Exhibit 10.43


 


VALUE ADDED RESELLER AGREEMENT


 


This Value Added Reseller Agreement (“Agreement”) is made effective as of this
19th day of June, 2003 (the “Effective Date”), by and between McKesson Information Solutions
LLC, a Delaware limited liability company, having a principal
place of business at 5995 Windward Parkway, Alpharetta, Georgia 30005 (“McKesson”), and Vital Images, Inc., a
Minnesota corporation, having a principal place of business at 3300 Fernbrook
Lane N., Suite 200, Plymouth, Minnesota 55447 (“Vital”).


 


RECITALS


 


A.                                   McKesson
develops and licenses certain products and desires to increase sales of such
products.


 


B.                                     Vital
owns, distributes and supports certain software known and marketed as “Vitrea 2
3D workstation.”


 


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


 


NOW, THEREFORE, the
parties agree as follows:


 


 


1.                                      DEFINITIONS


 


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


 


 


2.                                      SOFTWARE
LICENSE


 


2.1                                 Software
License Grant.  Subject to the terms
and conditions of this Agreement, Vital hereby grants to McKesson a
nonexclusive, nontransferable (except as provided in Sub-Section 7.10.3 -
Assignment), license;


 


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


 


2.1.2                        Right
to Use Documentation.  to use and
Incorporated all or any portion of the Documentation into documentation created
by McKesson, provided that McKesson identifies such Documentation, or portions
thereof as being proprietary to Vital, where applicable; and McKesson’s use of
such Documentation or portions thereof shall not be in any manner likely to
mislead or confuse Customers or contain any material inaccuracies;


 


2.1.3                        Right
to Sublicense.  to market,
sublicense, and distribute the Vital Software (including all Generally
Available future releases, bug fixes, enhancements, Interfaces Documentation,
and all marketing / product information and other materials used in the sales
process) in the Territory to the Target Market, provided McKesson first obtains
a 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 right
to offer the Vital Software to McKesson Customers only as integrated with
McKesson Software.  All Sublicense
Agreements shall include language substantially similar to the terms set forth
in Section 2.2.


 


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2.1.4                        Right
to Copy.  to copy the Vital Software
only as reasonably necessary to exercise the license rights granted in
Sub-Sections 2.1.1–2.1.3 above, including making a reasonable number of copies
for testing, backup and archival purposes.


 


2.2.                              License
Restrictions.  The following License
Restrictions apply to the license granted to McKesson pursuant to this
Agreement, and McKesson acknowledges and agrees that each Sublicense granted to
McKesson Customers pursuant to a Sublicense Agreement shall include language
substantially similar to the license restrictions below and such other
protections for McKesson’s intellectual property as would be customary to
include in license agreements for similar software.


 


2.2.1                        Copying
and Modification.  McKesson will not
modify or copy the Vital Software, in whole or in part, except as expressly
authorized in this Agreement; and will not grant such rights to a Customer
under a Sublicense Agreement.  McKesson
shall not remove or alter any trademark, copyright notice or other proprietary
notice incorporated in, marked on or affixed to any Vital Software or
Documentation by Vital or its licensors, and shall duplicate each such
trademark or notice on each copy of such Vital Software or Documentation; and
McKesson will not grant any rights to remove any such notices or trademarks to
a Customer under a Sublicense Agreement. 
McKesson shall reference Vital’s copyrights in strategic locations in
the Integrated version of the McKesson software, such as the “About” box  and any other locations as mutually agreed
to by the parties, for the purpose of protecting Vital’s copyrights and other
proprietary rights in the Vital Software.


 


2.3.2                        Reverse
Engineering.  McKesson acknowledges
and agrees that the Vital Software contains trade secrets of Vital and its
licensors, and, in order to protect such trade secrets and other interests that
Vital and its licensors may have in the Vital Software, as permitted by
applicable law, McKesson shall not disassemble, decompile or reverse engineer
the Vital Software nor permit any third party to do so including any Customer
pursuant to a Sublicense Agreement.


 


2.3.3                        Facility
Use Limitation.  McKesson
acknowledges and agrees that it will not grant to Customers the right to use
the Vital Software at any facility other than at a McKesson Customer Facility
as defined and agreed to in each Sublicense Agreement, Section 1, except
that McKesson may grant to Customer the right to use the Vital Software on a
temporary basis at an alternate location if a Customer is unable to use the
Vital Software at such Facility or facility of Service Provider due to
equipment malfunction or any cause beyond Customer’s or its Service Provider’s
reasonable control.


 


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


 


2.3.5                        Services
Limitation.  McKesson acknowledges
that it will not grant the right to Customers in any Sublicense Agreement to
use the Vital Software in any manner to provide service bureau, timesharing or
other computer services to third parties.


 


2.4                                 Limited
Rights.  McKesson acknowledges that
its rights in the Vital Software will be limited to those expressly granted in
this Section 2 and McKesson shall similarly limit any rights granted to a
Customer pursuant to a Sublicense Agreement. 
Vital reserves all Intellectual Property Rights and any other rights and
licenses in and to the Vital Software not expressly granted to McKesson
hereunder.


 


2.5                                 Software
Testing by McKesson.  McKesson will
have the right to test any Vital Software delivered by Vital hereunder
(including the initial and subsequent New and Major New Releases) to ensure
that when properly installed in accordance with McKesson’s written installation
instructions, configured and implemented on a system that meets the minimum
recommended system requirements set forth in the applicable Vital
Documentation, it performs in all material respects in accordance with the
applicable Documentation prior to offering such Vital Software for licensing to
McKesson Customers.  The initial testing
of the Vital Software may be performed by McKesson with assistance from Vital
during pilots at Customer Facilities as the parties may agree (the “Pilots”).  In the event that McKesson identifies any
problems with the Vital Software during the Pilots and any subsequent testing,
McKesson shall provide Vital with a reasonably detailed written report that
identifies 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 all
material respects in accordance with the applicable Documentation.


