Document:

Exhibit

10.40

 

AMENDED AND RESTATED

CHANGE IN CONTROL AGREEMENT

 

Effective

February 9, 2002

 

Mr. Jay D. MIller

3300 Fernbrook Lane North, Suite 200

Plymouth, Minnesota  55447

 

Dear Mr. Miller:

 

You are presently the Chief Executive Officer of

Vital Images, Inc., a Minnesota corporation (the “Company”).  The Company considers the establishment and

maintenance of a sound and vital management to be essential to protecting and

enhancing the best interests of the Company and its shareholders.  In this connection, the Company recognizes

that, as is the case with many publicly held corporations, the possibility of a

Change in Control may arise and that such possibility and the uncertainty and

questions which it may raise among management may result in the departure or

distraction of management personnel to the detriment of the Company and its

shareholders.

 

Accordingly, the Board has determined that

appropriate steps should be taken to minimize the risk that Company management

will depart prior to a Change in Control, thereby leaving the Company without

adequate management personnel during such a critical period, and that

appropriate steps also be taken to reinforce and encourage the continued

attention and dedication of members of the Company’s management to their assigned

duties without distraction in circumstances arising from the possibility of a

Change in Control.  In particular, the

Board believes it important, should the Company or its shareholders receive a

proposal for transfer of control, that you be able to continue your management

responsibilities without being influenced by the uncertainties of your own

personal situation.

 

The Board recognizes that continuance of your

position with the Company involves a substantial commitment to the Company in

terms of your personal life and professional career and the possibility of

foregoing present and future career opportunities, for which the Company

receives substantial benefits. 

Therefore, to induce you to remain in the employ of the Company, this

Amended and Restated Agreement, which has been approved by the Board, sets

forth the benefits which the Company agrees will be provided to you in the

event your employment with the Company is terminated in connection with a

Change in Control under the circumstances described below.

 

The following terms will have the meaning set

forth below unless the context clearly requires otherwise.  Terms defined elsewhere in this Agreement

will have the same meaning throughout this Agreement.

 

ARTICLE I.

DEFINITIONS

 

1.                                       “Affiliate” means (i) any corporation at

least a majority of whose outstanding securities ordinarily having the right to

vote at elections of directors is owned directly or indirectly by the Company

or (ii) any other form of business entity in which the Company, by virtue of a

direct or indirect ownership interest, has the right to elect a majority of the

members of such entity’s governing body.

 

2.                                       “Agreement” means this letter agreement as

amended, extended or renewed from time to time in accordance with its terms.

 

 

3.                                       “Board” means the board of directors of

the Company duly qualified and acting at the time in question.  On and after the date of a Change in

Control, any duty of the Board in connection with this Agreement is

nondelegable and any attempt by the Board to delegate any such duty is

ineffective.

 

4.                                       “Cause” means:

 

a.                                       your gross misconduct;

 

b.                                      your willful and continued failure to perform

substantially your duties with the Company (other than any such failure (1)

resulting from your Disability or incapacity due to bodily injury or physical

or mental illness or (2) relating to changes in your duties or responsibilities

as an executive officer of the Company as in effect immediately prior to a

Change in Control which in your reasonable judgment, is an adverse change

(other than, if applicable, any such change attributable to the fact that the

Company is no longer publicly owned)) after a demand for substantial

performance is delivered to you by the chair of the Board which specifically

identifies the manner in which you have not substantially performed your duties

and provides for a reasonable period of time within which you may take

corrective actions; or

 

c.                                       your conviction (including a plea of nolo

contendere) of willfully engaging in illegal conduct constituting a felony or

gross misdemeanor under federal or state law which is materially and

demonstrably injurious to the Company or which impairs your ability to perform

substantially your duties for the Company.

 

An act or failure to act will be

considered “gross” or “willful” for this purpose only if done, or omitted to be

done, by you in bad faith and without reasonable belief that it was in, or not

opposed to, the best interests of the Company. 

Any act, or failure to act, based upon authority given pursuant to a

resolution duly adopted by the Company’s board of directors (or a committee

thereof) or based upon the advice of counsel for the Company will be

conclusively presumed to be done, or omitted to be done, by you in good faith

and in the best interests of the Company. 

It is also expressly understood that your attention to matters not

directly related to the business of the Company will not provide a basis for

termination for Cause so long as the Board did not expressly disapprove in

writing of your engagement in such activities either before or within a

reasonable period of time after the Board knew or could reasonably have known

that you engaged in those activities. 

Notwithstanding the foregoing, you may not be terminated for Cause

unless and until there has been delivered to you a copy of a resolution duly

adopted by the affirmative vote of not less than a majority of the entire

membership of the Board at a meeting of the Board called and held for the

purpose (after reasonable notice to you and an opportunity for you, together

with your counsel, to be heard before the Board), finding that in the good

faith opinion of the Board you were guilty of the conduct set forth above in

clauses a., b. or c. of this definition and specifying the particulars thereof

in detail.

