Document:

VITAL IMAGES, INC

Exhibit 10.35

 

VITAL IMAGES, INC.

AND

TOSHIBA CORPORATION

 

MARKETING AND DISTRIBUTION AGREEMENT

 

THIS AGREEMENT is made as of January 21, 2002

by and between Vital Images, Inc., a Minnesota corporation having its principal

place of business at 3300 Fernbrook Lane N., Suite 200, Plymouth, Minnesota

55447 USA (“Vital Images”) and Toshiba Corporation, Medical Systems Company,

having its place of business at 1385, Shimoishigami, Otawara-Shi, Tochigi

324-8550, Japan (“Toshiba”).

 

Recitals

 

A.                                            Vital

Images develops and licenses proprietary medical visualization software

products (defined below as the “Products”) and desires to increase the

marketing and distribution of the Products.

 

B.                                             Toshiba possesses the

necessary expertise and marketing organization to promote, market, distribute

and support the Products.

 

C.                                             Vital Images desires to

appoint Toshiba, and Toshiba desires appointment, as a nonexclusive reseller of

the Products.

 

NOW, THEREFORE, in

consideration of the mutual premises and covenants hereinafter set forth, the

parties agree as follows:

 

ARTICLE

1:  DEFINITIONS

 

For purposes of this Agreement, the following words, terms and phrases

shall have the following meanings unless the context otherwise requires:

 

1.1                                 Confidential Information.  “Confidential Information” shall mean all information designated

by a party as confidential and which is disclosed by Vital Images to Toshiba or

its Dealer Associates, as hereinafter specified, is disclosed by Toshiba or its

Dealer Associates to Vital Images, or is embodied in the Products, regardless

of the form in which it is disclosed, relating to markets, customers, products,

patents, inventions, procedures, methods, designs, strategies, plans, assets,

liabilities, prices, costs, revenues, profits, organization, employees, agents,

resellers or business in general, or, in the case of Vital Images, the

algorithms, programs, user interfaces and organization of the Products.

 

1.2                                 First Level Maintenance.  “First Level Maintenance” shall mean electronic, telephone or

in-person response to deal with any problem or software bug in the Product

which is provided by Vital Images, Toshiba or the Dealer Associates, as

hereinafter specified, to customers in the Territory who have installed the Products

that are under Vital Images’ standard warranty or standard software maintenance

program.  Such response shall attempt

(i) to identify the nature and extent of the customer’s problem, (ii) if

appropriate, to obtain a copy of magnetic media, hard copy printout or

electronic file forwarded over the internet containing the problem or software

bug to be forwarded promptly to Vital Images electronically or by facsimile,

and (iii) to advise the customer in the application of any recommended solution

or workaround to such problem or bug.

 

 

1.3                                 Government Approval.  “Government Approval” shall mean any approvals, licenses,

registrations or authorizations of any federal, state or local regulatory

agency, department, bureau or other government entity, foreign or domestic,

necessary for use, marketing, sale or distribution of the Products in a

regulatory jurisdiction, including without limitation the U.S. Food and Drug

Administration (“FDA”).

 

1.4                                 Products.  “Products” shall mean only those computer software products in

object code form as described in Exhibit A and any related user

documentation as released from time to time by Vital Images, including any

later authorized releases or versions of such software or documentation during

the term of this Agreement.

 

1.5                                 Second Level Maintenance.  “Second Level Maintenance” shall mean electronic, telephone or

in-person response provided by Vital Images to Toshiba or the Dealer Associates

to deal with any problem or software bug in the Products that cannot be handled

by Toshiba or the Dealer Associate alone under the First Level Maintenance for

such customers in the Territory who have installed the Products that are under

Vital Images’ standard warranty or standard software maintenance program.

 

1.6                                 Territory.  “Territory” shall mean the area described in Exhibit B.

 

1.7                                 Vitreaâ  2.  “Vitreaâ  2”

shall mean 2-D and 3-D medical visualization software marketed by Vital

Images under the name “Vitreaâ  2.”

 

ARTICLE

2:  APPOINTMENT

 

2.1                                 Scope.  Vital Images hereby appoints Toshiba, and Toshiba hereby accepts

such appointment, as Vital Images’ nonexclusive reseller of the Products during

the term of this Agreement in the Territory, subject to all the terms and

conditions of this Agreement.

 

2.2                                 Dealer Associates.  Effective with the signing of this Agreement, Toshiba hereby

appoints and Vital Images consents to the appointment of, the Toshiba

subsidiaries and distributors listed in Exhibit C as its agents to

market and distribute the Products within the Territory (collectively “Dealer

Associates”). Provided, however, Toshiba shall remain fully liable for the

performance of such Dealer Associates and Toshiba hereby indemnifies and holds

Vital Images harmless from all damages, losses, costs or expenses arising in

any manner from any act or omission on the part of such Dealer Associates.  Toshiba shall furnish Vital Images with a

copy of any such appointment agreement with any Dealer Associates.  Further, Toshiba hereby agrees to use its

best efforts to integrate Toshiba Medical Systems Co., Ltd in Japan (“TMSJ”) as

a Dealer Associate, and Toshiba and Vital Images hereby agree to amend any

related provisions of this Agreement, including Exhibits B, C, E, F

and G at such time that TMSJ becomes a Dealer Associate.

 

2.3                                 Use of Terms.  The terms “sale”, “purchase”, “distribution”, “resale”,

“reseller” and “Dealer” are used herein for convenience only and refer to the

sale of software licenses for the Products. 

Toshiba hereby acknowledges Vital Images retains all right, title and

interest in and to the copyrights and other intellectual property rights in the

Products and that such Products are to be distributed to Toshiba’s and Dealer

Associate’s customers in compliance with such acknowledgment.

 

ARTICLE

3:  GENERAL OBLIGATIONS OF TOSHIBA

 

3.1                                 Marketing.  Toshiba shall have the following obligations with respect to the

marketing and distribution of the Products:

 

(a)                                  To use its commercially

reasonable best efforts to further the promotion, marketing and distribution of

the Products in the Territory;

 

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(b)                                 Outside of the United States,

to install only authorized versions of the Products as supplied by Vital Images

for customers in the Territory;

 

(c)                                  To promptly respond to all

inquiries or complaints from customers; outside of the United States, to

provide all necessary and appropriate First Level Maintenance of the Products;

and to cooperate with Vital Images in the provision of the Second Level

Maintenance;

 

(d)                                 To provide Vital Images with

appropriate details of all complaints and bugs found in the Products, whether

such complaints or bugs were discovered by Toshiba, any of its Dealer

Associates or customers thereof;

 

(e)                                  To reasonably investigate

possible leads with respect to potential customers in the Territory who are

referred to Toshiba by Vital Images;

 

(f)                                    To maintain an adequately

trained and staffed sales and technical support group for the marketing,

distribution, installation and support of the Products outside of the United

States, and for the marketing and distribution of the Products in the United

States;

 

(g)                                 To

provide appropriate sales staff for training by Vital Images in the United

States, and both sales and technical support staff for training by Vital Images

outside of the United States, at mutually-agreeable locations;

 

(h)                                 To

provide Vital Images with reports of its activities and other information

regarding the Products in the Territory in such detail and with such frequency

as is reasonably agreed between both parties;

 

(i)                                     To

conduct its business in a professional manner, which will reflect positively

upon Vital Images and its Products;

 

(j)                                     To

provide Vital Images with customer registration information as is reasonably

requested by Vital Images;

 

(k)                                  To

abide by all applicable laws and regulations in the Territory, including, if

applicable, the U.S. Export Administration Regulations; and

 

(l)                                     To

apprise all customers of the terms of Section 2.3 of this Agreement regarding

the ownership of intellectual property embodied in the Products.

 

3.2                                 Toshiba Demonstration

License.  Upon written request of Toshiba and/or its

Dealer Associates, Vital Images agrees to grant to Toshiba and/or its Dealer

Associates up to fifteen (15) one-year royalty free software licenses, in total

at any time, for the latest version of the Products solely for their own

customer demonstration and promotional uses, subject to the Terms and

Conditions for the Demonstration License attached hereto as Exhibit D.  From time to time during such one-year

period, Vital Images agrees to provide Toshiba and/or its Dealer Associates

with update or upgrade releases of the Product, free of charge.  During or after one (1) year free use of the

Products, Toshiba and/or its Dealer Associates may or shall, respectively,

purchase and pay for the Products to be purchased pursuant to this Article 3.2

in accordance with Article 6 below, except that the purchase price shall be 40%

of the prices for the Products as set forth in the Product Price List, Exhibit

E hereto.  The Terms and Conditions

for the Demonstration License shall be superseded upon purchase of such Toshiba

Demonstration Licenses and such Demonstration Licenses shall then be subject to

the terms and conditions of this Agreement, including license and warranty.

 

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3.3                                 Customer Demonstration

License.  Toshiba and/or its Dealer Associates may

purchase, under this Agreement, up to twenty (20) additional software licenses,

in total, for the Products solely for use at mutually agreed-upon customer

sites in the Territory for purposes of referrals and business development.  Toshiba and/or its Dealer Associates shall

pay for such license in accordance with Article 6 below, except that the amount

due Vital Images for such license shall be 40% of the prices for the Products

as set forth in the Product Price List, Exhibit E hereto.

 

3.4                                 Promotional Materials.  Vital Images shall furnish Toshiba with a reasonable quantity of

Vital Images data sheets, brochures and other marketing materials for the

Products in the English language for use by Toshiba and its Dealer Associates.

