Document:

Exhibit 10.21

 

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT, made and entered into as of the 10th day of December,
2008, by and between Vital Images, Inc. (“Company”) and Reza A. Ghanbari (“Executive”).

 

W I T N E S S E T H:

 

WHEREAS, Company desires to retain the services of Executive for and on
behalf of Company on the terms and subject to the conditions set forth herein.

 

WHEREAS, each of the parties acknowledge that they are receiving good
and valuable consideration for entering into this Employee Agreement and
Executive acknowledges that this Employment Agreement, including the
non-disclosure agreement set forth herein, was negotiated between the parties
hereto and that Executive received bargained for consideration in the form of
benefits resulting to Executive from the terms and conditions of such
employment, in exchange for entering into this Employment Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the sufficiency of which is hereby acknowledged, the parties hereto agree
as follows:

 

ARTICLE I.

 

EMPLOYMENT AND TERM

 

1.1           EMPLOYMENT.  Upon the terms subject to the conditions
herein contained, Company hereby employs Executive as Executive Vice President,
Strategy and Products, and Executive hereby accepts such employment, subject to
the supervision of the President and Chief Executive Officer of the
Company.  Executive shall devote his best
skill and efforts (reasonable sick leave and vacations excepted) to the
performance of his duties under this Agreement.

 

1.2           TERM.  This Agreement shall take effect upon the
date first above written, and shall remain in effect as “at-will” employment
until terminated in accordance with Article IV.  Upon termination of this Agreement, except as
otherwise provided herein, neither the Company nor Executive shall have any
further rights, duties, privileges, or obligations hereunder.

 

1.3           COMPLIANCE WITH COMMITMENTS AND OBLIGATIONS.    Executive represents and warrants as follows: (i) he is not a party to any other agreement or obligation for personal services; (ii) there exist no impediments or restraints, contractual or otherwise on Executive’s power, right or ability to enter into this Agreement and to perform his duties and obligations hereunder; and (iii) the performance of his obligations 
 

	RG
	  Executive

	MC
	  Company

 

 
under this Agreement do not and will not violate or conflict with any agreement relating to confidentiality, non-competition or exclusive employment to which Executive is or was subject.
 
1.4           INSIDER TRADING POLICY.  Executive will be required, as a condition of employment with the Company, to sign and comply in every respect with the Company’s Insider Trading Policy, a copy of which is enclosed.

 

ARTICLE II.

 

COMPENSATION

 

2.1           BASE
SALARY.  In exchange for
the provision of services, Company agrees that it will pay Executive commencing
December 10, 2008, at the rate of $250,000 per year, payable in accordance with
standard pay practices of Company, less any applicable withholdings or
deductions.

 

2.2           BENEFITS.  In addition to the compensation set forth
under Section 2.1, Executive shall be entitled to participate in any of
Company’s standard benefit policies or plans, including its Employee Stock
Purchase plan, according to their terms. 
Subject to the provisions of Section 4.1(d) of this Agreement,
these policies may be modified or terminated from time to time by Company, but
not retroactively.  The written terms of
the policies shall govern any questions of eligibility, coverage, or duration
of coverage.

 

2.3           INCENTIVE
COMPENSATION.  As an
incentive to performance, Executive shall be eligible to receive initiative
compensation and/or benefits as follows:

 

a.             Executive shall be
eligible to participate in Company’s Management Incentive Plan (the “Plan”) as
it is established annually by the Board of Directors.  Pursuant to the Plan, Executive’s incentive
target for calendar year 2008 shall be thirty-five percent (35%) of Executive’s
base salary for calendar year 2008. 
Executive’s incentive compensation for calendar year 2008 under the
Plan, if any, will be determined as soon as practical after December 31,
2008, and will be paid to Executive in a lump sum, less any withholdings or
deductions, on or before March 31, 2009.

