Document:

Exhibit 10.1

 

TRANSITION AGREEMENT

 

THIS TRANSITION AGREEMENT
(this “Agreement”) is entered into as of January 23, 2009, by and
among, Virtual Radiological Corporation, a Delaware corporation (the “Company”),
Sean O. Casey, M.D. (the “Executive”), and, solely for purposes of Section 1(f) hereof,
Virtual Radiologic Professionals, LLC, a Delaware limited liability company and
an affiliated medical practice of the Company (“VRP”).

 

Recitals

 

A.                                   The
Executive is currently employed by the Company as its Chief Executive Officer,
and serves as a director and Chairman of the Company.

 

B.                                     The
Company and the Executive are parties to an Employment Agreement, dated
effective as of October 1, 2007 (the “Employment Agreement”),
pursuant to which the Executive is employed by the Company as its Chief
Executive Officer.

 

C.                                     The
Company and the Executive desire to provide for a transition following the
Executive’s resignation as Chief Executive Officer of the Company, effective
upon the date and subject to the terms and conditions as provided for in this
Agreement.

 

D.                                    The
parties desire to resolve all present and potential issues between them
relating to the Executive’s employment and the termination of his employment
with the Company, and have agreed to the full resolution of any such issues as
provided for in this Agreement.

 

Agreements

 

In consideration
of the mutual promises and provisions contained in this Agreement, the parties,
intending to be legally bound, agree as follows:

 

1.                                      Termination
of Employment.

 

(a)                                       Resignation.  The Executive hereby resigns as Chief
Executive Officer of the Company, and as an officer and director of any
subsidiaries of the Company, effective as of January 26, 2009 (the “Resignation
Date”).  The Executive’s employment
by the Company and any subsidiaries shall terminate effective as of the
Resignation Date.

 

(b)                                       Termination
of Employment Agreement.  The
Employment Agreement is hereby terminated effective as of the Resignation Date,
and neither the Company nor the Executive shall have any rights or obligations
thereunder, except as follows:

 

(1)                                  Restrictive Covenants. 
Section 10 of the Employment Agreement shall remain in effect after
the Resignation Date in accordance with its terms, except that the restrictions
set forth in Sections 10(b) and (c) shall be amended and replaced
with the following:

 

(A)                               Non-solicitation.  During Executive’s service as Chairman of the
Board and for a period of two (2) years thereafter, Executive shall

 

 

not,
directly or indirectly, individually or on behalf of any other person, firm,
corporation or other entity, knowingly solicit, aid or induce (i) any
employee of or consultant to the Company or any of its subsidiaries or
affiliates to leave such employment or engagement in order to accept employment
with or render services to or with any other person, firm, corporation or other
entity unaffiliated with the Company or knowingly take any action to materially
assist or aid any other person, firm, corporation or other entity in
identifying or hiring any such employee or (ii) any customer of the
Company or any of its subsidiaries or affiliates to purchase goods or services
then sold by the Company or any of its subsidiaries or affiliates from another
person, firm, corporation or other entity or assist or aid any other persons or
entity in identifying or soliciting any such customer.

 

(B)                                 Noncompetition.  Executive acknowledges that he performs
services of a unique nature for the Company that are irreplaceable, and that
his performance of such services to a competing business will result in
irreparable harm to the Company. 
Accordingly, during Executive’s service as Chairman of the Board and for
a period of one (1) year thereafter (but subject to extension, as provided
below) Executive shall not, directly or indirectly, own, manage, operate,
control, be employed by (whether as an employee, consultant, independent
contractor or otherwise, and whether or not for compensation) or render
services to any person, firm, corporation or other entity, in whatever form,
engaged in any business of the same type as any business in which the Company
or any of its subsidiaries or affiliates is engaged on the date of termination of his
service as Chairman of the Board or in which they have proposed, on or prior to
such date, to be engaged in on or after such date, in any locale of any country
in which the Company or its subsidiaries conducts business.  The foregoing shall not prevent Executive
from owning not more than one percent of the total shares of all classes of
stock outstanding of any publicly held entity engaged in such business, nor
will it restrict Executive from rendering services to charitable organizations,
as such term is defined in Section 501(c) of the Internal Revenue
Code of 1986, as amended. 
Notwithstanding the foregoing, the Company may, at its option, extend
the duration of this restrictive covenant for up to twelve (12) additional
months following termination of the Executive’s service as Chairman of the Board (for
a total of up to twenty-four (24) months) upon notice given to the Executive at
any time within ninety (90) days following such termination, and the Company’s
written agreement to pay Executive additional severance for the duration of the
extension at the rate provided in Section 4(f), below.

