Document:

Exhibit 10.18

 

AMENDMENT
NO. 3 TO

MARKETING AND DISTRIBUTION AGREEMENT

DATED MARCH 30, 2007 BETWEEN

VITAL IMAGES, INC. AND TOSHIBA MEDICAL SYSTEMS CORPORATION

 

THIS AMENDMENT NO. 3 (the “Amendment”) is
made as of March, 2008 by and between Vital Images, Inc., a Minnesota corporation having its principal
place of business at 5850 Opus Parkway, Suite 300, Minnetonka, Minnesota
55343 USA (“Vital Images”)  and Toshiba Medical Systems Corporation having
its place of business at 1385, Shimoishigami, Otawara-Shi, Tochigi 324-8550,
Japan (“Toshiba”).

 

This
Amendment modifies the Marketing and Distribution Agreement dated March 30,
2007 between the parties. Under this Amendment, the following items in the
Agreement are modified as set forth below:

 

1.             Exhibit E: The pricing for
licenses of and maintenance for the # Products set forth in Exhibit E to
the Marketing and Distribution Agreement are revised
as set forth in Exhibit E to this Amendment. All other provisions of Exhibit E
attached to the Marketing and Distribution Agreement, and Amendments 1 and 2
thereof, remain unchanged.

 

2.             This Amendment shall take effect as
of March, 2008.

 

3.             Except as amended hereby, the
Agreement shall remain in full force and effect in accordance with its original
terms. The amended portions of the Agreement shall be read, wherever reasonable
to do so, to be consistent with the portions not so amended; provided that the
amended portions shall be deemed to control and any conflict shall be resolved
in favor of such amended portions.

 

IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their duly authorized representatives below.

 

	
  VITAL IMAGES, INC.

  	
   

  	
  TOSHIBA MEDICAL SYSTEMS 

  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By 

  	
  /s/ Susan A. Wood

  	
   

  	
  By 

  	
   /s/Satoshi Kimura

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name 

  	
  Susan A. Wood

  	
   

  	
  Name 

  	
  Satoshi Kimura

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title

  	
  Executive Vice President,

  	
   

  	
  Title 

  	
  X-ray System
  Division General Manager

  
	
   

  	
   

  	
  Product Marketing
  and Development

  	
   

  	
   

  
														

 

# Confidential Treatment has been
requested, the portion indicated has been redacted and the redacted portion has
been separately filed with the Securities and Exchange Commission.

 

 

EXHIBIT E

PRODUCT PRICE LIST

 

Exhibit E of the Agreement is modified by
changing the pricing for the Product set forth below and

adding the following packages:

 

	
  License

  	
   

  	
  U.S. (current)

  	
   

  	
  U.S. (new)

  	
   

  	
  Non-U.S. 

  (current)

  	
   

  	
  Non-U.S. (new)

  	
   

  
	
  # *

  	
   

  	
  $

  	
  #

  	
   

  	
  $

  	
  #

  	
   

  	
  $

  	
  #

  	
   

  	
  $

  	
  #

  	
   

  
														

 

*when and if available

 

ADDITIONAL
SOFTWARE PACKAGE PRICING

 

	
   

  	
   

  	
  Pricing for New Customers

  	
   

  
	
  Package

  	
   

  	
  U.S.A. 

  (2008)

  	
   

  	
  Non-U.S.A. 

  (2008)

  	
   

  
	
  Angio XA Basic Package

  	
   

  	
  $

  	
  #

  	
   

  	
  $

  	
  #

  	
   

  
	
  ·      Vitrea â

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      # *

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Angio XA CT Package  

  	
   

  	
  $

  	
  #

  	
   

  	
  $

  	
  #

  	
   

  
	
  ·      Vitrea â  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      # * 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      CT Perfusion option  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Peripheral Vessel Probe option

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*when and if available

 

	
   

  	
   

  	
  Pricing for Existing Customers off 

  Maintenance**

  	
   

  
	
  Package

  	
   

  	
  U.S.A. 

  (2008)

  	
   

  	
  Non-U.S.A. 