 

b.             The Company’s Board
of Directors has approved that Executive shall be entitled to receive (i) a
stock option grant exercisable for 150,000 shares, which shall vest as to 28%
on December 10th, 2009,
and 2% will vest each month thereafter; and (ii) 15,000 shares of
restricted stock, which shall vest as to 25% on the one-year anniversary of
grant date of December 10th,
2008, and as to additional increments of 25% on each anniversary thereafter, which
shall be more fully set forth in a Restricted Stock Agreement that you will be
provided separately.

 

2.4           VACATION.  Executive shall initially receive twenty (20)
days of vacation per year.

 

2.5           BUSINESS
EXPENSES.  The Company
will reimburse Executive for all reasonable, ordinary, and necessary expenses
incurred by him in the performance of his duties 

 

	RG
	  Executive

	MC
	  Company

 

2

 

hereunder, provided that Executive accounts
to Company for such expenses in a manner normally prescribed by Company for
reimbursement of expenses.  Such
reimbursement requests must be accompanied by the appropriate documentation and
shall be subject to review by Company’s President and Chief Executive Officer.

 

ARTICLE III.

 

DUTIES OF EXECUTIVE

 

3.1           SERVICES.  Executive shall perform all duties and
obligations charged to Executive by the Board of Directors of Company, as the
same may be determined from time to time. 
The Board shall assure adequate time, resources, and authority for
Executive to reach goals mutually agreed upon by Company and Executive.

 

3.2           TIME AND
EFFORT.  Executive shall
devote his full time and effort to the business of Company.  Executive shall perform the duties and
obligations required of Executive hereunder in a competent, efficient, and
satisfactory manner at such hours and work conditions as the performance of these
duties may require.

 

3.3           ARTICLES
AND BY-LAWS.  Executive
shall act in accordance with so as to abide by the Articles of Incorporation of
Company, the Bylaws of Company and all decisions of the Board of Directors of
Company.

 

3.4           CONFIDENTIALITY
AND LOYALTY.  Executive
acknowledges that during the course of his employment he has produced and may
produce and have access to material, records, data, and information not
generally available to the public (“Confidential Information”) regarding
Company, its customers and affiliates. 
Accordingly, during and subsequent to the termination of this Agreement,
Executive shall hold in confidence and not directly or indirectly disclose,
use, copy, or make lists of any such confidential information, except to the
extent authorized in writing by Company, or as required by law or any competent
administrative agency or as otherwise is reasonable necessary or appropriate in
connection with the performance by Executive of his duties pursuant to this
Agreement.  Upon termination of his
employment under this Agreement, Executive shall promptly deliver to Company (i) all
records, manuals, books, documents, letters, reports, data, calculations, and
all copies of any of the foregoing which are the property of Company and (ii) all
other property of Company and Confidential Information which in any of these
cases are in his possession or under his control.  Executive agrees to abide by Company’s
reasonable policies as in effect from time to time, respecting avoidance of
interests conflicting with those of Company.

 

3.5           WORKS
MADE FOR HIRE.  Executive
acknowledges and agrees that any and all works of authorship by Executive made
pursuant to this Agreement or any prior agreements are within the scope of
services to be provided to Company and shall constitute “works made for hire”
as defined by the Copyright Act of 1976, Title 17 of the United States Code, as
now enacted or hereinafter amended.  To the extent Employee retains any rights of any
nature in any Work Product, Employee hereby assigns to Company all of Employee’s
right, title, and interest (including but not limited to all 

 

	RG
	  Executive

	MC
	  Company

 

3

 

patent, copyright, trade secret,
and moral rights) in and to all Work Products prepared by Employee, whether
patentable or not, made or conceived in whole or in part by Employee within the
scope of Employee’s employment by Company, or that involve the use of
Confidential Information.  Accordingly,
Executive acknowledges and agrees that Company shall be the sole and exclusive
owner of any and all copyright(s) with respect to such works of authorship
and that Executive shall not be entitled to any additional compensation over
and above the compensation set forth herein or otherwise already received by
Executive unless otherwise agreed in writing by Company.  If any work of authorship created hereunder
or prior to hereto is not deemed to be a “work made for hire,” Executive hereby
assigns all right, title, and interest therein to Company.  Executive is
hereby notified that this assignment of Work Product does not include any
invention where (i) Executive did not use the equipment, supplies,
facility or trade secret information of Company; (ii) Executive developed
the invention on his own time; (iii) the invention does not directly
relate to the business of Company or Company’s actual or anticipated research
or development; and (iv) the invention did not result from any work
performed for Company.