 

The Executive acknowledges the legitimate the Company
interests which the restrictive covenants set forth above are designed to
protect.  The Executive further agrees
that the restrictive covenants set forth above are reasonable in their scope
and duration, and are supported by adequate

 

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consideration, including but not limited to the
benefits originally provided under the Employment Agreement and this Agreement.

 

(2)                                  Invention Assignment and Disclosure. 
The parties acknowledge and agree that Section 11 of the
Employment Agreement shall continue to apply to all Inventions (as defined in
the Employment Agreement) made or conceived by the Executive prior to the
Resignation Date, including, for the avoidance of doubt, the Executive’s
obligations under Section 11(c) with respect to all such
Inventions.  To facilitate the
performance of the Executive’s obligations under Section 11(b) of the
Employment Agreement (and without limiting any of the Executive’s obligations
thereunder or under any other part of Section 11 of the Employment
Agreement), Executive covenants and agrees to work, in good faith, with
designated officers of the Company (including, but not limited to, the Company’s
Chief Technology Officer and Chief Medical Officer) during the sixty (60) day
period following the Resignation Date, to confirm adequate disclosure and
documentation of all such Inventions, including by preparing and submitting
written disclosures of such Inventions in reasonable detail to the Company, and
engaging in meetings and discussions with such officers as requested from time
to time.  The Executive represents to the
Company that, except as disclosed pursuant to this Section 1(b)(2) or
as previously disclosed and assigned to the Company, the Executive has not made
or conceived any Inventions.

 

(c)                                       Health
Benefits.  To the extent that the
Executive elects COBRA continuation coverage under the Company’s group medical
and/or dental plans, then for a period of twelve months after the Resignation Date,
the Company will pay or reimburse the Executive for that portion of the cost of
continuation coverage that is greater than the portion for which the Executive
would have been responsible had the Executive’s termination of employment not
occurred.

 

(d)                                       Bonus.  The Company shall pay the Executive a bonus
of $20,000, subject to applicable withholding for income and employment related
taxes, with the first regular payroll following expiration of all rescission
periods set forth in the Release (as defined below) in lieu of any other bonus
to which the Executive may have been entitled for 2008 or 2009 under any
executive incentive bonus plan or the Employment Agreement.

 

(e)                                       Return
of Company Property.  The Executive
shall promptly return all of the Company’s property and information to the
Company, including but not limited to any
laptop, cell phone, keys, access cards, phone cards and credit cards, and will
promptly delete from any electronic media in his possession, custody, or
control (such as personal computers, cell phones, hand-held devices, back-up
devices, zip drives, PDAs, etc.) or to which he has or has had access (such as
remote e-mail exchange servers, back-up servers, off-site storage, etc.), all
documents or electronically stored images of the Company, including writings,
drawings, graphs, charts, sound recordings, images, and other data or data
compilations stored in any medium from which such information can be
obtained;.  The parties acknowledge and
agree that the Executive is in possession of certain physical archives and
assets and that “prompt” return of such items shall mean return within a
reasonable period of time, and that the Company will provide reasonable

 

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assistance and cooperation in connection with the return of such
items.  The Executive will certify in
writing, to the Company’s President that he has to his knowledge and belief
returned or made available to the Company for the Company to reclaim all
property and information covered by this subsection (e).  For the avoidance of doubt, the Executive
shall be entitled to electronic copies of his personal files on the Company
laptop in his possession, and the parties will cooperate with one another in
identifying such personal files and providing electronic copies of such
personal files to the Executive.

 

(f)                                         Termination
of VRP Agreement.  VRP and the
Executive acknowledge and agree that the Amended and Restated Independent
Physician Agreement, dated September 13, 2007 (the “VRP Agreement”),
will terminate as of the Resignation Date in accordance with Section 6.2(d) thereof,
and that neither VRP nor the Executive shall have any rights or obligations
thereunder.  VRP and the Executive shall
not have any obligation to negotiate any new agreement as contemplated by the
last sentence of Section 6.2(d) of the VRP Agreement.

 

(g)                                      Release.  Simultaneously with the execution of this
Agreement, the Executive will execute a release in the form attached to this
Agreement as Exhibit A (the “Release”).  This Agreement will not be interpreted or
construed to limit the Release in any manner and the existence of any dispute
respecting the interpretation or alleged breach of this Agreement will not
nullify or otherwise affect the validity or enforceability of this Release.