 

5.                                       “Change

in Control” means any of the following:

 

a.                                       the sale, lease, exchange or other transfer,

directly or indirectly, of all or substantially all of the assets of the

Company in one transaction or in a series of related transactions, to any

Person;

 

b.                                      except in the case of the liquidation or

dissolution of the Company in connection with the bankruptcy or insolvency of

the Company or similar arrangement for the benefit of the

 

2

 

Company’s creditors, the

approval by the shareholders of the Company of any plan or proposal for the

liquidation or dissolution of the Company, as the case may be;

 

c.                                       any Person is or becomes the “beneficial owner”

(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of

(1) 20 percent or more, but not more than 50 percent, of the combined voting

power of the outstanding securities of the Company ordinarily having the right

to vote at elections of directors, unless the transaction resulting in such

ownership has been approved in advance by the “continuing directors” or (2)

more than 50 percent of the combined voting power of the outstanding securities

of the Company ordinarily having the right to vote at elections of directors

(regardless of any approval by the continuing directors);

 

d.                                      a merger or consolidation to which the Company is

a party if the shareholders of the Company immediately prior to the effective

date of such merger or consolidation have, solely on account of ownership of

securities of the Company at such time, “beneficial ownership” (as defined in

Rule 13d-3 under the Exchange Act) immediately following the effective date of

such merger or consolidation of securities of the surviving company

representing (1) 50 percent or more, but not more than 80 percent, of the

combined voting power of the surviving corporation’s then outstanding

securities ordinarily having the right to vote at elections of directors,

unless such merger or consolidation has been approved in advance by the continuing

directors, or (2) less than 50 percent of the combined voting power of the

surviving corporation’s then outstanding securities ordinarily having the right

to vote at elections of directors (regardless of any approval by the continuing

directors);

 

e.                                       the continuing directors cease for any reason to

constitute at least a majority of the Board; or

 

f.                                         a change in control of a nature that is

determined by outside legal counsel to the Company, in a written opinion

specifically referencing this provision of the Agreement, to be required to be

reported (assuming such event has not been “previously reported”) pursuant to

section 13 or 15(d) of the Exchange Act, whether or not the Company is then

subject to such reporting requirement, as of the effective date of such change

in control.

 

For purposes of this Section

1(e), a “continuing director” means any individual who is a member of the Board

on February 9, 2002, while he or she is a member of the Board, and any

individual who subsequently becomes a member of the Board whose election or

nomination for election by the Company’s shareholders was approved by a vote of

at least a majority of the directors who are continuing directors (either by a

specific vote or by approval of the proxy statement of the Company in which

such individual is named as a nominee for director without objection to such

nomination).

 

6.                                       “Code” means the Internal Revenue Code of

1986, as amended.  Any reference to a

specific provision of the Code includes a reference to such provision as it may

be amended from time to time and to any successor provision.

 

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

any Affiliate.

 

8.                                       “Confidential Information” means

information which is proprietary to the Company or proprietary to others and

entrusted to the Company, whether or not trade secrets. It includes information

relating to business plans and to business as conducted or anticipated to be

conducted, and to past or current or

 

3

 

anticipated products or

services.  It also includes, without

limitation, information concerning research, development, purchasing,

accounting, marketing and selling.  All

information which you have a reasonable basis to consider confidential is

Confidential Information, whether or not originated by you and without regard

to the manner in which you obtain access to that and any other proprietary

information.

 

9.                                       “Date of Termination” following a Change

in Control (or prior to a Change in Control if your termination was either a

condition of the Change in Control or was at the request or insistence of any

Person related to the Change in Control) means:

 

a.                                       if your employment is to be terminated for

Disability, 30 days after Notice of Termination is given (provided that you

have not returned to the performance of your duties on a full-time basis during

such 30-day period);

 

b.                                      if your employment is to be terminated by the

Company for Cause or by you for Good Reason, the date specified in the Notice

of Termination, which date may not be less than 30 days or more than 60 days

after the date on which the Notice of Termination is given unless you and the

Company otherwise expressly agree;

 

c.                                       if your employment is to be terminated by the

Company for any reason other than Cause, Disability, death or Retirement, the

date specified in the Notice of Termination, which in no event may be a date

earlier than 90 days after the date on which a Notice of Termination is given,

unless an earlier date has been expressly agreed to by you in writing either in

advance of, or after; receiving such Notice of Termination; or

 

d.                                      if your employment is terminated by reason of

death or Retirement, the date of death or Retirement, respectively.

 

In the case of termination by

the Company of your employment for Cause, if you have not previously expressly

agreed in writing to the termination, then within 30 days after receipt by you

of the Notice of Termination with respect thereto, you may notify the Company

that a dispute exists concerning the termination, in which event the Date of

Termination will be the date set either by mutual written agreement of the

parties or by the judge or arbitrators in a proceeding as provided in Article

VII Section 6 of this Agreement.  During

the pendency of any such dispute, you will continue to make yourself available

to provide services to the Company and the Company will continue to pay you

your full compensation and benefits in effect immediately prior to the date on

which the Notice of Termination is given (without regard to any changes to such

compensation or benefits which constitute Good Reason) and until the dispute is

resolved in accordance with Article VII Section 6 of this Agreement.  You will be entitled to retain the full

amount of any such compensation and benefits without regard to the resolution

of the dispute unless the judge or arbitrators decide(s) that your claim of a

dispute was frivolous or advanced by you in bad faith.

 

10.                                 “Disability” means a disability as defined

in the Company’s long-term disability plan as in effect immediately prior to

the Change in Control or; in the absence of such a plan, means permanent and

total disability as defined in section 22(e)(3) of the Code.

 

4

 

11.                                 “Exchange Act” means the Securities

Exchange Act of 1934, as amended.  Any

reference to a specific provision of the Exchange Act or to any rule or

regulation thereunder includes a reference to such provision as it may be

amended from time to time and to any successor provision.

