**Exhibit10.40**

 

**AMENDED AND RESTATEDCHANGE IN CONTROL AGREEMENT**

 

Effective

February 9, 2002

 

Mr. Jay D. MIller

3300 Fernbrook Lane North, Suite 200

Plymouth, Minnesota  55447

 

Dear Mr. Miller:

 

You are presently the Chief Executive Officer ofVital Images, Inc., a Minnesota corporation (the “Company”).  The Company considers the establishment andmaintenance of a sound and vital management to be essential to protecting andenhancing the best interests of the Company and its shareholders.  In this connection, the Company recognizesthat, as is the case with many publicly held corporations, the possibility of aChange in Control may arise and that such possibility and the uncertainty andquestions which it may raise among management may result in the departure ordistraction of management personnel to the detriment of the Company and itsshareholders.

 

Accordingly, the Board has determined thatappropriate steps should be taken to minimize the risk that Company managementwill depart prior to a Change in Control, thereby leaving the Company withoutadequate management personnel during such a critical period, and thatappropriate steps also be taken to reinforce and encourage the continuedattention and dedication of members of the Company’s management to their assignedduties without distraction in circumstances arising from the possibility of aChange in Control.  In particular, theBoard believes it important, should the Company or its shareholders receive aproposal for transfer of control, that you be able to continue your managementresponsibilities without being influenced by the uncertainties of your ownpersonal situation.

 

The Board recognizes that continuance of yourposition with the Company involves a substantial commitment to the Company interms of your personal life and professional career and the possibility offoregoing present and future career opportunities, for which the Companyreceives substantial benefits. Therefore, to induce you to remain in the employ of the Company, thisAmended and Restated Agreement, which has been approved by the Board, setsforth the benefits which the Company agrees will be provided to you in theevent your employment with the Company is terminated in connection with aChange in Control under the circumstances described below.

 

The following terms will have the meaning setforth below unless the context clearly requires otherwise.  Terms defined elsewhere in this Agreementwill have the same meaning throughout this Agreement.

 

**ARTICLE I.**

**DEFINITIONS**

 

1.                                       “Affiliate” means (i) any corporation atleast a majority of whose outstanding securities ordinarily having the right tovote at elections of directors is owned directly or indirectly by the Companyor (ii) any other form of business entity in which the Company, by virtue of adirect or indirect ownership interest, has the right to elect a majority of themembers of such entity’s governing body.

 

2.                                       “Agreement” means this letter agreement asamended, extended or renewed from time to time in accordance with its terms.

 

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3.                                       “Board” means the board of directors ofthe Company duly qualified and acting at the time in question.  On and after the date of a Change inControl, any duty of the Board in connection with this Agreement isnondelegable and any attempt by the Board to delegate any such duty isineffective.

 

4.                                       “Cause” means:

 

a.                                       your gross misconduct;

 

b.                                      your willful and continued failure to performsubstantially your duties with the Company (other than any such failure (1)resulting from your Disability or incapacity due to bodily injury or physicalor mental illness or (2) relating to changes in your duties or responsibilitiesas an executive officer of the Company as in effect immediately prior to aChange in Control which in your reasonable judgment, is an adverse change(other than, if applicable, any such change attributable to the fact that theCompany is no longer publicly owned)) after a demand for substantialperformance is delivered to you by the chair of the Board which specificallyidentifies the manner in which you have not substantially performed your dutiesand provides for a reasonable period of time within which you may takecorrective actions; or

 

c.                                       your conviction (including a plea of nolocontendere) of willfully engaging in illegal conduct constituting a felony orgross misdemeanor under federal or state law which is materially anddemonstrably injurious to the Company or which impairs your ability to performsubstantially your duties for the Company.

 

An act or failure to act will beconsidered “gross” or “willful” for this purpose only if done, or omitted to bedone, by you in bad faith and without reasonable belief that it was in, or notopposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to aresolution duly adopted by the Company’s board of directors (or a committeethereof) or based upon the advice of counsel for the Company will beconclusively presumed to be done, or omitted to be done, by you in good faithand in the best interests of the Company. It is also expressly understood that your attention to matters notdirectly related to the business of the Company will not provide a basis fortermination for Cause so long as the Board did not expressly disapprove inwriting of your engagement in such activities either before or within areasonable period of time after the Board knew or could reasonably have knownthat you engaged in those activities. Notwithstanding the foregoing, you may not be terminated for Causeunless and until there has been delivered to you a copy of a resolution dulyadopted by the affirmative vote of not less than a majority of the entiremembership of the Board at a meeting of the Board called and held for thepurpose (after reasonable notice to you and an opportunity for you, togetherwith your counsel, to be heard before the Board), finding that in the goodfaith opinion of the Board you were guilty of the conduct set forth above inclauses a., b. or c. of this definition and specifying the particulars thereofin detail.