  (2008)

  	
   

  
	
  Angio XA Basic Package

  	
   

  	
  $

  	
  #

  	
   

  	
  $

  	
  #

  	
   

  
	
  ·      Vitrea
  â  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      # *

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Angio XA CT Package 

  	
   

  	
  $

  	
  #

  	
   

  	
  $

  	
  #

  	
   

  
	
  ·      Vitrea
  â  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      # * 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      CT
  Perfusion option  

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ·      Peripheral
  Vessel Probe option

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

*when and if available

 

**Existing Customers on Maintenance will
receive the products when and if they are made available

 

# Confidential Treatment has been
requested, the portion indicated has been redacted and the redacted portion has
been separately filed with the Securities and Exchange Commission.Exhibit
10.19

 

Execution
Copy

 

SEPARATION AND
NON-COMPETE AGREEMENT

 

This Separation and
Non-Compete Agreement is entered into as of January 16, 2008 (“Execution
Date”) by and between Vital Images, Inc. (“Company”), a Minnesota
corporation, and Jay D. Miller (“Employee”), a resident of the State of
Minnesota.

 

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

 

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

 

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

 

C.            Competitive Products and Services,
as used herein, shall include all products and services similar to or the same
as those offered by Company to its customers involving advanced medical
visualization and analysis software technologies beyond MIP (Minimum Intensity
Projection) and MPR (Multi Planar Reformation) that allow for analysis,
manipulation, and distribution of images, such as radiological studies, in 2D,
3D and 4D.

 

D.            Employee’s Claims, as used
herein, means all of the rights Employee, has on or prior to the date hereof,
to any relief of any kind from Company, whether or not Employee now knows about
those rights, arising out of his employment with Company, and his employment
termination, including, but not limited to, claims arising under the Age
Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act; the Minnesota Human Rights Act; the Americans with Disabilities
Act; Title VII of the Civil Rights Act of 1964, as amended; the Minnesota
Whistleblower Act; or other federal, state or local civil rights laws; claims
pursuant to that certain Employment Agreement between Company and Employee
dated February 9, 2002 (the “Employment Agreement”); claims pursuant to
that certain Amended and Restated Change in Control Agreement dated February 9,
2002 (the “Change in Control Agreement”); claims pursuant to any other
agreement, understanding, plan or arrangement under which Employee could
receive compensation from the Company, as the parties intend for this Agreement
to settle all obligations remaining between the parties; claims for breach of
contract; fraud or misrepresentation; defamation, intentional or negligent
infliction of emotional distress; breach of covenant of good faith and fair
dealing; promissory estoppel; negligence; wrongful termination of employment;
and any other claims for unlawful employment practices arising on or prior to
the date hereof; provided, however, that the term “Employee’s Claims” shall in
no event include 

 

 

 

Employee’s
rights to receive the payments, benefits and continuing protections required to
be provided under this Agreement, including, without limitation, Employee’s
rights to receive reimbursement of his expenses, in accordance with Company
policies, benefits under Company’s life insurance and 401(k) plans and
similar fringe benefit programs for which Employee was eligible as of the
Separation Date, and under laws related thereto.

 

E.             Company’s Claims, as used
herein, means all of the rights Company now has to any relief of any kind from
Employee, or from his heirs, beneficiaries, successors or assigns, whether or
not Company now knows about those rights, arising out of Employee’s employment
with Company on or prior to the date of this Agreement, including, but not
limited to, claims for breach of contract; fraud or misrepresentation;
defamation, intentional or negligent infliction of emotional distress; breach
of covenant of good faith and fair dealing, promissory estoppel; negligence or
under applicable federal, state or local law.

 

F.             Vested Stock Options, as
used herein, shall mean those stock options held by Employee which are vested
as of May 15, 2008, as described on Schedule A, attached hereto.

 

2.             Separation Date.  Employee shall cease to be an officer of the
Company on January 9, 2008.  After January 9,
2008, Employee shall continue as an employee of the Company and will remain on
the Company’s payroll and be paid on the Company’s regular pay dates, which are
twice monthly, at his current rate of base salary through January 31,
2008, and thereafter as provided below through May 15, 2008 (“Separation
Date”).  From January 10, 2008
through the Separation Date, Employee will provide such transition services as
are reasonably requested by the Chief Executive Officer of the Company, who
will coordinate the logistics of such services. 
After January 31, 2008, Employee will receive $3,500 per Company
pay period, for not more than five (5) days of service per 30 day period,
as such service is reasonably requested by the Chief Executive Officer.  Employee’s service will include attendance at
the ESI Snowmass conference from February 18 through February 20,
2008.  If more than five (5) days of
service per thirty calendar day period after January 31, 2008 is requested
and provided, Company will compensate Employee for such service at the rate of
$1,400 per day of service.  Through the
Separation Date, Employee will be entitled to receive his current health and
welfare benefits, including the opportunity to contribute to the Company’s 401K
plan.  Except as expressly set forth
herein, Employee shall not be entitled to any compensation or other payments
during the period from and after January 9, 2008.  After January 9, 2008, Employee shall no
longer accrue vacation time.