 

3.6           COMPANY
TO HOLD PROPRIETARY RIGHTS.  Furthermore,
and without limiting the foregoing, Executive acknowledges and agrees that all
proprietary rights, including, without limitation, all patent, trademark, trade
secret, copyright, and other rights, which may exist in connection with any and
all inventions, ideas, and works created or conceived by Executive for Company,
either before or after the date hereof, shall be the sole and exclusive
property of Company and Executive shall have no further rights therein and, to
the extent necessary, assigns all such rights to Company.  All patent, copyright, and other rights in
such inventions, ideas, and works shall be the property of Company, who shall
have the sole right to seek patent, copy, registered design or other protection
in connection therewith.  Executive shall
at Company’s reasonable expense do all things and execute all such documents as
Company may reasonably require to vest in Company the rights and protection
herein described.

 

3.7           RESTRICTION ON COMPETITION.  Executive agrees that for a period of
eighteen (18) months from the date of Executive’s termination of employment
with the Company, irrespective of the reasons for termination, Executive shall
not, directly or indirectly, and regardless of whether Executive is
acting as owner, partner, stockholder, employee, broker, agent, principal,
trustee, corporate officer, director, consultant or in any other capacity, do any of the following:

 

(1) Own, manage, operate, join, control, consult
with, participate in the ownership, operation or control of, be employed by, or
be connected in any manner with any person or entity which manufactures, sells,
solicits, offers, offers to provide, or provides any Competitive Products and
Services, unless such employment is by a large diversified entity and on a
basis such that Executive will have no involvement whatsoever with the
provision of Competitive Products and Services during the Restricted
Period.  For purposes of this Agreement,
Competitive Products and Services shall include all products and services
similar to or the same as those offered by Company to its customers involving
advanced medical visualization and analysis software technologies beyond MIP
(Minimum Intensity Projection) and MPR (Multi Planar Reformation) that allow
for 

 

	RG
	  Executive

	MC
	  Company

 

4

 

analysis,
manipulation, and distribution of images, such as radiological studies, in 2D,
3D and 4D.  This restriction applies
worldwide, and Executive agrees and acknowledges a worldwide restriction is
reasonable in scope given the Company’s worldwide territory;

 

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

 

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

 

3.8           REMEDIES.  Executive agrees and understands that any
breach of any of the covenants or agreements set forth in this ARTICLE III of
this Agreement will cause Company irreparable harm for which there is no
adequate remedy at law, and, without limiting whatever other rights and
remedies Company may have under this paragraph, Executive consents to the
issuance of an injunction in favor of Company enjoining the breach of any of
the aforesaid covenants or agreements by any court of competent
jurisdiction.  If any or all of the
aforesaid covenants or agreements are held to be unenforceable because of the
scope or duration of such covenant or agreement or the area covered thereby,
the parties agree that the court making such determination shall have the power
to reduce or modify the scope, duration, and/or area of such covenant to the
extent that allows the maximum scope, duration, and/or area permitted by
applicable law.

 

ARTICLE IV.