 

5.                                       “Changein Control” means any of the following:

 

a.                                       the sale, lease, exchange or other transfer,directly or indirectly, of all or substantially all of the assets of theCompany in one transaction or in a series of related transactions, to anyPerson;

 

b.                                      except in the case of the liquidation ordissolution of the Company in connection with the bankruptcy or insolvency ofthe Company or similar arrangement for the benefit of the

 

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Company’s creditors, theapproval by the shareholders of the Company of any plan or proposal for theliquidation or dissolution of the Company, as the case may be;

 

c.                                       any Person is or becomes the “beneficial owner”(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of(1) 20 percent or more, but not more than 50 percent, of the combined votingpower of the outstanding securities of the Company ordinarily having the rightto vote at elections of directors, unless the transaction resulting in suchownership has been approved in advance by the “continuing directors” or (2)more than 50 percent of the combined voting power of the outstanding securitiesof the Company ordinarily having the right to vote at elections of directors(regardless of any approval by the continuing directors);

 

d.                                      a merger or consolidation to which the Company isa party if the shareholders of the Company immediately prior to the effectivedate of such merger or consolidation have, solely on account of ownership ofsecurities of the Company at such time, “beneficial ownership” (as defined inRule 13d-3 under the Exchange Act) immediately following the effective date ofsuch merger or consolidation of securities of the surviving companyrepresenting (1) 50 percent or more, but not more than 80 percent, of thecombined voting power of the surviving corporation’s then outstandingsecurities ordinarily having the right to vote at elections of directors,unless such merger or consolidation has been approved in advance by the continuingdirectors, or (2) less than 50 percent of the combined voting power of thesurviving corporation’s then outstanding securities ordinarily having the rightto vote at elections of directors (regardless of any approval by the continuingdirectors);

 

e.                                       the continuing directors cease for any reason toconstitute at least a majority of the Board; or

 

f.                                         a change in control of a nature that isdetermined by outside legal counsel to the Company, in a written opinionspecifically referencing this provision of the Agreement, to be required to bereported (assuming such event has not been “previously reported”) pursuant tosection 13 or 15(d) of the Exchange Act, whether or not the Company is thensubject to such reporting requirement, as of the effective date of such changein control.

 

For purposes of this Section1(e), a “continuing director” means any individual who is a member of the Boardon February 9, 2002, while he or she is a member of the Board, and anyindividual who subsequently becomes a member of the Board whose election ornomination for election by the Company’s shareholders was approved by a vote ofat least a majority of the directors who are continuing directors (either by aspecific vote or by approval of the proxy statement of the Company in whichsuch individual is named as a nominee for director without objection to suchnomination).

 

6.                                       “Code” means the Internal Revenue Code of1986, as amended.  Any reference to aspecific provision of the Code includes a reference to such provision as it maybe amended from time to time and to any successor provision.

 

7.                                       “Company” means Vital Images, Inc. and/orany Affiliate.

 

8.                                       “Confidential Information” meansinformation which is proprietary to the Company or proprietary to others andentrusted to the Company, whether or not trade secrets. It includes informationrelating to business plans and to business as conducted or anticipated to beconducted, and to past or current or

 

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anticipated products orservices.  It also includes, withoutlimitation, information concerning research, development, purchasing,accounting, marketing and selling.  Allinformation which you have a reasonable basis to consider confidential isConfidential Information, whether or not originated by you and without regardto the manner in which you obtain access to that and any other proprietaryinformation.