 

3.             Company’s Obligations and
Severance Agreements.  In
consideration for Employee’s agreements, covenants and promises contained
herein, specifically including, but not limited to, the release of Employee
Claims and Employee’s promises to refrain from competing with the Company and
soliciting its clients and employees as set forth herein, Company and Employee
agree as follows:

 

A.            Severance Payment.  Company agrees to pay to Employee a Severance
Payment of Five Hundred Thousand and 00/100 Dollars ($500,000.00) (“Severance
Payment”).  This Severance Payment will
be payable in one lump sum on the first day of the seventh month following the
Separation Date, i.e., on November 17, 2008, or upon his earlier 

 

 

2

 

 

death.  The Severance Payment shall be subject to
federal and state withholding taxes and FICA.

 

B.            Medical Insurance Benefits.  Company, pursuant to federal and state law,
will provide, for a period of eighteen (18) months following the Separation
Date (“COBRA Period”), a continuation of the group medical and dental insurance
coverage on the same basis as it was previously provided to Employee by
Company.  Through the earlier of (i) Employee’s
participation in equivalent group medical and dental insurance benefits with a
new employer or (ii) November 30, 2009 (the “Suspension Date”),
Company will pay that portion of the premium for group medical and dental
insurance that it paid during Employee’s employment, with the remainder to be
paid by Employee.  After the Suspension
Date, Employee will be required to pay for all such benefits for the remainder
of the COBRA Period, if any, should Employee elect to continue COBRA coverage.
At the conclusion of the Suspension Period, Company will pay Employee an
additional severance payment in an amount equal to the Company’s portion of the
monthly premium for group medical and dental insurance for Employee as of the
expiration of the COBRA Period, multiplied by a period of six (6) months (“Additional
Severance Payment”). The Additional Severance Payment shall be subject to
federal and state withholding taxes and FICA and Employee shall be solely
responsible for the additional tax consequences, if any, related to Company’s
payments on Employee’s behalf as set forth in this Section 3.B.

 

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

 

D.            Release.  Effective as of the expiration of the January 2008
Rescission Periods, as hereafter defined, Company hereby releases all Company’s
Claims, provided, however, that such release is not intended to apply to any
willful misconduct by Employee of which Company does not have present
knowledge.  Company agrees to provide a “bring
down” release in the form attached hereto as Schedule B and incorporated herein
by this reference.  This bring-down
release will be provided on the Separation Date, and issued simultaneously with
and in further consideration for Employee’s bring-down release.  Company’s bring down release shall be
delivered in exchange for the simultaneous delivery to Company of Employee’s
bring-down release on the Separation Date, but its effectiveness shall be
contingent upon the expiration of Employee’s May 2008 Rescission Periods,
without rescission of Employee’s bring-down release.  In the event Employee rescinds his bring-down
release, Company’s bring-down release shall automatically become null and void
without further notice.

 

E.             Extension of Exercise Period for
Vested Stock Options.  The Company
shall extend Employee’s time period to exercise those Vested Stock Options set
forth on Schedule A, other than Option Nos. 435 and 436, until the earlier of May 15,
2011 or the date set forth on Schedule A. 
Employee’s non-vested options shall terminate on the Separation
Date.  Company and Employee shall enter
into amendments to the agreements for the Vested Stock Options to memorialize
the changes described in the foregoing two sentences, but the changes shall be
effective as of the expiration of the May 2008 Rescission Periods,
notwithstanding any failure to enter into any such amendments.

 

 

3

 

 

F.             Computer and Cell Phone.  Company shall allow Employee to retain the
laptop computer, cell phone and cell phone number issued by or through the
Company to Employee; however, Employee shall remove or destroy any Company
property or information identified by the Company contained on the laptop
computer and cell phone no later than the date of this Agreement, to the
satisfaction of the Company.  For such
purpose, on the date this Agreement is signed by Employee, Employee shall give
access to Company to the laptop computer and cell phone.  Cell phone expenses after the Separation Date
will be the full responsibility of Employee.