 

12.                                 “Good Reason” means:

 

a.                                       the termination of your employment with

the Company by you for any reason, except in connection with the termination of

your employment for Cause, Disability or Retirement or as a result of your

death;

 

b.                                      a reduction by the Company in your base

salary (or an adverse change in the form or timing of the payment thereof) as

in effect immediately prior to the Change in Control or as thereafter

increased;

 

c.                                       the failure by the Company to continue in effect

any Plan in which you (and/or your family) are eligible to participate at any

time during the 90-day period immediately preceding the Change in Control (or

Plans providing you (and/or your family) with at least substantially similar

benefits) other than as a result of the normal expiration of any such Plan in

accordance with its terms as in effect immediately prior to the 90-day period

immediately preceding the time of the Change in Control, or the taking of any

action, or the failure to act, by the Company which would adversely affect your

(and/or your family’s) continued eligibility to participate in any of such

Plans on at least as favorable a basis to you (and/or your family) as is the

case on the date of the Change in Control or which would materially reduce your

(and/or your family’s) benefits in the future under any of such Plans or

deprive you (and/or your family) of any material benefit enjoyed by you (and/or

your family) at the time of the Change in Control;

 

d.                                      the Company’s requiring you to be based more than

30 miles from where your office is located immediately prior to the Change in

Control, except for required travel on the Company’s business, and then only to

the extent substantially consistent with the business travel obligations which

you undertook on behalf of the Company during the 90-day period immediately

preceding the Change in Control (without regard to travel related to or in

anticipation of the Change in Control);

 

e.                                       the failure by the Company to obtain from any

Successor the assent to this Agreement contemplated by Article VI of this

Agreement;

 

f.                                         any purported termination by the Company of your

employment which is not properly effected pursuant to a Notice of Termination

and pursuant to any other requirements of this Agreement, and for purposes of

this Agreement, no such purported termination will be effective;

 

g.                                      any refusal by the Company to continue to allow

you to attend to matters or engage in activities not directly related to the

business of the Company which, at any time prior to the Change in Control, you

were not expressly prohibited in writing by the Board from attending to or

engaging in; or

 

5

 

h.                                      the termination of your employment by the Company

for any reason other than death, Disability or Retirement during the twelve

(12) months following the month in which a Change in Control occurs.

 

13.                                 “Notice of Termination” means a written

notice given on or after the date of a Change in Control (unless your

termination before the date of the Change in Control was either a condition of

the Change in Control or was at the request or insistence of any Person related

to the Change in Control) which indicates the specific termination provision in

this Agreement pursuant to which the notice is given.  Any purported termination by the Company or by you for Good

Reason on or after the date of a Change in Control (or before the date of a

Change in Control if your termination was either a condition of the Change in

Control or was at the request or insistence of any Person related to the Change

in Control) must be communicated by written Notice of Termination to be

effective; provided, that your failure to provide Notice of Termination will

not limit any of your rights under this Agreement except to the extent the

Company demonstrates that it suffered material actual damages by reason of such

failure.

 

14.                                 “Person” means any individual,

corporation, partnership, group, association or other “person,” as such term is

used in section 14(d) of the Exchange Act, other than the Company, any

Affiliate or any employee benefit plan(s) sponsored by the Company or an

Affiliate.

 

15.                                 “Plan” means any compensation plan,

program, policy or agreement (such as a stock option, restricted stock plan or

other equity-based plan), any bonus or incentive compensation plan, program,

policy or agreement, any employee benefit plan, program, policy or agreement

(such as a thrift, pension, profit sharing, medical, dental, disability,

accident, life insurance, relocation, salary continuation, expense reimbursements,

vacation or fringe benefits plan or policy) or any other plan, program, policy

or agreement of the Company intended to benefit employees (and/or their

families) generally, management employees (and/or their families) as a group or

you (and/or your family) in particular.

 

16.                                 “Retirement” means termination of

employment on or after the day on which you attain the age of 65.

 

17.                                 “Successor” means any Person that succeeds

to, or has the practical ability to control (either immediately or solely with

the passage of time), the Company’s business directly, by merger, consolidation

or other form of business combination, or indirectly, by purchase of the

Company’s outstanding securities ordinarily having the right to vote at the

election of directors or, all or substantially all of its assets or otherwise.

 

6

 

ARTICLE

II.

TERM OF

AGREEMENT

 

This Amended and Restated Agreement is effective immediately and will

continue in effect until February 9, 2003; provided, however; that

commencing on February 9, 2003 and each February 9 thereafter, the term of this

Agreement will automatically be extended for 12 additional months beyond the

expiration date otherwise then in effect, unless at least 90 calendar days prior

to any such February 9, the Company or you has given notice that this Agreement

will not be extended; and, provided, further; that if a Change in Control has

occurred during the term of this Agreement, this Agreement will continue in

effect beyond the termination date then in effect for a period of 12 months

following the month during which the Change in Control occurs or, if later,

until the date on which the Company’s obligations to you arising under or in

connection with this Agreement have been satisfied in full.

 

ARTICLE III.

CHANGE IN CONTROL BENEFITS

 

1.                                       Benefits upon a Change in Control Termination.  You

will become entitled to the payments and benefits described in clauses (a) and

(b) of this Section 1 of Article III, subject to the limitations described in

clause (c) of this Section 1 of Article III, and to the benefit of the

provisions described in clause (c), if and only if (i) your employment with the

Company is terminated by the Company for any reason other than death, Cause,

Disability or Retirement, or if you terminate your employment with the Company

for any reason, including but not limited to, Good Reason; and (ii) the

termination occurs either within the period beginning on the date of a Change

in Control and ending on the last day of the twelfth month that begins after

the month during which the Change in Control occurs or prior to a Change in

Control if your termination was either a condition of the Change in Control or

was at the request or insistence of a Person related to the Change in Control.

 

a.                                       Cash Payment.  Within ten (10) business days

following the Date of Termination or, if later, within ten (10) business days

following the date of the Change in Control, the Company will make a lump-sum

cash payment to you in an amount equal to the product of (i) your annual base

salary in effect on the date of the Change in Control multiplied by (ii) 2.