 

TERMINATION

 

4.1           RESIGNATION
OF EXECUTIVE.  Executive
may resign his employment at any time for any reason upon fifteen (15) days advance
written notice to the President and Chief Executive Officer.  If Executive resigns his employment without
Good Reason (as that term is defined below), he shall not be entitled to
severance pay.  If Executive resigns his
employment for Good Reason, the Company shall pay Executive the severance pay
set forth in Section 4.2 below provided Executive agrees to release any
claims he may have against the Company in exchange for receipt of severance
pay.  For purposes of the Agreement, Good
Reason shall mean the occurrence of any of the following events, which the
Company has not cured within thirty (30) days of notice thereof:

 

a.             A material breach of
this Agreement by the Company;

 

	RG
	  Executive

	MC
	  Company

 

5

 

b.             A material adverse
change in Executive’s status or position as an executive officer of the Company
as a result of a material diminution in Executive’s duties, responsibilities,
or authority as of the date of this Agreement (except in connection with the
termination of Executive’s employment in accordance with Section 4.3
hereof);

 

c.             A reduction by the
Company of the Executive’s base salary as the same may be increased from time
to time;

 

d.             Without replacement
by a plan providing benefits to Executive equal to or greater than those
discontinued or by payment of cash in lieu of such benefits, the failure by the
Company to continue in effect, within its maximum stated term, any employee
benefit plan in which Executive is participating in prior to the date of this
Agreement or taking of any action by the Company that would adversely affect
Executive’s participation or materially reduce Executive’s benefits under all
such plans; provided, however, that Good Reason shall not include changes,
modifications, and terminations of the Company’s standard benefit policies and
plans which are generally applicable to the Company’s officers and employees;
or

 

e.             The Company’s
requiring Executive to be based anywhere other than that Minneapolis/St. Paul,
Minnesota metropolitan statistical area or the location Executive has chosen to
be based out of, except for required travel on the Company’s business.

 

4.2           TERMINATION
BY COMPANY.  Company shall
have the right to terminate Executive’s employment without notice and with or
without Cause, as that term is defined below. 
If Company terminates Executive’s employment without cause, Company
shall pay Executive nine (9) months of severance pay based on Executive’s
base salary at the time of termination and nine months of continuation of
benefits, provided Executive agrees to release any claims he may have against
the company, pursuant to Company’s standard release agreement for such
circumstances, in exchange for the receipt of severance pay.  Executive’s severance pay, if any, shall be
payable in one lump sum, less any applicable withholdings or deductions, within
ten (10) days after the expirations of any applicable rescission
periods.  If Company terminates Executive’s
employment with Cause, Executive shall not receive severance pay.

 

Notwithstanding anything in this Agreement to the contrary, if all or
any portion of the severance pay described in this Section 4.2 is subject
to the requirements of Code Section 409A and the Company determines that
Executive is a “specified employee” as defined in Code Section 409A as of
the date of Executive’s termination of employment, such payments shall not be
paid or commence earlier than the first day of the seventh month following the
date of Executive’s termination of employment.

 

4.3           TERMINATION
FOR CAUSE. 
Notwithstanding anything contained in this Agreement to the contrary,
Company shall have the right to terminate the employment of Executive for
Cause.  Cause means:

 

a.             Executive’s gross
misconduct;

 

	RG
	  Executive

	MC
	  Company

 

6

 

b.             Executive shall
inexcusably violate or willfully refuse to obey the lawful and reasonable
instructions of the President and Chief Executive Officer or the Board of
Directors of the Company; or

 

c.             Executive’s
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 Executive’s ability to perform substantially his 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 Executive in bad faith and
without reasonable belief that it was in, or not opposed to, the best interests
in 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 Executive in good faith and in the best interests of the
Company.  It is also expressly understood
that Executive’s attention to matters not directly related to 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 Executive’s engagement in such
activities either before or within a reasonable period of time after the Board
knew or could have reasonably known the Executive engaged in those
activities.  Notwithstanding the
foregoing, Executive may not be terminated for Cause unless and until there has
been delivered to him 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 Executive and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board
Executive was guilty of the conduct set forth above in clauses a., b., or c. of
this definition and specifying the particulars thereof in detail.

 

Where the employment of the Executive is terminated pursuant to this Article IV,
Section 4.3 of this Agreement, such termination shall be effective upon
the delivery of notice thereof to Executive.