 

(a)                                  Upon request of Toshiba or

its Dealer Associates, Vital Images shall provide up to 4,000 copies to be used

with Toshiba’s CT systems, and 1,000 copies to be used with Toshiba’s X-ray

systems, of each of such promotional materials and any revision(s) thereof, at

no charge.  If Toshiba requests any

particular promotional material in excess of such applicable number of copies,

then Toshiba may purchase the exceeding number of copies thereof from Vital

Images.

 

(b)                                 In lieu of providing such

promotional materials directly, Vital Images, at its discretion, may provide

Toshiba with an electronic media copy of same with a nonexclusive,

nontransferable right and license to use same, without modification of any

kind, for the local reproduction of such materials solely for purposes of

Toshiba’s performance under this Agreement.

 

(c)                                  If Toshiba or its Dealer

Associates believes that non-English language versions of such promotional

materials or non-English language advertising of the Products are necessary or

desirable for effective marketing of the Products in the Territory, Toshiba

shall arrange and pay for the preparation of such non-English language

materials, which shall be subject to the prior review and written approval of

Vital Images.  If Toshiba or its Dealer

Associates believe that non-English language versions of user’s manual of the

Products are necessary and upon request of Toshiba or its Dealer Associates,

Vital Images shall provide such translated version to Toshiba or its Dealer

Associates which made such request, at no charge.  In all cases, Vital Images shall be the sole and exclusive owner

of the copyrights in any such materials, regardless of language.

 

3.5                                 Reverse Engineering.  Toshiba shall not reverse engineer, decompile or disassemble the

Products and shall not knowingly allow any other person to do so.

 

3.6                                 Toshiba Expenses.  Toshiba and its Dealer Associates assume full responsibility for

all its own costs and expenses incurred in carrying out its obligations under

this Agreement, including but not limited to all rents, salaries, commissions,

advertising, demonstrations, travel and accommodations; provided, however,

Vital Images will provide to Toshiba and its Dealer Associates at no charge

training for one hundred (100) of Toshiba’s and the Dealer Associates’ sales

and technical support staff, at Vital Images’ facilities or at any other

mutually-agreeable location, in the function, application, installation and the

First Level Maintenance of the Products and in the provision of assistance to

Vital Images in the Second Level Maintenance, provided, however, Toshiba or the

Dealer Associates shall pay the salaries and all transportation and living

expenses for its staff.  In the event

Toshiba or the Dealer Associate requests Vital Images to send a Vital Images

representative to Toshiba’s or the Dealer Associate’s office for training,

Toshiba or the Dealer Associates shall pay the transportation and living

expenses of such Vital Images representative.

 

If Vital Images

approves of any additional Dealer Associates appointed by Toshiba, Vital Images

and Toshiba shall make good faith arrangements for provision of comparable

materials, training, promotional

 

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materials (discussed

in Article 3.4 above) and license(s) to the Products solely for demonstration

purposes (discussed above in Article 3.2) to such Dealer Associate.

 

ARTICLE

4:  ORDERS FOR PRODUCTS

 

4.1                                 Purchase Orders.  Toshiba shall cause its Dealer Associates, and itself shall use

its best efforts to submit purchase orders for the Products to Vital Images in

writing (preferably by facsimile) at least fifteen (15) days prior to the

requested delivery date, which orders shall include the following information:

 

(a)                                  An identification of the

Products ordered (with release number);

 

(b)                                 Quantity of copies;

 

(c)                                  Requested delivery dates;

 

(d)                                 Shipping instructions and

shipping address; and

 

(e)                                  If applicable, any relevant

export control information or documentation to enable Toshiba and Vital Images

to comply with applicable U.S. export control laws.

 

4.2                                 Acceptance of Orders.  All purchase orders from Toshiba and the Dealer Associate are

subject to acceptance in writing by Vital Images, which acceptance shall not be

unreasonably withheld and shall be delivered by reply facsimile or by

e-mail.  Failure to respond to each

purchase order by Vital Images within 

five (5) business days from receipt of such purchase order shall be

deemed acceptance of such purchase order by Vital Images.

 

4.3                                 Delivery Terms.  All deliveries of the Products shall be from Vital Images’

facilities unless otherwise agreed in writing between the parties.  Vital Images shall bear shipping charges for

the shipment of any Products to its destination specified in the purchase

order.  All risk of damage to or loss or

delay of the Products shall pass to Toshiba or the Dealer Associate upon their

delivery to a common carrier.

 

4.4                                 Modification of Orders.  No accepted purchase order may be modified or canceled later than

thirty (30) days before the scheduled delivery date, except upon the written

agreement of both parties, provided, however, any price decrease for the

Products shall be implemented upon the effective date of such decrease and,

provided further, Vital Images may, at no additional cost to Toshiba and the

Dealer Associate, ship its latest authorized version or release of a Product in

response to any accepted purchase order. 

Toshiba’s and the Dealer Associate’s purchase orders or mutually-agreed

change orders shall be subject to all provisions of this Agreement, whether or

not the purchase order or change order so states, and any terms and conditions

of such purchase order or change order which conflict with the terms and conditions

of this Agreement shall be deemed excluded and of no legal effect as between

the parties.

 

4.5                                 Purchase Commitment.  Vital Images shall ship to Toshiba and/or

its Dealer Associates during the Term of this Agreement such Products as are

identified in and in accordance with the purchase orders submitted by Toshiba

and/or its Dealer Associates. 

Notwithstanding the foregoing, in the event Vital Images has not

received purchase orders containing such minimum amount of Vitreaâ  2 software

as is specified in Exhibit F attached hereto and incorporated herein

(the “Commitment”) within fifteen (15) days prior to the end of the applicable

calendar quarter, Vital Images shall ship to Toshiba America Medical Systems,

Inc. (“TAMS”) for the U.S. Commitment, or Toshiba Medical Systems Europe, B.V.

(“TMSE”) for the non-U.S. Commitment, depending on which Commitment was not

satisfied subject to the terms in the following paragraph, within three (3)

days prior to the end of such calendar quarter an amount of units of the Vitreaâ  2 software necessary for Toshiba to

meet the requirements of the Commitment and Toshiba shall cause TAMS and/or

TMSE,

 

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whichever received such Vitreaâ  2 software, to pay for same pursuant

to the payment terms specified in Article 6.

 

Quarterly  Vitreaâ  2 software purchases above the

minimums set forth in the Commitment may be applied to reduce or  satisfy the next two (2) quarterly purchase

commitments, and Toshiba may portion out such excess purchase amount within

such next two (2) quarterly purchase commitments in any manner it deems

appropriate.  Furthermore, for every two

(2)  Vitreaâ  2 software

purchase orders received from Toshiba or a non-U.S. Dealer Associate (excluding

TMSJ) above the applicable quarterly Commitment,  the quarterly TAMS Commitment shall be reduced by one (1) Vitreaâ  2 software

unit.  Similarly, for every one

(1)  Vitreaâ  2 software

purchase order received from TAMS above the applicable quarterly Commitment,

the quarterly non-U.S. (excluding TMSJ) Commitment shall be reduced by two (2) Vitreaâ  2 software

units.

 

Any purchases made by Toshiba and/or its Dealer Associates

pursuant to Sections 3.2 and 3.3 of this Agreement shall not be credited

against the Commitment.

 

In the event Vital Images

sells a Vitreaâ  2 software license directly to a

customer and not through Toshiba or the Dealer Associate, Toshiba or Dealer

Associate shall receive credit for such sale in the event Toshiba or Dealer

Associate introduced Vitreaâ  2 to such customer during the

marketing of Toshiba or Dealer Associate’s products to such customer.  Toshiba or Dealer Associate shall receive

credit for introducing Vitreaâ  2  to a customer upon proof that:

 

(a)                                  Vital Images (or Vital

Images’ dealer associate) and Toshiba or the Dealer Associate made a joint

visit to the customer to demonstrate Vitreaâ  2;

 

(b)                                 A quote was provided to the

customer including components of Vitreaâ  2 and Toshiba or Dealer Associate’s products; and

 

(c)                                  Such customer has not been

previously called upon by Vital Images (or Vital Images’ dealer associate)

within sixty (60) days prior to Toshiba or Dealer Associate’s quote.

 

4.6                                 Product Changes. Vital Images may do any of

the following upon sixty (60) days’ prior written notice to Toshiba:

 

(a)                                  Alter the specifications for

any Product or any new release thereof;

 

(b)                                 Except as set forth below,

discontinue the production of any Product;

 

(c)                                  Discontinue the development

of any new release of a Product, whether or not such new release has been

announced publicly; or

 

(d)                                 Commence the development and

distribution of new software products having features, which may make any

Product wholly or partially obsolete, whether or not Toshiba is granted any

distribution rights in respect of such new products.

 

Notwithstanding the

foregoing, Vital Images must have available for Toshiba, a successor software

of Vitreaâ  2,

and give at least six (6) months’ prior written notice to Toshiba before

discontinuing the production of Vitreaâ  2.

Toshiba’s

minimum purchase commitments will end in the event Vital Images discontinues

the production of Vitreaâ  2.

 

4.7                                 Installation of Products.  Unless otherwise agreed in writing by Vital Images, all

deliveries of the Products shall be directly to Toshiba or the Dealer Associates,

and outside of the United States Toshiba and the Dealer Associates shall then

have the sole responsibility for the installation and integration of such

Products into a 

 

6

 

customer’s computer system in the Territory

in accordance with the standards and specifications established by Vital Images

from time to time and provided to Toshiba and the Dealer Associates hereunder.

 

4.8                                    Distribution Report.  Name, address, telephone and facsimile numbers of customers who

purchased the Product in each calendar quarter shall be provided to Vital

Images within thirty (30) days after the end of such quarter.