 

9.                                       “Date of Termination” following a Changein Control (or prior to a Change in Control if your termination was either acondition of the Change in Control or was at the request or insistence of anyPerson related to the Change in Control) means:

 

a.                                       if your employment is to be terminated forDisability, 30 days after Notice of Termination is given (provided that youhave not returned to the performance of your duties on a full-time basis duringsuch 30-day period);

 

b.                                      if your employment is to be terminated by theCompany for Cause or by you for Good Reason, the date specified in the Noticeof Termination, which date may not be less than 30 days or more than 60 daysafter the date on which the Notice of Termination is given unless you and theCompany otherwise expressly agree;

 

c.                                       if your employment is to be terminated by theCompany for any reason other than Cause, Disability, death or Retirement, thedate specified in the Notice of Termination, which in no event may be a dateearlier than 90 days after the date on which a Notice of Termination is given,unless an earlier date has been expressly agreed to by you in writing either inadvance of, or after; receiving such Notice of Termination; or

 

d.                                      if your employment is terminated by reason ofdeath or Retirement, the date of death or Retirement, respectively.

 

In the case of termination bythe Company of your employment for Cause, if you have not previously expresslyagreed in writing to the termination, then within 30 days after receipt by youof the Notice of Termination with respect thereto, you may notify the Companythat a dispute exists concerning the termination, in which event the Date ofTermination will be the date set either by mutual written agreement of theparties or by the judge or arbitrators in a proceeding as provided in ArticleVII Section 6 of this Agreement.  Duringthe pendency of any such dispute, you will continue to make yourself availableto provide services to the Company and the Company will continue to pay youyour full compensation and benefits in effect immediately prior to the date onwhich the Notice of Termination is given (without regard to any changes to suchcompensation or benefits which constitute Good Reason) and until the dispute isresolved in accordance with Article VII Section 6 of this Agreement.  You will be entitled to retain the fullamount of any such compensation and benefits without regard to the resolutionof the dispute unless the judge or arbitrators decide(s) that your claim of adispute was frivolous or advanced by you in bad faith.

 

10.                                 “Disability” means a disability as definedin the Company’s long-term disability plan as in effect immediately prior tothe Change in Control or; in the absence of such a plan, means permanent andtotal disability as defined in section 22(e)(3) of the Code.

 

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11.                                 “Exchange Act” means the SecuritiesExchange Act of 1934, as amended.  Anyreference to a specific provision of the Exchange Act or to any rule orregulation thereunder includes a reference to such provision as it may beamended from time to time and to any successor provision.

 

12.                                 “Good Reason” means:

 

a.                                       the termination of your employment withthe Company by you for any reason, except in connection with the termination ofyour employment for Cause, Disability or Retirement or as a result of yourdeath;

 

b.                                      a reduction by the Company in your basesalary (or an adverse change in the form or timing of the payment thereof) asin effect immediately prior to the Change in Control or as thereafterincreased;

 

c.                                       the failure by the Company to continue in effectany Plan in which you (and/or your family) are eligible to participate at anytime during the 90-day period immediately preceding the Change in Control (orPlans providing you (and/or your family) with at least substantially similarbenefits) other than as a result of the normal expiration of any such Plan inaccordance with its terms as in effect immediately prior to the 90-day periodimmediately preceding the time of the Change in Control, or the taking of anyaction, or the failure to act, by the Company which would adversely affect your(and/or your family’s) continued eligibility to participate in any of suchPlans on at least as favorable a basis to you (and/or your family) as is thecase on the date of the Change in Control or which would materially reduce your(and/or your family’s) benefits in the future under any of such Plans ordeprive you (and/or your family) of any material benefit enjoyed by you (and/oryour family) at the time of the Change in Control;

 

d.                                      the Company’s requiring you to be based more than30 miles from where your office is located immediately prior to the Change inControl, except for required travel on the Company’s business, and then only tothe extent substantially consistent with the business travel obligations whichyou undertook on behalf of the Company during the 90-day period immediatelypreceding the Change in Control (without regard to travel related to or inanticipation of the Change in Control);

 

e.                                       the failure by the Company to obtain from anySuccessor the assent to this Agreement contemplated by Article VI of thisAgreement;

 

f.                                         any purported termination by the Company of youremployment which is not properly effected pursuant to a Notice of Terminationand pursuant to any other requirements of this Agreement, and for purposes ofthis Agreement, no such purported termination will be effective;

 

g.                                      any refusal by the Company to continue to allowyou to attend to matters or engage in activities not directly related to thebusiness of the Company which, at any time prior to the Change in Control, youwere not expressly prohibited in writing by the Board from attending to orengaging in; or

 

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h.                                      the termination of your employment by the Companyfor any reason other than death, Disability or Retirement during the twelve(12) months following the month in which a Change in Control occurs.