 

b.                                      Welfare Plans. The Company will maintain in full force and effect, for the continued

benefit of you and your dependents for a period terminating 24 months after the

Date of Termination, all insured and self-insured employee welfare benefit

Plans (including, without limitation, medical, life, dental, vision and

disability plans) in which you were eligible to participate at any time during the

90-day period immediately preceding the Change in Control, provided that your

continued participation is possible under the general terms and provisions of

such Plans and any applicable funding media and without regard to any

discretionary amendments to such Plans by the Company following the Change in

Control (or prior to the Change in Control if amended as a condition or at the

request or insistence of a Person (other than the Company) related to the

Change in Control) and provided that you continue to pay an amount equal to

your regular contribution under such Plans for such participation (based upon

your level of benefits and employment status most favorable to you at any time

during the 90-day period immediately preceding the Change in Control).  The continuation period under federal and

state continuation laws, to the extent applicable, will begin to run from the

date on which coverage pursuant to this clause (b) ends.  If, at the end of the 24-month period, you

have not previously received or are

 

7

 

not then receiving equivalent

benefits from a new employer (including coverage for any pre-existing

conditions), the Company, pursuant to federal and state law, will

provide, for a period of eighteen (18) months (the “COBRA Period”), a

continuation of your and your dependents’ coverage under such Plans (the “COBRA

Coverage”), provided that you will be required to pay for such benefits during

the COBRA Period, should you elect to receive COBRA Coverage. .

 

c.                                       Limitation on Payments and Benefits. 

Notwithstanding anything in this Agreement to the contrary, if any of

the payments or benefits to be made or provided in connection with this

Agreement, together with any other payments, benefits or awards which you have

the right to receive from the Company, or any corporation which is a member of

an “affiliated group” (as defined in section 1504(a) of the Code without regard

to section 1504(b) of the Code) of which the Company is a member (“Affiliate”),

constitute an “excess parachute payment” (as defined in section 280G(b) of the

Code), two calculations will be performed. 

In the first calculation, the payments, benefits or awards will be

reduced by the amount the Company deems necessary so that none of the payments

or benefits under the Agreement (including from the existing Stock Option and

Incentive Plan) are excess parachute payments. 

In the second calculation, the payments will not be reduced so as to

eliminate an excess parachute payment, but will be reduced by the amount of the

applicable excise tax as imposed by section 4999 of the Code.  The two calculations will be compared and

the calculation providing the largest net payment to the employee will be

utilized.  The calculations must be made

in good faith by legal counsel or a certified public accountant selected by the

Company, and such determination will be conclusive and binding upon you and the

Company.  If a reduction in payments or

benefits is required by the comparison above, the payments or benefits under

the Agreement shall be reduced in the order that minimizes the amount of total

reduction in payments and benefits under the Agreement as a result of this

provision.

 

2.                                       Disposition.  If, on or after the date of a

Change in Control, an Affiliate is sold, merged, transferred or in any other

manner or for any other reason ceases to be an Affiliate or all or any portion

of the business or assets of an Affiliate are sold, transferred or otherwise

disposed of and the acquiror is not the Company or an Affiliate (a

“Disposition”), and you remain or become employed by the acquiror or an

affiliate of the acquiror (as defined in this Agreement but substituting

“acquiror” for “Company”) in connection with the Disposition, you will be

deemed to have terminated employment on the effective date of the Disposition

for purposes of this section unless (a) the acquiror and its affiliates jointly

and severally expressly assume and agree, in a manner that is enforceable by

you, to perform the obligations of this Agreement to the same extent that the

Company would be required to perform if the Disposition had not occurred and

(b) the Successor guarantees, in a manner that is enforceable by you, payment

and performance by the acquiror.

 

ARTICLE IV.

INDEMNIFICATION

 

Following a Change in Control, the Company will indemnify and reimburse

you to the full extent permitted by law and the Company’s articles of

incorporation and bylaws for damages, costs and expenses (including, without

limitation, judgments, fines, penalties, settlements and reasonable fees and

expenses of your counsel) incurred in

 

8

 

connection with all matters, events and transactions relating to your

service to or status with the Company or any other corporation, employee

benefit plan or other entity with whom you served at the request of the

Company.

 

ARTICLE V.

CONFIDENTIALITY

 

You will not use, other than in connection with your employment with

the Company, or disclose any Confidential Information to any person not

employed by the Company or not authorized by the Company to receive such

Confidential Information, without the prior written consent of the Company; and

you will use reasonable and prudent care to safeguard and protect and prevent

the unauthorized disclosure of Confidential Information. Nothing in this

Agreement will prevent you from using, disclosing or authorizing the disclosure

of any Confidential Information: (a) which is or hereafter becomes part of the

public domain or otherwise becomes generally available to the public through no

fault of yours; (b) to the extent and upon the terms and conditions that the

Company may have previously made the Confidential Information available to

certain persons; or (c) to the extent that you are required to disclose such

Confidential Information by law or judicial or administrative process.

 

ARTICLE VI.

SUCCESSORS

 

The Company will seek to have any Successor, by agreement in form and

substance satisfactory to you, assent to the fulfillment by the Company of the

Company’s obligations under this Agreement. Failure of the Company to obtain

such assent at least three business days prior to the time a Person becomes a

Successor (or where the Company does not have at least three business days’

advance notice that a Person may become a Successor, within one business day

after having notice that such Person may become or has become a Successor) will

constitute Good Reason for termination by you of your employment.  The date on which any such succession

becomes effective will be deemed the Date of Termination and Notice of

Termination will be deemed to have been given on that date.  A Successor has no rights, authority or

power with respect to this Agreement prior to a Change in Control.