 

2.                                      Board
of Directors and Chair.

 

(a)                                       Continued
Service.  The Executive shall
continue to serve on the Company’s Board of Directors (the “Board”) in
accordance with the certificate of incorporation and by-laws of the
Company.  Subject to termination as
provided in Section 2(c), below, the Executive shall serve as
non-executive Chairman of the Board for an initial term of one (1) year
after the Resignation Date (the “Initial Term”), which term may be
renewed for successive terms of one (1) year upon the mutual agreement of
the Company and the Executive.

 

(b)                                       Responsibilities.  In his capacity as Chairman of the Board, the
Executive shall report to the Board and perform such duties customary for a
non-executive chairman as the Board may reasonably request from time to time,
including: (i) setting Board meeting agendas in collaboration with the
Chief Executive Officer; (ii) presiding at Board meetings, executive
sessions and the annual stockholder meeting; (iii) assigning tasks to the
appropriate committees; (iv) ensuring that information flows openly
between the management and the Board; (v) organizing the Chief Executive
Officer evaluation and provide continuous ongoing feedback; (vi) leading
the Board in anticipating and responding to crises; and (vii) assisting
with the transition and mentoring the new Chief Executive Officer.

 

(c)                                       Termination.  The Company and the Executive agree that
nothing stated in this Agreement shall require (i) the Executive to
continue to serve as Chairman or as a member of the Board, or (ii) the
Board to continue to retain the Executive as its

 

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Chairman.  The Board shall have
the right to terminate the Executive as Chairman of the Board, with or without
Cause, upon written notice to the Executive, and the Executive’s service as
Chairman will automatically terminate upon his death, resignation, removal or
expiration of his term as a director without being re-elected by the
stockholders.  For purposes of this
Agreement, Cause shall mean:

 

(1)                                  Executive shall have been indicted for a felony;

 

(2)                                  Executive shall have been convicted of (or plead “guilty”
or “nolo contendere” to or been found guilty and not convicted of) any
misdemeanor or summary offense involving fraud, theft, misrepresentation or
moral turpitude or any other misdemeanor or summary offense that will, in the
opinion of the Board, determined in good faith, adversely affect in any
material respect the Company’s prospects or reputation or Executive’s ability
to perform his obligations or duties to the Company or any of its subsidiaries
under this Agreement; or

 

(3)                                  The termination is evidenced by a resolution
adopted in good faith by the Board concluding that Executive:

 

(A)                               intentionally and continually failed substantially
to perform his reasonably assigned duties as Chairman with the Company pursuant
to this Agreement (other than a failure resulting from Executive’s incapacity
due to physical or mental illness), which failure has continued for a period of
at least 30 days after a written notice of demand for substantial performance,
signed by a duly authorized member of the Board, has been delivered to
Executive;

 

(B)                                 intentionally engaged in conduct which is
demonstrably and materially injurious to the Company; provided, however, that
no termination of Executive as Chairman of the Board shall be for Cause as set
forth in this subsection (B) until (1) there shall have been
delivered to Executive a copy of a written notice, signed by a duly authorized
member of the Board, stating that the Board has determined that Executive has
engaged in the conduct set forth in this subsection (B), and (2) Executive
shall have been provided an opportunity to be heard by the Board;

 

(C)                                 willfully or repeatedly engaged in misconduct or
gross negligence in the performance of his duties to as Chairman under this
Agreement that has a material detrimental effect on the Company; or

 

(D)                                committed an act of fraud, theft or dishonesty
against the Company or any of its subsidiaries or any act or omission intended
to result in the personal enrichment of Executive or his spouse, parents,
siblings, or descendants (whether by blood or adoption and including
stepchildren) or the spouses of such individuals in violation of law or of his
duty of loyalty to the Company or its subsidiaries at the expense, directly or
indirectly, of the Company or any of its subsidiaries.

 

5

 

Notwithstanding anything in the foregoing to the
contrary, if Executive has been terminated ostensibly for Cause because he has
been indicted for a felony, and he is not convicted of, or does not plead
guilty or nolo contendere to, such felony or a lesser offense (based on the
same operative facts), such termination shall be deemed to be a termination
without Cause as of the date of the termination; provided, however, that, any
payments due hereunder shall be only paid after a final determination in such
proceeding is reached.