 

13.                                 “Notice of Termination” means a writtennotice given on or after the date of a Change in Control (unless yourtermination before the date of the Change in Control was either a condition ofthe Change in Control or was at the request or insistence of any Person relatedto the Change in Control) which indicates the specific termination provision inthis Agreement pursuant to which the notice is given.  Any purported termination by the Company or by you for GoodReason on or after the date of a Change in Control (or before the date of aChange in Control if your termination was either a condition of the Change inControl or was at the request or insistence of any Person related to the Changein Control) must be communicated by written Notice of Termination to beeffective; provided, that your failure to provide Notice of Termination willnot limit any of your rights under this Agreement except to the extent theCompany demonstrates that it suffered material actual damages by reason of suchfailure.

 

14.                                 “Person” means any individual,corporation, partnership, group, association or other “person,” as such term isused in section 14(d) of the Exchange Act, other than the Company, anyAffiliate or any employee benefit plan(s) sponsored by the Company or anAffiliate.

 

15.                                 “Plan” means any compensation plan,program, policy or agreement (such as a stock option, restricted stock plan orother equity-based plan), any bonus or incentive compensation plan, program,policy or agreement, any employee benefit plan, program, policy or agreement(such as a thrift, pension, profit sharing, medical, dental, disability,accident, life insurance, relocation, salary continuation, expense reimbursements,vacation or fringe benefits plan or policy) or any other plan, program, policyor agreement of the Company intended to benefit employees (and/or theirfamilies) generally, management employees (and/or their families) as a group oryou (and/or your family) in particular.

 

16.                                 “Retirement” means termination ofemployment on or after the day on which you attain the age of 65.

 

17.                                 “Successor” means any Person that succeedsto, or has the practical ability to control (either immediately or solely withthe passage of time), the Company’s business directly, by merger, consolidationor other form of business combination, or indirectly, by purchase of theCompany’s outstanding securities ordinarily having the right to vote at theelection of directors or, all or substantially all of its assets or otherwise.

 

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**ARTICLEII.**

**TERM OFAGREEMENT**

 

This Amended and Restated Agreement is effective immediately and willcontinue in effect until February 9, 2003; provided, however; thatcommencing on February 9, 2003 and each February 9 thereafter, the term of thisAgreement will automatically be extended for 12 additional months beyond theexpiration date otherwise then in effect, unless at least 90 calendar days priorto any such February 9, the Company or you has given notice that this Agreementwill not be extended; and, provided, further; that if a Change in Control hasoccurred during the term of this Agreement, this Agreement will continue ineffect beyond the termination date then in effect for a period of 12 monthsfollowing the month during which the Change in Control occurs or, if later,until the date on which the Company’s obligations to you arising under or inconnection with this Agreement have been satisfied in full.

 

**ARTICLE III.**

**CHANGE IN CONTROL BENEFITS**

 

1.                                       Benefits upon a Change in Control Termination.  Youwill become entitled to the payments and benefits described in clauses (a) and(b) of this Section 1 of Article III, subject to the limitations described inclause (c) of this Section 1 of Article III, and to the benefit of theprovisions described in clause (c), if and only if (i) your employment with theCompany is terminated by the Company for any reason other than death, Cause,Disability or Retirement, or if you terminate your employment with the Companyfor any reason, including but not limited to, Good Reason; and (ii) thetermination occurs either within the period beginning on the date of a Changein Control and ending on the last day of the twelfth month that begins afterthe month during which the Change in Control occurs or prior to a Change inControl if your termination was either a condition of the Change in Control orwas at the request or insistence of a Person related to the Change in Control.

 

a.                                       Cash Payment.  Within ten (10) business daysfollowing the Date of Termination or, if later, within ten (10) business daysfollowing the date of the Change in Control, the Company will make a lump-sumcash payment to you in an amount equal to the product of (i) your annual basesalary in effect on the date of the Change in Control multiplied by (ii) 2.

