EXHIBIT 10.1
DISTRIBUTION AGREEMENT
between
Bio-Vascular, Inc.
and
Vital Images, Inc.
Dated ________________, 1997
TABLE OF CONTENTS
PAGE
ARTICLE 1. DEFINITIONS..................................................... 1
ARTICLE 2. PRE-DISTRIBUTION TRANSACTIONS................................... 4
2.1. Reincorporation; Other Corporate Action........................... 4
2.2. Bio-Vascular Approval............................................. 4
2.3. Related Agreements................................................ 4
2.4. Securities Law Actions............................................ 4
2.5. Capital Contribution.............................................. 5
ARTICLE 3. THE DISTRIBUTION................................................ 5
3.1. Conditions to the Distribution.................................... 5
3.2. The Distribution.................................................. 6
3.3. Fractional Shares................................................. 6
3.4. Warrants.......................................................... 6
ARTICLE 4. INDEMNIFICATION, CLAIMS AND OTHER MATTERS....................... 7
4.1. Indemnification by Bio-Vascular................................... 7
4.2. Indemnification by Vital Images................................... 7
4.3. Insurance Proceeds................................................ 8
4.4. Procedure for Indemnification..................................... 8
4.5. Other Claims...................................................... 10
4.6. Contribution in Respect of Certain Indemnifiable Losses........... 10
4.7. No Beneficiaries.................................................. 10
ARTICLE 5. CERTAIN ADDITIONAL MATTERS...................................... 10
5.1. Construction of Agreements........................................ 10
5.2. Consents, Etc..................................................... 11
5.3. No Representations or Warranties.................................. 11
5.4. Officers and Directors............................................ 11
5.5. Existing Intercompany Arrangements................................ 11
5.6. Intercompany Accounts............................................. 11
5.7. Qualification as Tax-Free Distribution............................ 11
ARTICLE 6. ACCESS TO INFORMATION AND SERVICES.............................. 12
6.1. Provision of Corporate Records.................................... 12
6.2. Access to Information............................................. 12
6.3. Production of Witnesses and Individuals........................... 12
6.4. Retention of Records.............................................. 13
6.5. Confidentiality................................................... 13
6.6. Privileged Matters................................................ 14
ARTICLE 7. INSURANCE....................................................... 15
7.1. Policies and Rights of Vital Images............................... 15
7.2. Post-Distribution Date Claims..................................... 15
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7.3. Administration and Reserves....................................... 16
7.4. Allocation of Insurance Proceeds................................. 16
7.5. Agreement for Waiver of Conflict and Shared Defense.............. 16
ARTICLE 8. DISPUTE RESOLUTION............................................. 16
8.1. Negotiation and Binding Arbitration.............................. 16
8.2. Initiation....................................................... 17
8.3. Submission to Arbitration........................................ 17
8.4. Equitable Relief................................................. 17
8.5. Consolidation.................................................... 17
SECTION 9. MISCELLANEOUS.................................................. 17
9.1. Entire Agreement................................................. 17
9.2. Expenses......................................................... 17
9.3. Governing Law.................................................... 17
9.4. Jurisdiction and Venue........................................... 18
9.5. Notices.......................................................... 18
9.6. Modification of Agreement........................................ 18
9.7. Termination...................................................... 18
9.8. Successors and Assigns........................................... 18
9.9. No Third Party Beneficiaries..................................... 19
9.10. Titles and Headings; Interpretation.............................. 19
9.11. Exhibits......................................................... 19
9.12. Severability..................................................... 19
9.13. No Waiver........................................................ 19
9.14. Survival......................................................... 19
9.15. Counterparts..................................................... 19
EXHIBITS
Exhibit A Employee Benefits Agreement
Exhibit B Tax Sharing Agreement
Exhibit C Transition Services Agreement
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DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (this "Agreement"), dated as of _________, 1997, is
made and entered into by and between Bio-Vascular, Inc., a Minnesota corporation
("Bio-Vascular"), and Vital Images, Inc., a Minnesota corporation ("Vital
Images").