 

3.                                      Transition
Matters.

 

(a)                                       Transition
of Affiliated Medical Practices. 
Subject to the transition of such roles as contemplated below, the
Executive agrees to remain in his current positions as a shareholder, member,
president, director and managing member, as applicable, of Virtual Radiologic
Professionals of California, P.A., Virtual Radiologic Professionals of
Illinois, S.C., Virtual Radiologic Professionals of Michigan, P.C., Virtual
Radiologic Professionals of Minnesota, P.A., Virtual Radiologic Professionals
of New York, P.A. and Virtual Radiologic Professionals of Texas, P.A.
(collectively, the “Professional Corporations”), shall devote his
reasonable efforts to the performance of services to VRP and the Professional
Corporations in the manner he provided prior to the date hereof (excluding,
however providing any professional interpretation and consultation services,
including preliminary and/or official interpretations), shall perform such
services in good faith and not take any action that would reasonably be
expected to disrupt the Company’s business or cause VRP or the Professional
Corporations to breach their obligations to the Company, to patients or to
other parties to whom VRP or the Professional Corporations have contractual or
professional obligations, subject to the provisions in the last sentence in
this paragraph.  At the Company’s request
and expense, the Executive shall take all action necessary to (a) transfer
to the Company or the Company’s designee all of the Executive’s equity
interests in VRP and the Professional Corporations (including, in connection
therewith, to elect corporate taxation of any such entity); (b) resign
from any positions that the Executive holds in VRP and the Professional
Corporations; and (c) in either such case, execute all documentation
requested by the Company in connection therewith.  To
the extent that Dr. Eduard Michel as the Company’s designee is qualified
to be the holder of the equity interests in VRP or any Professional
Corporation, such equity interests will be transferred to Dr. Michel
within thirty days of the date hereof, and the remaining transfers to the
Company or the Company’s designee shall be completed no later than June 30,
2009.  In the case of VRP, the consideration for the equity interests will
be the amount provided in Section 12.17 of that certain Professional and
Management Services Agreement and License between the Company and VRP, dated January 1,
2006, and in the case of the Professional Corporations, the consideration for
such equity interests will be equal to the initial subscription price paid by
Executive.  In addition, Dr. Michel will replace the Executive as (i) president
and managing member of VRP, and (ii) sole director, President and CEO, CFO
and Medical Director of the Professional Corporations at the time the related
equity interests are transferred, to the extent permitted by applicable law or
regulation, but in no event later than June 30, 2009.  In the event the transfers of the equity
interests in VRP and the Professional Corporations and the removal of
Executive of the positions that he holds with VRP and the Professional
Corporations have not been completed by June 30, 2009 (other than a
failure

 

6

 

as a result of a breach by Executive of his obligations under this Section 3(a)),
then the amounts payable under Section 4(f) shall be commenced early
for each month or partial month after June 30, 2009 that such transfers
and removals have not been completed, but shall again be suspended until
triggered under Section 4(f), once such transfers and removals have been
completed.  Until the foregoing transfers
have been completed, the Executive shall have rights to information and to
reasonably direct compliance with applicable laws and professional requirements
by the VRP or any Professional Corporation in which he continues to hold an
equity interest or officer position.

 

(b)                                       Support.  As part of the transition, the Company will
perform all administrative tasks and pay all costs relating to the medical
licenses that the Executive has maintained in connection with VRP and
Professional Corporations and the termination of such licenses at their stated
expiration date, including handling all reporting requirements and paying any
fines or penalties for not complying with the reporting requirements.  Within thirty (30) days after such licensing
and terminations are completed, the Company shall proved Executive with a
complete list and description of the licensing and credential history of
Executive based on the records maintained by the Company.

 

(c)                                       Medical Malpractice Insurance.  During the term of this Agreement and for a
period of at least seven (7) years after the termination hereof, the
Company agrees to maintain or purchase medical malpractice coverage (with the same or similar coverage terms and
limits to the existing coverage terms and limits) insuring against malpractice claims made against the Executive relating to
professional medical services performed by the Executive prior to the Resignation Date and in the scope of the Executive’s employment
with the Company and VRP.  Executive
shall be named as an insured or additional insured under such coverage and such
coverage shall not be modified, cancelled or terminated without 30 days prior
written notice from the insurer to Executive. 
Upon request of Executive, the Company shall provide Executive with a
certificate of insurance evidencing its compliance with the requirements of
this Section 3(c).

 

(d)                                       Cooperation.  The Executive agrees to cooperate with the
Company in its transition efforts as follows: (1) to be available, on a
reasonable basis, to answer questions that may arise relating to the Executive’s
employment with or duties to the Company; and (2) to be available upon
reasonable notice from the Company, with or without a subpoena, to be
interviewed, review documents or things, give depositions, testify, or engage
in other reasonable activities, with respect to matters and/or disputes
concerning which the Executive has or may have knowledge as a result of or in
connection with his employment by the Company. 
In performing his obligations to testify or otherwise provide
information, the Executive will honestly, truthfully, forthrightly, and
completely provide the information requested. 
The Company will use reasonable efforts to have its officers or
employees provide the information and cooperation contemplated by this Section 3(d) before
making a request of the Executive under this Section 3(d).