 

ARTICLE 5:  SOFTWARE

MAINTENANCE SERVICES

 

5.1                                 Software Maintenance

Agreements.  For each customer purchasing a license for

the Products in the Territory, Toshiba and/or the Dealer Associates shall use

its reasonable best efforts to persuade such customer to purchase annual software

maintenance services under a software maintenance program.  Such software maintenance services shall

include updates and upgrades  to the Vitreaâ  2 and

other applicable Products that have been purchased by the customer, free of

charge to the customer.  It is agreed

between the parties that newly released options to Vitreaâ  2, except for those listed in Exhibit E and

purchased by the customer, shall be excluded from such updates and upgrades,

unless explicitly agreed between the parties. 

Provided,

however, even after the Warranty Period (hereinafter defined in Section

8.1(a)), upon written request from Toshiba or its Dealer Associates, for up to

six (6) months after the expiration date of the Warranty Period, Vital Images

shall continue, without charge, to support and shall upgrade or update such

Product to its latest version available within the Warranty Period, with

downward compatibility.  Further, for

non-U.S. sales, after the expiration of such six-month post warranty grace

period, Toshiba and/or its Dealer Associates may purchase the latest version of

the

Vitreaâ  2 for

their customers at a price of $         

, per each release. 

Notwithstanding the foregoing, if the Product has not been updated for

no more than two (2) years after expiration of the Warranty Period, such

Product may be upgraded or updated to its latest version for $          .

 

5.2                                 First Level Maintenance

Service.  In accordance with its technical ability,

and based upon its prior experience and its training by Vital Images, Toshiba

and/or the Dealer Associates shall use its reasonable best efforts to provide the

First Level Maintenance to customers outside of the United States.  Vital Images shall provide First Level

Maintenance to customers in the United States.

 

5.3                                 Second Level Maintenance

Service.  In accordance with its technical ability and

based upon its prior experience and its training by Vital Images, Toshiba

and/or the Dealer Associates shall use its reasonable best efforts to assist

Vital Images in providing the Second Level Maintenance to Toshiba and/or Dealer

Associates for the benefit of customers in the Territory excluding the United

States.

 

5.4                                 Customer Contact.  Except as set forth in Section 5.2, Toshiba and/or the Dealers

Associates shall have the primary responsibility for direct contact with

customers in the Territory in regard to the function, application, installation

or maintenance of the Products under the First Level Maintenance and the Second

Level Maintenance.

 

ARTICLE

6:  PRICES AND PAYMENTS

 

6.1                                 Prices.  Toshiba and the Dealer Associates shall pay Vital Images in

accordance with the prices for the Products or for maintenance support services

as specified in the Product Price List, Exhibit E hereto.  All Product Price List prices are for

shipment from Vital Images’ facilities to its destination.  Any special packing or handling shall be at

the sole expense of Toshiba.

 

6.2                                 Payment Terms.  For each order of the Products or annual maintenance support

services, Toshiba and/or its Dealer Associates, who ordered such Products or

annual maintenance support service, shall pay in accordance with the Product

Price List in U.S.  Dollars within

forty-five (45) days of the date of shipment,

 

7

 

provided that the

ordered item is delivered to the purchaser specified in the purchase order

prior to the payment due date.

 

6.3                                 Overdue Payments.  If and for so long as any payment from Toshiba to Vital Images

under this Agreement shall be overdue:

 

(a)                                  Interest at twelve percent

(12%) per annum or the highest rate permitted under applicable law, whichever

is lower, shall automatically become due on all balances outstanding; and

 

(b)                                 Vital Images reserves the

right to withhold or suspend shipment of the Products to Toshiba and/or the Dealer

Associate if there is an unsettled outstanding balance owed by Toshiba or the Dealer

Associate to Vital Images.

 

ARTICLE

7:  APPROVALS; ADVERSE REACTIONS;

PRODUCT RECALLS

 

7.1                                 Government Approval.  Vital Images shall make diligent efforts to prepare and file all

applications required to obtain all necessary Government Approval for each

country in the Territory specified in Exhibit G hereto, the Principal

Countries, where such Government Approval has not already been obtained.  For all other countries in the Territory, if

any, Vital Images shall diligently prepare and file all applications required

to obtain all necessary Government Approval for each such country as Vital

Images, in its sole discretion, deems necessary.  Vital Images shall keep Toshiba apprised of its progress with

respect to any such applications. 

Toshiba shall furnish Vital Images with such assistance and cooperation

as may be reasonably requested in connection with the securing of such

Government Approval.

 

7.2                                 Compliance.  Vital Images  shall  comply with all applicable regulatory

requirements.  However, Toshiba shall

provide all information within its possession 

to Vital Images necessary for Vital Images to comply with its medical

device reporting requirements to the FDA or any other comparable regulatory

body elsewhere in the world.  Vital

Images shall comply with all health registration laws, regulations and orders

of any government entity within the Territory and with all other governmental

requirements relating to the promotion, marketing and sale of the Products in

each country in the Territory.  Toshiba

shall submit all advertising claims to Vital Images for written approval prior

to their first use by any party, such consent not to be unreasonably withheld.

 

7.3                                 Adverse Event Reporting.  Toshiba shall advise Vital Images, by telephone or facsimile,

within twenty-four (24) hours after it becomes aware of any adverse event

(which is defined as personal injury or death) from the use of any Product or

malfunction of any Product.  Unless

otherwise required by applicable local laws, Toshiba shall advise Vital Images

of any such adverse event prior to any report or filing being made by Toshiba

with the FDA or any other comparable regulatory body elsewhere in the world.

 

7.4                                 Corrective Action.

 

(a)          Notice

of Corrective Action.  If Vital Images believes that a corrective

action with respect to the Products is desirable or required by law, or if any

governmental agency having jurisdiction (including, without limitation, the

FDA) shall request or order any corrective action with respect to the Products,

including any recall, customer notice, restriction, change, corrective action

or market action or any Product change, Vital Images shall promptly notify

Toshiba and the Dealer Associates.  Any

and all corrective actions shall be conducted at the expense of Vital Images,

except costs associated with notifying customers of such corrective

action.  Toshiba and/or the Dealer

Associates shall maintain complete and accurate records, for such periods as

may be required by applicable law, of all Products they sold.  The parties shall cooperate fully with each

other in effecting any corrective action with respect to the Products pursuant

to this

 

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Section 7.4,

including communication with any customers and Toshiba shall cause its Dealer

Associates, and itself shall comply with all reasonable directions of Vital

Images’ regarding such corrective action. 

This Section 7.4 shall not limit the obligations of either party under

law regarding any corrective action with respect to the Products required by

law or properly mandated by governmental authority.

 

(b)         Refund.  If any Products are required to be returned to Vital Images

pursuant to this Article 7.4 and no replacement is provided therefor by Vital

Images, Vital Images shall refund to Toshiba’s or the Dealer Associate’s

customers any unearned license fees paid to Toshiba or the Dealers Associates

(the amount of the license fee each such customer paid for the products, less a

reasonable value for use determined by prorating the license fee paid on a

thirty-six (36) month straight-line amortization method). Vital Images shall

indemnify Toshiba or the Dealer Associate from any actions made by Toshiba or

the Dealer Associate’s customers claiming reimbursement of license fees,

whether or not in excess of the amount specified in this paragraph.

 

ARTICLE

8:  WARRANTIES AND REPRESENTATIONS;

INDEMNIFICATION

 

8.1                                 Product Warranties to

Customers.  Vital Images hereby authorizes Toshiba and

the Dealer Associates to pass through to its customers Vital Images’ standard

software warranties as set forth below.

 

(a)                                  Limited Warranty.  Vital  Images warrants to

Toshiba and the Dealer Associates for twelve (12) months from installation or

sixteen (16) months from the delivery date, whichever expires first (the

“Warranty Period”), that the Products, when properly installed and operated,

will substantially perform the functions described in the functional

specifications for the Products, as contained in the applicable written

documentation for the Products, and that such Product shall be upgraded or

updated to its latest version with the assurance of downward

compatibility.  Vital Images shall have

no obligation under this provision if (a) the Products have not been properly

installed, used or maintained, whether in accordance with Vital Images’

then-applicable operating manuals; or (b) the Products have been modified in

any manner or are used or combined with other computer software programs,

hardware or data not supplied by Vital Images and without the prior written

consent of Vital Images; or (c) the Products have been distributed to a

customer with any warranties or representations, oral or written, made by

Toshiba or any third party beyond those expressly set forth herein.

 

(b)                                 Exclusive Remedy.  Vital Images’ entire liability for any warranty claim made by

Toshiba or the Dealer Associates under Section 8.1(a) above during the Warranty

Period, and

Toshiba’s and its Dealer Associates’ exclusive remedy for any such claim, shall

be for Vital Images, at its option, to either (i) replace any defective media

which prevents the Products from satisfying the limited warranty described in

Section 8.1(a); (ii) attempt to correct any material and reproducible errors

reported by Toshiba or the Dealer Associate; or (iii) terminate this  Agreement and refund the fees paid by the

customers of Toshiba and the Dealer Associates for the Products.  Vital Images does not warrant that the

operation of the Products will be uninterrupted or error-free, that all errors

in the Products will be corrected, that the Products will satisfy customer’s

requirements or that the Products will operate in the combinations which such

customer may select for use.