 

ARTICLE

VII.

OTHER

PROVISIONS

 

1.                                       Binding Agreement.  This

Agreement inures to the benefit of, and is enforceable by, you, your personal

and legal representatives, executors, administrators, successors, heirs,

distributees, devisees and legatees. If you die while any amount would still be

payable to you under this Agreement if you had continued to live, all such

amounts, unless otherwise provided in this Agreement, will be paid in

accordance with the terms of this Agreement to your devisee, legatee or other

designee or; if there be no such designee, to your estate.

 

2.                                       No Mitigation.  You will not be required to

mitigate the amount of any payments or benefits the Company becomes obligated

to make or provide to you in connection with this Agreement by seeking other

employment or otherwise. The payments or benefits to be made or provided to you

in connection with this Agreement may not be reduced, offset or subject to

recovery by the Company by any payments or benefits you may receive from other

employment or otherwise.

 

9

 

3.                                       No Setoff.  The Company has no right to

delay or setoff payments or benefits owed to you under this Agreement against

amounts owed or claimed to be owed by you to the Company under this Agreement

or otherwise.

 

4.                                       Taxes.  All payments and benefits to be made or

provided to you in connection with this Agreement will be subject to required

withholding of federal, state and local income, excise and employment-related

taxes.

 

5.                                       Notices.  For the purposes of this

Agreement, notices and all other communications provided for in, or required

under, this Agreement must be in writing and will be deemed to have been duly

given when personally delivered or when mailed by United States registered or

certified mail, return receipt requested, postage prepaid and addressed to each

party’s respective address set forth on the first page of this Agreement

(provided that all notices to the Company must be directed to the attention of

the chair of the Board), or to such other address as either party may have

furnished to the other in writing in accordance with these provisions, except

that notice of change of address will be effective only upon receipt.

 

6.                                       Disputes.  If you so elect, any dispute,

controversy or claim arising under or in connection with this Agreement will be

settled exclusively by binding arbitration administered by the American

Arbitration Association in Minneapolis, Minnesota in accordance with the

Commercial Arbitration Rules of the American Arbitration Association then in

effect.  Judgment may be entered on the

arbitrator’s award in any court having jurisdiction; provided, that you may

seek specific performance of your right to receive payment or benefits until

the Date of Termination during the pendency of any dispute or controversy arising

under or in connection with this Agreement. 

The Company will be entitled to seek an injunction or restraining order

in a court of competent jurisdiction (within or without the State of Minnesota)

to enforce the provisions of Article V of this Agreement.

 

7.                                       Jurisdiction.  Except as specifically

provided otherwise in this Agreement, the parties agree that any action or

proceeding arising under or in connection with this Agreement must be brought

in a court of competent jurisdiction in the State of Minnesota, and hereby

consent to the exclusive jurisdiction of said courts for this purpose and agree

not to assert that such courts are an inconvenient forum

 

8.                                       Related Agreements.  To the

extent that any provision of any other Plan or agreement between the Company

and you limits, qualifies or is inconsistent with any provision of this

Agreement, then for purposes of this Agreement, while such other Plan or

agreement remains in force, the provision of this Agreement will control and

such provision of such other Plan or agreement will be deemed to have been

superseded, and to be of no force or effect, as if such other agreement had

been formally amended to the extent necessary to accomplish such purpose.  Nothing in this Agreement prevents or limits

your continuing or future participation in any Plan provided by the Company and

for which you may qualify, and nothing in this Agreement limits or otherwise

affects the rights you may have under any Plans or other agreements with the

Company.  Amounts which are vested

benefits or which you are otherwise entitled to receive under any Plan or other

agreement with the Company at or subsequent to the Date of Termination will be

payable in accordance with such Plan or other agreement.

 

9.                                       No Employment or Service Contract.  Nothing

in this Agreement is intended to provide you with any right to continue in the

employ of the Company for any period of specific duration or interfere with or

 

10

 

otherwise restrict in any way your

rights or the rights of the Company, which rights are hereby expressly reserved

by each, to terminate your employment at any time for any reason or no reason

whatsoever, with or without cause.

 

10.                                 Funding and Payment. 

Benefits payable under this Agreement will be paid only from the general

assets of the Company.  No person has

any right to or interest in any specific assets of the Company by reason of

this Agreement.  To the extent benefits

under this Agreement are not paid when due to any individual, he or she is a

general unsecured creditor of the Company with respect to any amounts due.  The Company with whom you were employed

immediately before your Date of Termination has primary responsibility for

benefits to which you or any other person are entitled pursuant to this

Agreement but to the extent such Company is unable or unwilling to provide such

benefits, the Company and each other Affiliate are jointly and severally

responsible therefor to the extent permitted by applicable law.  If you were simultaneously employed by more

than one Company immediately before your Date of Termination, each such Company

has primary responsibility for a portion of the benefits to which you or any

other person are entitled pursuant to this Agreement that bears the same ratio

to the total benefits to which you or such other person are entitled pursuant

to this Agreement as your base pay from the Company immediately before your

Date of Termination bears to your aggregate base pay from all such Companies.

 

11.                                 Survival.  The respective obligations

of, and benefits afforded to, the Company and you which by their express terms

or clear intent survive termination of your employment with the Company or

termination of this Agreement, as the case may be, including without limitation

the provisions of Articles III, IV, V and VI and Sections 3, 4, 5 and 6 of

Article VII of this Agreement, will survive termination of your employment with

the Company or termination of this Agreement, as the case may be, and will

remain in full force and effect according to their terms.

 

ARTICLE VIII.