 

G.            Accrued But Unused Vacation Time.  Company shall pay Employee for all accrued
but unused vacation time, through the date of this Agreement, an amount
estimated to be $35,680.00, less applicable federal and state withholding taxes
and FICA.  Employee shall be eligible to
continue to make contributions to Employee’s 401(k) Plan account from
Employee’s compensation and payments under this Agreement in accordance with
the terms of the Plan and applicable law.

 

H.            Indemnification of Employee.  Employee shall retain all of his rights to be
indemnified, shall be entitled to advancement of expenses, and shall be held
harmless by Company as an officer and director of the Company, for acts or omissions
occurring while an officer, director or employee of the Company on or prior to
the Separation Date (the “Indemnification Period”), to the fullest extent
permitted by law and the Company’s Articles of Incorporation and Bylaws, and on
a basis that is not less favorable than that provided for the Company’s other
officers and directors, and shall continue to be eligible for coverage and to
be a named insured under the Company’s Corporate Directors’ and Officers’
Liability policies as in effect from time to time with respect to the
Indemnification Period.

 

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

 

A.            Release.  Employee hereby releases all Employee’s
Claims.  Employee agrees to provide a “bring
down” release in the form attached hereto as Schedule C and incorporated herein
by this reference.  This bring-down
release will be provided on the Separation Date, except in the event of his
death or disability prior to the Separation Date.  Employee acknowledges that the money and
promises received and to be received by Employee are in exchange for the
releases of Employee’s Claims.

 

B.            Covenant Not To Sue.  Employee agrees that he will not initiate any
litigation to pursue Employee Claims released under either the initial release
or the bring-down release provided for in Section 4.A.  This covenant does not apply to litigation
challenging the validity of Section 4.A. 
Excluded from this covenant are any claims which cannot be waived by
law, including, without limitation, the right to file a charge with or
participate in any investigation conducted by the Equal Employment Opportunity
Commission (“EEOC”) or any state or local agency.  Employee agrees to waive, however, his right
to any monetary recovery should the EEOC or any state or local agency pursue
any claims on Employee’s behalf. 
Further, Employee agrees to pay 

 

 

4

 

 

Company’s
attorneys’ fees if Employee breaches the covenant not to sue contained in this Section 4.B.

 

C.            Non-Compete Restrictions.  In exchange for the Company’s agreements,
covenants and promises set forth in Section 3 of this Agreement,
including, without limitation, Company’s agreement to extend the exercise
period of the Vested Stock Options, which Employee acknowledges are adequate
consideration for his obligations in this Section 4.C, Employee agrees
that Employee shall not, directly or indirectly, on behalf of himself or a
third party, for a period of eighteen (18) months following the
Separation Date (“Restricted Period”), do any of the following:

 

1.             Own, manage, operate, join,
control, consult with, participate in the ownership, operation or control of, be
employed by, or be connected in any manner with any person or entity which
manufactures, sells, solicits, offers, offers to provide, or provides any
Competitive Products and Services, unless such employment is by a large
diversified entity and on a basis such that Employee will have no involvement
whatsoever with the provision of Competitive Products and Services during the
Restricted Period.  This restriction
applies worldwide, and Employee agrees and acknowledges a worldwide restriction
is reasonable in scope given the Company’s worldwide territory;

 

2.             Solicit customers or the business
of any person, firm, corporation or other entity who is or who was a customer
or account of Company or any of Company’s affiliates and subsidiaries while
Employee was employed by Company, including but not limited to resellers or
distributors of Company products or services, or accept business from any
person, firm, corporation or other entity who is or who was a customer or
account of Company or any of Company’s affiliates and subsidiaries while
Employee was employed by Company, for the purpose of selling to such customer
or account any Competitive Product or Service; and

 

3.             Induce or seek to induce any person
employed with Company or its affiliates as of the Separation Date to
discontinue that person’s employment with Company and/or solicit, recruit, hire
or participate in any other person’s or entity’s effort to hire an employee of
Company.

 

D.            Company Property.  Unless otherwise set forth herein, Employee
will return to Company all property belonging to Company immediately upon the
execution of this Agreement, whether such property is currently on or off the
premises of Company, including, without limitation, any and all computer
hardware or computer software.