WHEREAS, Vital Images is currently a wholly-owned subsidiary of Bio-
Vascular, engaged in the business of developing, marketing and supporting
medical visualization software and systems for use in clinical diagnosis and
surgical planning.
WHEREAS, the Board of Directors of Bio-Vascular has determined it to
be in the best interests of the shareholders of Bio-Vascular to separate Vital
Images from Bio-Vascular by distributing all of the issued and outstanding
shares of Vital Images common stock, $.01 par value per share, including certain
preferred stock purchase rights attached thereto (the "Vital Images Common
Stock"), to the holders of Bio-Vascular's common stock, par value $.01 per share
(the "Bio-Vascular Common Stock"), as provided herein; and
WHEREAS, Bio-Vascular and Vital Images have determined that it is
necessary and desirable to establish the principal corporate transactions
required to effect the Distribution, certain other agreements governing matters
relating to the Distribution and the relationship of Bio-Vascular and Vital
Images after the Distribution.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, Bio-
Vascular and Vital Images agree as follows:
ARTICLE
I.
DEFINITIONS
As used in this Agreement, initially capitalized terms defined
immediately after their use shall have the respective meanings thereby provided,
and the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
Action: any action, claim, suit, arbitration, inquiry, subpoena, discovery
request, proceeding or investigation by or before any court or grand jury, any
governmental or other regulatory or administrative agency or commission or any
arbitration tribunal.
Affiliate: with respect to any specified person, a person that, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with such specified person; provided, however, that
unless otherwise expressly provided, Vital Images and Bio-Vascular shall not be
deemed to be Affiliates of one another for purposes of this Agreement.
Agent: American Stock Transfer & Trust Company, the distribution agent
appointed by Bio-Vascular and Vital Images to distribute or make book entry
credits for the Vital Images Common Stock in connection with the Distribution.
Books and Records: the books and records (or true and complete copies
thereof), including computerized records, of Bio-Vascular that relate
principally to Vital Images and are necessary for the operation of the Vital
Images Business, including, without limitation, the corporate documents and
records of corporate proceedings of Vital Images, all books and records relating
to Vital Images Employees, the purchase of materials, supplies and services by
Vital Images; the dealings with customers of Vital Images; and all files
relating to any Action involving Vital Images.
Code: the Internal Revenue Code of 1986, as amended.
Commission: the Securities and Exchange Commission.
Distribution: the distribution as a dividend of Vital Images Common Stock
to holders of Bio-Vascular Common Stock, as provided in Article 3 hereof.
Distribution Date: the effective date of the Distribution, as determined
by the Board of Directors of Bio-Vascular.
Employee Benefits Agreement: the agreement, substantially in the form of
Exhibit A hereto, pursuant to which Bio-Vascular and Vital Images will provide
for certain employee benefit matters.
Exchange Act: the Securities Exchange Act of 1934, as amended.
Form 10: the Registration Statement on Form 10 filed by Vital Images with
the Commission to register the Vital Images Common Stock pursuant to the
Exchange Act.
Indemnifiable Losses: with respect to any claim by an Indemnitee for
indemnification authorized pursuant to Article 4 hereof, any and all losses,
liabilities, claims, damages, obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all Actions,
demands, assessments, judgments, settlements and compromises relating thereto
and reasonable attorneys' fees and expenses in connection therewith) suffered by
such Indemnitee with respect to such claim.
Indemnifying Party: any party who is required to pay any other person
pursuant to Article 4 hereof.
Indemnitee: any party who is entitled to receive payment from an
Indemnifying Party pursuant to Article 4 hereof.
Indemnity Payment: the amount an Indemnifying Party is required to pay an
Indemnitee pursuant to Article 4 hereof.
Information Statement: the definitive information statement, substantially
in compliance with Regulation 14C under the Exchange Act, to be mailed to the
holders of Bio-Vascular Common Stock in connection with the Distribution.
Insurance Proceeds: those monies (i) received by an insured from an
insurance carrier or (ii) paid by an insurance carrier on behalf of the insured,
in either case net of any applicable premium adjustment, retrospectively rated
premium, deductible, retention, cost or reserve paid or held by or for the
benefit of such insured.