MISCELLANEOUS

 

1.                                       Modification and Waiver.  No

provision of this Agreement may be modified, waived or discharged unless such

modification, waiver or discharge is agreed to in a writing signed by you and the

chair of the Board. No waiver by any party to this Agreement at any time of any

breach by another party to this Agreement of, or of compliance with, any

condition or provision of this Agreement to be performed by such party will be

deemed a waiver of similar or dissimilar provisions or conditions at the same

or at any prior or subsequent time.

 

2.                                       Entire Agreement.  No

agreements or representations, oral or otherwise, express or implied, with

respect to the subject matter to this Agreement have been made by any party

which are not expressly set forth in this Agreement.

 

3.                                       Governing Law.  This Agreement and the legal

relations among the parties as to all matters, including, without limitation,

matters of validity, interpretation, construction, performance and remedies,

will be governed by and construed exclusively in accordance with the internal

laws of the State of Minnesota (without regard to the conflict of laws

principles of any jurisdiction).

 

4.                                       Headings.  Headings are for purposes of

convenience only and do not constitute a part of this Agreement.

 

11

 

5.                                       Further Acts.  The parties to this Agreement

agree to perform, or cause to be performed, such further acts and deeds and to

execute and deliver or cause to be executed and delivered, such additional or

supplemental documents or instruments as may be reasonably required by the

other party to carry into effect the intent and purpose of this Agreement.

 

6.                                       Severability.  The invalidity or

unenforceability of all or any part of any provision of this Agreement will not

affect the validity or enforceability of the remainder of such provision or of

any other provision of this Agreement, which will remain in full force and

effect.

 

7.                                       Counterparts.  This Agreement may be

executed in several counterparts, each of which will be deemed to be an

original, but all of which together will constitute one and the same

instrument.

 

If this letter correctly sets forth our agreement

on the subject matter discussed above, kindly sign and return to the Company

the enclosed copy of this letter which will then constitute our agreement on

this subject.

 

	

  Sincerely,

  	

   

  	

   

  
	

   

  	

   

  	

  VITAL IMAGES, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Douglas M. Pihl

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Name: Douglas M. Pihl

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Title: Chairman

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Agreed to this 12th day of December 2002.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  /s/  Jay D. Miller

  	

   

  
	

   

  	

   

  	

  Employee

  
						

 

12Exhibit

10.41

 

VITAL IMAGES, INC.

NON-STATUTORY STOCK OPTION AGREEMENT

 

	

  OPTIONEE:

  	

  Jay Miller

  
	

   

  	

   

  
	

  GRANT DATE:

  	

  March 12, 2002

  
	

   

  	

   

  
	

  NUMBER OF OPTION SHARES:

  	

  165,000 Shares

  
	

   

  	

   

  
	

  OPTION PRICE PER SHARE:

  	

  $7.25 per Share

  
	

   

  	

   

  
	

  EXPIRATION DATE:

  	

  March 12, 2010

  

 

THIS AGREEMENT is made as of the Grant Date

set forth above, by and between Vital Images, Inc., a Minnesota corporation

(the “Company”), and the Optionee named above, who is an employee of the

Company or a subsidiary of the Company (the “Optionee”).

 

The Company desires, by affording the Optionee an

opportunity to purchase shares of its Common Stock, as hereinafter provided, to

induce the Optionee to continue performing services for the Company.

 

NOW, THEREFORE, in consideration of the

mutual cove­nants hereinafter set forth and for other good and valuable

consideration, the parties hereby agree as follows:

 

1.                                      Grant

of Option.  The Company hereby

grants to the Optionee the right and option to purchase all or any part of the

aggregate number of shares of Common Stock set forth above (the “Option

Shares”) (such number being subject to adjustment as provided in paragraph 8

hereof) on the terms and subject to the conditions set forth in this

Agreement.  This option is not intended to be an

“incentive stock option” within the meaning of section 422 of the Internal

Revenue Code of 1986, as amended (the “Code”) and is being granted outside of

the Company’s 1997 Stock Option and Incentive Plan (the “Plan”).

 

2.                                      Purchase

Price.  The purchase price of the

Option Shares shall be the Option Price per share set forth above (such Option

Price being subject to adjustment as provided in paragraph 8 hereof).

 

3.                                      Term

and Exercise of Option.

 

(a)                                  The

term of this option shall commence on the Grant Date set forth above and shall

continue until the Expiration Date set forth above, unless earlier terminated

as provided herein.

 

 

(b)                                 Unless

the Compensation Committee of the Board of Directors of the Company shall

decide otherwise, and except as otherwise provided herein, this option will be

exercisable in cumulative installments as follows:

 

(i)                                     None

of the Option Shares may be purchased prior to March 12, 2003;

 

(ii)                                  Up

to 52,368 of the Option Shares may be purchased at any time after March 11,

2003 and prior to termination of this option; and

 

(iii)                               This

option shall become exercisable as to an additional 4,000 of the Option Shares

(less any shares previously purchased pursuant to this option) on the 12th day

of each successive calendar month, through December 12, 2003, following the date

set forth in paragraph 2(b)(ii) above and prior to termination of this option;

 

(iv)                              This

option shall become exercisable as to an additional 3,270 of the Option Shares

(less any shares previously purchased pursuant to this option) on the 12th day

of each successive calendar month from January 2004 through December 2004 and

prior to termination of this option;

 

(v)                                 This

option shall become exercisable as to an additional 2,893 of the Option Shares

(less any shares previously purchased pursuant to this option) on the 12th day

of each successive calendar month from January 2005 through December 2005 and

prior to termination of this option;

 

(vi)                              This

option shall become exercisable as to an additional 892 of the Option Shares

(less any shares previously purchased pursuant to this option) on the 12th day

of each successive calendar month from January 2006 through March 2006 and

prior to termination of this option;

 

(c)                                  To

exercise this option, the Optionee shall give written notice to the Company in

the form attached as Exhibit A, to the attention of its Chief Financial Officer

or other designated agent, and shall deliver payment in full for the Option

Shares with respect to which this option is then being exercised, as provided

in paragraph 4(b) below.