 

b.                                      Welfare Plans. The Company will maintain in full force and effect, for the continuedbenefit of you and your dependents for a period terminating 24 months after theDate of Termination, all insured and self-insured employee welfare benefitPlans (including, without limitation, medical, life, dental, vision anddisability plans) in which you were eligible to participate at any time during the90-day period immediately preceding the Change in Control, provided that yourcontinued participation is possible under the general terms and provisions ofsuch Plans and any applicable funding media and without regard to anydiscretionary amendments to such Plans by the Company following the Change inControl (or prior to the Change in Control if amended as a condition or at therequest or insistence of a Person (other than the Company) related to theChange in Control) and provided that you continue to pay an amount equal toyour regular contribution under such Plans for such participation (based uponyour level of benefits and employment status most favorable to you at any timeduring the 90-day period immediately preceding the Change in Control).  The continuation period under federal andstate continuation laws, to the extent applicable, will begin to run from thedate on which coverage pursuant to this clause (b) ends.  If, at the end of the 24-month period, youhave not previously received or are

 

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not then receiving equivalentbenefits from a new employer (including coverage for any pre-existingconditions), the Company, pursuant to federal and state law, willprovide, for a period of eighteen (18) months (the “COBRA Period”), acontinuation of your and your dependents’ coverage under such Plans (the “COBRACoverage”), provided that you will be required to pay for such benefits duringthe COBRA Period, should you elect to receive COBRA Coverage. .

 

c.                                       Limitation on Payments and Benefits. Notwithstanding anything in this Agreement to the contrary, if any ofthe payments or benefits to be made or provided in connection with thisAgreement, together with any other payments, benefits or awards which you havethe right to receive from the Company, or any corporation which is a member ofan “affiliated group” (as defined in section 1504(a) of the Code without regardto section 1504(b) of the Code) of which the Company is a member (“Affiliate”),constitute an “excess parachute payment” (as defined in section 280G(b) of theCode), two calculations will be performed. In the first calculation, the payments, benefits or awards will bereduced by the amount the Company deems necessary so that none of the paymentsor benefits under the Agreement (including from the existing Stock Option andIncentive Plan) are excess parachute payments. In the second calculation, the payments will not be reduced so as toeliminate an excess parachute payment, but will be reduced by the amount of theapplicable excise tax as imposed by section 4999 of the Code.  The two calculations will be compared andthe calculation providing the largest net payment to the employee will beutilized.  The calculations must be madein good faith by legal counsel or a certified public accountant selected by theCompany, and such determination will be conclusive and binding upon you and theCompany.  If a reduction in payments orbenefits is required by the comparison above, the payments or benefits underthe Agreement shall be reduced in the order that minimizes the amount of totalreduction in payments and benefits under the Agreement as a result of thisprovision.

 

2.                                       Disposition.  If, on or after the date of aChange in Control, an Affiliate is sold, merged, transferred or in any othermanner or for any other reason ceases to be an Affiliate or all or any portionof the business or assets of an Affiliate are sold, transferred or otherwisedisposed of and the acquiror is not the Company or an Affiliate (a“Disposition”), and you remain or become employed by the acquiror or anaffiliate of the acquiror (as defined in this Agreement but substituting“acquiror” for “Company”) in connection with the Disposition, you will bedeemed to have terminated employment on the effective date of the Dispositionfor purposes of this section unless (a) the acquiror and its affiliates jointlyand severally expressly assume and agree, in a manner that is enforceable byyou, to perform the obligations of this Agreement to the same extent that theCompany would be required to perform if the Disposition had not occurred and(b) the Successor guarantees, in a manner that is enforceable by you, paymentand performance by the acquiror.

 

**ARTICLE IV.**

**INDEMNIFICATION**

 

Following a Change in Control, the Company will indemnify and reimburseyou to the full extent permitted by law and the Company’s articles ofincorporation and bylaws for damages, costs and expenses (including, withoutlimitation, judgments, fines, penalties, settlements and reasonable fees andexpenses of your counsel) incurred in

 

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connection with all matters, events and transactions relating to yourservice to or status with the Company or any other corporation, employeebenefit plan or other entity with whom you served at the request of theCompany.

 

**ARTICLE V.**

**CONFIDENTIALITY**

 

You will not use, other than in connection with your employment withthe Company, or disclose any Confidential Information to any person notemployed by the Company or not authorized by the Company to receive suchConfidential Information, without the prior written consent of the Company; andyou will use reasonable and prudent care to safeguard and protect and preventthe unauthorized disclosure of Confidential Information. Nothing in thisAgreement will prevent you from using, disclosing or authorizing the disclosureof any Confidential Information: (a) which is or hereafter becomes part of thepublic domain or otherwise becomes generally available to the public through nofault of yours; (b) to the extent and upon the terms and conditions that theCompany may have previously made the Confidential Information available tocertain persons; or (c) to the extent that you are required to disclose suchConfidential Information by law or judicial or administrative process.