 

E.             Confidentiality.  For all time hereafter forever, Employee will
not use or make available or divulge to any person, firm, corporation or other
entity any information of or regarding Company including, without limitation,
trade secrets, customer lists, business policies, financial information,
technical information, employee information, methods of operation, marketing
programs, customer price lists or any other confidential or secret information
concerning the business and affairs of Company or any of its affiliates, except
to the extent (i) such information is in the public domain without fault
of 

 

 

5

 

 

Employee
or (ii) Employee is required to respond to a lawful and valid subpoena or
other legal process or other government or regulatory inquiry, in which case he
shall give Company prompt notice thereof (except to the extent legally
prohibited).

 

F.             Confidentiality of Agreement.  Until such time as the terms of this
Agreement have been publicly disclosed by Company, Employee agrees that he will
keep the terms and conditions of this Agreement that have not been so disclosed
strictly confidential except that Employee may disclose the terms and
conditions of this Agreement to his spouse, if any, attorney, tax preparer,
government agencies or as required by law.

 

G.            Non-Disparagement.  For all time hereafter forever, Employee
agrees that he shall not disparage or defame Company or its employees or
directors in any respect.

 

H.            Cooperation and Continuing
Assistance From Employee.  Employee
agrees to cooperate with reasonable requests by the Company through the
expiration of his service on the Board of Directors of the Company to provide
information or assist Company with the transition of Employee’s job duties to
other Company employees, which shall be at Company’s expense.

 

I.              Member of Board of Directors.  Employee will continue to serve on Company’s
Board of Directors until the earlier of (i) the shareholders’ meeting of
Company which is currently scheduled to be held in May 2008 (“Shareholders’
Meeting”) or May 15, 2008.  Employee
shall not be entitled to compensation for his service on the Board of
Directors, and Employee will not be eligible for re-election to the Board of
Directors after the date of the Shareholders’ Meeting.

 

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

 

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

 

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

 

B.            Employee has a period of twenty-one
(21) calendar days from the date on which he receives an unsigned copy of this
Agreement during which to consider whether or not 

 

 

6

 

 

to
sign this Agreement and that, having been advised of that entitlement, he may
elect to sign this Agreement at any time prior to the expiration of that
twenty-one (21) day period.  Employee
acknowledges that he received a copy of this Agreement on January 6, 2008
and that any revisions to this Agreement after January 6, 2008 will not
extend or alter such twenty-one (21) day period for Employee to consider
whether to sign the Agreement.

 

C.            Employee may rescind (that is,
cancel), within seven (7) calendar days of signing the Agreement, the
provisions of Section 4.A. of this Agreement with respect to claims
arising under the Age Discrimination in Employment Act (“ADEA Rescission
Period”) and may rescind within fifteen (15) calendar days of signing the
Agreement, the provisions of Section 4.A. of this Agreement with respect
to claims arising under the Minnesota Human Rights Act (“MHRA Rescission Period”)
(collectively, “Rescission Periods”).  To
be effective, rescission must be in writing, delivered to Company at
Vital Images, Inc., 5850 Opus Parkway, Suite 300, Minnetonka,
MN   55343, ATTN:  Vice
President, Human Resources, within the applicable Rescission Period, or sent to
Company, at such address, by certified mail, return receipt requested, postmarked
within the applicable Rescission Period.

 

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

 

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

 

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

 

9.             Announcements.  Employee shall be entitled to reasonable
input regarding internal and external announcements regarding the subject
matter of this Agreement.

 

10.           Employee Acknowledgements.  Employee acknowledges and represents that
this Agreement memorializes the terms and conditions agreed to by and between
Company and Employee on December 31, 2007. 
Employee further acknowledges and represents that:  (a) he has read this Agreement and
understands its consequences; (b) he has received adequate opportunity to
read and consider this Agreement; (c) he has determined to execute this
Agreement of his own free will and acknowledges that he has not relied upon any
statements or 

 

 

7

 

 

explanations
made by Company regarding this Agreement; (d) the promises of Company made
in this Agreement constitute fair and adequate consideration for the promises,
releases and agreements made by Employee in this Agreement; (e) the Vested Stock Options which
are “incentive stock options,” as that term is used in Section 422 of the
Internal Revenue Code of 1986, as amended, which are being extended as provided
in Section 3.E. will become nonqualified stock options that are not
incentive stock options; and (f) Company will be required to disclose the
terms of this Agreement in a Current Report on Form 8-K to be filed with
the Securities and Exchange Commission (“SEC”) and to file a copy of this
Agreement with the SEC.