 

4.4.          SURVIVING
RIGHTS.  Notwithstanding
the termination of Executive’s employment, the parties shall be required to
carry out any provisions hereof which contemplate performance subsequent to
such termination; and such termination shall not affect any liability or other
obligation which shall have accrued prior to such termination, including, but
not limited to, any liability for loss or damage on account of a prior default.

 

4.5.          COOPERATION
AND NON-DISPARAGEMENT.   
Executive agrees that, during the term of this Agreement and for three (3) years
following the termination of his employment, Executive will (i) assist and
cooperate with the Company regarding any claims or disputes involving matters
within the knowledge or responsibilities of Executive; and (ii) not in any
way or by any means disparage the Company, the members of the Company’s Board
of Directors or the Company’s officers and employees. During 

 

	RG
	  Executive

	MC
	  Company

 

7

 

the same period, Company agrees to not in any
way or by any means disparage the Executive.

 

4.6.          DISCLOSURE.    Executive agrees that, during the term of
this Agreement and for three (3) years following the termination of his
employment, Executive will inform any new employer or other person or entity
with whom he enters into a business relationship, before accepting employment
or entering into a business relationship, of the post-employment restrictions
and obligations contained in this Agreement, including but not limited to the
existence of Articles 3.4, 3.5, 3.7 and 4.5 above.

 

ARTICLE V.

 

GENERAL PROVISIONS

 

5.1           NOTICES.  All notices, requests, and other communications
shall be in writing and except as otherwise provided herein, shall be
considered to have been delivered if personally delivered or when deposited in
the United States mail, first class, or certified or registered, postage
prepaid, return receipt requested, addressed to the proper party at its address
set forth below, or to such other address as such party may hereafter designate
by written notice to the other party:

 

	
  a.

  	
  If to Company, to:

  	
  Vital Images, Inc.

  
	
   

  	
   

  	
  5850 Opus Parkway, Suite 300

  
	
   

  	
   

  	
  Minnetonka, MN 55343

  
	
   

  	
   

  	
  Attention: President and CEO

  
	
   

  	
   

  	
   

  
	
  b.

  	
  If to Executive, to:

  	
  Ray A. Ghanbari

  
	
   

  	
   

  	
  3144 Northview Road

  
	
   

  	
   

  	
  Wayzata, MN 55391

  

 

5.2           WAIVER,
MODIFICATION, or AMENDMENT. 
No waiver, modification, or amendment of any term, condition, or
provision of this Agreement shall be valid or of any effect unless made in
writing, signed by the party to be bound or its duly authorized representative
and specifying with particularity the nature and extent of such waiver,
modification, or amendment.  Any waiver
by any party of any default of the other shall not effect, or impair any right
arising from, any subsequent default. 
Nothing herein shall limit the rights and remedies of the parties hereto
under and pursuant to this Agreement, except as hereinbefore set forth.  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.

 

5.3           ENTIRE
AGREEMENT.  This Agreement
contains the entire understanding of the parties hereto in respect of
transactions contemplated hereby and supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

 

	RG
	  Executive

	MC
	  Company

 

8

 

5.4           INTERPRETATION
AND SEVERANCE.  The
provisions of this Agreement shall be applied and interpreted in a manner
consistent with each other so as to carry out the purposes and intent of the
parties hereto, but if for any reason any provision hereof is determined to be
unenforceable or invalid, such provision or such part thereof as may be
unenforceable or invalid shall be deemed severed from this Agreement and the
remaining provisions shall be carried out with the same force and effect as if
the severed provision or part thereof had not been a part of this Agreement.

 

5.5           GOVERNING
LAW.  This Agreement shall
be construed and enforced in accordance with the laws of the State of
Minnesota.

 

5.6           ASSIGNMENT.  Executive acknowledges that Executive’s
services are unique and personal. 
Accordingly, Executive may not assign Executive’s rights or delegate
Executive’s duties or obligations under this Agreement.  Company’s rights and obligations under this
Agreement shall inure to the benefit of and shall be binding on Company’s
successors and assigns.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written by signature below and initialization
of each page.