 

(c)                                  Warranty Extension.  Replacement or correction of all or any part of the Products does

not extend the Warranty Period, which shall begin on the delivery date.  Vital Images and its third party licensors

expressly disclaim any commitment to provide maintenance or support of the

Products beyond the Warranty Period, in the absence of entering into a

 

9

 

separate software

maintenance arrangement with Vital Images and except to the extent stated in

Section 5.1 for the 6-month post warranty grace period.  Furthermore, the Products are derived from

and include software from third party licensors, who make no warranty, express

or implied, regarding the Products, who disclaim any and all liability for the

Products and who will not undertake to provide any information or support

regarding the Products.

 

(d)                                 Maintenance Obligations.  As part of its First Level Maintenance obligations, Toshiba shall

and it shall cause its Dealer Associates to promptly inform Vital Images of any

claims made by their customers in the Territory under such software warranties.  All such warranty claims shall be made

promptly in writing and shall state the nature and details of the claim, the

date the cause of the claim was first observed and the serial number of the

Products concerned, if any.  Further,

all such warranty claims must be received by Vital Images no later than fifteen

(15) days after the expiration of the Warranty Period for such customer.

 

8.2                                 Warranty to Toshiba.  Vital Images hereby represents and warrants to Toshiba:

 

(a)                                  Vital Images owns or has the

lawful right from others to grant the rights to market and distribute the

Products as set forth in this Agreement;

 

(b)                                 Vital Images has entered into

an agreement with PointDx, Inc. and has procured any necessary license from

PointDx, Inc. to fulfill its obligations under this Agreement.  Vital Images has no knowledge of any claim

of infringement by the Products of any third party intellectual property

rights, such as patents, copyrights, trade secrets or trademarks; and

 

(c)                                  Vital Images has taken all

appropriate corporate action to authorize execution and performance of this

Agreement.

 

8.3                                 Limited Warranty.  THE WARRANTIES SET FORTH IN ARTICLES 8.1 AND 8.2 ABOVE ARE IN

LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WHICH ARE HEREBY DISCLAIMED

AND EXCLUDED BY VITAL IMAGES, INCLUDING WITHOUT LIMITATION ANY WARRANTY OF

MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

8.4                 Indemnification of Toshiba.  Vital Images hereby agrees to indemnify, defend and hold Toshiba

harmless from any third party suit, claim or other legal action (“Legal

Action”) (i) that alleges any injuries or death and damages to property solely

by use of the Products, but only to the extent caused or contributed to by

Vital Images, and/or (ii) that alleges the Products, or any of them, infringe

any patent, copyright, or trade secret, including any reasonable costs or legal

fees thereby incurred by Toshiba and/or the Dealer Associates.  Vital Images shall be given written notice

of any Legal Action within thirty (30) days of Toshiba’s first knowledge

thereof, provided, that, the failure of Toshiba to notify Vital Images of any

such matter within the thirty (30) day period shall not release Vital Images,

in whole or in part, from its obligations under this Section 8.4, except to the

extent Toshiba’s failure to so notify Vital Images materially prejudices Vital

Images’ ability to defend against such Legal Action.  Vital Images shall have sole and exclusive control of the defense

of any Legal Action, including the choice and direction of any legal counsel.  Toshiba may not settle or compromise any

Legal Action without the written consent of Vital Images.  If a Product is found to infringe any such

third party intellectual property right in such a Legal Action, at Vital

Images’ sole discretion and expense, Vital Images may (i) obtain a license from

such third party for the benefit of Toshiba and its customers; or (ii) replace

or modify the Product so that it is no longer infringing; or (iii) if neither

of the foregoing is commercially feasible, terminate this Agreement and refund

to Toshiba or the Dealer Associate all amounts previously paid by Toshiba or the

Dealer Associate for the Software and the Products, if applicable law requires

such refund.

 

10

 

8.5                                 Indemnification of Vital

Images.  Toshiba hereby agrees to indemnify, defend

and hold Vital Images harmless from any and all claims, demands, losses and

liabilities, including any reasonable costs or legal fees thereby incurred by

Vital Images, resulting from Toshiba’s acts or omissions, including, without

limitation, misrepresentations regarding the Products, any violation of

applicable laws or regulations relating to the marketing and distribution of

the Products, any breach of any covenant or term in this Agreement, any failure

by Toshiba to provide the required support or training to end users or to

properly install the Products; and any misappropriation by a Toshiba or the Dealer

Associate customer of any Vital Images intellectual property.

 

ARTICLE

9:  LIMITATION OF REMEDIES

 

9.1                                 Delay.  The delivery date for each order placed by Toshiba or the Dealer

Associate will be indicated on Toshiba or the Dealer Associate’s purchase

order.  If Vital Images fails to deliver

the Products within sixty (60) days of the deadline(s) indicated in such

purchase orders, Toshiba or the Dealer Associate shall have the right to cancel

such order and purchase equivalent products from an alternative source.  Vital Images shall pay Toshiba or the Dealer

Associate for the difference between the price of the alternative product and

the price for the Products under the cancelled purchase order(s), not later

than twenty (20) days following receipt of Toshiba or the Dealer Associate’s

invoice

 

9.2                                 Sole Remedies.  THE SOLE AND EXCLUSIVE REMEDIES FOR BREACH OF ANY AND ALL

WARRANTIESAND THE SOLE REMEDIES FOR VITAL IMAGES’ LIABILITY OF ANY KIND

(INCLUDING LIABILITY FOR NEGLIGENCE OR PRODUCTS LIABILITY) WITH RESPECT TO THE

PRODUCTS AND THEIR USE, THE SERVICES COVERED BY THIS AGREEMENT, AND ALL OTHER

PERFORMANCE BY VITAL IMAGES UNDER THIS AGREEMENT SHALL BE LIMITED TO THE

REMEDIES PROVIDED IN THIS AGREEMENT.

 

9.3                                 Consequential Damages.  VITAL IMAGES AND TOSHIBA OR THE DEALER ASSOCIATE SHALL HAVE NO

LIABILITY OF ANY KIND FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL

LOSS OR DAMAGE, EVEN IF VITAL IMAGES OR TOSHIBA OR THE DEALER ASSOCIATE SHALL

HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH POTENTIAL LOSS OR DAMAGE BY

TOSHIBA OR THE DEALER ASSOCIATE OR VITAL IMAGES.  IN NO EVENT SHALL VITAL IMAGES BE LIABLE FOR ANY DAMAGES IN

EXCESS OF THE AGGREGATE AMOUNTS ACTUALLY PAID BY TOSHIBA OR DEALER ASSOCIATE TO

VITAL IMAGES UNDER THIS AGREEMENT, EXCEPT FOR ACTIONS FOR PERSONAL INJURY OR

DEATH, PROPERTY DAMAGE, INTELLECTUAL PROPERTY INFRINGEMENT, ACTIONS ARISING

UNDER FDA OR APPLICABLE LOCAL REGULATIONS IN THE TERRITORY, OR AS OTHERWISE

PROVIDED UNDER THIS AGREEMENT OR BY LAW.

 

ARTICLE

10:  CONFIDENTIALITY

 

10.1                           Confidential Information;

Term.  All Confidential Information shall be deemed

confidential and proprietary to the party disclosing such information

hereunder.  Each party may use the

Confidential Information of the other party during the term of this Agreement

only as permitted or required for the receiving party’s performance hereunder.  The receiving party shall not disclose or

provide any Confidential Information to any third party and shall take

reasonable measures to prevent any unauthorized disclosure by its employees,

agents, contractors or consultants during the term hereof including appropriate

individual nondisclosure agreements. 

The foregoing duty shall apply to any Confidential Information for a

period of five (5) years from the date of its disclosure.

 

10.2                           Exclusions.  The following shall not be considered Confidential Information

for purposes of this Article 10:

 

11

 

(a)                                  Information which is or

becomes in the public domain through no fault or act of the receiving party;

 

(b)                                 Information which was

independently developed by the receiving party without the use of or reliance

on the disclosing party’s Confidential Information;

 

(c)                                  Information which was

provided to the receiving party by a third party under no duty of

confidentiality to the disclosing party; or

 

(d)                                 Information which is required

to be disclosed by law, provided, however, prompt prior notice thereof shall be

given to the party whose Confidential Information is involved.

 

ARTICLE

11:  TRADEMARKS

 

11.1                           Use of Trademarks.  Vital Images hereby grants to Toshiba and the Dealer Associates,

and Toshiba and the Dealer Associates hereby accepts from Vital Images, a

nonexclusive, nontransferable and royalty-free license to use the Vital Images

trademarks specified in the List of Trademarks, Exhibit H hereto, as

such list may be modified from time to time, solely in connection with the

distribution, promotion, advertising and maintenance of the Products.  Toshiba shall cause its Dealer Associates,

and itself shall not use any other marks or trade names in connection with the

marketing and distribution of the Products. 

All such Vital Images trademarks shall be used by Toshiba and/or the

Dealer Associates in accordance with Vital Images’ standards, specifications

and instructions, but in no event beyond the term of this Agreement.  Vital Images may inspect and monitor the

activities of Toshiba and/or the Dealer Associates to ensure that such use of

the Vital Images trademarks is in accordance with such standards,

specifications and instructions. 

Toshiba and the Dealer Associates are not granted any right, title or

interest in such trademarks other than the foregoing limited license, and

Toshiba shall cause its Dealer Associates, and itself shall not use any Vital

Image trademarks as part of Toshiba’s or the Dealer Associate’s corporate or

trade name or permit any third party to do so.

 

11.2                           Registration.  Vital Images shall use its best efforts to register the Vital

Images trademarks specified in the List of Trademarks, Exhibit H hereto,

as such list may be modified during the term of this Agreement, within the

Territory when and if Vital Images determines, in its sole discretion, that

registration is necessary or useful to the successful distribution of the

Products.  Vital Images shall be the

sole party to initiate any such registration and shall bear all the expenses

thereof.

