Document:

Exhibit 10.19

 

CHANGE IN CONTROL AGREEMENT

 

August 5, 2008

 

Dear Vikram Simha:

 

In connection with your hiring as the Chief Technology Officer and
Executive Vice President of Engineering of Vital Images, Inc., a Minnesota
corporation (the “Company”), we hereby offer you valuable and unique benefits.  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 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 more than 50% 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 after a Change in Control which constitute Good
Reason) 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, exchange or other transfer, directly or indirectly, of all or
substantially all of the assets of the Company to any Person in one transaction
or in a series of related transactions which occur during the twelve-month
period ending on the date of the most recent purchase or other acquisition by
such Person;

 

b.                                      any
Person is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of (1) 30 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 

 

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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 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); or

 

e.                                       the
continuing directors cease for any reason to constitute at least a majority of
the Board.

 

For purposes of this Section 1(e), a “continuing
director” means any individual who is a member of the Board on August 1,
2008, 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).

 

In all cases, the determination of whether a Change in
Control has occurred shall be made in accordance with Code Section 409A
and the regulations, notices and other guidance of general applicability issued
thereunder.

 

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 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);

 

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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.

 

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.                                       change in your status,
position(s), duties or responsibilities as an executive of the Company as in
effect immediately prior to the Change in Control which, in your reasonable
judgment, is an adverse change (other than, if applicable, any such change
directly attributable to the fact that the Company is no longer publicly owned)
except in connection with the termination of your employment for Cause,
Disability or Retirement or as a result of your death or by you other than for
Good Reason;

 

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;

 

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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

 

h.                                      the
termination of your employment by the Company for any reason other than death,  Cause, 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.

 

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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.

 

ARTICLE II.

TERM OF
AGREEMENT

 

This Agreement is effective immediately and will continue in effect until July 31,
2009; provided, however; that commencing on July 31, 2009 and each July 31
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 July 31, 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 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 

 

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make a lump-sum cash payment to you in an amount equal
to your annual base salary in effect on the date of the Change in Control.

 

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 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.

 

d.                                      409A
Restrictions.  Notwithstanding the
foregoing, if any of the payments or other benefits described in this Article III
are subject to the requirements of Code Section 409A and the Company
determines that you are a “specified employee” as defined in Code Section 409A

 

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as of the Date of Termination, such payments shall not
be paid or commence earlier than the first day of the seventh month following the
Date of Termination.

 

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.  This Section 2
of Article III shall be applied in accordance with Code Section 409A
and the regulations, notices and other guidance of general applicability issued
thereunder.

 

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 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 

 

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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.

 

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 

 

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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 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 

 

10

 

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. 
Notwithstanding anything in this Agreement to the contrary, the Company
expressly reserves the right to amend this Agreement to the extent necessary to
comply with Code Section 409A, as it may be amended from time to time, and
the regulations, notices and other guidance of general applicability issued
thereunder.

 

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.

 

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/ Michael H.
  Carrel

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Michael Carrel

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Agreed to this 6
  day of Aug, 2008.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ Vikram
  Simha

  
	
   

  	
  Vikram Simha

  
					

 

11Exhibit 10.20

 

December 10,
2008

 

Reza
A. Ghanbari, Ph.D

3144
Northview Road

Wayzata,
MN  55391

 

Dear
Ray,

 

On
behalf of Vital Images, Inc., I am pleased to offer you the full-time
position of Executive Vice President, Strategy and Products,
reporting directly to me.  Your base
salary will be $10,416.67 semi-monthly, which annualizes to $250,000.   Your
start date will be December 10, 2008. 
This offer letter will expire on December 10, 2008.

 

In
addition to your base salary, you will be eligible for the management bonus
program.   Your management bonus incentive
target for calendar year 2008 will be 35% of base pay.  Awards under the management bonus incentive
plan will be based on achievement of a combination of both company and personal
performance goals. Moreover, there is an opportunity for the bonus payout to be
more than your incentive target, based on overachievement of Company goals.
Payouts under the management incentive bonus plan are expected to be made to
qualifying employees on a lump sum basis on or before March 15, 2009.   Please be advised that Vital Images reserves
the right, without prior notice, to make any changes to the manager bonus
program at its discretion, of which you will be notified.

 

Additionally,
the Company will pay you a signing bonus of $25,000.  Appropriate taxes will be withheld on this
bonus.  Should you leave the Company
voluntarily within one year after your start date; the sign-on bonus must be
repaid to the Company.

 

In addition to your salary, management will
recommend that you receive non-qualified options to purchase 150,000 shares of
Vital Images Common Stock and 15,000 shares of restricted stock.  The grants will be priced as of your start date with Vital Images (or
the first preceding trading date, if the markets are closed on your start date)
and will be under our standard terms and conditions for such grants.

 

Upon
joining Vital Images, you will be eligible to participate in the Company’s
fringe benefit program. Specifically, you will accrue 1.66 days 

 

 

per
month (.833 days per pay period) which equals 20 days (4 weeks) of vacation per
year. You will also receive ten

(10) paid
holidays per calendar year.   Medical, Dental, and Disability
Insurance will be effective the first of the month following the start
date.  You may participate in the Vital Images Employee Stock Purchase
Plan the first day of any quarter, and the Vital Images 401(k) plan the
first day of the month, following a three-month waiting period.  Please be
advised that Company fringe benefit programs are subject to change as a matter
of Company policy.

 

Initially,
your position will be based in our corporate offices in Minnetonka, MN. After June 2009,
you may be based out of any US city you wish, with reasonable business travel
as required.

 

In
compliance with the Immigration Reform and Control Act, all new employees are
required to provide proof of work eligibility and identification. In order to
satisfy these requirements, certain documents must be presented within 72 hours
of your start date.  Please review the
list, which is attached to the Form I-9, of appropriate documentation and
bring these with you on your first day of employment.

 

You
should be aware that your employment with Vital Images is for no specified
period and constitutes at will employment. 
As a result, you are free to resign at any time, for any reason or for
no reason.  Similarly, Vital Images is
free to conclude our employment relationship with you at any time, with or
without cause, and with or without notice.

 

This
offer of employment is contingent upon successful completion of a background
investigation by the Human Resources Department at Vital Images.  Confirmation of completion of the
investigation will be provided to you as soon as the investigation is complete.

 

To
accept this offer of employment, please sign below and return one copy of this
letter as soon as possible in the enclosed envelope, along with your signed
non-disclosure agreement.

 

Ray,
we are excited about having you on the Vital Images’ team.  We are confident that you will contribute to
our Company’s growth and that we can provide a challenging and rewarding work
environment to further your professional career.

 

Sincerely,

 

	
  /s/
  Michael H. Carrel

  	
   

  
	
   

  
	
  Michael
  Carrel

  
	
  President/Chief
  Executive Officer

  
	
   

  
	
   

  
	
  Accepted
  by

  	
  /s/
  Reza Ghanbari 

  	
   

  	
  Date

  	
            12/10/08

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