 

**ARTICLE VI.**

**SUCCESSORS**

 

The Company will seek to have any Successor, by agreement in form andsubstance satisfactory to you, assent to the fulfillment by the Company of theCompany’s obligations under this Agreement. Failure of the Company to obtainsuch assent at least three business days prior to the time a Person becomes aSuccessor (or where the Company does not have at least three business days’advance notice that a Person may become a Successor, within one business dayafter having notice that such Person may become or has become a Successor) willconstitute Good Reason for termination by you of your employment.  The date on which any such successionbecomes effective will be deemed the Date of Termination and Notice ofTermination will be deemed to have been given on that date.  A Successor has no rights, authority orpower with respect to this Agreement prior to a Change in Control.

 

**ARTICLEVII.**

**OTHERPROVISIONS**

 

1.                                       Binding Agreement.  ThisAgreement inures to the benefit of, and is enforceable by, you, your personaland legal representatives, executors, administrators, successors, heirs,distributees, devisees and legatees. If you die while any amount would still bepayable to you under this Agreement if you had continued to live, all suchamounts, unless otherwise provided in this Agreement, will be paid inaccordance with the terms of this Agreement to your devisee, legatee or otherdesignee or; if there be no such designee, to your estate.

 

2.                                       No Mitigation.  You will not be required tomitigate the amount of any payments or benefits the Company becomes obligatedto make or provide to you in connection with this Agreement by seeking otheremployment or otherwise. The payments or benefits to be made or provided to youin connection with this Agreement may not be reduced, offset or subject torecovery by the Company by any payments or benefits you may receive from otheremployment or otherwise.

 

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3.                                       No Setoff.  The Company has no right todelay or setoff payments or benefits owed to you under this Agreement againstamounts owed or claimed to be owed by you to the Company under this Agreementor otherwise.

 

4.                                       Taxes.  All payments and benefits to be made orprovided to you in connection with this Agreement will be subject to requiredwithholding of federal, state and local income, excise and employment-relatedtaxes.

 

5.                                       Notices.  For the purposes of thisAgreement, notices and all other communications provided for in, or requiredunder, this Agreement must be in writing and will be deemed to have been dulygiven when personally delivered or when mailed by United States registered orcertified mail, return receipt requested, postage prepaid and addressed to eachparty’s respective address set forth on the first page of this Agreement(provided that all notices to the Company must be directed to the attention ofthe chair of the Board), or to such other address as either party may havefurnished to the other in writing in accordance with these provisions, exceptthat notice of change of address will be effective only upon receipt.

 

6.                                       Disputes.  If you so elect, any dispute,controversy or claim arising under or in connection with this Agreement will besettled exclusively by binding arbitration administered by the AmericanArbitration Association in Minneapolis, Minnesota in accordance with theCommercial Arbitration Rules of the American Arbitration Association then ineffect.  Judgment may be entered on thearbitrator’s award in any court having jurisdiction; provided, that you mayseek specific performance of your right to receive payment or benefits untilthe Date of Termination during the pendency of any dispute or controversy arisingunder or in connection with this Agreement. The Company will be entitled to seek an injunction or restraining orderin a court of competent jurisdiction (within or without the State of Minnesota)to enforce the provisions of Article V of this Agreement.

 

7.                                       Jurisdiction.  Except as specificallyprovided otherwise in this Agreement, the parties agree that any action orproceeding arising under or in connection with this Agreement must be broughtin a court of competent jurisdiction in the State of Minnesota, and herebyconsent to the exclusive jurisdiction of said courts for this purpose and agreenot to assert that such courts are an inconvenient forum

 

8.                                       Related Agreements.  To theextent that any provision of any other Plan or agreement between the Companyand you limits, qualifies or is inconsistent with any provision of thisAgreement, then for purposes of this Agreement, while such other Plan oragreement remains in force, the provision of this Agreement will control andsuch provision of such other Plan or agreement will be deemed to have beensuperseded, and to be of no force or effect, as if such other agreement hadbeen formally amended to the extent necessary to accomplish such purpose.  Nothing in this Agreement prevents or limitsyour continuing or future participation in any Plan provided by the Company andfor which you may qualify, and nothing in this Agreement limits or otherwiseaffects the rights you may have under any Plans or other agreements with theCompany.  Amounts which are vestedbenefits or which you are otherwise entitled to receive under any Plan or otheragreement with the Company at or subsequent to the Date of Termination will bepayable in accordance with such Plan or other agreement.