 

11.3                           Markings.  Toshibas shall cause its Dealer Associates, and itself shall not

remove or alter any Vital Images trade names, trademarks, copyright notices,

serial numbers, labels, tags or other identifying marks, symbols or legends

affixed to any Products, documentation, containers or packages.

 

11.4                           Infringement.  Toshiba shall cause its Dealer Associates, and itself shall

promptly notify Vital Images in writing of any unauthorized use of Vital

Images’ trademarks or similar marks which may constitute an infringement or

passing off of Vital Images’ trademarks. 

Vital Images reserves the right in its sole discretion to institute any

proceedings against such third party infringers, and Toshiba shall refrain from

doing so.  Toshiba shall cooperate fully

with Vital Images in any legal action taken by Vital Images against such third

parties, provided that Vital Images shall pay all expenses of such action.  All damages, which may be awarded or agreed

upon in settlement of any legal action, shall accrue to Vital Images.

 

11.5                           Termination of Use.  Toshiba shall not adopt, use or register any words, phrases or

symbols which are identical to or confusingly similar to any of Vital Images’

trademarks.  Upon termination of this

Agreement, Toshiba shall immediately cease any use of the Vital Images

trademarks in any manner.  In addition,

Toshiba hereby empowers Vital Images and shall assist Vital Images, if

requested, to cancel, revoke or withdraw any

 

12

 

governmental

registration or authorization permitting Toshiba to use Vital Images trademarks

in the Territory.

 

ARTICLE

12:  TAXES AND DUTIES

 

12.1                           Taxes in the Territory.  Toshiba and/or its Dealer Associates shall be responsible for and

shall pay all taxes (except Vital Images’ income taxes), duties, import

deposits, assessments and other governmental charges, however designated, which

are now or hereafter imposed by any governmental authority or agency that are

based on (a) the payment of any amount by Toshiba or the Dealer Associates to

Vital Images pursuant to this Agreement for the Products or the use thereof, or

(b) the import of the Products into the Territory if such transaction is

international in nature.

 

12.2                           Net Payments.  All payments to be

made by Toshiba and its Dealer Associates to Vital Images pursuant to this

Agreement represent net amounts Vital Images is entitled to receive and shall

not be subject to any deductions for any reason whatsoever except as allowed in

this Agreement or by law.  In the event

any of said charges become subject to withholding taxes, duties, import

deposits, assessments or other governmental charges, however designated, except

Vital Images’ income taxes, said payments from Toshiba or its Dealer Associates

shall be increased to such an extent as to allow Vital Images to receive the

net amounts due under this Agreement.

 

ARTICLE

13:  IMPORT AND EXPORT OF PRODUCTS

 

13.1                           Import Documentation.  If applicable, Toshiba shall be responsible for obtaining all

licenses and permits required to import the Products into the Territory in

accordance with applicable laws or regulations in the Territory.

 

13.2                           Export Regulations.  If applicable, Toshiba shall supply Vital Images on a timely

basis with all necessary information and documentation requested by Vital

Images for export of the Products in accordance with U.S. export control laws

or regulations.  Vital Images shall be

responsible for compliance with all applicable U.S. Export Administration Regulations

for all Products shipped by it to Toshiba or the Dealer Associates.  If applicable,  Toshiba hereby assures Vital

Images that:

 

(a)                                  Toshiba shall cause its

Dealer Associates, and itself shall not re-export, directly or indirectly, the

Products or the direct product of the Products to any destination forbidden

under the then-applicable U.S. Export Administration Regulations;

 

(b)                                 Toshiba’s commitment in

paragraph (a) above shall apply in all cases unless the U.S. Export

Administration Regulations expressly permit such re-export or the U.S. Commerce

Department’s Office of Export Licensing has granted such authorization in

writing; and

 

(c)                                  Toshiba’s commitment in

paragraph (a) above shall survive termination of this Agreement.

 

ARTICLE

14:  TERM AND TERMINATION

 

14.1                           Term.  This Agreement shall take effect retroactively as of September 1,

2001 and shall have an initial term through September 30, 2002 (the

“Term”).  At the end of the Term, this Agreement

shall automatically terminate unless prior to the date of termination, this

Agreement is extended pursuant to the mutual written agreement of Toshiba and

Vital Images.

 

14.2                           Termination.  Notwithstanding the provisions of Section 14.1 above, this

Agreement may be terminated earlier by either party upon written notice to the

other party:

 

13

 

(a)                                  If the other party files a

petition of any type as to its bankruptcy, is declared bankrupt, becomes

insolvent, makes an assignment for the benefit of creditors, goes into

liquidation or receivership or otherwise loses legal control of its business

voluntarily;

 

(b)                                 If the other party is in

material breach of this Agreement and has failed to cure such breach within

thirty (30) days of receipt of written notice thereof from the first party;

 

(c)                                  If an event of Force Majeure

continues for more than six (6) months.

 

(d)                                 If Vital Images so elects due

to a Legal Action, as specified in Article 8.4 above; or

 

(e)                                  Upon mutual agreement by both

parties.

 

14.3                           Rights and Obligations on

Termination.  In the event of termination of this

Agreement for any reason, the parties shall have the following rights and

obligations:

 

(a)                                  Neither party shall be

released from the obligation to make payment of all amounts then or thereafter

due and payable;

 

(b)                                 The rights of any customer of

Toshiba or the Dealer Associates who holds a valid license for the Products

prior to the effective date of such termination shall not be affected;

 

(c)                                  Toshiba’s indemnification

obligation under Article 2.2, and the parties’ obligations under Articles 7, 8,

9, 10, 11, 12, 13, 16 and 17 shall survive any termination of this Agreement;

 

(d)                                 Unless the parties otherwise

agree in writing, Toshiba shall cause its Dealer Associates and itself shall

return all copies of the Products and any other items of Confidential

Information to Vital Images and, if applicable, shall erase all copies of the

Products from its computer systems and shall certify in writing to Vital Images

that it has done so; and

 

(e)                                  Unless the parties otherwise

agree in writing, Vital Images shall return all Confidential Information of

Toshiba or the Dealer Associate and any copy thereof to Toshiba or the Dealer

Associate.

 

14.4                           No Compensation.  In the event of any termination of this Agreement under Section

14.2, subject to Section 14.3(a), neither party shall owe any compensation to

the other party for lost profits, lost opportunities, goodwill or any other

loss or damage as a result of or arising from such termination.

 

ARTICLE

15:  FORCE MAJEURE

 

15.1                           Definition.  “Force Majeure” shall mean any event or condition beyond the

reasonable control of either party which prevents, in whole or in material

part, the performance by one of the parties of its obligations hereunder or which

renders the performance of such obligations so difficult or costly as to make

such performance commercially unreasonable. 

Without limiting the foregoing, the following shall constitute events or

conditions of Force Majeure:  acts of

State or governmental action, riots, disturbance, war, strikes, lockouts,

slowdowns, prolonged shortage of energy or other supplies, epidemics, fire,

flood, hurricane, typhoon, earthquake, lightning and explosion, or any refusal

or failure of any governmental authority to grant any export license legally

required.

 

15.2                           Notice.  Upon written notice to the other party, a party affected by an

event of Force Majeure shall be suspended without any liability on its part

from the performance of its obligations under this Agreement,

 

14

 

except for the

obligation to pay any amounts due and owing hereunder.  Such notice shall include a description of

the nature of the event of Force Majeure, and its cause and possible

consequences.  The party claiming Force Majeure

shall also promptly notify the other party of the termination of such event.

 

15.3                           Suspension of Performance.  During the period that the performance by one of the parties of

its obligations under this Agreement has been suspended by reason of an event

of Force Majeure, the other party may likewise suspend the performance of all

or part of its obligations hereunder to the extent that such suspension is

commercially reasonable.

 

ARTICLE

16:  ARBITRATION

 

16.1                           Dispute Resolution.  Except as provided in Section 16.2 below, Vital Images and

Toshiba shall each use its best efforts to resolve any dispute between them

promptly and amicably and without resort to any legal process if feasible

within thirty (30) days of receipt of a written notice by one party to the

other party of the existence of such dispute. 

Except as provided in Section 16.2 below, no further action may be taken

under this Article 16 unless and until executive officers of Vital Images and

Toshiba have met in good faith to discuss and settle such dispute.  The foregoing requirement in this Article

16.1 shall be without prejudice to either party’s right, if applicable, to

terminate this Agreement under Article 14.2 above.

 

16.2                           Litigation Rights Reserved.  If any dispute arises with regard to the unauthorized use or

infringement of the Confidential Information by any party hereto, the party

whose Confidential Information is being infringed may seek any available remedy

at law or in equity from a court of competent jurisdiction.

 

16.3                           Procedure for Arbitration.  Except as provided in Section 16.2 above, any dispute, claim or

controversy arising out of or in connection with this Agreement which has not

been settled through negotiation within a period of thirty (30) days after the

date on which either party shall first have notified the other party in writing

of the existence of a dispute shall be settled by final and binding arbitration

under the then-applicable Commercial Arbitration Rules or, if Toshiba’s

principal place of business is outside the United States, the International

Arbitration Rules of the American Arbitration Association (“AAA”).  Any such arbitration shall be conducted by

three (3) arbitrators appointed by mutual agreement of the parties or, failing

such agreement, in accordance with said Rules. 