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Insured Claims: those Liabilities that, individually or in the aggregate,
are covered within the terms and conditions of any of the Policies, whether or
not subject to deductibles, co-insurance, uncollectibility or retrospectively-
rated premium adjustments, but only to the extent that such Liabilities are
within applicable Policy limits, including aggregates.
Intercompany Debt: intercompany debt owed by Vital Images to Bio-Vascular.
Liabilities: any and all debts, liabilities and obligations, whether
accrued, contingent or reflected on a balance sheet, known or unknown,
including, without limitation, those arising under any law, rule, regulation,
Action, order or consent decree of any governmental entity or any judgment of
any court of any kind or award of any arbitrator of any kind, and those arising
under any contract, commitment or undertaking.
Policies: insurance policies and insurance contracts of any kind,
including, without limitation, primary and excess policies, comprehensive
general liability policies, automobile and workers' compensation insurance
policies, and self-insurance arrangements, together with the rights and benefits
thereunder.
Record Date: the date determined by the Board of Directors of Bio-Vascular
as the record date for the Distribution.
Related Agreements: the Employee Benefits Agreement, Transition Services
Agreement, Tax Sharing Agreement and all other agreements entered into by Bio-
Vascular and Vital Images pursuant to this Agreement or otherwise in connection
with the Distribution.
Securities Act: the Securities Act of 1933, as amended.
Shared Policies: all Policies owned or maintained by or on behalf of Bio-
Vascular prior to the Distribution Date, relating to both Bio-Vascular's
business and the Vital Images Business.
Staff: the Staff of the Commission.
Tax Sharing Agreement: the agreement, substantially in the form of Exhibit
B hereto, pursuant to which Bio-Vascular and Vital Images will provide for
certain tax matters.
Transition Services Agreement: the agreement, substantially in the form of
Exhibit C hereto, pursuant to which Bio-Vascular will provide certain
transitional services to Vital Images following the Distribution Date.
Vital Images Business: (i) the business of developing, marketing and
supporting medical visualization software and systems for use in clinical
diagnosis and surgical planning; (ii) any terminated, divested or discontinued
businesses or operations as of the Distribution Date that primarily related to
Vital Images or were conducted by Vital Images; and (iii) any business or
operation conducted by Vital Images or any Affiliate of Vital Images at any time
on or after the Distribution Date.
Vital Images Employee: any employee of Vital Images, and any employee of
Bio-Vascular who is assigned to Vital Images on or prior to the Distribution
Date, including, but not limited to, any such employee who was laid off, on
leave of absence or any disability leave as of the Distribution Date.
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Warrants: all unexercised warrants to purchase Bio-Vascular Common Stock
issued and outstanding as of the Record Date, which as of the date hereof,
consist of warrants to purchase an aggegrate of 90,000 shares of Bio-Vascular
Common Stock issued and outstanding and anticipated to remain as such as of the
Record Date.
ARTICLE
2.
PRE-DISTRIBUTION TRANSACTIONS
2.1. Reincorporation; Other Corporate Action. Prior to the date of this
Agreement, Vital Images, formerly an Iowa corporation, will have taken all
necessary action to reincorporate as a Minnesota corporation, and to
qualify as a foreign corporation in each jurisdiction where the conduct of
its business or location of its properties or employees so requires. In
addition, Vital Images will take all other corporate action necessary to
undertake the transactions contemplated by this Agreement or any Related
Agreement, which corporate actions will include, but will not be limited
to, authorization of a sufficient number of shares of Vital Images Common
Stock necessary to effect the Distribution and the approval of appropriate
stock-based compensation or other plans, agreements and arrangements, as
provided for in the Employee Benefits Agreement.
2.2. Bio-Vascular Approval. Bio-Vascular shall cooperate with Vital Images in
effecting, and if so requested by Vital Images, Bio-Vascular shall, as the
sole shareholder of Vital Images, approve or ratify, any actions that are
reasonably necessary or desirable to be taken by Vital Images to
effectuate the transactions contemplated by this Agreement or any Related
Agreement in a manner consistent with the terms hereof or thereof, as the
case may be, including, without limitation, the reincorporation of Vital
Images as a Minnesota corporation, the election or appointment of
directors and officers of Vital Images to serve in such capacities
following the Distribution Date, and the approval of appropriate stock-
based compensation or other plans, agreements and arrangements for Vital
Images Employees, non-Vital Images Employee members of Vital Images' Board
of Directors and consultants of Vital Images.