 

7

 

(e)                                       Performance.  The Executive shall perform his obligations
under this Section 3 promptly upon the Company’s request and at no charge
to the Company; provided that the Company shall pay any travel and other out of
pocket costs incurred by the Executive in providing the cooperation requested
by the Company under Section 3(d) above.

 

4.                                      Compensation.

 

(a)                                       Cash
Compensation.  Solely during the term
of his service, and subject to the Executive’s compliance with his obligations
under this Agreement (including his execution and delivery of the Release,
without rescission thereof), the Company shall pay the Executive $210,000 per
year, payable in arrears in monthly installments of $17,500 on or before the
last day of each month, for serving as non-Executive Chairman of the
Board.  The Executive will not be paid
any additional cash compensation that may be paid to other non-employee
directors.

 

(b)                                       Future
Option Grants.  During the term of
his service as a director, the Executive will be entitled to grants of stock
options made to other continuing non-employee directors in amounts and on the
same terms and conditions as grants to such other non-employee directors.

 

(c)                                       Existing
Stock Options.  The Company and the
Executive acknowledge and agree that, as of the Resignation Date, the Executive
holds options to purchase an aggregate of 100,000 shares of Common Stock of the
Company (the “Existing Options”). 
The Existing Options are hereby amended to provide that:

 

(1)                                  notwithstanding
the Executive’s termination of employment, the continued vesting and
exercisability of such options shall be determined by reference to the
Executive’s continued service as a director of the Company; and

 

(2)                                  such
options shall vest in full and remain exercisable for the balance of their stated
term, without earlier expiration, in the event that (i) the Company fails
to nominate the Executive for election as a director, or (ii) the Company
terminates the Executive as Chairman of the Board without Cause.

 

The Executive
acknowledges that to the extent that the Existing Options are not exercised
within ninety days after the Resignation Date, such options will no longer
qualify as “incentive stock options” under Section 422 of the Internal
Revenue Code.

 

(d)                                       Expenses.  The Company shall reimburse the Executive for
all reasonable and necessary out-of-pocket business, travel and entertainment
expenses incurred by the Executive in the performance of his duties as Chairman
of the Board, subject to advance the Company’s normal policies and procedures for
expense verification and documentation applicable to non-employee directors.

 

(e)                                       Laptop
and E-mail.  As long as the Executive
is serving as Chairman of the Board, the Executive will be provided with a
laptop computer and his current e-mail account for purposes of performing
services pursuant to this Agreement.

 

8

 

(f)                                         Severance.  If the Executive’s service as Chairman of
the Board is terminated due to (i) the Company’s failure to nominate the
Chairman for re-election to the Board; (ii) removal of Chairman title by
board without Cause; or (iii) the parties failure to agree to renew the
term under Section 2(a) as of the end of the Initial Term or any
renewal term, the Executive (or his estate in the event of his death after such
termination) will be entitled to a severance payment of $420,000, payable in
monthly installments over a period of twelve months thereafter; provided,
however, that the aggregate amount payable hereunder and the number of months of
payment shall be reduced to the extent of early payments, if any, under Section 3(a).

 

(g)                                      Additional
Benefits.  The Company will pay or
reimburse the Executive for his reasonable legal and other out-of-pocket costs
and expenses related to the transition of VRP and the Professional Corporations
contemplated by Section 3. In addition, the Company will pay or reimburse
the Executive for his reasonable legal expenses related to the negotiation of
this Agreement, up to a maximum of $15,000. 
The Company will assign to the Executive the two term life insurance
policies that the Company currently owns on the life of the Executive, at no
cost to the Executive.

 

(h)                                      Status;
Authority. The parties acknowledge and agree that during the term of his
service as Chairman, the Executive shall not be an employee of the Company and
that the Executive’s status hereunder is that of an independent contractor
providing services to the Company.  The
Executive neither expects nor desires that the Company: (i) withhold from
any fees due and payable to him any taxes (state, federal, income, social
security or otherwise); (ii) pay with respect to the Executive any fees or
taxes for workers’ compensation or unemployment compensation; or (iii) provide
the Executive with any other benefits customarily provided to employees.  The Executive acknowledges and agrees that it
is his responsibility to make all estimated and other necessary federal and
state tax payments arising from compensation received by the Executive pursuant
to this Section 4.