At least one (1) arbitrator shall be an experienced computer software

professional, and at least one (1) arbitrator shall be an experienced business

attorney with a background in the licensing and distribution of computer

software.  Any such arbitration

initiated by Vital Images shall be conducted in Orange County, California,

U.S.A., and any such arbitration initiated by Toshiba or Dealer Associate shall

be conducted in Minneapolis, Minnesota, U.S.A., any such arbitration to be

conducted in the English language.  An

arbitral award may be enforced in any court of competent jurisdiction.  Notwithstanding any contrary provision in

the AAA Rules, the following additional procedures and rules shall apply to any

such arbitration:

 

(a)                               Each party shall have the

right to request from the arbitrators, and the arbitrators shall order upon

good cause shown, reasonable and limited pre-hearing discovery, including (i)

exchange of witness lists, (ii) depositions under oath of named witnesses at a

mutually convenient location, (iii) written interrogatories and (iv) document

requests.

 

(b)                                 Upon conclusion of the

pre-hearing discovery, the arbitrators shall promptly hold a hearing upon the

evidence to be adduced by the parties and shall promptly render a written

opinion and award.

 

(c)                                  The arbitrators may not award

or assess punitive damages against either party.

 

15

 

(d)                                 Each party shall bear its own

costs and expenses of the arbitration and one-half (1/2) of the fees and costs

of the arbitrators, subject to the power of the arbitrators, in their sole

discretion, to award all such reasonable costs, expenses and fees to the

prevailing party.

 

ARTICLE

17:  MISCELLANEOUS

 

17.1                           Relationship.  This Agreement does not make either party the employee, agent or

legal representative of the other for any purposes whatsoever.  Neither party is granted any right or

authority to assume or to create any obligation or responsibility, express or

implied, on behalf of or in the name of the other party.  Each party is acting as an independent

contractor.

 

17.2                           Assignment.  Toshiba shall not assign or otherwise transfer its rights and

obligations under this Agreement except with the prior written consent of Vital

Images, which consent will not be unreasonably withheld.  This Agreement shall be binding upon, inure

to the benefit of and be assignable by Vital Images to the successors and

assigns of the business interest of Vital Images including, without limitation,

any successor to or assignees of the assets or stock of Vital Images as a

result of any sale, merger or any other corporate reorganization or

transaction.  Any prohibited assignment

shall be null and void.

 

17.3                           Notices.  Notices permitted or required to be given hereunder shall be

deemed sufficient if given by registered or certified mail, postage prepaid,

return receipt requested, by private courier service, or by facsimile addressed

to the respective addresses of the parties as first written above or at such

other addresses as the respective parties may designate by like notice from

time to time.  Notices so given shall be

effective upon (i) receipt by the party to which notice is given, or (ii) on

the fifth (5th) day following domestic mailing or the tenth (10th)

day following international mailing, as may be the case, whichever occurs

first.

 

17.4                           Entire Agreement.  This Agreement, including the Exhibits hereto which are

incorporated herein, constitutes the entire agreement of the parties with

respect to the subject matter hereof and supersedes all proposals, oral or

written, and all negotiations, conversations, discussions, and previous

distribution or value added reseller agreements heretofore between the

parties.  Toshiba hereby acknowledges

that it has not been induced to enter into this Agreement by any

representations or statements, oral or written, not expressly contained

herein.  Specifically, that certain

Vital Image, Inc. and Toshiba America Medical Systems, Inc. Reseller Agreement

dated September 11, 2000 (effective July 1, 2000) is hereby superseded in whole

by this Agreement.

 

17.5                           Amendment.  This Agreement may not be modified, amended, rescinded, canceled

or waived, in whole or in part, except by written amendment signed by both

parties hereto.

 

17.6                           Publicity.  This Agreement is confidential, and no party shall issue press

releases or engage in other types of publicity of any nature dealing with the

commercial or legal details of this Agreement without the other party’s prior

written approval, which approval shall not be unreasonably withheld.  However, approval of such disclosure shall

be deemed to be given to the extent such disclosure is required to comply with

governmental rules, regulations or other governmental requirements.  In such event, the publishing party shall

furnish a copy of such disclosure to the other party.

 

17.7                           Governing Law.  This Agreement shall be governed by and interpreted under the

laws of the state within which the action is filed as specified in Section 16.3

above, excluding its choice of law rules.

 

17.8                           Severability.  If any provision of this Agreement is found unenforceable under

any of the laws or regulations applicable thereto, such provision terms shall

be deemed stricken from this Agreement, but such invalidity or unenforceability

shall not invalidate any of the other provisions of this Agreement.

 

16

 

17.9                           Counterparts.  This Agreement may be executed in two or more counterparts in the

English language and each such counterpart shall be deemed an original

hereof.  In case of any conflict between

the English version and any translated version of this Agreement, the English

version shall govern.

 

17.10                     Waiver.  No failure by either party to take any action or assert any right

hereunder shall be deemed to be a waiver of such right in the event of the

continuation or repetition of the circumstances giving rise to such right.

 

IN WITNESS WHEREOF, the parties have caused

this Agreement to be executed by their duly authorized

representatives below.

 

	

  VITAL IMAGES, INC.

  	

   

  	

  Toshiba Medical Systems

  
	

   

  	

   

  	

   

  
	

  By

  	

  /s/ Albert Emola

  	

   

  	

   

  	

  By

  	

  /s/ Kenichi Komatsu

  	

   

  
	

   

  	

   

  	

   

  
	

  Name

  	

  Albert Emola

  	

   

  	

   

  	

  Name

  	

  Kenichi Komatsu

  	

   

  
	

   

  	

   

  	

   

  
	

  Title

  	

  President & CEO

  	

   

  	

   

  	

  Title

  	

  Chief Technology Executive

  	

   

  
											

 

 

LIST OF EXHIBITS

 

A             Products

B             Territory

C             List of Dealer Associates

D             Terms

and Conditions for the Demonstration License

E              Product Price List

F              Product Commitments

G             Principal Countries

H             List of Vital Images

Trademarks

 

17

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

A

PRODUCTS

 

Vitrea â 2

 

VScoreÔ

 

VScore with EKG GateÔ

 

VScore with AutoGateÔ

 

3D Angiography Option

 

CT Colonography Option

 

Automated Vessel Measurements Option

 

CT Perfusion Option

 

18

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

B

TERRITORY

 

Worldwide, except

for Japan and those countries barred by the

 

Office of Foreign Assets Control (“OFAC”) of

the U.S. Department of the Treasury

 

19

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

C

LIST

OF DEALER ASSOCIATES

 

	

  Company Name

  	

   

  	

  MAIN COUNTRY

  	

   

  	

  Address

  

 

 

20

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

D

TERMS AND CONDITIONS FOR THE DEMONSTRATION

LICENSE

 

ARTICLE 1: 

LICENSE GRANT AND USE FOR DEMONSTRATION LICENSE

 

1.1                                 License

Grant.  Subject to the terms of this

Exhibit D, Vital Images hereby grants to Toshiba and its Dealer

Associates (“Licensees”) a nonexclusive, non-transferable, royalty free license

(“Demonstration License”) to use the Products limited solely to promotion, demonstration,

evaluation and testing.  Except as

provided herein, Licensees hereby agree that the Products under this License

shall not be used for any business activities of the Licensees without the

prior written consent of Vital Images, such consent to be at the sole

discretion of Vital Images.

 

1.2                                 Restrictions

on Use.  Licensees agree not to

engage in, cause or permit the reverse engineering, disassembly, recompilation,

modification or any similar manipulation of the Products, nor may Licensees

loan, lease, distribute, assign or otherwise transfer the Products or copies

thereof, in whole or in part, to any third party.

 

1.3                                 Copying.  Licensees shall not copy the Products,

except that each Licensee may make and maintain one (1) copy of the Products

for back-up and archival purposes, provided such copy includes all Vital Images

copyright, proprietary rights and other notices included on or in the Products.

 

1.4                                 Ownership.  All right, title and interest in the

Products shall at all times remain the property of Vital Images and its

licensors, subject to the Demonstration Licenses granted to Licensees under

this Exhibit D.  Licensees

understand and agree that it takes title only to the media on which the

Products are provided to it, but that the Products shall remain the property

of, and proprietary to, Vital Images.

 

ARTICLE 2: 

TERM AND TERMINATION

 

2.1                                 Term.  The term of each Demonstration License shall

be one (1) year from delivery thereof.

 

2.2                                 Termination.

 Each Licensee may terminate the

Demonstration License at any time by giving written notice to Vital Images.

 

2.3                                 Termination

of a Demonstration License.  Upon

any termination of a Demonstration License, Licensee shall

(a)

immediately cease all use of the Products licensed pursuant to such Demonstration

License, and (b) certify in writing to Vital Images within thirty (30) days

after such termination that Licensee has either destroyed, permanently erased

or returned to Vital Images the Products and all copies thereof licensed

pursuant to such Demonstration License.

 

2.4                                 Effect

of Termination of Demonstration License. 

Upon termination of the Demonstration License,  such License to the Products granted under

this Exhibit D shall immediately terminate.  Articles 1.4, 3, 4 and 5 of this Exhibit D shall survive such

termination of the Demonstration License, if the Product(s) licensed pursuant

to such Demonstration License is not purchased. Otherwise, as provided in

Section 3.2 of the main body of that certain Marketing and Distribution

Agreement between Toshiba Corporation and Vital Images, Inc. dated January      , 2002 (the “Agreement’), the terms and

conditions under this Exhibit D shall be superseded upon purchase of the

Products and shall be totally subject to the terms and conditions provided in

the main body of the Agreement.