 


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2.6                                 Vital
Software Warranties.


 


2.6.1                        Performance.  Provided that the Vital Software has been
properly installed in accordance with Vital’s written installation
instructions, configured and implemented on a system that meets the minimum
recommended system requirements set forth in the Documentation, Vital warrants
that the Vital Software, and all subsequent modifications, Corrections,
enhancements, and New Releases (including Major New Releases) of Vital
Software, will perform in all material respects in accordance with the
functional specifications set forth in the Documentation.


 


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


 


2.6.3                        Obstructions.  Vital warrants that the Vital Software, as
delivered to McKesson (or a McKesson Customer if sent directly from Vital to
such Customer), does not contain any virus, worm, trap door, back door or other
device that would interfere with or disrupt the use of the Vital Software in
accordance with the Documentation, or that would corrupt or erase any data.


 


2.7                                 Comprehensive
Support; Correction of Defects.


 


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


 


2.7.2                        Correction
of Defects; Comprehensive Support Period. 
Vital agrees to provide Comprehensive Support for each New Release
including Correction of Defects for a period of six (6) months following the
General Availability of a Major New Release (“Comprehensive Support
Period”).  Notwithstanding anything herein
to the contrary, after the Comprehensive Support Period, Vital will be no
longer obligated to provide Corrections for Defects prioritized as High, Medium
or Low but will provide Corrections for Critical Defects and all other support
obligations of Comprehensive Support. 
Notwithstanding the above, Vital shall be obligated to support only the
then-current Release of the Vital Software and the immediately prior Release.


 


2.7.3                        Vital’s
Inability 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 the
pre-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 to
provide such Correction within the corresponding time frame as defined in Exhibit A.  If Vital, in its sole discretion, determines that it is unwilling
or unable to provide such Correction within the required timeframe; or if Vital
commences to provide a Correction to such Defect, but McKesson, in its sole
discretion, does not believe that such Correction can be, or has been, provided
within a commercially reasonable time frame, then, McKesson shall notify Vital
in writing.


 


2.8                                 Trademark
Rights.


 


2.8.1                        Vital
Trademarks.  Vital grants McKesson,
a non-exclusive, non-transferable (except as set forth in
Sub-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 guidelines
established by Vital (as amended from time to time), a current copy of which is
attached to this agreement as Exhibit H. 
McKesson shall not receive any ownership in or to Vital’s trademarks as
a result of such use.  McKesson shall
not use any of Vital’s trademarks, service marks, logos, or slogans in any
manner likely to confuse, mislead, or deceive the public, or to be adverse to
the best interests of Vital.


 


2.9                                 Source
Code Rights.


 


2.9.1                        Escrow.  Vital agrees that it will deposit with its
escrow agent the Source Code for the Vital Software and all future
enhancements, bug fixes, corrections, New Releases and Major New Releases made
Generally Available during the Term and that the same will be considered
Deposit 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 the
execution of this Agreement, Vital shall enroll McKesson as a beneficiary of
the escrow agreement.  McKesson shall be
responsible for all costs incurred in connection with the naming of McKesson as
a beneficiary under the escrow agreement.


 


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


 


2.9.3                        License
to Deposit Materials.  If McKesson
obtains the Deposit Materials in accordance with the escrow agreement then,
subject to the terms and conditions of this Agreement, Vital hereby grants
McKesson a nonexclusive, nontransferable (except as provided in
Sub-Section 7.10.3 of this Agreement), perpetual license to use and modify
the Source Code and Documentation for the sole purpose of correcting errors and
bugs in the Vital Software in order for McKesson to continue to provide
Software Maintenance Services to Customers under Sublicense Agreements and for
no other purpose; provided that this license to the Source Code shall not limit
the license granted to McKesson pursuant to Section 2.1 hereof.  Any such rights to correct errors and bugs
will be limited to such individuals in McKesson’s organization to whom access
is necessary to accomplish said permitted use of the Source Code,
Documentation, and any other materials that comprise the Deposit Materials
pursuant to this Sub-Section, and McKesson shall keep the Source Code and
Documentation no less secure as the source code and documentation for
McKesson’s Software.  In the event that
McKesson makes any modifications to the Source Code in-accordance with its
rights under this Agreement, Vital shall not be required to incorporate any
such changes to the Generally Available Vital Software.


 


2.9.4                        Confidential
Treatment.  Vital shall retain all
right, title and interest in and to the Deposit Materials, and accordingly
McKesson will treat the Deposit Materials as Vital’s Confidential Information
under Sub-Section 7.3.  McKesson
shall maintain a log of the individuals who have access to the Deposit Materials
and where the Deposit Materials are located. 
Upon reasonable advance written notice to McKesson, McKesson shall
provide Vital with access to such log.


 


2.10                           Phased
Integration.  McKesson and Vital
agree to follow a phased integration plan, as outlined in Exhibit G, in the
development of the Integrated Software.


 


3.                                      MARKETING
ACTIVITIES.


 


3.1                                 Marketing
Activities.


 


3.1.1                        Press
Releases.  Subject to each party’s
prior written approval, either party may issue a press release from time to
time to publicize other significant events regarding joint business
developments.