 

 

	
   

  	
  VITAL IMAGES, INC.:

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Michael H. Carrel

  
	
   

  	
   

  	
  Michael H. Carrel

  
	
   

  	
   

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/ Reza Ghanbari

  
	
   

  	
   

  	
  Reza A. Ghanbari

  

 

	RG
	  Executive

	MC
	  Company

 

9Exhibit 10.22

 

CHANGE IN CONTROL AGREEMENT

 

December 10, 2008

 

Reza
A. Ghanbari

3144
Northview Road

Wayzata,
MN 55391

 

Dear Dr. Ghanbari:

 

In
connection with your hiring as the Executive Vice President, Strategy and
Products 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

 

2

 

percent, of the combined
voting power of the outstanding securities of the Company ordinarily having the
right to vote at elections of directors, unless the transaction resulting in
such ownership has been approved in advance by the “continuing directors” or (2) more
than 50 percent of the combined voting power of the outstanding securities of
the Company ordinarily having the right to vote at elections of directors
(regardless of any approval by the continuing directors);

 

d.             a merger or consolidation to which the
Company is a party if the shareholders of the Company immediately prior to the
effective date of such merger or consolidation have, solely on account of
ownership of securities of the Company at such time, “beneficial ownership” (as
defined in Rule 13d-3 under the Exchange Act) immediately following the
effective date of such merger or consolidation of securities of the surviving
company representing 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:

 

3

 

a.             if your employment is to be terminated for
Disability, 30 days after Notice of Termination is given (provided that you
have not returned to the performance of your duties on a full-time basis during
such 30-day period);

 

b.             if your employment is to be terminated by the
Company for Cause or by you for Good Reason, the date specified in the Notice
of Termination, which date may not be less than 30 days or more than 60 days
after the date on which the Notice of Termination is given unless you and the
Company otherwise expressly agree;

 

c.             if your employment is to be terminated by the
Company for any reason other than Cause, Disability, death or Retirement, the
date specified in the Notice of Termination, which in no event may be a date
earlier than 90 days after the date on which a Notice of Termination is given,
unless an earlier date has been expressly agreed to by you in writing either in
advance of, or after; receiving such Notice of Termination; or

 

d.             if your employment is terminated by reason of
death or Retirement, the date of death or Retirement, respectively.

 

In the case of termination
by the Company of your employment for Cause, if you have not previously
expressly agreed in writing to the termination, then within 30 days after
receipt by you of the Notice of Termination with respect thereto, you may
notify the Company that a dispute exists concerning the termination, in which
event the Date of Termination will be the date set either by mutual written
agreement of the parties or by the judge or arbitrators in a proceeding as
provided in Article VII Section 6 of this Agreement.  During the pendency of any such dispute, you
will continue to make yourself available to provide services to the Company and
the Company will continue to pay you your full compensation and benefits in
effect immediately prior to the date on which the Notice of Termination is
given (without regard to any changes to such compensation or benefits which
constitute Good Reason) and until the dispute is resolved in accordance with Article VII
Section 6 of this Agreement.  You
will be entitled to retain the full amount of any such compensation and
benefits without regard to the resolution of the dispute unless the judge or
arbitrators decide(s) that your claim of a dispute was frivolous or
advanced by you in bad faith.

 

10.           “Disability” means a disability as defined in the Company’s
long-term disability plan as in effect immediately prior to the Change in
Control or; in the absence of such a plan, means permanent and total disability
as defined in section 22(e)(3) of the Code.