 

21

 

ARTICLE 3: 

WARRANTIES; INDEMNIFICATION

 

3.1                                 No

Warranty.  Vital Images makes no

warranty to Licensees that the Products licensed under the Demonstration

License, even when properly installed and operated, will substantially perform

the functions described in the functional specifications for the Products, as

contained in the applicable written documentation for the Products.  All Products licensed under the

Demonstration License are provided to Licensees “AS IS.” Provided however,

during the term of each Demonstration License, Vital Images shall provide

Licensees with any update or upgrade releases to the Vitrea® 2 or other applicable Products licensed

thereunder, as soon as they become available. 

It is agreed between the parties that newly released options to Vitrea® 2, except for those

listed in Exhibit E to the Agreement and licensed under the applicable

Demonstration License, shall be excluded from such updates and upgrades unless

explicitly agreed between the parties.

 

3.2                                 Exclusive

Remedy.  Vital Images’ entire

liability, and Licensees’ exclusive remedy, for any claim made by Licensees

under Article 3.1 above shall be for Licensee to terminate the Demonstration License

for such Product.  Vital Images does not

warrant that the operation of the Products will be uninterrupted or error-free,

that all errors in the Products will be corrected, that the Products will

satisfy Licensee’s requirements or that the Products will operate in the

combinations which Licensees may select for use.

 

3.3                                 Warranty

Disclaimer.  THE WARRANTY SET FORTH

IN ARTICLE 3.1 ABOVE IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS

OR IMPLIED, WHICH ARE HEREBY DISCLAIMED AND EXCLUDED BY VITAL IMAGES, INCLUDING

WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR

PURPOSE, NON-INFRINGEMENT OR USE, AND ALL OBLIGATIONS OR LIABILITIES ON THE

PART OF VITAL IMAGES FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE USE,

MAINTENANCE OR PERFORMANCE OF THE PRODUCTS. 

Furthermore, the Products are derived from and include software from

third party licensors, who make no warranty, express or implied, regarding the

Products, who disclaim any and all liability for the Products and who will not

undertake to provide any information or support regarding the Products.

 

3.4                                 Infringement

Indemnity.  Vital Images hereby agrees

to indemnify, defend and hold Licensees harmless from any third party suit,

claim or other legal action (“Legal Action”) that alleges the Products

infringes any patent, copyright, or trade secret, including any award of

damages and costs made against Licensees by a final judgment of a court of last

resort based upon a Legal Action, provided that:  (a) Licensees give written notice of any Legal Action to Vital

Images within fifteen (15) days of Licensee’s first knowledge thereof, provided

that, the failure of Licensee

to notify Vital Images of any such matter within the fifteen (15) day period

shall not release Vital Images, in whole or in part, from its obligations under

this Article 3.4, except to the extent such Licensee’s failure to so notify

Vital Images materially prejudices Vital Images’ ability to defend against such

Legal Action; (b) Vital Images has sole and exclusive control of the

defense of any Legal Action, including the choice and direction of any legal

counsel, and all related settlement negotiations; and (c) Licensees provide

Vital Images (at Vital Images’ expense for reasonable out-of-pocket expenses)

with assistance, information and authority to perform the above.

 

Notwithstanding

the foregoing, Vital Images and its licensors shall have no liability for any

Legal Action based on or arising out of: 

(a) the failure by Licensees to use a non-infringing version or release

of the Products if made available by Vital Images, (b) the combination,

operation or use of the Products with software, hardware or data not furnished or

approved by Vital Images, if such Legal Action would have been avoided by use

of the Products without such software, hardware or data, or (c) the use of any

Products in a manner for which it was neither designed nor contemplated.

 

22

 

In the event

that the Products are held or are believed by Vital Images to infringe, Vital

Images shall, at its option and expense, terminate the Demonstration License to

such Products.

 

This Article 3.4

states Licensees’ exclusive remedy, and Vital Images’ and its licensors’ entire

liability, for any infringement claim related to the Products or their use.

 

ARTICLE 4: 

LIMITATION OF REMEDIES

 

4.1                                 Delay.  VITAL IMAGES SHALL NOT BE LIABLE FOR ANY LOSS

OR DAMAGE CAUSED BY DELAY IN FURNISHING PRODUCTS OR ANY OTHER PERFORMANCE UNDER

THIS EXHIBIT D.

 

4.2                                 Sole

Remedies.  THE SOLE AND EXCLUSIVE

REMEDIES FOR BREACH OF ANY AND ALL WARRANTIES AND THE SOLE REMEDIES FOR VITAL

IMAGES’ LIABILITY OF ANY KIND (INCLUDING LIABILITY FOR NEGLIGENCE OR PRODUCT

LIABILITY) WITH RESPECT TO THE PRODUCTS COVERED BY THIS EXHIBIT D AND

ALL OTHER PERFORMANCE BY VITAL IMAGES UNDER THIS EXHIBIT D SHALL BE

LIMITED TO THE REMEDIES PROVIDED IN ARTICLE 3 OF THIS EXHIBIT D.

 

4.3                                 Damages

Limitation.  VITAL IMAGES SHALL HAVE

NO LIABILITY OF ANY KIND FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL

LOSS OR DAMAGE, EVEN IF VITAL IMAGES SHALL HAVE BEEN ADVISED OF THE POSSIBILITY

OF SUCH POTENTIAL LOSS OR DAMAGE, INCLUDING ANY LIABILITY FOR DAMAGES ARISING

OUT OF OR RESULTING FROM THE USE, MAINTENANCE OR PERFORMANCE OF THE PRODUCTS,

INCLUDING, WITHOUT LIMITATION, THE LOSS OR CORRUPTION OF LICENSEES’ OR ANY

THIRD PARTY DATA.

 

ARTICLE 5: 

RELATIONSHIP OF THIS EXHIBIT D AND THE MAIN BODY OF THE AGREEMENT

 

In all other respects, the main body of the Agreement shall prevail

and shall apply to the Demonstration Licenses granted under this Exhibit D

as well.  Specifically, and not in

limitation of the foregoing, defined terms used in this Exhibit D, if not

defined herein, shall have the meaning given them in the Agreement.

 

23

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

E

PRODUCT

PRICE LIST

 

	

   

  	

   

  	

  Platform Configuration

  	

   

  	

  Software License

  Pricing

  	

   

  	

  Annual Software

  Maintenance Pricing

  
	

  License

  	

   

  	

  Required

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  
	

  Vitrea  â 2

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  VScoreÔ

  option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  VScore with EKG GateÔ

  option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  VScore

  with AutoGateÔ option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  3D Angiography Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CT Perfusion Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  CT Colongraphy Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Automated Vessel Measurements Option

  	

   

  	

  Windows Platform

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

24

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

F

PRODUCT

COMMITMENTS

 

Toshiba and/or its

Dealer Associates shall purchase from Vital Images during the twelve (12) month

period ended September 30, 2002 the following Vitrea  â 2 Software License minimums:

 

YEAR 1

 

	

   

  	

   

  	

  Commitment

  	

   

  	

  Cumulative Total

  
	

   

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  
	

  QUARTER 4  

  Oct. 1, 2001 -

  Dec. 31, 2001

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

YEAR 2

 

	

   

  	

   

  	

  Commitment

  	

   

  	

  Cumulative Total

  
	

   

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  	

   

  	

  U.S.

  	

   

  	

  Non-U.S.

  
	

  QUARTER 1  
Jan. 1, 2002 - Mar. 31, 2002

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  QUARTER 2  
April 1, 2002 - June 30, 2002

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  QUARTER 3  

  July 1, 2002 -

  Sept. 31, 2002

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  

 

Any purchases made

by Toshiba and/or its Dealer Associates pursuant to Sections 3.2 and 3.3 of

this Agreement shall not be credited against the Commitment.

 

25

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

G

PRINCIPAL COUNTRIES

 

The European Union

U.S.A.

 

26

 

VITAL IMAGES, INC. AND TOSHIBA CORPORATION

MARKETING AND DISTRIBUTION AGREEMENT

 

EXHIBIT

H

LIST

OF VITAL IMAGES TRADEMARKS

 

Vitrea â

 

VScoreÔ

 

VScore with EKG GateÔ

 

VScore with AutoGateÔ

 

27severance agreement - male 40 or over

Exhibit 10.36

 

SEVERANCE

AGREEMENT

 

This Severance and

Redemption Agreement effective as of the 9th day of February, 2002,

by and between Vital Images, Inc., a Minnesota corporation (“Company”) and

Albert Emola (“Employee”).

 

W I T N E S S E T H:

 

WHEREAS, Employee

was employed by Company pursuant to an Employment Agreement with Company dated

December 27, 1999 (the “Employment Agreement”);

 

WHEREAS, pursuant

to the Employment Agreement, Employee entered into an Incentive Stock Option

Agreement and a Non-Qualified Stock Option Agreement with Company, each dated

December 28, 1999 (collectively, the “Stock Option Agreements”); and

 

WHEREAS, Employee

is a shareholder of Company.

 

NOW, THEREFORE, in

consideration for the promises and covenants contained herein, the receipt and

sufficiency of which the parties acknowledge, the parties hereby agree as

follows:

 

1.             Definitions.  We intend all words used in this Severance

and Redemption 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 mean the undersigned Employee, except that with respect to

paragraphs 4.A. and 4.B. it shall also include anyone who has obtained any

legal rights or claims through the undersigned Employee.

 

B.            Company, as

used herein, shall at all times mean Company and its parent companies, its

subsidiaries, successors and assigns, its affiliated and predecessor companies,

its successors and assigns, 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 Employee or former employees of

Company, in their official or individual capacities.