 

5.                                      Indemnification
and Tax Matters.

 

(a)                                       Indemnification.  Subject to the Executive’s continued
performance of all of his obligations under Section 3 of this Agreement,
the Company will indemnify, defend, and hold the Executive harmless from and
against all claims, judgments, expenses, and liabilities of any kind (including
reasonable attorneys’ fees) arising out of or relating to the following:

 

(1)                                  Any
valid actions or inactions performed in good faith as an equity owner, officer,
director, or managing member, as applicable, of VRP or the Professional
Corporations until the transfer of the Executive’s equity interests in such
entities in accordance with Section 3; and

 

(2)                                  Any
tax liability (including, without limitation, income and capital gains taxes)
and penalties and interest with respect thereto, resulting from (i) the
transfer of the Executive’s equity interests in VRP or the Professional
Corporations to the Company or a designee of the Company, (ii) the
conversion of

 

9

 

VRP or the
Professional Corporations from a pass-through tax entity to a corporate entity,
(iii) the liquidation or dissolution of VRP or the Professional
Corporations, or (iv) any audits or adjustments to the tax returns
previously filed by or with respect to VRP or the Professional Corporations.

 

(b)                                       Tax
Gross-Up.  To the extent the
Executive incurs a tax liability (including federal, state and local taxes) in
connection with the Company’s payment of an indemnification obligation pursuant
to this Section 5 that the Executive would not have incurred had the
Company not paid such indemnification obligation, the Company will make an
additional payment to the Executive in an amount equal to such tax liability,
less any tax benefit realized by the Executive (including with respect to
federal, state or local taxes) as a result of the payment of such
indemnification obligation (the “Tax Benefit”), plus an additional
amount sufficient to permit Executive to retain a net amount after all taxes
equal to the amount of the indemnification claim less the Tax Benefit.

 

(c)                                       Tax
Returns.  The Company will pay or
reimburse the Executive for his reasonable accounting and other out of pocket
costs and expenses related to the preparing the Executive’s personal federal
and state income tax returns for calendar years 2008 and 2009 and any audit of
the Executive’s tax returns relating to the Executive’s ownership of VRP or the
Professional Corporations.

 

6.                                      Executive’s
Representations and Warranties. 
The Executive represents and warrants to the Company and VRP as follows:

 

(a)                                       Good
Faith.  At all times that he was an
employee, officer, or director of the Company prior to the date of this
Agreement, the Executive acted in good faith, had no reasonable cause to
believe that his conduct was unlawful, and reasonably believed that his conduct
was in or not opposed to the best interests of the Company.

 

(b)                                       Capacity;
Enforceability.  The Executive has
the legal capacity to execute and deliver this Agreement and the Release and to
perform his obligations hereunder and thereunder.  This Agreement and the Release are the legal,
valid and binding obligations of the Executive, enforceable in accordance with
their respective terms.

 

(c)                                       Company
Statements.  The Executive has not
relied upon any statements or representations made by the Company or its
attorneys, written or oral, including but not limited to statements regarding
tax or legal matters, pertaining to actions contemplated by this Agreement,
other than the statements set forth in this Agreement and the Release.

 

7.                                      Company’s
Representations and Warranties. 
The Company and VRP represent and warrant to the Executive as follows:

 

(a)                                       Capacity;
Enforceability.  The execution and
delivery of this Agreement on behalf of the Company and VRP have been duly
authorized by all necessary corporate action of the Company and VRP, as
appropriate.  This Agreement and is the
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms.

 

10

 

(b)                                       Executive’s
Statements.  The Company and VRP have
not relied upon any statements or representations made by the Executive or his
attorneys, written or oral, pertaining to actions contemplated by this
Agreement, other than the statements set forth in this Agreement and the
Release.

 

8.                                      Full
Compensation.  The Executive
acknowledges and understands that the payments made and other consideration
provided by the Company under this Agreement will fully compensate the Executive
for and extinguish any and all of the potential claims the Executive is
releasing in the Release, including without limitation, any claims for
attorneys’ fees and costs and any and all claims for any type of legal or
equitable relief.  The Executive agrees
that such payments are in lieu of any severance payments, benefits or any other
forms of compensation to which he may be entitled under any other agreements,
plans, policies or arrangements of the Company, VRP, the Professional
Corporations, or their affiliates, including but not limited to the Employment
Agreement and the VRP Agreement.

 

9.                                      Legal
Representation.  The Executive
acknowledges that he has consulted with his own attorney before executing this
Agreement and the Release, that he has had a full opportunity to consider this
Agreement and the Release, and that he has had a full opportunity to ask any
questions that he may have concerning this Agreement and the Release, and the
settlement of his potential claims against the Company.