 

9.                                       No Employment or Service Contract.  Nothingin this Agreement is intended to provide you with any right to continue in theemploy of the Company for any period of specific duration or interfere with or

 

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otherwise restrict in any way yourrights or the rights of the Company, which rights are hereby expressly reservedby each, to terminate your employment at any time for any reason or no reasonwhatsoever, with or without cause.

 

10.                                 Funding and Payment. Benefits payable under this Agreement will be paid only from the generalassets of the Company.  No person hasany right to or interest in any specific assets of the Company by reason ofthis Agreement.  To the extent benefitsunder this Agreement are not paid when due to any individual, he or she is ageneral unsecured creditor of the Company with respect to any amounts due.  The Company with whom you were employedimmediately before your Date of Termination has primary responsibility forbenefits to which you or any other person are entitled pursuant to thisAgreement but to the extent such Company is unable or unwilling to provide suchbenefits, the Company and each other Affiliate are jointly and severallyresponsible therefor to the extent permitted by applicable law.  If you were simultaneously employed by morethan one Company immediately before your Date of Termination, each such Companyhas primary responsibility for a portion of the benefits to which you or anyother person are entitled pursuant to this Agreement that bears the same ratioto the total benefits to which you or such other person are entitled pursuantto this Agreement as your base pay from the Company immediately before yourDate of Termination bears to your aggregate base pay from all such Companies.

 

11.                                 Survival.  The respective obligationsof, and benefits afforded to, the Company and you which by their express termsor clear intent survive termination of your employment with the Company ortermination of this Agreement, as the case may be, including without limitationthe provisions of Articles III, IV, V and VI and Sections 3, 4, 5 and 6 ofArticle VII of this Agreement, will survive termination of your employment withthe Company or termination of this Agreement, as the case may be, and willremain in full force and effect according to their terms.

 

**ARTICLE VIII.**

**MISCELLANEOUS**

 

1.                                       Modification and Waiver.  Noprovision of this Agreement may be modified, waived or discharged unless suchmodification, waiver or discharge is agreed to in a writing signed by you and thechair of the Board. No waiver by any party to this Agreement at any time of anybreach by another party to this Agreement of, or of compliance with, anycondition or provision of this Agreement to be performed by such party will bedeemed a waiver of similar or dissimilar provisions or conditions at the sameor at any prior or subsequent time.

 

2.                                       Entire Agreement.  Noagreements or representations, oral or otherwise, express or implied, withrespect to the subject matter to this Agreement have been made by any partywhich are not expressly set forth in this Agreement.

 

3.                                       Governing Law.  This Agreement and the legalrelations among the parties as to all matters, including, without limitation,matters of validity, interpretation, construction, performance and remedies,will be governed by and construed exclusively in accordance with the internallaws of the State of Minnesota (without regard to the conflict of lawsprinciples of any jurisdiction).

 

4.                                       Headings.  Headings are for purposes ofconvenience only and do not constitute a part of this Agreement.

 

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5.                                       Further Acts.  The parties to this Agreementagree to perform, or cause to be performed, such further acts and deeds and toexecute and deliver or cause to be executed and delivered, such additional orsupplemental documents or instruments as may be reasonably required by theother party to carry into effect the intent and purpose of this Agreement.

 

6.                                       Severability.  The invalidity orunenforceability of all or any part of any provision of this Agreement will notaffect the validity or enforceability of the remainder of such provision or ofany other provision of this Agreement, which will remain in full force andeffect.

 

7.                                       Counterparts.  This Agreement may beexecuted in several counterparts, each of which will be deemed to be anoriginal, but all of which together will constitute one and the sameinstrument.

 

If this letter correctly sets forth our agreementon the subject matter discussed above, kindly sign and return to the Companythe enclosed copy of this letter which will then constitute our agreement onthis subject.

 
| Sincerely, |   |                                      |
|------------|--------|-------------------------------------------|
|       |   | VITAL IMAGES, INC.                        |
|       |   |                                      |
|       |   | By:                                       | /s/ Douglas M. Pihl |   |
|       |   |                                      |
|       |   | Name: Douglas M. Pihl                     |
|       |   |                                      |
|       |   | Title: Chairman                           |
|       |   |                                      |
|       |   | Agreed to this 12th day of December 2002. |
|       |   |                                      |
|       |   | /s/Jay D. Miller                          |   |
|       |   | Employee                                  |
|            |        |                                           |  |  |  |

 

12

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