 

C.            Employee’s Claims,

as used herein, means all of the rights Employee has now to any relief of any

kind from Company whether or not Employee now knows about those rights, arising

out of his employment with Company, and his employment termination, including,

but not limited to, claims arising under the Age Discrimination in Employment

Act; the Minnesota Human Rights Act; the Americans with Disabilities Act; Title

VII of the Civil Rights Act of 1964, as amended; or other federal, state or

local civil rights laws; 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; and claims for any compensation, bonus or wages

in addition to those payments set forth in Section 3.

 

D.            Company’s Claims,

as used herein, means all of the rights Company now has to any relief of any

kind from Employee, whether or not Company now knows about those rights,

arising out of Employee’s employment with Company or his status as shareholder

or officer.

 

2.             Termination.  On February 9, 2002, Employee’s employment

with Company was terminated.  Employee

and Company agree Employee will be relieved of his duties with Company after

February 9, 2002.

 

3.             Company’s Obligations And

Severance Agreements.  In

consideration for Employee’s promises contained herein, specifically including,

but not limited to, the release of all Employee’s claims and Employee’s

promises to refrain from disclosing confidential information and trade secrets

of Company, Company agrees as follows:

 

A.            Severance Payment.  Pursuant to Section 4.2 of the Employment

Agreement, Company agrees to pay to Employee a severance payment of $192,000.00

(“Severance Payment”) which is equal to twelve (12) months of Employee’s salary

calculated at Employee’s regular rate of pay as of the date of this

Agreement.  This Severance Payment will

be payable in one lump sum within ten (10) days after the expiration of the

Rescission Periods, as defined herein. 

The Severance Payment shall be subject to federal and state withholding

taxes and FICA.

 

B.            Incentive Compensation.  Employee acknowledges that Company has paid

Employee an Incentive Bonus (“Bonus”) for the 2001 calendar year in the amount

of $85,092.00, and that the Bonus is in full satisfaction of any and all claims

or rights Employee may have to a bonus including, but not limited to, any and

all claims or rights for a bonus under Section 2 of the Employment Agreement.

 

C.            Vacation.  Company agrees that in lieu of all accrued

vacation pay due to Employee, Employee shall be entitled to retain the February

15 and February 28 regular payroll payments made erroneously to Employee.  Employee acknowledges receipt of said

payments.

 

D.            Options.  Company and Employee acknowledge and agree

that the schedule attached hereto as Exhibit A, incorporated herein by

reference, identifies the options granted to Employee and the extent to which

said options have vested through the date of termination.  Employee acknowledges that any of said

vested options that have not been exercised within a period of three months

after termination of employment shall immediately terminate and will not

thereafter be exercisable.

 

E.             Medical

Insurance Benefits.  Company,

pursuant to federal and state law, will provide, for a period of eighteen (18)

months following the effective date of Employee’s termination (“COBRA Period”),

a continuation of the group medical insurance coverage previously provided to

Employee and his spouse  by

Company.  Through February 28, 2002,

 

2

 

Company will pay the premium for the group medical insurance that it

paid during Employee’s employment. 

After such date, Employee will be required to pay for such benefits for

the remainder of the COBRA Period, should Employee elect to continue COBRA

coverage.

 

F.             Outplacement

Payment.  To assist Employee in

obtaining a new position and help defray the cost of outplacement services, the

Company agrees to pay Employee the aggregate sum of Twenty Thousand Dollars

($20,000).  Said payment shall be made

to Employee with the payment due pursuant to paragraph 3A above.

 

G.            Computer/Palm

Pilot.  The Company agrees that

Employee shall be entitled to retain the computer and palm pilot he received on

account of his prior position with the Company.

 

H.            Non-Disparagement.  The Company agrees that its directors,

senior officials and managers shall not knowingly vilify, disparage, slander,

or defame Employee.

 

I.              Confidentiality

Of Agreement.  Company agrees that

it will keep the terms and conditions of this Agreement strictly confidential

except that the Company may disclose the terms and conditions of this Agreement

to its advisors or as required by law.

 

4.             Employee Obligations.  As material inducement to Company in

entering into this Agreement and providing the consideration described in

Section 3, Employee hereby agrees as follows:

 

A.            Release.  Employee agrees to release all Employee’s

Claims, provided, however, that such release is not intended to apply to any

willful misconduct by Company of which Employee does not have present

knowledge.  Employee acknowledges that

the money and promises received and to be received by Employee under Sections 3

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 vindicate any rights he may have  had

if he had not released Employee’s Claims, except as may be necessary to enforce

this Agreement.  Further, Employee

agrees to pay Company’s attorneys fees if Employee breaches the covenant not to

sue contained in this Section 4.B.  

 

C.            Company Property.  Employee will return all property belonging

to Company 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.

 

D.            Confidentiality.  Employee reaffirms his obligations within

paragraphs 3.4, 3.5 and 3.6 of the Employment Agreement.

 

E.             Confidentiality

Of Agreement.  Employee agrees that

he will keep the terms and conditions of this Agreement strictly confidential

except that Employee may disclose the terms and conditions of this Agreement to

his spouse, attorney, tax preparer, government

 

3

 

agencies, or as required by law. 

Employee agrees that in the event that Employee discloses any of the

terms of this Agreement, including the fact of payment other than as set forth

above, he shall be liable to Company as set forth in Section 4.G. of this

Agreement and for any and all injuries or damages sustained by Company

including costs, disbursements and attorneys’ fees incurred by Company as a

direct result of any violation of this paragraph.

 

F.             Non-Disparagement.  Employee agrees that after the term of his

employment with Company, he will not knowingly vilify, disparage, slander or

defame the Company, including Company’s business or business practices.

 

G.            Remedies.  Employee acknowledges that any breach of any

of the promises set forth in Sections 4.C., 4.D., 4.E., and 4.F. will cause

Company irreparable harm for which there is no adequate remedy at law and

Employee therefore consents to the issuance of any injunction in favor of

Company enjoining the breach of any of those promises by any court of competent

jurisdiction.  If any promise made by

Employee in this Section 4 should be held to be unenforceable because of its

scope or duration, or the area or subject matter covered thereby, Employee

agrees that the court making such determination shall have the power to reduce

or modify the scope, duration, subject matter or area of that promise to the

extent that allows the maximum scope, duration, subject matter or area

permitted by applicable law.  Employee

further agrees that the remedies provided for herein are in addition to, and

are not to be construed as replacements for, or a limitation of, rights and

remedies otherwise available to Company.

 

5.             Employee’s

Understandings.  Employee acknowledges

and represents that:

 

A.            Employee understands

that he has the right to consult with an attorney regarding the meaning and

effect of this Agreement.

 

B.            Employee also

understands that he has a period of twenty-one (21) calendar days from the date

on which he receives an unsigned copy of this Agreement in which to consider

whether or not to sign this Agreement and that, having been advised of that

entitlement, he may elect to sign this Agreement at any time prior to the

expiration of that time period.

 

C.            Employee understands

that he may rescind (that is, cancel) within seven (7) calendar days of signing

the Agreement the provisions of Section 4.A. of this Agreement with respect to

claims arising under the Age Discrimination in Employment Act (“ADEA Rescission

Period”) and that he may rescind within fifteen (15) calendar days of signing

the Agreement the provisions of Section 4.A. of this Agreement with respect to

claims arising under the Minnesota Human Rights Act (“MHRA Rescission Period”)

(collectively, “Rescission Periods”). 

To be effective, rescission must be in writing, delivered to Company at

Vital Images, Inc., 3300 Fernbrook Lane N., Suite 200, Plymouth, MN 55447,

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 5C of this Agreement, Company

will have the right, exercisable by written notice

 

4

 

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 5 of this Agreement) shall remain valid and continue in full force

and effect.

 

7.             Performance By Employee and

Company.  Nothing contained herein

shall operate as a waiver or an election of remedies by either party should the

other party fail to perform any duty or obligation imposed upon them

hereunder.  Notwithstanding anything

contained herein to the contrary, this Agreement and the duties and obligations

hereunder shall continue in full force and effect irrespective of any violation

of any term or provision of this Agreement by Employee.

 

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.             Employee Acknowledgments.  Employee acknowledges and represents

that:  (a) he has read this Agreement

and understand its consequences; (b) he has received adequate opportunity to

read and consider this Agreement; (c) he has determined to execute this

Agreement of his own free will and acknowledges that he has not relied upon any

statements or explanations made by Company regarding this Agreement; and (d)

the promises of Company made in this Agreement constitute fair and adequate consideration

for the promises, releases and agreements made by Employee in this Agreement.

 

10.           Entire Agreement.  This Agreement, including any exhibits

attached hereto or documents expressly referred to herein, contains the entire

agreement between Company and Employee and supersedes and cancels any and all

other  prior  agreements, whether oral or in writing,

between Company and Employee with respect to the matters referred to herein.

 

11.           Governing Law.  This Agreement shall be construed and

enforced in accordance with the laws of the State of Minnesota.

 

12.           Effective Date.  This Agreement was originally offered to

Employee on or about February 21, 2002. 

Employee shall have until the close of business on March 14, 2002  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 March 14, 2002.

 

13.           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.  For purposes of execution

of this Agreement, the parties agree a facsimile signature will be treated the

same as an original signature; however, the parties agree to provide one

another with original signatures after execution.

 

5

 

	

   

  	

   

  	

   

  	

   

  	

  VITAL IMAGES,

  INC.

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Dated:

  	

  March 25, 2002

  	

   

  	

   

  	

  By:

  	

  /s/Douglas M.

  Pihl

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Its:

  	

  Chairman

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Dated:

  	

  March 14, 2002

  	

   

  	

   

  	

  /s/Albert Emola

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Albert Emola

  	

   

  

 

6

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