 


3.1.2                        Marketing
Collateral.  Vital shall provide
McKesson with a single electronic copy of any marketing and promotional
materials that Vital uses in its own efforts to market the Vital Software
outside the Target Market so that McKesson may modify these materials for the
purpose of marketing its version of the Integrated Software in the Target
Market.  Additionally, the parties will
work together based on mutual agreement to develop articles or material
regarding the Vital Software for McKesson marketing publications, and any other
marketing publications released by McKesson from time to time during the term
of this Agreement.  At McKesson’s sole
discretion, McKesson shall include references to the Vital Software in
presentations, and shall be responsible for the design and development of
marketing collateral for the Vital Software when such software is integrated
with McKesson Software.


 


3.1.3                        RFP
Responses.  Vital shall provide
assistance, as reasonably necessary and agreed upon, to support McKesson’s
efforts to formulate “stock” responses to requests for proposals (“RFP’s”) from
McKesson Customers in which such responses shall recommend the Vital Software
as a McKesson recommended solution, or a component thereof.  Such cooperation to include, without
limitation, providing McKesson with Vital’s standard RFP responses, and
providing any other reasonable assistance as needed to ensure the accuracy of
McKesson’s responses to questions regarding Vital Software, the development and
maintenance of standard information to use in RFP responses, and clarifications
of such responses.


 


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


 


3.1.5                        Trade
Show Attendance.  Vital shall
participate with McKesson as mutually agreed at vendor fairs and healthcare
informatics industry trade shows, seminars and selected user group events.


 


 


4.                                      MCKESSON
RESPONSIBILITIES.


 


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


 


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


 


4.3                                 Deployment
of New Releases.  McKesson shall use
reasonable efforts to evaluate New Releases of the Vital Software for the
purpose of integrating, sublicensing and distributing such New Releases to
McKesson Customers that have purchased Software Maintenance Services from
McKesson for the Integrated Software, or to future Customers.  While it is the parties’ desire that
McKesson certify such New Releases as ready for resale and/or distribution to
McKesson Customers, they acknowledge that the integration of McKesson Software
with Vital Software (and not sublicensed as a stand-alone product), is a
complex process and that such changes may require substantial development
efforts on behalf of McKesson, third parties and McKesson Customers, and that
whether the New Releases are incorporated into or integrated with any McKesson
Software and offered for resale / sublicense to McKesson Customers is in the
sole discretion of McKesson.


 


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


 


4.5                                 Reporting.  McKesson shall furnish Vital with the
following reports.


 


4.5.1                        Royalty
Reports.  McKesson shall provide
Vital with quarterly reports setting forth (i) the names and addresses of
Customers to whom the Vital Software has been sublicensed and shipped in the
prior calendar quarter, (ii) the McKesson list price for the Vital Software,
(iii) the license fee actually charged to each Customer by McKesson (or its
Affiliates or Distributors) pursuant to a Sublicense Agreement, and (iv) any
other pertinent information agreed to by the parties for the purpose of
documenting the basis for payment of Royalties and Fees for Software
Maintenance Services by McKesson to Vital as set forth in Section 6 of
this Agreement, and Exhibit C  attached
hereto and incorporated herein by reference (“Royalty Reports”).  Such Royalty Reports shall be supplied to
Vital within thirty (30) days following the last day of the calendar quarter
for such calendar quarter (e.g. the report for the calendar quarter
beginning January 1 and ending March 31 shall be due on or before
April 30).


 


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


 


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


 


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


 


 


5.                                      VITAL
RESPONSIBILITIES.


 


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


 


5.1                                 Delivery
of Vital Software.  Vital shall
deliver to McKesson the Vital Software both for its internal use solely in
connection with the obligations of McKesson set forth in Section 2.1, and
for marketing, sublicensing, and distribution of such Vital Software to
Customers.  The specific procedures for
the initial delivery of the Vital Software, delivery of subsequent New
Releases, upgrades, Enhancements and Documentation, and the delivery of the
Vital Software to Customers are set forth in Exhibit D attached hereto and incorporated herein by
reference.


 


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


 


5.3                                 Assistance
to McKesson.  Following execution of
this Agreement, Vital shall provide McKesson with the training, integration
work, testing and Pilot of the Vital Software, and all other related activities
as 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 used
and distributed by McKesson Customers, and McKesson may reproduce such
Documentation at no additional charge as necessary to provide such
Documentation to Customers.


 


5.5                                 Technical
Support and Software Maintenance Services. 
Vital shall provide McKesson with Technical Support and Software
Maintenance Services as defined in Exhibit
F attached hereto and incorporated herein by reference, and as
more fully set forth in Sub-Section 2.7.


 


5.6                                 Pre-releases.  Upon McKesson’s reasonable request, Vital
shall provide newly developed or beta versions (“Pre-releases”) of Vital
Software for review, evaluation, training and planning purposes.  Vital shall make Pre-releases available to
McKesson as soon as possible, and in no event later than when Vital makes the
same available to other value-added resellers of the Vital Software.  Notwithstanding anything herein to the
contrary, the license granted to McKesson with respect to any Pre-release shall
be a limited non-exclusive, non-transferable right and license to use the
object code version of the Pre-release for McKesson’s internal purposes solely
in connection with evaluating the Pre-release. 
In no event will McKesson seek to obtain source code relating to the
Pre-release or attempt to copy, alter, modify, reverse engineer, disassemble or
decompile any Pre-release.  All information
concerning the Pre-release including, without limitation, its functionality and
any errors, defects or malfunctions, shall be considered Confidential
Information of Vital.  In the event of
any such revocation or termination, McKesson shall promptly return to Vital all
copies of the Pre-release in its possession or control.  Once a Pre-release becomes Generally
Available Vital Software, the license granted pursuant to this
Sub-Section no longer applies.  ANY
PRE-RELEASE SOFTWARE IS PROVIDED TO MCKESSON “AS IS” AND VITAL MAKES NO
WARRANTIES AND SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES REGARDING THE
PRE-RELEASE SOFTWARE.