 

11.           Entire Agreement.  Unless otherwise set forth herein, this
Agreement, including any Schedules attached hereto or documents expressly
referred to herein contains the entire agreement between Company and Employee
and, except as expressly set forth herein, supersedes and cancels any and all
other agreements, arrangements and understandings, whether oral or in writing,
between Company and Employee with respect to the terms and conditions of his
employment with Company and the termination of his employment.  This Agreement does not supersede, cancel or
otherwise void Section 3.5 of the Employment Agreement entitled “Works
Made For Hire,” which shall remain in full force and effect.

 

12.           Termination Clause.  Except as provided in Section 11 of this
Agreement, the Employment Agreement and Change in Control Agreement terminate
effective the Separation Date.

 

13.           Mitigation.  Employee shall not be required to mitigate
the amount of any payments or benefits Company is required to make or provide
in connection with this Agreement by seeking other employment or otherwise.

 

14.           Governing Law.  This Agreement shall be construed and
enforced in accordance with the laws of the State of Minnesota.  All actions regarding this Agreement shall be
brought in a state or federal court within the State of Minnesota.

 

15.           Effective Date.  This Agreement was originally offered to
Employee on or about January 6, 2008. 
Employee shall have until the close of business on January 27, 2008
to accept this Agreement.  If Employee
desires to accept this Agreement, Employee shall execute the Agreement and
return the same to Company at the address set forth in Section 5.C.
hereof.  If Employee does not so accept
this Agreement, this Agreement, and the offer contained herein, shall be null
and void as of the close of business on January 27, 2008.

 

 

8

 

 

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

 

	
   

  	
  VITAL IMAGES, INC.

  
	
   

  	
   

  	
   

  
	
  Dated:1-17-08

  	
  By:

  	
  /s/ Peter J. Goepfrich

  
	
   

  	
  Its:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:1-17-08

  	
  /s/ Jay D. Miller

  
	
   

  	
  Jay D. Miller

  

 

 

9

 

Schedule A

 

Vested Stock Options for Jay
D. Miller

 

	
  Option

  No.

  	
   

  	
  Type*

  	
   

  	
  Grant

  Date

  	
   

  	
  Per Share

  Exercise

  Price

  	
   

  	
  Last Exercise

  Date

  	
   

  	
  Number of Shares

  Subject to Vested

  Portion of Option at

  May 15, 2008

  
	
  435

  	
   

  	
  ISO

  	
   

  	
  05/11/2000

  	
   

  	
  $7.3438

  	
   

  	
  05/11/2008

  	
   

  	
  8,659

  	
  **

  
	
  436

  	
   

  	
  NQ

  	
   

  	
  05/11/2000

  	
   

  	
  $7.3438

  	
   

  	
  05/11/2008

  	
   

  	
  4,841

  	
  **

  
	
  604

  	
   

  	
  ISO

  	
   

  	
  02/08/2001

  	
   

  	
  $5.1880

  	
   

  	
  02/08/2009

  	
   

  	
  11,574

  	
   

  
	
  605

  	
   

  	
  NQ

  	
   

  	
  02/08/2001

  	
   

  	
  $5.1880

  	
   

  	
  02/08/2009

  	
   

  	
  5,926

  	
   

  
	
  707

  	
   

  	
  ISO

  	
   

  	
  03/12/2002

  	
   

  	
  $7.2500

  	
   

  	
  03/12/2010

  	
   

  	
  35,000

  	
   

  
	
  708

  	
   

  	
  NQ

  	
   

  	
  03/12/2002

  	
   

  	
  $7.2500

  	
   

  	
  03/12/2010

  	
   

  	
  165,000

  	
   

  
	
  741

  	
   

  	
  ISO

  	
   

  	
  02/06/2003

  	
   

  	
  $9.6000

  	
   

  	
  02/06/2011

  	
   

  	
  4,572

  	
   

  
	
  742

  	
   

  	
  NQ

  	
   

  	
  02/06/2003

  	
   

  	
  $9.6000

  	
   

  	
  02/06/2011

  	
   

  	
  25,428

  	
   

  
	
  895

  	
   

  	
  ISO

  	
   

  	
  02/05/2004

  	
   

  	
  $12.5990

  	
   

  	
  05/15/2011

  	
   

  	
  8,224

  	
   

  
	
  896

  	
   

  	
  NQ

  	
   

  	
  02/05/2004

  	
   