2.3. Related Agreements. Bio-Vascular and Vital Images will use their best
efforts to cause, on or before the Distribution Date, the execution and
delivery by each party of the Related Agreements and any other agreements
deemed necessary or desirable by the parties to establish and govern the
post-Distribution relationship of the parties.
2.4. Securities Law Actions.
(a) Bio-Vascular and Vital Images will prepare, and file with the
Commission, the Form 10, which shall include the Information
Statement, setting forth appropriate disclosure concerning Vital
Images, the Distribution and any other appropriate matters required to
be stated therein or determined to be included therein by Bio-Vascular
and Vital Images. Bio-Vascular and Vital Images shall use reasonable
efforts to cause the Form 10 to become effective under the Exchange
Act as soon as practicable after the filing thereof, and, prior to the
Distribution Date, Bio-Vascular shall mail the Information Statement
to holders of Bio-Vascular Common Stock as of the Record Date. The
joint obligations of Bio-Vascular and Vital Images under this Section
2.4(a) shall not affect their respective obligations of indemnity
under Article 4 hereof.
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(b) Bio-Vascular and Vital Images shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of the
various states or other political subdivisions of the United States in
connection with the Distribution.
(c) Vital Images will prepare and file, and will use its best efforts to
have approved, an application for listing of the Vital Images Common
Stock on the Nasdaq SmallCap Market.
2.5. Capital Contribution. In anticipation of the Distribution, Bio-Vascular has
assigned to Vital Images $10 milllion in cash, cash equivalents and
marketable securities, effective November 1, 1996, and has contributed the
Intercompany Debt as of that date, in the amount of approximately $3.1
million, to the capital of Vital Images. Effective as of the Distribution
Date, Bio-Vascular will make such additional capital contributions to Vital
Images as necessary to bring Vital Images' cash, cash equivalents and
marketable securities balances to a combined $10 million and eliminate any
additional Intercompany Debt owed by Vital Images on the Distribution Date.
ARTICLE
3.
THE DISTRIBUTION
3.1. Conditions to the Distribution. The Board of Directors of Bio-Vascular will
have the sole discretion to determine, by resolution, the Record Date, the
Distribution Date and all appropriate procedures in connection with the
Distribution, provided that the Distribution will not occur prior to such
time as each of the following conditions have been satisfied or have been
waived by Bio-Vascular's Board of Directors, in its sole discretion:
(a) an opinion from Coopers & Xxxxxxx, LLP will have been obtained, in
form and substance satisfactory to Bio-Vascular's Board of Directors,
with respect to the federal income tax status of the Distribution
under Section 355 of the Code;
(b) any material approvals and consents necessary to consummate the
Distribution will have been obtained and will be in full force and
effect;
(c) no order, injunction or decree issued by any court or agency of
competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Distribution will be in effect, and
no other event will have occurred or failed to occur that prevents the
consummation of the Distribution;
(d) the Form 10 will have been declared effective by the Commission;
(e) Bio-Vascular will have received a favorable response from the Staff to
a request for "no-action" treatment concerning, among other matters,
whether the Distribution and related
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transactions may be effected without registration of the Vital Images
Common Stock under the Securities Act; and
(f) no other events or developments shall have occurred subsequent to the
date of this Agreement that, in the judgment of Bio-Vascular's Board
of Directors, would result in the Distribution having a material
adverse effect on Bio-Vascular or its shareholders;
provided further that the satisfaction of such conditions will not create
any obligation on the part of Bio-Vascular, Vital Images or any other
person to effect or to seek to effect the Distribution or in any way limit
Bio-Vascular's right to terminate this Agreement.