 


5.7                                 Participation
in Development.  McKesson and Vital
Product management groups shall meet on a agreed-upon basis for the purposes of
gathering input for the future direction and ongoing development of Vital
Software and to product rollout schedules, release schedules, and contemplated
new releases and enhancements.


 


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6.                                      FEES; PAYMENT TERMS.


 


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


 


6.2                                 Fees
for Software Maintenance Services. 
McKesson shall pay to Vital a fee for Software Maintenance Services for
each copy of the Vital Software sublicensed to a Customer pursuant to a
Sublicense Agreement (“Fees for Maintenance Services”).  The Fees for Maintenance Services, and
associated payment terms, are more specifically defined in Exhibit C attached hereto and incorporated
herein by reference.


 


6.3                                 Customer
Fees.  McKesson shall determine the
fees to be charged to McKesson Customers for the Vital Software, including fees
for the software license, implementation, maintenance and support services,
training, and any other fees for services mutually agreed upon by McKesson and
Customer(s) in a Sublicense Agreement. 
McKesson agrees that when Vital Software is licensed to a Customer
simultaneously with McKesson’s software as set forth on a Sublicense Agreement;
then, McKesson shall not discount the Vital Software any more than the discount
offered to a Customer for the McKesson software licensed to Customer under the
same agreement.  McKesson shall notify
Vital of its intended list price of Vital Software and any price change
thereafter.


 


7.                                       GENERAL TERMS


 


7.1                                 Payment.


 


7.1.1                        Payment
Terms.  The payment terms for the
Royalties and Fees for Maintenance Services payable to Vital are set forth in Exhibit C attached hereto and
incorporated herein by reference.


 


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


 


7.1.3                        Audit
Rights.  During the term of this
Agreement and for a period of three (3) years following any termination or
expiration of this Agreement, the parties shall each keep complete and accurate
records of transactions involving the Vital Software and use of such Vital
Software by Customers, and provision of services, including development of all
deliverables pursuant to this Agreement, by each party.  During such time, McKesson shall permit an
independent third party auditor appointed by Vital and reasonably acceptable to
McKesson to examine and audit such specific records during reasonable business
hours upon fifteen (15) days prior written notice with respect to the audited
party’s compliance with the terms of this Agreement.  If such an audit uncovers a deficiency in payment to the auditing
party of greater than five percent (5%) in reporting or payments for the
audited period, the audited party shall bear the actual and direct audit
expenses and immediately pay such deficient amount; otherwise the auditing
party shall bear the costs of such audit. 
Such audit rights and obligations set forth in this
Sub-Section 7.1.3 extend to such Affiliate(s) or Distributor(s) that has
sublicensed the Vital Software to a Customer pursuant to the terms of this
Agreement.


 


7.2                                 Proprietary
Rights.  Except for license rights
expressly granted by Vital under this Agreement, each party will retain all
rights, title and interests in and to its Intellectual Property Rights. 


 


7.3                                 Confidentiality.


 


7.3.1                        Obligations
of the Parties.  McKesson and Vital
acknowledge that in the course of testing, installing, utilizing and
maintaining the Vital Software, each party will become familiar with certain
non-public proprietary or trade secret information of the other party concerning
the other’s business affairs and financial data (including the terms and
conditions of this Agreement), property, methods of operation, processing
system or other information (collectively, “Confidential Information”).  Each party may use and disclose Confidential
Information (a) only as permitted under this Agreement (b) only to the extent
required to fulfill that party’s obligation under this Agreement (c) only to
the extent required for the proper management and administration of each respective
party 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 of
care and security as each use to maintain the confidentiality of its own
Confidential Information, but in no event shall the parties use less than
commercially reasonable efforts to protect such Confidential Information.  Upon becoming aware of any use or disclosure
of Confidential Information not provided in this Agreement, a party shall
promptly report such use or disclosure to the other party and a party will
promptly notify the other party of the Institution of any proceedings to obtain
such Confidential Information.  The
provisions of this Sub-Section 7.3 shall survive termination or expiration
of this Agreement.


 


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


 


7.3.3                        Exceptions.  Information shall not be considered
Confidential Information under this Section that: (i) is publicly known
prior to or after disclosure hereunder other than through acts or omissions
attributable to the recipient or its employees or representatives in violation
hereof; (ii) as demonstrated by prior written records, is already known to the
recipient at the time of disclosure hereunder; (iii) is disclosed in good faith
to the recipient by a third party having a lawful right to do so; or (iv) is
the subject of written consent of the party which supplied such information
authorizing disclosure.


 


7.4                                 General
Warranties and Disclaimers.


 


7.4.1                        Corporate
Authority.  Each party warrants that
it is a duly organized and validly existing corporation and has complete and
unrestricted corporate power and authority to enter into this Agreement.


 


7.4.2                        Disclaimer.  THE WARRANTIES EXPRESSLY PROVIDED IN THIS
AGREEMENT ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS AND IMPLIED, INCLUDING
BUT NOT LIMITED TO, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE, WHICH WARRANTIES ARE HEREBY SPECIFICALLY DISCLAIMED.


 


7.5                                 Intellectual
Property Infringement.


 


7.5.1                                                Infringement
Indemnity by Vital.  Vital will
defend or settle at Vital’s own expense, any action or other proceeding brought
against McKesson or a McKesson Customer to the extent that it is based on a
claim that the use of the Vital Software delivered under this Agreement
infringes any copyright or that the Vital Software incorporates any
misappropriated trade secrets.