 

10.                               Taxes.  The Company will deduct from any payments
made to the Executive under this Agreement any withholding or other taxes that
the Company is required to deduct, if any, under applicable law.  Except to the extent taxes are withheld by
the Company and except for the express provisions hereof regarding tax payments
and indemnification, the Executive shall be solely responsible for the payment
of all taxes due and owing with respect to fess, benefits and other
compensation provided to him hereunder.

 

11.                               Assignment.  The rights and obligations of the Company
under this Agreement will inure to the benefit of and be binding upon the
successors and assigns of the Company. 
The Executive may not assign this Agreement or any rights hereunder,
except his rights hereunder shall inure to the benefit of this estate in the
event of his death.  Any purported or
attempted assignment or transfer by the Executive of this Agreement or any of
the Executive’s duties, responsibilities, or obligations hereunder will be
void.

 

12.                               Miscellaneous.

 

(a)                                       Notices.  Notices required to be given under this
Agreement must be in writing and will be deemed to have been given when
personally served, sent by courier or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, to the last known
residence address of the Executive or, in the case of the Company or VRP, to
their principal offices, as appropriate, to the attention of the Chief
Executive Officer of the Company, or to such other address as any party may
have furnished to the other in writing in accordance herewith, except that
notice of change of address will be effective only upon receipt by the other
party.

 

11

 

(b)                                       Governing
Law.  The validity, interpretation,
performance, and enforcement of this Agreement will be governed by the laws of
the State of Minnesota without regard to conflicts-of-laws provisions that
would require application of any other law.

 

(c)                                       Jurisdiction
and Venue.  The Executive, the
Company and VRP consent to jurisdiction of the Hennepin County, Minnesota
district court and/or United States District Court for the District of
Minnesota, for the purpose of resolving all claims for enforcement or breach of
this Agreement.  Any such actions must be
brought in such courts.  Each party
consents to personal jurisdiction over such party in the state and/or federal
courts of Minnesota and hereby waives any defense of lack of personal
jurisdiction or forum non conveniens.

 

(d)                                       Severability.  In the event any provision of this Agreement
is held illegal or invalid for any reason, such illegality or invalidity will
not in any way affect the legality or validity of any other provision hereof
and such illegal or invalid provision will be deemed severed from this
Agreement.

 

(e)                                       Entire
Agreement.  Except for any and all
agreements or understandings related to the Existing Options (which have not
been affected or altered by this Agreement except as provided in Section 4(c)),
this Agreement, the Release, and the surviving provisions of the Employment
Agreement and the VRP Agreement set forth the entire understanding between the
Company and the Executive.  This
Agreement may not be altered or amended, except by a writing executed by the
party against whom such alteration or amendment is to be enforced.

 

(f)                                         Counterparts.  This Agreement may be simultaneously executed
in any number of counterparts, and such counterparts executed and delivered,
each as an original, will constitute but one and the same instrument.

 

(g)                                      Captions
and Headings.  The captions and
section headings used in this Agreement are for convenience of reference only,
and will not affect the construction or interpretation of this Agreement or any
of the provisions hereof.

 

(h)                                      Waivers.  No failure on the part of any party to
exercise, and no delay in exercising, any right or remedy hereunder will
operate as a waiver thereof; nor will any single or partial exercise of any
right or remedy hereunder preclude any other or further exercise thereof, or
the exercise of any other right or remedy granted hereby or by any related
document or by law.  No single or partial
waiver of rights or remedies hereunder, nor any course of conduct of the
parties, will be construed as a waiver of rights or remedies by any party
(other than as expressly and specifically waived).

 

(i)                                         Reliance
by Third Parties.  This Agreement is
intended for the exclusive benefit of the parties hereto and their respective
heirs, executors, administrators, personal representatives, successors, and
permitted assigns, and no other person or entity has any right to rely on this
Agreement or to claim or derive any benefit therefrom, absent the express
written consent of the party to be charged with such reliance or benefit.

 

12

 

(j)                                         Arbitration.  Any dispute or controversy arising under or
in connection with this Agreement shall be submitted to arbitration in
accordance with the rules of the American Arbitration Association then in
effect in Minneapolis, Minnesota before a single arbitrator who shall be
knowledgeable in executive employment law, who shall be independent of, and
have no ex parte communications with, the parties or their representatives, and
who shall render written findings of fact, conclusions of law and order.  In addition to any other inherent powers,
arbitrators shall have the express powers to order a party to comply with or
desist from breaching any of the terms of this Agreement.  The determination of the arbitrators shall be
final and binding upon the parties and may be entered a s a final judgment in
any court of competent jurisdiction.  The
parties shall equally share the costs of arbitration, unless otherwise ordered
by the arbitrators.  Nothing herein,
however, shall deprive a party of the right to seek equitable relief from the
courts to restrain or enjoin the other from a breach of this Agreement pending
the empanelling of the arbitrators or their final determination.