3.2. The Distribution. On or prior to the Distribution Date, Bio-Vascular will
deliver to the Agent the certificate for all of the shares of Vital Images
Common Stock owned by Bio-Vascular prior to the Distribution. Upon
certification by Bio-Vascular as to the number of shares of Bio-Vascular
Common Stock outstanding on the Record Date, Vital Images will deliver to
the Agent, for the benefit of holders of record of Bio-Vascular Common
Stock on the Record Date, stock certificate(s) representing, in the
aggregate (and rounded down to the nearest whole share), a number of shares
representing one (1) share of Vital Images Common Stock for every two (2)
shares of Bio-Vascular Common Stock outstanding on the Record Date (less
the shares of Vital Images Common Stock owned by Bio-Vascular prior to the
Distribution and previously delivered to the Agent pursuant to this
Section), and shall instruct the Agent to distribute, as promptly as
practicable following the Distribution Date to holders of record of Bio-
Vascular Common Stock on the Record Date, one (1) share of Vital Images
Common Stock for every two (2) shares of Bio-Vascular Common Stock, and
cash in lieu of fractional shares of Vital Images Common Stock, to be
obtained in the manner provided in Section 3.3 hereof. All of the shares of
Vital Images Common Stock issued in the Distribution will be fully paid,
nonassessable and free of preemptive rights.
3.3. Fractional Shares. No certificates or scrip representing fractional shares
of Vital Images Common Stock will be issued as a part of the Distribution,
and in lieu of receiving fractional shares, each holder of Bio-Vascular
Common Stock who would otherwise be entitled to receive a fractional share
of Vital Images Common Stock pursuant to the Distribution will receive cash
for such fractional share. Bio-Vascular and Vital Images agree that Bio-
Vascular shall instruct the Agent: (i) to determine the number of whole
shares and fractional shares of Vital Images Common Stock allocable to each
holder of Bio-Vascular Common Stock as of the Record Date; (ii) to
aggregate all such fractional shares into whole shares; (iii) to sell the
whole shares obtained thereby in the open market at then-prevailing prices
on behalf of Bio-Vascular shareholders who would otherwise be entitled to
receive fractional shares interests; and (iv) to distribute to each such
Bio-Vascular shareholder such shareholder's ratable share of the total
proceeds of such sales (net of any commissions incurred in connection with
such sales), net of any amounts required to be withheld under applicable
law.
3.4. Warrants. Vital Images will assume its proportionate share of obligations
represented by the Warrants such that, after the Distribution, each Warrant
will be exercisable for shares of both Bio-Vascular Common Stock and shares
of Vital Images Common Stock, according to the ratio set forth in Section
3.2 hereof. Upon notice to Bio-Vascular of the exercise of any Warrants,
Bio-Vascular will promptly provide notice thereof to Vital Images, and
Vital Images will promptly thereafter issue to the exercising holder of
such Warrants the appropriate number of shares of Vital Images Common
Stock. Vital Images will be entitled to receive a pro rata portion
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of the exercise price, determined by multiplying the per share exercise
price stated in the Warrant by the ratio of the post-Distribution fair
market value of Vital Imates Common Stock to the post-Distribution fair
market value of Bio-Vascular Common Stock. For the purposes of this Section
3.4, "post-Distribution fair market value" means:
(i) with respect to Bio-Vascular Common Stock, the average of the
last reported sales prices on each of the five (5) trading days
immediately following the Distribution Date, as reported by the
Nasdaq National Market;
(ii) with respect to Vital Images Common Stock, the average of the
daily average of bid and asked prices reported by the Nasdaq
SmallCap Market or "over the counter market" on each of the five
(5) trading days immediately following the Distribution Date.
ARTICLE
4.