 


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


 


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


 


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


 


8

















equivalent in function to
the affected Vital Software; or (iii) if options (i) and (ii) above are not
practical in McKesson’s reasonable opinion, then Vital may take possession of
the affected Vital Software and terminate McKesson’s rights and
McKesson’s obligations under this Agreement in respect of such Vital Software,
and upon any such termination Vital will refund to McKesson a portion of the
Royalties paid for that Vital Software based upon five (5) year straight-line
depreciation, with depreciation deemed to have commenced on the corresponding
date of delivery to McKesson and/or the specific Customer(s).


 


7.5.1.4                                       Exclusive
Remedy.  THE FOREGOING ARE VITAL’S
SOLE AND EXCLUSIVE OBLIGATIONS, AND MCKESSON’S SOLE AND EXCLUSIVE REMEDIES,
WITH RESPECT TO INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL PROPERTY
RIGHTS.


 


7.5.2                                                Infringement
Indemnity by McKesson.  McKesson
will defend or settle at McKesson’s own expense, any action or other proceeding
brought against Vital to the extent that it is based on a claim that the use or
integration of the McKesson Software with the Vital Software and use of the
Integrated Software infringes any copyright or that the Integrated Software
incorporates any misappropriated trade secrets.


 


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


 


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


 


7.5.2.3                                       Exclusive
Remedy.  THE FOREGOING ARE
MCKESSON’S SOLE AND EXCLUSIVE OBLIGATIONS, AND VITAL’S SOLE AND EXCLUSIVE
REMEDIES, WITH RESPECT TO INFRINGEMENT OR MISAPPROPRIATION OF INTELLECTUAL
PROPERTY RIGHTS.


 


7.6                                 Limitations
of Liability.


 


7.6.1                        Total
Damages.  EXCEPT FOR ANY LIABILITY
UNDER SUB-SECTION 7.5 (INTELLECTUAL PROPERTY INFRINGEMENT) AND
SUB-SECTION 7.3 (CONFIDENTIALITY), VITAL’S TOTAL LIABILITY UNDER THIS
AGREEMENT WITH RESPECT TO THE VITAL SOFTWARE OR ANY SERVICES DELIVERED WILL BE
LIMITED TO THE TOTAL ROYALTIES, FEES FOR MAINTENANCE SERVICES, AND ANY OTHER
FEES PAID BY MCKESSON TO VITAL UNDER THIS AGREEMENT.


 


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


 


7.6.3                        Material
Consideration.  THE PARTIES
ACKNOWLEDGE AND AGREE THAT THE FOREGOING LIMITATIONS OF LIABILITY ARE A
CONDITION AND MATERIAL CONSIDERATION FOR THEIR ENTRY INTO THIS AGREEMENT.


 


7.6.4                        Limitation
of McKesson’s Obligations.  McKesson
reserves the right to withhold service or otherwise cease performance of its
development, marketing, maintenance and support obligations hereunder with
respect to any McKesson Customer which is found by McKesson to be in default or
breach of any agreement with McKesson with respect to the Vital Software.  Upon such cessation of services, McKesson
shall be relieved of 


 


9

















 


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


 


7.7                                 Term
and Termination.


 


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


 


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


 


7.7.3                        Survival
of Provisions.  The following
provisions of this Agreement will survive termination or expiration of this
Agreement 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 (Dispute
Resolution) and Sub-Section 7.10 (General Provisions).


 


7.7.4                        Orderly
Transition.  Except for termination
of this Agreement as a result of McKesson’s material breach or infringement of
Vital’s Intellectual Property Rights, for a period of one (1) year after the
effective date of termination or expiration of this Agreement (i) each license
granted by Vital to McKesson to use the Software under this Agreement will
continue; and (ii) Vital will cooperate with McKesson in a timely manner to
assist McKesson to achieve an orderly transition (the “Transition
Period”).  Notwithstanding anything to
the contrary and regardless of whether such services are provided during the
Initial Term, any Renewal Term, or thereafter, Vital has the right to be
compensated for such services as set forth in Exhibit C, Section III.


 


7.7.5                        Return
of Software.  At the end of the
Transition Period pursuant to Sub-Section 7.7.4, or the effective date of
termination or expiration of this Agreement If no such transition period
applies, McKesson will promptly cease using and return to Vital or (at Vital’s
request) destroy and erase all copies of the Vital Software in its possession
or control, and certify in writing to Vital that it has done so.


 


7.8                                 Books
and Records.  McKesson and Vital
agree to make available upon the written request of the Secretary of Health and
Human Services or the Comptroller General, or their representatives, this
Agreement and such books, documents and records as may be necessary to verify
the nature and extent of the costs of the services rendered hereunder to the
full extent required by the Health Care Financing Administration implementing
Section 952 of the Omnibus Reconciliation Act of 1980, codified at 42
U.S.C. Section 1395x(v)(1)(I), or by any other applicable federal or state
authority.


 


10

















 


7.9                                 Dispute
Resolution.  Any claim arising out
of or relating to this Agreement or its subject matter or any right or
obligation created by this Agreement, irrespective of the legal theory or
claims underlying such dispute (including tort or statutory claims) (“Dispute”) shall be
resolved in accordance with this Sub-Section 7.9.  The party asserting the Dispute will give
prompt notice to the other party describing the Dispute in reasonable detail (“Dispute Notice”).  Each party agrees not to commence court
proceedings against the other party relating to a Dispute, except that the
provisions of this Section will not prevent a party from commencing court
proceedings seeking injunctive relief for Disputes related to Intellectual
Property Rights or Confidential Information. 
Promptly after receipt of the Dispute Notice, the parties will negotiate
in good faith to resolve the Dispute. 
If the Dispute has not been resolved within forty (40) days after
receipt of the Dispute Notice, then either party, by notice to the other party,
may refer the Dispute for exclusive, binding and final resolution by
arbitration conducted by the American Arbitration Association in accordance
with its Commercial Arbitration Rules and the United States Arbitration
Act.  The arbitration will be conducted
by a single arbitrator, with at least five (5) years experience in arbitrating
technology-related legal disputes, selected jointly by the parties, or selected
by the American Arbitration Association if the parties fall to agree on an
arbitrator within a reasonable period. 
There will be no discovery of documents under the arbitration
procedure.  A party may enter judgment
on the award rendered by the arbitrators in any court having jurisdiction.