 

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;

 

4

 

b.             a reduction by the Company in your base salary (or an adverse change in
the form or timing of the payment thereof) as in effect immediately prior to
the Change in Control or as thereafter increased;

 

c.             the failure by the Company to continue in
effect any Plan in which you (and/or your family) are eligible to participate
at any time during the 90-day period immediately preceding the Change in
Control (or Plans providing you (and/or your family) with at least
substantially similar benefits) other than as a result of the normal expiration
of any such Plan in accordance with its terms as in effect immediately prior to
the 90-day period immediately preceding the time of the Change in Control, or
the taking of any action, or the failure to act, by the Company which would
adversely affect your (and/or your family’s) continued eligibility to
participate in any of such Plans on at least as favorable a basis to you
(and/or your family) as is the case on the date of the Change in Control or
which would materially reduce your (and/or your family’s) benefits in the
future under any of such Plans or deprive you (and/or your family) of any
material benefit enjoyed by you (and/or your family) at the time of the Change
in Control;

 

d.             the Company’s requiring you to be based more
than 30 miles from where your office is located immediately prior to the Change
in Control, except for required travel on the Company’s business, and then only
to the extent substantially consistent with the business travel obligations
which you undertook on behalf of the Company during the 90-day period
immediately preceding the Change in Control (without regard to travel related
to or in anticipation of the Change in Control);

 

e.             the failure by the Company to obtain from any
Successor the assent to this Agreement contemplated by Article VI of this
Agreement;

 

f.              any purported termination by the Company of
your employment which is not properly effected pursuant to a Notice of
Termination and pursuant to any other requirements of this Agreement, and for
purposes of this Agreement, no such purported termination will be effective;

 

g.             any refusal by the Company to continue to
allow you to attend to matters or engage in activities not directly related to the
business of the Company which, at any time prior to the Change in Control, you
were not expressly prohibited in writing by the Board from attending to or
engaging in; or

 

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

 

5

 

this Agreement except to the
extent the Company demonstrates that it suffered material actual damages by
reason of such failure.

 

14.           “Person” means any individual, corporation, partnership, group,
association or other “person,” as such term is used in section 14(d) of
the Exchange Act, other than the Company, any Affiliate or any employee benefit
plan(s) sponsored by the Company or an Affiliate.

 

15.           “Plan” means any compensation plan, program, policy or agreement
(such as a stock option, restricted stock plan or other equity-based plan), any
bonus or incentive compensation plan, program, policy or agreement, any
employee benefit plan, program, policy or agreement (such as a thrift, pension,
profit sharing, medical, dental, disability, accident, life insurance,
relocation, salary continuation, expense reimbursements, vacation or fringe
benefits plan or policy) or any other plan, program, policy or agreement of the
Company intended to benefit employees (and/or their families) generally,
management employees (and/or their families) as a group or you (and/or your
family) in particular.

 

16.           “Retirement” means termination of employment on or after the day
on which you attain the age of 65.

 

17.           “Successor” means any Person that succeeds to, or has the
practical ability to control (either immediately or solely with the passage of
time), the Company’s business directly, by merger, consolidation or other form
of business combination, or indirectly, by purchase of the Company’s outstanding
securities ordinarily having the right to vote at the election of directors or,
all or substantially all of its assets or otherwise.

 

ARTICLE
II.

TERM OF AGREEMENT

 

This Agreement is effective immediately and will
continue in effect until December 10, 2009; provided, however; that
commencing on December 10, 2009 and each December 10 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 December 10, 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

 

6

 

your termination was either
a condition of the Change in Control or was at the request or insistence of a
Person related to the Change in Control.

 

a.             Cash Payment. 
Within ten (10) business days following the Date of Termination or,
if later, within ten (10) business days following the date of the Change
in Control, the Company will make a lump-sum cash payment to you in an amount
equal to 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

 

7

 

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 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.

 

8

 

ARTICLE
VI.

SUCCESSORS

 

The Company will seek to have any Successor,
by agreement in form and substance satisfactory to you, assent to the
fulfillment by the Company of the Company’s obligations under this Agreement.
Failure of the Company to obtain such assent at least three business days prior
to the time a Person becomes a Successor (or where the Company does not have at
least three business days’ advance notice that a Person may become a Successor,
within one business day after having notice that such Person may become or has
become a Successor) will constitute Good Reason for termination by you of your
employment.  The date on which any such
succession becomes effective will be deemed the Date of Termination and Notice
of Termination will be deemed to have been given on that date.  A Successor has no rights, authority or power
with respect to this Agreement prior to a Change in Control.