 

The parties have signed
this Agreement as of the date first set forth above.

 

 

	
  VIRTUAL
  RADIOLOGIC CORPORATION

  	
   

  	
  SEAN O.
  CASEY, M.D.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Robert C.
  Kill

  	
   

  	
  /s/ Sean O.
  Casey, M.D.

  
	
  Name:

  	
   Robert C. Kill

  	
   

  	
   

  
	
  Title:

  	
  President and
  Chief Operating Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  For purposes of
  Section 1(f) only:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VIRTUAL
  RADIOLOGIC PROFESSIONALS, LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Eduard
  Michel, M.D.

  	
   

  	
   

  
	
  Name:

  	
   Eduard Michel, M.D.

  	
   

  	
   

  
	
  Title:

  	
  Medical Director

  	
   

  	
   

  

 

13Exhibit
10.2

 

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Amendment is made and entered into
effective as of January 26, 2009 (the “Effective Date”), between
Virtual Radiologic Corporation, a Delaware corporation (the “Company”),
and Robert Kill (the “Executive”).

 

Recitals

 

WHEREAS, the Company and the Executive are
parties to an Employment Agreement, dated as of May 29, 2007, as amended
on December 30, 2008 (the “Employment Agreement”) relating to the
Executive’s employment as the Company’s President and Chief Operating Officer;

 

WHEREAS, the Board of Directors of the
Company has appointed the Executive to the position of President and Chief
Executive Officer, effective as of the Effective Date; and

 

WHEREAS, the parties hereto desire to amend
the Employment Agreement to reflect such appointment, as set forth herein.

 

Amendment

 

NOW, THEREFORE, in consideration of the
mutual covenants and agreements herein contained, the parties hereto hereby
agree as follows:

 

1.                                      Title and
Reporting Relationship.  All
references in the Employment Agreement to the Executive’s official capacity as
President and Chief Operating Officer are hereby amended to refer to the
Executive’s capacity as President and Chief Executive Officer, and all
references to the Company’s Chief Executive Officer with respect to the
Executive’s reporting relationship shall be amended to refer to the Company’s
Board of Directors.

 

2.                                      Base Salary.   Section 3 of the Employment Agreement is
hereby amended in its entirety to read as follows:

 

The Company agrees to pay Executive a base salary (the “Base Salary”)
at an annual rate of Four Hundred Twenty Thousand Dollars ($420,000), payable
in accordance with the regular payroll practices of the Company, but not less
frequently than monthly.  Executive’s Base
Salary shall be fixed for the Original Employment Term, and thereafter in any
Additional Term shall be determined by the Board (or a committee thereof) and
may be increased, but not decreased, from time to time by the Board.  The base salary as determined herein from
time to time shall constitute “Base Salary” for purposes of this Agreement.

 

3.                                      Incentive Bonus.  Section 4
of the Employment Agreement is hereby amended in its entirety to read as
follows:

 

During the Employment Term, Executive shall be eligible
to participate in the Company’s bonus and other incentive compensation plans
and programs for the Company’s senior executives at a level commensurate with
his position.  Executive shall 

 

 

have the opportunity to earn an annual target bonus (the “Annual Bonus”)
to be determined by and measured against objective financial criteria to be
determined by the Board (or a committee thereof) of up to 60% of Base Salary or
such greater percentage as may be provided in an annual bonus plan approved by
the Board (or a committee thereof), upon the Company’s achievement of financial
and operating metrics to be annually determined by the Board (or a committee
thereof).   Such annual incentive bonuses
are payable to the Executive no later than 60 days following the close of the
fiscal year.

 

4.                                       No Other Amendment.  Except as set forth herein, the Employment
Agreement shall remain in full force and effect in accordance with its terms.

 

5.                                       Definitions.  All capitalized terms that are not defined
herein shall be as defined in the Employment Agreement.

 

6.                                       Counterparts.  This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement. Facsimile execution
and delivery of this Agreement shall be legal, valid and binding execution and
delivery for all purposes.

 

IN WITNESS WHEREOF, the parties hereto have
executed this Second Amendment effective as of the date first above written.

 

 

	
   

  	
   

  	
  VIRTUAL RADIOLOGIC CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Michael J. Kolar

  
	
   

  	
   

  	
  Name:

  	
  Michael J. Kolar

  
	
   

  	
   

  	
  Title:

  	
  Vice President, General Counsel and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Robert C. Kill

  
	
   

  	
   

  	
   

  	
      Robert C. Kill

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