 


7.10                           General
Provisions.


 


7.10.1                  Governing
Law.  This Agreement will be
governed by and construed in accordance with the laws of the State of
Minnesota, exclusive of its rules governing choice of law and conflict of
laws.  Any action of any kind arising
out 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                  Export
Assurance.  Each party shall comply
with the U.S. Foreign Corrupt Practices Act and all export laws and
restrictions and regulations of the United States and any country in the
Territory in which such party has the right to market, sublicense and
distribute the McKesson Software pursuant to this Agreement.  Vital hereby acknowledges and agrees that it
will first obtain any export license or approval required by the United States
Department of Commerce pursuant to Section 370 of the Export
Administrative Regulation prior to exporting the McKesson Software.


 


7.10.3                  Assignment.  This Agreement will bind and inure to the
benefit of each party’s permitted successors and assigns.  Neither party shall assign this Agreement
without the express written consent of the other; provided, that either party
may, upon giving ten (10) days prior written notice to the other, assign this
Agreement to any (i) wholly owned subsidiary or (ii) entity resulting from the
sale, combination or transfer of all or substantially all of the assets or
capital stock of such, or from any other corporate form of reorganization by or
of such party; provided further, that the assigning party shall remain liable
for assignee’s performance hereunder. 
Notwithstanding the foregoing, if any assignment otherwise permitted under
the immediately preceding sentence by giving prior written notice is, directly
or indirectly, to a person or entity that the non-assigning party reasonably
deems to be its competitor, the non-assigning party may terminate this
Agreement upon ninety (90) days advance written notice.


 


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


 


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


 


11

















 


	
  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 or
enforce any of its rights under this Agreement will not act as a waiver of such
rights.


 


7.10.7                  Force
Majeure.  Neither party will be
liable to the other party for any failure or delay in performance caused by
matters beyond the first party’s reasonable control, and such failure or delay
will not constitute a material breach of this Agreement.


 


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


 


7.10.9                  Publicity.  The parties may publicly announce that they
have entered into this Agreement and describe their relationship in general
terms.  Neither party will make any
other public announcement or press release regarding this Agreement or any
activities performed under this Agreement without the prior written consent of
the other party.


 


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


 


7.10.11            Relationship
of Parties.  Each party enters into
and performs this Agreement as an independent contractor of the other
party.  This Agreement will not be
construed as constituting a relationship of employment, agency, partnership,
joint venture or any other form of legal association, except as expressly set
forth in this Agreement.  Each party
will have no power, and will not represent that it has any power, to bind the
other party or to assume or to create any obligation or responsibility on
behalf of the other party or in the other party’s name.


 


7.10.12            Construction
of Agreement.  This Agreement has
been negotiated by the parties and its provisions will not be presumptively
construed for or against either party. 
The headings and Section titles in this Agreement are used for
convenience only, and will not affect the construction or interpretation of
this Agreement.


 


12

















 


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


 


Each party executes this Agreement by its duly authorized
representative.


 


 


	
  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

  	
   

  
												



 


13

















 


EXHIBIT A


 


TO THE

VALUE ADDED RESELLER AGREEMENT


 


DEFINITIONS


 


“Vital Software”
means the software products, in object code form only, proprietary to Vital or
for which Vital has the right to distribute and which comprise the software set
forth on Exhibit B,
including any related Documentation, Corrections, enhancements, Interfaces and
New Releases (and Major New Releases) thereto that Vital makes available to
McKesson 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 makes
such software perform functions it was designed to perform or corrects Defects
or “bugs”.


 


“Critical”
priority Defect means that a Defect in the Vital Software directly affects a
Customer’s delivery of patient care or significantly and materially affects the
financial operations of such Customers and no acceptable means of “working
around” the Defect exists.  Vital shall
use its best efforts to provide an immediate Correction, and shall be included
in a “patch” to the Vital Software.


 


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


 


“Defect”
of the Vital Software occurs when those product functions and features
contained within the generally available Vital Software and the Documentation do
not perform in a material respect with the Documentation and the Functional
Requirements set forth in Exhibit B,
attached hereto and incorporated herein by reference and such failure to
perform is replicated for Vital by McKesson or is otherwise replicated by
Vital.


 


“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, and
specifications for the Vital Software (including any Corrections, enhancements,
Interfaces, New Releases, and Major New Releases); provided that Documentation
shall not include any training materials.


 


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


 


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


 


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


 


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


 


“Implementation Services”
means the implementation services specified in a Sublicense Agreement, which
may include software loading, data conversion, software interface table and
master file audits, software testing assistance, equipment installation
services, and training and education that McKesson will perform for a Customer
pursuant to the applicable Sublicense Agreement.


 


“Intellectual Property Rights”
means copyright rights, patent rights, trade secret rights, and any other
proprietary rights in or to intangible property recognized in any jurisdiction
in the world, now or hereafter existing, whether or not registered or
registerable.