  	
  $12.5990

  	
   

  	
  05/15/2011

  	
   

  	
  21,776

  	
   

  
	
  1126

  	
   

  	
  NQ

  	
   

  	
  02/15/2005

  	
   

  	
  $15.4000

  	
   

  	
  05/15/2011

  	
   

  	
  8,200

  	
   

  
	
  1553

  	
   

  	
  NQ

  	
   

  	
  03/09/2006

  	
   

  	
  $32.1400

  	
   

  	
  05/15/2011

  	
   

  	
  14,000

  	
   

  
	
  1792

  	
   

  	
  NQ

  	
   

  	
  02/02/2007

  	
   

  	
  $32.6400

  	
   

  	
  05/15/2011

  	
   

  	
  8,840

  	
   

  

* “ISO” means an “incentive stock option,” as that term is used in the
Internal Revenue Code of 1986, as amended. 
“NQ” means an option that is not an incentive stock option.

 

** Options 435 and 436 are not being extended in connection with this
Agreement and, unless exercised prior thereto, will expire on May 11,
2008.

 

 

 

A-1

 

 

Schedule B

 

Company’s “Bring-down”
Release

 

This
Bring-down Release Agreement is entered into as of
                  ,
2008 by Vital Images, Inc. (“Company”), a Minnesota corporation.

 

1.             Definitions.  We intend all words used in this Bring-down
Release to have their plain meanings in ordinary English.  Specific terms we use in this Bring-down
Release have the following meanings:

 

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

 

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

 

C.            Company’s Claims,
as used herein, means all of the rights Company now has to any relief of any
kind from Employee, or from his heirs, beneficiaries, successors or assigns, whether
or not Company now knows about those rights, arising out of Employee’s
employment with Company on or prior to the date of this Bring-down Release,
including, but not limited to, claims for breach of contract; fraud or
misrepresentation; defamation, intentional or negligent infliction of emotional
distress; breach of covenant of good faith and fair dealing, promissory
estoppel; negligence or under applicable federal, state or local law.

 

2.             Company Obligations.  As material inducement to Employee in entering
into that certain Separation and Non-Compete Agreement dated January 16,
2008 between the Company and Employee (the “Separation Agreement”), and
specifically in consideration for the releases of claims, as set forth in more
detail in the Separation Agreement, Company hereby agrees as follows:

 

A.           Release.  Effective as of the expiration of Employee’s May 2008
Rescission Periods, as defined in the Separation Agreement, without rescission
of Employee’s bring-down release, Company hereby releases all Company’s Claims,
provided, however, that such release is not intended to apply to any willful
misconduct by Employee of which Company does not have present knowledge.

 

3.             Cancellation of Bring-down
Release By Company.  If Employee
exercises his right of rescission under Section 3.C. of the Employee
Bring-down Release, Company will have the right, exercisable by written notice
delivered to Employee, to terminate this Bring-down Release 

 

 

B-1

 

 

in
its entirety, in which event Company will have no obligation whatsoever to
Employee hereunder.  If Employee
exercises his right of rescission under Section 3.C. of the Employee
Bring-down Release, and Company does not exercise its right to terminate this
Bring-down Release hereunder, the remaining provisions of this Bring-down
Release (including, specifically, the remaining provisions of Section 2 of
this Bring-down Release) shall remain valid and continue in full force and
effect.

 

4.             Governing Law.  This Bring-down Release shall be construed
and enforced in accordance with the laws of the State of Minnesota.  All actions regarding this Bring-down Release
shall be brought in a state or federal court within the State of Minnesota.

 

5.             Effective Date.  This Bring-down Release shall be effective
upon the date set forth below.

 

	
   

  	
  VITAL IMAGES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
					

 

 

 

2

 

 

 

Schedule C

 

Employee’s “Bring-down”
Release

 

This
Bring-down Release Agreement is entered into as of
                  ,
2008 by Jay D. Miller, a resident of the State of Minnesota (“Employee”).