INDEMNIFICATION, CLAIMS
AND OTHER MATTERS
4.1. Indemnification by Bio-Vascular. Bio-Vascular will indemnify, defend and
hold harmless Vital Images and each of its directors, officers, employees,
agents and Affiliates from and against any and all Indemnifiable Losses of
Vital Images or any of its Affiliates arising out of or due to, directly or
indirectly, any Action relating to: (i) the business or operations of Bio-
Vascular, or its Affiliates, exclusive of the Vital Images Business; (ii)
any claim that the information included in the Information Statement or
Form 10 under (A) the captions "Summary -- Distributing Corporation,"
"-- Principal Businesses to be Retained by Bio-Vascular" or "-- Primary
Purpose of the Distribution," (B) the captions "The Distribution -- Reasons
for the Distribution," "-- Manner of Effecting the Distribution" and "--
Certain Federal Income Tax Consequences" or (C) the caption "Security
Ownership of Certain Beneficial Owners" is false or misleading with respect
to any material fact or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
(iii) Third Party Claims (as defined below) of failure by Bio-Vascular to
perform under, or any violation by Bio-Vascular of, any provision of this
Agreement or any Related Agreement, which is to be performed or complied
with by Bio-Vascular; and (iv) breaches of this Agreement or any Related
Agreement by Bio-Vascular or its Affiliates.
4.2. Indemnification by Vital Images. Vital Images will indemnify, defend and
hold harmless Bio-Vascular and each of its directors, officers, employees,
agents and Affiliates from and against any and all Indemnifiable Losses of
Bio-Vascular or any of its Affiliates arising out of or due to, directly or
indirectly, any Action relating to: (i) the Vital Images Business and its
operation prior to, on or after the Distribution Date (including any
Indemnifiable Loss relating to, arising out of or resulting from any act or
failure to act by any director, officer or agent of Vital Images or any
Vital Images Employee, whether or not such act or failure to act is or was
within such person's authority); (ii) any claim that the information
included in the Information Statement or Form 10, other than the
information under the captions listed in Section 4.1(ii) hereof, is false
or misleading with respect to any material fact or omits to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading; (iii) Third Party Claims of failure by Vital Images
to perform under, or any violation by Vital Images of, any provision of
this Agreement or any
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Related Agreement which is to be performed or complied with by Vital
Images; and (iv) breaches of this Agreement or any Related Agreement by
Vital Images or its Affiliates.
4.3. Insurance Proceeds. The amount that any Indemnifying Party is or may be
required to pay to any Indemnitee pursuant to Section 4.1 or Section 4.2
hereof will be reduced (including, without limitation, retroactively) by
any Insurance Proceeds and other amounts actually recovered by or on behalf
of such Indemnitee in reduction of the related Indemnifiable Loss. If an
Indemnitee shall have received an Indemnity Payment in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance
Proceeds or other amounts in respect of such Indemnifiable Loss as
specified above, then such Indemnitee will pay to such Indemnifying Party a
sum equal to the amount of such Insurance Proceeds or other amounts
actually received. Notwithstanding the foregoing, nothing in this Section
will grant to Vital Images or its Affiliates any direct or indirect rights
or benefits to insurance coverage with respect to which Vital Images is not
otherwise entitled under Article 7 hereof, nor require Bio-Vascular or its
Affiliates to make any claim for insurance coverage unless and to the
extent that Vital Images would otherwise be entitled to have Bio-Vascular
make a claim under Article 7 hereof.
4.4. Procedure for Indemnification.
(a) If either party shall receive notice of any claim or Action brought,
asserted, commenced or pursued by any person or entity not a party to
this Agreement (hereinafter a "Third Party Claim"), with respect to
which the other party is or may be obligated to make an Indemnity
Payment, it shall give such other party prompt notice thereof
(including any pleadings relating thereto) after becoming aware of
such Third Party Claim, specifying in such reasonable detail as is
known to it the nature of such Third Party Claim and the amount or
estimated amount thereof, to the extent such estimate is then feasible
(which estimate shall not be conclusive of the final amount of such
claim); provided, however, that the failure of a party to give notice
as provided in this Section 4.4 shall not relieve the other party of
its indemnification obligations under this Article 4, except to the
extent that such other party is actually prejudiced by such failure to
give notice.
(b) For any Third Party Claim concerning which notice is required to be
given, and, in fact, is given under subparagraph (a) of this Section
4.4, the Indemnifying Party shall defend in a timely manner, to the
extent permitted by law, such Third Party Claim through counsel
appointed by the Indemnifying Party and reasonably acceptable to the
Indemnitee. Once an Indemnifying Party has commenced its defense of an
Indemnitee, it cannot withdraw from such defense until conclusion of
the matter, unless the Indemnified Party agrees to the withdrawal or
the Indemnitee is also defending the claim. The Indemnitee shall have
the right to participate in the defense of the Third Party Claim by
employing separate counsel at its own expense.