 


“Low”
priority Defect means that a Defect is primarily cosmetic in nature or produces
minimum confusion.  This includes
spelling errors, screen presentation problems, or rare, inconsistent
presentations.  The Correction to such
Low priority Defects will vary by issue and shall be included in the next
release as appropriate.


 


14

















 


“McKesson Software” means
the McKesson software products and/or third-party software in object code form
only, and related Documentation, including any corrections and enhancements
thereto 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 Vital
Software. The Correction of these Medium priority Defects shall be included in
the next Release of the Vital Software, and may include such workaround.


 


“New Release(s)”
means all modifications, revisions, Enhancements, Corrections or replacements
for Vital Software and related Documentation which Vital has agreed to provide
pursuant to this Agreement or which Vital makes Generally Available to its
customers 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 Software
including major changes of technical architecture and/or support for
significant new business functions and is made Generally Available by Vital.


 


“Royalty(ies)” means
an 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 Maintenance
Services, and any other services that either party provides to the other party
or a McKesson Customer pursuant to this Agreement or a Sublicense Agreement.


 


“Software Maintenance
Services” means corrections of Software or
Documentation due to Defects in the Vital Software or Documentation, as
applicable, improvements to existing functionality provided by Vital, as well
as the provision of verification, diagnosis, and repair of Defects or the
development of effective workarounds for problems that cannot be resolved
immediately.


 


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


 


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


 


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


 


“Technical Support” means
all reasonable technical support and consultation from Vital’s support hotline
(“Hotline”) to assist McKesson in the resolution of problems with the Vital
Software, Defects (see Sub-Section 2.7.2 for specific obligations to
correct Defects), and/ or bugs in the Vital Software encountered by McKesson or
McKesson Customers in the operation, configuration, implementation and support
of Vital Software.  McKesson shall
contact the Hotline in writing by email, Monday through Friday, from 8:00 am to
6:00 pm EST.  Such Technical Support
shall include appropriate efforts to verify and provide a Correction for
Defects in the Vital Software depending on the severity and priority of the
Defect defined herein as “Critical”, “High”, “Medium” or “Low”.


 


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


 


15

















 


	
  Value Added Reseller Agreement

  	
   

  	
  Vital Images, Inc.

  
	
  PROPRIETARY AND CONFIDENTIAL TO

  	
   

  	
  June 16, 2003

  
	
  VITAL MEDICLA IMAGING COMPANY.

  	
   

  	
   

  



 


EXHIBIT B


 


VITAL SOFTWARE


 


Vitreaâ
2 3D Software


 


16

















 


EXHIBIT C


 


ROYALTIES,


FEES FOR MAINTENANCE SERVICES, AND


OTHER SERVICES AND COSTS


 


I.                                         ROYALTIES
FOR VITAL SOFTWARE


 


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


 


Vital will continuously advise McKesson of the Vital software list
prices via an electronic quotation model via an MS Excel file delivered to
McKesson electronically.


 


II.                                     FEES
FOR MAINTENANCE SERVICES


 


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


 


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


 


The Fees for Maintenance Services payable to Vital shall be an amount
equal to *% of the aggregate amount of Fees for Maintenance Services invoiced
by McKesson for so long as McKesson is obligated to provide maintenance
services to its Customers.


 


III.                                 OTHER
SERVICES AND CHARGES


 


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


 


Basic Training/Immersion Training.  Vital shall make available Basic Training
and Immersion Training in the functionality of the Vital Software available to
a maximum of 3 designated McKesson employees. 
The initial Immersion Training shall be held on site at Vital offices in
Plymouth, Minnesota.  Such Basic
Training and Immersion Training shall be provided as soon as reasonably
possible following the Effective Date of this Agreement at a mutually agreed
upon time.


 


Sales Training.  Vital shall make available training sessions dedicated to sales
positioning and how to perform demonstrations of the Vital Software, geared
towards the McKesson Sales force.  Such
Sales Training shall be provided as soon as reasonably possible following the
Effective Date of this Agreement at a mutually agreed upon time and place.


 


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


 


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Release Training.


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


 


All Other Services


All other services not specified in this agreement to be provided free
of 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 expenses
incurred by Vital under this Agreement in accordance with McKesson’s Travel
Policy as set forth in Exhibit E below.


 












* The material has been omitted pursuant to a request for confidential
treatment and the material has been filed separately with the Office of the
Secretary 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 most
recent version of Vital Software and Documentation (unless McKesson specifies a
different available version) for use by McKesson in accordance with the terms
and conditions of this Agreement within fifteen (15) days after the Effective
Date.


 


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 for
use by McKesson as permitted by Sub-Section 2.1 of this Agreement.


 


Customer Delivery.  McKesson shall deliver the Vital Software to Customers subject to
a Sublicense Agreement.  McKesson shall
be responsible for installation and implementation at Customer sites.  McKesson may copy Vital Software to electronic
media for delivery or may deliver Vital Software and Documentation via
electronic interchange.


 


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EXHIBIT E


 


2001 MCKESSON CORPORATE TRAVEL POLICY

TRAVEL POLICY, PROCEDURES, AND EXPENSE REIMBURSEMENT GUIDELINES


 


A.                                    Air
Travel - The Company will reimburse all business air travel as long as such
travel is at the lowest cost available airfare, short of endangering the reason
for the trip or the business needs dictated by a customer.  The guidelines surrounding our travel policy
are 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 of
travel requires the prior approval of the McKesson contact established pursuant
to Sub-Section 3.2.5 of the Agreement.


 


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


 


C.                                    Car
Rentals.  The Company will reimburse
car rentals only when other means of transportation are unavailable, more
costly, or impractical.  The use of a
rental car must be justified as a business need and not as a matter of personal
convenience.  The use of intermediate or
full-size cars is acceptable only when two or more employees are traveling
together and sharing the rental car, or when it is necessary to have a larger
vehicle for carrying clients or equipment.