 

(d)                                 Neither

the Optionee nor the Optionee’s heirs or legal representatives, as the case may

be, will be, or will be deemed to be, a holder of any Option Shares for any

purpose unless and until certificates for such Option Shares are issued to the

Optionee or the Optionee’s heirs or legal representatives under the terms of

the Option Plan.

 

1.                                      Limitations

on Exercise of Option.

 

(a)                                  Except

as provided in paragraph 6 or 7 below, this option may not be exercised unless

the Optionee, at all times during the period beginning on the Grant Date and

 

2

 

ending on the day three months before the date of such exercise, shall

have been continuously employed by the Company or a subsidiary of the Company.

 

(b)                                 The

exercise of this option will be contingent upon receipt from the Optionee (or

the purchaser acting under paragraph 7 below) of the full Option Price of such

Option Shares.  Subject to approval of

the Committee administering the Option Plan, payment of the Option Price may be

made in cash, check, bank draft, money order, by tender of a broker exercise

notice or in shares of Common Stock previously owned by the Optionee for more

than six months and having an aggregate fair market value on the date of

exercise which is not less than the Option Price.

 

(c)                                  The

issuance of Option Shares upon the exercise of this option shall be subject to

all applicable laws, rules, and regulations. 

If, in the opinion of the Compensation Committee, (i) the listing,

registration, or qualification of the Option Shares under any state or federal

law, (ii) the consent or approval of any regulatory body, or (iii) an

agreement of the Optionee with respect to the disposition of the Option Shares,

is necessary or desirable as a condition to the issuance or sale of the Option

Shares, this option shall not be exercisable unless and until such listing,

registration, qualification, consent, approval or agreement is effected or

obtained in form satisfactory to the Compensation Committee.

 

2.                                      Nontransferability

of Option.  This option shall not be

transferable by the Optionee, other than by will or the laws of descent and

distribution.  During the lifetime of

the Optionee, this option shall be exercis­able only by the Optionee.

 

3.                                      Termination

of Employment.

 

(a)                                  If

the Optionee shall cease to be employed by the Company or a subsidiary of the

Company as a result of permanent and total disability (as defined by the Code),

this option will become immediately exercisable in full on the date of

termination of employment and may be exercised within a period of one year

after such termination of employment, but in no case later than the Expiration

Date set forth above.

 

(b)                                 If

the Optionee shall cease to be employed by the Company or a subsidiary of the

Company as a result the Optionee’s Retirement (as defined by the Option Plan),

this option will become immediately exercisable in full on the date of

termination of employment and may be exercised for a period of three months

after such termination of employment, but in no case later than the Expiration

Date.

 

(c)                                  If

the Optionee shall cease to be employed by the Company or a subsidiary of the

Company for any reason other than death, permanent and total disability or

retirement, this option may be exercised, to the extent the Optionee shall have

been entitled to do so at the date of termination of employment, within a

period of three months after such termination of employment, but in no case

later than the Expiration Date set forth above; provided, however, that if

Optionee’s employment is terminated by the Company for “cause” (as defined in

the Option Plan), this option shall immediately terminate and will not

thereafter be exercisable.

 

3

 

(d)                                 This

option will not confer upon the Optionee any right with respect to continuance

of employment by the Company or a subsidiary of the Company, nor will it

interfere in any way with the Company’s right or the subsidiary’s right to

terminate the Optionee’s employment at any time.

 

4.                                      Death

of Optionee.  In the event of the

death of the Optionee while in the employ of the Company or a subsidiary of the

Company, this option will become exercisable in full at the date of death and

may be exercised within a period of one year after the date of death, but in no

case later than the Expiration Date set forth above.  In such event, this option shall be exercisable only by the

executors or administrators of the Optionee or by the person or persons to whom

the Optionee’s rights under the option shall pass by the Optionee’s Will or the

laws of descent and distribu­tion.

 

5.                                      Merger,

Consolidation, Reorganization, Liquidation; Adjustments.  Subject to the other provisions of this

option, in the event of any change in the outstanding shares of Common Stock by

reason of any reorganization, merger, consolidation, liquidation, stock

dividend or split, recapitalization, reclassification, combination, or exchange

of shares or other similar corporate change, then if the Compensation Committee

shall determine, in its sole discretion, that such change necessarily or

equitably requires an adjustment in the number of Option Shares or in the

Option Price Per Share in order to prevent enlargement or dilution of the

rights of the Optionee, such adjustments shall be made by the Committee and

shall be conclusive and binding for all purposes of this option.  No adjustment shall be made in connection

with the issuance by the Company of any warrants, rights, or options to acquire

additional Common Stock or of securities convertible into Common Stock.

 

9.                                      Immediate

Acceleration of Option. 