 

ARTICLE VII.

OTHER PROVISIONS

 

1.             Binding Agreement.  This
Agreement inures to the benefit of, and is enforceable by, you, your personal
and legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you die while any amount would still be payable to
you under this Agreement if you had continued to live, all such amounts, unless
otherwise provided in this Agreement, will be paid in accordance with the terms
of this Agreement to your devisee, legatee or other designee or; if there be no
such designee, to your estate.

 

2.             No Mitigation.  You
will not be required to mitigate the amount of any payments or benefits the
Company becomes obligated to make or provide to you in connection with this
Agreement by seeking other employment or otherwise. The payments or benefits to
be made or provided to you in connection with this Agreement may not be
reduced, offset or subject to recovery by the Company by any payments or
benefits you may receive from other employment or otherwise.

 

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

 

9

 

arbitrator’s award in any
court having jurisdiction; provided, that you may seek specific performance of
your right to receive payment or benefits until the Date of Termination during
the pendency of any dispute or controversy arising under or in connection with
this Agreement.  The Company will be
entitled to seek an injunction or restraining order in a court of competent
jurisdiction (within or without the State of Minnesota) to enforce the
provisions of Article V of this Agreement.

 

7.             Jurisdiction. 
Except as specifically provided otherwise in this Agreement, the parties
agree that any action or proceeding arising under or in connection with this Agreement
must be brought in a court of competent jurisdiction in the State of Minnesota,
and hereby consent to the exclusive jurisdiction of said courts for this
purpose and agree not to assert that such courts are an inconvenient forum

 

8.             Related Agreements.  To
the extent that any provision of any other Plan or agreement between the
Company and you limits, qualifies or is inconsistent with any provision of this
Agreement, then for purposes of this Agreement, while such other Plan or
agreement remains in force, the provision of this Agreement will control and
such provision of such other Plan or agreement will be deemed to have been
superseded, and to be of no force or effect, as if such other agreement had
been formally amended to the extent necessary to accomplish such purpose.  Nothing in this Agreement prevents or limits
your continuing or future participation in any Plan provided by the Company and
for which you may qualify, and nothing in this Agreement limits or otherwise
affects the rights you may have under any Plans or other agreements with the
Company.  Amounts which are vested
benefits or which you are otherwise entitled to receive under any Plan or other
agreement with the Company at or subsequent to the Date of Termination will be
payable in accordance with such Plan or other agreement.

 

9.             No Employment or Service Contract. 
Nothing in this Agreement is intended to provide you with any right to
continue in the employ of the Company for any period of specific duration or
interfere with or 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.

 

10

 

11.           Survival.  The respective obligations of,
and benefits afforded to, the Company and you which by their express terms or
clear intent survive termination of your employment with the Company or
termination of this Agreement, as the case may be, including without limitation
the provisions of Articles III, IV, V and VI and Sections 3, 4, 5 and 6 of Article VII
of this Agreement, will survive termination of your employment with the Company
or termination of this Agreement, as the case may be, and will remain in full
force and effect according to their terms.

 

ARTICLE
VIII.

MISCELLANEOUS

 

1.             Modification and Waiver.  No
provision of this Agreement may be modified, waived or discharged unless such modification,
waiver or discharge is agreed to in a writing signed by you and the chair of
the Board. No waiver by any party to this Agreement at any time of any breach
by another party to this Agreement of, or of compliance with, any condition or
provision of this Agreement to be performed by such party will be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. 
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.

 

11

 

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 H. Carrel

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President & CEO

  
	
   

  	
   

  
	
   

  	
  Agreed to this 10th day of December, 2008.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
     /s/ Reza Ghanbari

  
	
   

  	
  Dr. Reza A. Ghanbari

  
					

 

12

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