 


D.                                    Other
Transportation


 


Personal Car - The
Company prefers travel through use of public transportation, but an employee’s
automobile should be used when other transportation is unavailable or economy
can be realized.  The Company will
reimburse the employee at the rate of .31 cents per mile over and above the
normal commute, plus parking and tolls, for authorized business use of personal
cars.  The normal commute includes an
employee’s drive to his/her office, or FM site, if located in the same city in
which the employee resides.


 


Taxis and other Out of Town Transportation - The
cost of a taxi to and from places of business, hotels, or airports in
connection 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 transportation
whenever feasible.  Receipts are
required for all transportation expenses.


 


II.                                     MEALS


 


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


 


	
  Breakfast

  	
   

  	
  $

  	
  8.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lunch

  	
   

  	
  $

  	
  12.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dinner

  	
   

  	
  $

  	
  20.00

  	
   

  



 


20

















 


III.                                 OTHER REIMBURSABLE EXPENSES


 


A.                                    Telephone
Expenses


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


 


2.               Personal - The Company will pay charges
for personal long distance calls when the employee is away from home for
business reasons.  These should be
limited to one ten-minute call a day. 
In order to maximize the savings potential employees should place
personal calls through AT&T.


 


B.                                    Tips
and Gratuities.  The Company will
pay for reasonable tipping and gratuities:


•                  up to 20% of the
total restaurant bill


•                  $1 per bag
porterage


•                  up to 15% of the
total cab fare


 


C.                                    In-Town
Expenses. When traveling within his/her headquarters city, an employee may
expense charges for local transportation if required for business purposes and
when authorized.  Whenever public
transportation is not used, claims for taxis, private limousines, and personal
car mileage should be separated, claimed, and explained, showing the purpose of
the trip and the itinerary.


 


21

















 


EXHIBIT F


 


SOFTWARE SUPPORT AND MAINTENANCE SERVICES


 


1.0                                 Software Support by
MCKESSON - VITAL and MCKESSON acknowledge and agree that initially,
MCKESSON shall obtain assistance from VITAL in order to provide software
services, including support and maintenance directly to MCKESSON
customers.  MCKESSON shall provide
problem triage and “first call” maintenance services.


 


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


 


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


 


2.0                                 Software
Maintenance by VITAL.  At the start
of this Agreement, VITAL shall provide, at no extra charge, the following
maintenance services in the form of software upgrade and support of the
Licensed Products to MCKESSON as described herein:


 


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


 


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


 


2.3                                 Level Three Support:  VITAL shall use all commercially reasonable
efforts to promptly rectify any problem with the Licensed Products when
MCKESSON gives notice and reasonable documentation to VITAL of a problem which
results in the Licensed Products not being in substantial conformance to the
documentation in Exhibit D and such problem requires VITAL to fix or modify the
source code to the Licensed Products.


 


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


 


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


 


22

















 


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


 


2.6                                 Telephone
Availability:  VITAL shall provide
reasonable telephone support for the Licensed Product, during the Warranty
Period, between the hours of 8:00 a.m. and 5:00 p.m. Central Time, excluding
weekends and holidays, to MCKESSON’s customers and designated support
personnel.


 


2.7                                 Single Designated
Site:  VITAL shall provide Telephone
support services to a single site of MCKESSON to be designated by written
notice from MCKESSON to VITAL.  The location
of the designated site may be changed upon 14 days prior written notice by
MCKESSON to VITAL.


 


23

















 


EXHIBIT G


 


PHASED INTEGRATION PLAN OF LICENSED PRODUCTS


 


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


 


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


 


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


 


24

















 


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 and
company name.  Individual parts should
not 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 infinity
sign is Pantone 872 (metallic gold), the name “Vital Images” is black and the
drop 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 to
white with Pantone 187 (red) and Pantone 872 (metallic gold) remaining
constant.


 


When necessary, it is acceptable to replace the Pantone 872 (metallic
gold) 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 Web
pages, fact sheets, sales collateral, tradeshow signage and slide
presentations.


 


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


 


Size


The logo should be reproduced in a size proportionate to surrounding
elements.  However, it should never be
reduced to an illegible size.


 


Availability


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


 


Authorization


The Vital Images logo may be utilized for so long as a valid agreement
is in place between Vital Images and McKesson. 
McKesson acknowledges and agrees that it shall receive no rights of
ownership in or to the logo or other Vital Images trademarks as a result of
such use.  Usage of and all pre-printed
materials containing the logo shall cease upon termination of the underlying
agreement between Vital Images and McKesson.


 


25

















 


II. 
Vitreaâ Product Name


 


Components


 


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


 


Color


 


Vitreaâ2
can appear in black, Pantone 187 (red) or Pantone 872 (metallic gold).


 


Font


 


The font used for Vitreaâ
2 is Berling Italics.  In written
documentation, such as a Microsoft Word document, it can appear in a standard
Times New Roman font.


 


Usage


 


Vitreaâ
2 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 Vitreaâ
2 in a document, it is acceptable to refer to the product simply as Vitrea.


 


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


 


Size


 


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


 


Authorization


 


The Vitreaâ
2 product name may be utilized for so long as a valid agreement is in place
between Vital Images and McKesson. 
McKesson acknowledges and agrees that it shall receive no rights of
ownership in or to the product name or other Vital Images trademarks as a
result of such use.  Usage of and all
pre-printed materials containing the Vitreaâ
2 product name shall cease upon termination of the underlying agreement between
Vital Images and McKesson.


 


26

















 


III. 
Specification Form


 





 


 





 


 





 


27