S standard maintenance practices.  If MCKESSON determines that the reportedproblem relates to the Licensed Products, then MCKESSON shall refer the call toVITAL, and provide VITAL with the customer contact information and suchdiagnostic information as MCKESSON may have at that time.

 

1.2                                 Vital and McKessonacknowledge that the intent over time is to have McKesson assume the levels ofsupport that Vital will initially provide, as described in 2.0 below.

 

2.0                                 SoftwareMaintenance by VITAL.  At the startof this Agreement, VITAL shall provide, at no extra charge, the followingmaintenance services in the form of software upgrade and support of theLicensed Products to MCKESSON as described herein:

 

2.1                                 Level One Support:  If MCKESSON has referred the customerproblem to VITAL, VITAL shall determine whether the problem is due to amisunderstanding of the documentation or improperly functioning hardware.  If the problem is due to a misunderstandingof the documentation or improperly functioning hardware, VITAL’s supportanalysis will assist the customer in resolving the problem.

 

2.2                                 Level Two Support:  If the problem is not due to a misunderstandingby the customer of the documentation or improperly functioning hardware,VITAL’s support analysis shall make a reasonable effort to duplicate theproblem on VITAL’s internal version of the Licensed Product and work directlywith the Customer to provide solutions to the problem.

 

2.3                                 Level Three Support:  VITAL shall use all commercially reasonableefforts to promptly rectify any problem with the Licensed Products whenMCKESSON gives notice and reasonable documentation to VITAL of a problem whichresults in the Licensed Products not being in substantial conformance to thedocumentation in Exhibit D and such problem requires VITAL to fix or modify thesource code to the Licensed Products.

 

2.4                                 Replacement Copies:  In the event that MCKESSON’s master copy ofthe Licensed Product is lost or destroyed, VITAL shall provide MCKESSON with areplacement master copy of the Licensed Product, a copy of which will beprovided to the customer at no additional license charge.

 

2.5                                 Products Supported:  Software maintenance services shall beprovided for the release of the Licensed Products integrated with acommercially available MCKESSON Product during the Warranty Period.  In the event that MCKESSON requests softwaremaintenance services from VITAL and the cause of the reported problem issubstantially determined by VITAL to be the result of the use of a release ofthe Licensed Products which is no longer supported, or modifications made tothe Licensed Product by persons other than VITAL, or a malfunction in aMCKESSON Product, computer hardware or other software or abnormal operatingconditions or accidental

 

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damage to the Licensed Products (electrical or otherwise), thenMCKESSON shall pay VITAL on a time and materials basis for the performance ofthose services.

 

2.6                                 TelephoneAvailability:  VITAL shall providereasonable telephone support for the Licensed Product, during the WarrantyPeriod, between the hours of 8:00 a.m. and 5:00 p.m. Central Time, excludingweekends and holidays, to MCKESSON’s customers and designated supportpersonnel.

 

2.7                                 Single DesignatedSite:  VITAL shall provide Telephonesupport services to a single site of MCKESSON to be designated by writtennotice from MCKESSON to VITAL.  The locationof the designated site may be changed upon 14 days prior written notice byMCKESSON to VITAL.

 

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**EXHIBIT G**

 

**PHASED INTEGRATION PLAN OF LICENSED PRODUCTS**

 

**Phase 1**     Integration of the McKessonSoftware and Vital Software will be performed at the DICOM communication levelonly, whereby query and retrieval of data will be via the DICOM standard.  It is envisioned that the McKesson Softwareand Vital Software will reside on separate computers in this phase.

 

**Phase 2**     Integration of the McKessonSoftware and Vital Software will be beyond Phase 1 to include Vital Softwareaccess to the McKesson Software database for improved performance.  It is envisioned that the McKesson Softwareand Vital Software will reside on separate computers in this phase.

 

**Phase 3**     Integration of the McKessonSoftware and Vital Software will be beyond Phase 2 to include harmonized UserInterfaces and seamless function calls between the two.  It is envisioned that the McKesson Softwareand Vital Software will reside on the same computer in this phase.

 

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**EXHIBIT H**

 

**Vital Images Guidelines for Trademark Usage**

 

I. Vital Images Logo

 

Components

The Vital Images logo is a single item consisting of a “V” symbol andcompany name.  Individual parts shouldnot be used separately.  In particular,the name always needs to be centered directly beneath the symbol.

 

Color

The Vital Images logo is represented in three colors.  The “V” is Pantone 187 (red), the infinitysign is Pantone 872 (metallic gold), the name “Vital Images” is black and thedrop shadow is a 50% grey.

 

The logo can be used in shades of grey.  For use on a dark background, the black can be reversed out towhite with Pantone 187 (red) and Pantone 872 (metallic gold) remainingconstant.

 

When necessary, it is acceptable to replace the Pantone 872 (metallicgold) with Pantone 117 (yellow) in printed collateral materials.

 

Font

The Vital Images font is Berling Bold.

 

Usage

The Vital Images logo can appear on various media.  Suggestions include placing the logo on Webpages, fact sheets, sales collateral, tradeshow signage and slidepresentations.

 

**All materials using the logo must besubmitted to Vital Images for approval prior to publication or usage.**

 

Size

The logo should be reproduced in a size proportionate to surroundingelements.  However, it should never bereduced to an illegible size.

 

Availability

The logo can be reproduced directly from the specification sheet.  Additional sheets can be obtained from theVital Images Marketing Department.

 

Authorization

The Vital Images logo may be utilized for so long as a valid agreementis in place between Vital Images and McKesson. McKesson acknowledges and agrees that it shall receive no rights ofownership in or to the logo or other Vital Images trademarks as a result ofsuch use.  Usage of and all pre-printedmaterials containing the logo shall cease upon termination of the underlyingagreement between Vital Images and McKesson.

 

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II. Vitreaâ Product Name

 

Components

 

Vitreaâis a registered trademark of Vital Images, Inc.  The product name should appear as Vitreaâ2.  Vitrea is capitalized, followed by aregistered trademark symbol in superscript, then a space and the number “2”.

 

Color

 

Vitreaâ2can appear in black, Pantone 187 (red) or Pantone 872 (metallic gold).

 

Font

 

The font used for Vitreaâ2 is Berling Italics.  In writtendocumentation, such as a Microsoft Word document, it can appear in a standardTimes New Roman font.

 

Usage

 

Vitreaâ2 can appear on various media. Suggestions include placing the product name on Web pages, fact sheets,sales collateral, tradeshow signage, slide presentations.  After the first usage of Vitreaâ2 in a document, it is acceptable to refer to the product simply as Vitrea.

 

**All materials using the logo must besubmitted to Vital Images for approval prior to publication/usage.**

 

Size

 

The Vitreaâ2 product name should never be reduced to an illegible size.

 

Authorization

 

The Vitreaâ2 product name may be utilized for so long as a valid agreement is in placebetween Vital Images and McKesson. McKesson acknowledges and agrees that it shall receive no rights ofownership in or to the product name or other Vital Images trademarks as aresult of such use.  Usage of and allpre-printed materials containing the Vitreaâ2 product name shall cease upon termination of the underlying agreement betweenVital Images and McKesson.

 

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III. Specification Form

 

 

 

 

 

 

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