 

1.             Definitions.  We intend all words used in this Bring-down
Release to have their plain meanings in ordinary English.  Specific terms we use in this Bring-down
Release have the following meanings:

 

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

 

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

 

C.            Employee’s Claims,
as used herein, means all of the rights Employee, has on or prior to the date
hereof, to any relief of any kind from Company, whether or not Employee now
knows about those rights, arising out of his employment with Company, and his
employment termination, including, but not limited to, claims arising under the
Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection
Act; the Minnesota Human Rights Act; the Americans with Disabilities Act; Title
VII of the Civil Rights Act of 1964, as amended; the Minnesota Whistleblower
Act; or other federal, state or local civil rights laws; claims pursuant to
that certain Employment Agreement between Company and Employee dated February 9,
2002 (the “Employment Agreement”); claims pursuant to that certain Amended and
Restated Change in Control Agreement dated February 9, 2002 (the “Change
in Control Agreement”); claims pursuant to any other agreement, understanding,
plan or arrangement under which Employee could receive compensation from the
Company, as the parties intend for the Separation and Non-Compete Agreement
dated January 16, 2008 between Company and Employee (“Separation Agreement”)
pursuant to which this Bring-down Release is being delivered, to settle all
obligations remaining between the parties; claims for breach of contract; fraud
or misrepresentation; defamation, intentional or negligent infliction of
emotional distress; breach of covenant of good faith and fair dealing;
promissory estoppel; negligence; wrongful termination of employment; and any
other claims for unlawful employment practices arising on or prior to the date
hereof; provided, however, that the term “Employee’s Claims” shall in no event
include Employee’s rights to receive the payments, benefits and continuing
protections required to be provided under the Separation Agreement, including,
without limitation, 

 

 

C-1

 

Employee’s rights to receive reimbursement of his expenses, in
accordance with Company policies, benefits under Company’s life insurance and
401(k) plans and similar fringe benefit programs for which Employee was
eligible as of the Separation Date, as defined in the Separation Agreement, and
under laws related thereto.

 

2.             Employee Obligations.  As material inducement to Company in entering
into the Separation Agreement, and specifically in consideration for the
payments and benefits, as set forth in more detail in the Separation Agreement,
Employee hereby agrees as follows:

 

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

 

B.            Covenant
Not To Sue.  Employee agrees that he
will not initiate any litigation to pursue claims which Employee released in Section 2.A.  This covenant does not apply to litigation
challenging the validity of Section 2.A. 
Excluded from this covenant are any claims which cannot be waived by
law, including, without limitation, the right to file a charge with or
participate in any investigation conducted by the Equal Employment Opportunity
Commission (“EEOC”) or any state or local agency.  Employee agrees to waive, however, his right
to any monetary recovery should the EEOC or any state or local agency pursue
any claims on Employee’s behalf. 
Further, Employee agrees to pay Company’s attorneys’ fees if Employee
breaches the covenant not to sue contained in this Section 2.B.

 

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

 

A.            Employee
has the right to consult with an attorney regarding the meaning and effect of
this Bring-down Release.

 

B.            Employee acknowledges that he was offered a period of
twenty-one (21) calendar days from the date on which he receives an unsigned
copy of this Bring-down Release in which to consider whether or not to sign
this Bring-down Release and that, having been advised of that entitlement, such
period has expired.

 

C.            Employee may rescind (that is, cancel) within seven (7) calendar
days of signing the Bring-down Release, the provisions of Section 2.A. of
this Bring-down Release with respect to claims arising under the Age
Discrimination in Employment Act (“ADEA Rescission Period”) and that he may
rescind within fifteen (15) calendar days of signing the Bring-down Release the
provisions of Section 2.A. of this Bring-down Release with respect to
claims arising under the Minnesota Human Rights Act (“MHRA Rescission Period”)
(collectively, “Rescission Periods”).  To
be effective, rescission must be in writing, delivered to Company at 5850 Opus
Parkway, Suite 300, Minnetonka, MN 
55343, ATTN:  Vice President,
Human Resources, within the applicable Rescission Period, or sent to Company,
at such address, by certified mail, return receipt requested, postmarked within
the applicable Rescission Period.

 

4.             Cancellation of Bring-down
Release By Company.  If Employee
exercises his right of rescission under Section 3.C. of this Bring-down
Release, Company’s Bring-down Release shall 

 

 

2

 

be
null and void in its entirety without further notice to Employee.  This shall not limit any other rights or
remedies available to Company by law.

 

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

 

6.             Governing Law.  This Bring-down Release shall be construed
and enforced in accordance with the laws of the State of Minnesota.  All actions regarding this Bring-down Release
shall be brought in a state or federal court within the State of Minnesota.

 

7.             Effective Date.  This Bring-down Release shall be effective
upon the date set forth below.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Jay D. Miller

  

 

 

3

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