Notwithstanding any provision in this option to the contrary, this

option will become exercisable in full immediately if, subsequent to the Grant

Date set forth above, any of the following events shall occur:

 

(a)                                  The

sale, lease, exchange or other transfer, directly or indirectly, of

substantially all of the assets of the Company (in one transaction or in a

series of related transactions) to a person or entity that is not controlled by

the Company,

 

(b)                                 The

approval by the shareholders of the Company of any plan or proposal for the

liquidation or dissolution of the Company;

 

(c)                                  A

merger or consolidation to which the Company is a party if the shareholders of

the Company immediately prior to effective date of such merger or consolidation

have “beneficial ownership” (as defined in Rule 13d-3 under the Securities

Exchange Act of 1934), immediately following the effective date of such merger

or consolidation, of securities of the surviving corporation representing (A)

more than 50%, but not more than 80%, of the combined voting power of the

surviving corporation’s then outstanding securities ordinarily having the right

to vote at elections of directors, unless such merger or consolidation has been

approved in advance by the Incumbent Directors (as defined below), or

(B) 50% or less of the

 

4

 

combined voting power of the surviving corporation’s then outstanding

securities ordinarily having the right to vote at elections of directors

(regardless of any approval by the Incumbent Directors);

 

(d)                                 Any

person becomes after the effective date of the Plan the “beneficial owner” (as

defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or

indirectly, of (A) 20% or more, but not 50% or more, of the combined voting

power of the Company’s outstanding securities ordinarily having the right to

vote at elections of directors, unless the transaction resulting in such

ownership has been approved in advance by the Incumbent Directors, or (B) 50%

or more of the combined voting power of the Company’s outstanding securities

ordinarily having the right to vote at elections of directors (regardless of

any approval by the Incumbent Directors);

 

(e)                                  The

Incumbent Directors cease for any reason to constitute at least a majority of

the Board; or

 

(f)                                    Any

other change in control of the Company of a nature that would be required to be

reported pursuant to Section 13 or 15(d) of the Securities Exchange Act of

1934, whether or not the Company is then subject to such reporting

requirements.

 

For purposes of this

paragraph 9, “Incumbent Directors” of the Company will mean any individuals who

are members of the Board on the effective date of the Plan and any individual

who subsequently becomes a member of the Board whose election, or nomination

for election by the Company’s shareholders, was approved by a vote of at least

a majority of the Incumbent Directors (either by specific vote or by approval

of the Company’s proxy statement in which such individual is named as a nominee

for director without objection to such nomination).

 

The Compensation Committee may, in its sole

discretion, determine that the Optionee shall receive, with respect to some or

all of the Option Shares, cash in an amount equal to the excess of the Fair

Market Value (as defined in the Plan) of such Option Shares immediately prior

to the effective date of such Change in Control over the Exercise Price.

 

The Optionee shall not be entitled to the immediate

acceleration of this option or cash payments as provided in this paragraph 9 to

the extent that such acceleration or payments would, with respect to the

Optionee, constitute a “parachute payment” for purposes of Internal Revenue

Code Section 280G, or any successor provision.  The Compensation Committee shall have the right to eliminate,

alter or reduce the acceleration of this option or any cash payment, as the

case may be, made pursuant to this paragraph 9 so that the Optionee will not

receive a “parachute payment.”

 

Notwithstanding any provision in the Option Plan or

this option to the contrary, neither the Board of Directors nor the

Compensation Committee shall have the power or right, either before or after

the occurrence of an event described in subparagraph (a) through (f) above, to

rescind, modify or amend the provisions of this paragraph 9 without the consent

of the Optionee.

 

5

 

10.                               Interpretation.  The interpretation and construction of any

provision of the Option Plan and this option shall be made by the Compensation

Committee and shall be final, conclusive and binding on the Optionee and all

other persons.

 

11.                               Option

Plan Governs.  This option is in all

respects subject to and governed by all of the provisions of the Option Plan.

 

6

 

IN WITNESS WHEREOF, the Company has caused

this Agreement to be executed in its corporate name by its duly authorized

officer, and the Optionee has executed this Agreement as of the Grant Date set

forth above.

 

	

   

  	

  COMPANY:

  	

   

  	

  VITAL IMAGES, INC.

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By

  	

  /s/ Gregory S. Furness

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

  Name: Gregory S. Furness

  
	

   

  	

   

  	

   

  	

   

  	

  Title:  

  Chief Financial Officer,

  
	

   

  	

   

  	

   

  	

   

  	

  Senior Vice President - Finance

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  OPTIONEE:

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  /s/ Jay D. Miller

  	

   

  
	

   

  	

   

  	

   

  	

  Name: Jay Miller

  	

   

  
							

 

7

 

EXHIBIT

A

 

NOTICE

OF EXERCISE OF

STOCK

OPTION

 

TO:

 

FROM:

 

DATE:

 

RE:                                                                              Exercise

of Stock Option

 

I here by exercise my option to purchase

               

shares of Common Stock at

$                      

per share (total exercise price of

$                       ),

effective today’s date.  This notice is

given in accordance with the terms of my Stock Option Agreement dated

                                ,

             .  The option price and vested amount is in

accordance with Sections 2 and 3 of the Stock Option Agreement.

 

Check

one:

 

o                                    Attached

is cash, or a check, bank draft or money order payable to Vital Images, Inc.,

or a combination thereof, for the total exercise price of the shares being

purchased.

 

o                                    Attached

is a broker exercise notice, together with a check made payable to Vital

Images, Inc. and instructions as to delivery of the shares.

 

o                                    Attached

is a certificate(s) for

                         

shares of common stock that I have owned for more than six months and is duly

endorsed in blank and surrendered for the exercise price of the shares being

purchased.

 

Please prepare the stock certificate in the following

name(s):

 

Sincerely,

 

 

	

   

  	

   

  
	

  (Signature)

  
	

   

  
	

   

  	

   

  
	

  (Print or Type Name)

  
	

   

  
	

   

  
	

  Letter and consideration

  received on

                          ,

  20  

  
	

   

  
	

  By:

  	

   

  	

   

  
	

   

  
	

  Name:

  	

   

  	

   

  
	

   

  
	

  Title:

  	

   

  	

   

  
					

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00049-of-00352.parquet"}]]