(c) If a party responds to a notice of a Third Party Claim by denying its
obligation to indemnify the other party, or if the Indemnifying Party
fails to defend in a timely manner, the Indemnitee shall be entitled
to defend such Third Party Claim through counsel appointed by it. In
addition, if it is later determined that such party wrongfully denied
such claim, or the Indemnifying Party failed to defend timely, then
the Indemnifying Party shall (i) reimburse the Indemnitee for all
costs and expenses (other than salaries of officers and employees)
incurred reasonably by the Indemnitee in connection with its defense
of such Third Party Claim; and (ii) be estopped from
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challenging a judgment, order, settlement, compromise, or consent
judgment resolving the Third Party Claim entered into in good faith by
the Indemnitee (if such claim has been resolved prior to the
conclusion of the proceeding between the Indemnitee and Indemnifying
Party). An Indemnifying Party, after initially rejecting a claim for
defense or indemnification, may defend and indemnify the Indemnitee,
at any time prior to the resolution of said Third party Claim, for
such claim, provided that (x) the Indemnifying Party reimburses the
Indemnitee for all costs and expenses (other than salaries of officers
and employees) incurred reasonably by the Indemnitee in connection
with its defense of such Third Party Claim up to the time the
Indemnifying Party assumes control of the defense of such claim
(including costs incurred in the transition of the defense from the
Indemnitee to the Indemnifying Party); and (y) the assumption of the
defense of the Third Party Claim will not prejudice or cause harm to
the Indemnitee.
(d) With respect to any Third Party Claim for which indemnification has
been claimed hereunder, no party shall enter into any compromise or
settlement, or consent to the entry of any judgment which (i) does not
include as a term thereof the giving by the third party of a release
to the Indemnitee from all further liability concerning such Third
Party Claim on terms no less favorable than those obtained by the
party entering into such compromise, settlement or consent; or (ii)
imposes any obligation on the Indemnitee without such Indemnitee's
written consent (such consent not to be withheld unreasonably), except
an obligation to pay money which the Indemnifying Party has agreed to
pay on behalf of the Indemnitee. In the event that an Indemnitee
enters into any such compromise, settlement or consent without the
written consent of the Indemnifying Party (other than as contemplated
by Section 4.4(c) hereof), the entry of such compromise, settlement or
consent shall relieve the Indemnifying Party of its indemnification
obligation related to the claims underlying such compromise,
settlement or consent.
(e) Upon final judgment, determination, settlement or compromise of any
Third Party Claim, and unless otherwise agreed by the parties in
writing, the Indemnifying Party shall pay promptly on behalf of the
Indemnitee, or to the Indemnitee in reimbursement of any amount
theretofore required to be paid by the Indemnitee, the amount so
determined by final judgment, determination, settlement or compromise.
Upon the payment in full by the Indemnifying Party of such amount, the
Indemnifying Party shall succeed to the rights of such Indemnitee to
the extent not waived in settlement, against the third party who made
such Third Party Claim and any other person who may have been liable
to the Indemnitee with respect to the indemnified matter.
(f) In connection with defending against Third Party Claims, the parties
shall cooperate with and assist each other by making available all
employees, books, records, communications, documents, items and
matters within their knowledge, possession or control that are
necessary, appropriate or reasonably deemed relevant with respect to
defense of such claims; provided, however, that nothing in this
subparagraph (f) shall be deemed to require the waiver of any
privilege, including the attorney-client privilege, or protection
afforded by the attorney work product doctrine. In addition,
regardless of the party actually defending a Third Party Claim for
which there is an indemnity obligation under Section 4.1 or 4.2
hereof, the parties shall give each other regular status reports
relating to such action with detail sufficient to permit the other
party to assert and protect its rights and obligations under this
Agreement.
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(g) The provisions of this Section 4.4 shall survive for two (2) years
following the date of this Agreement and shall be the exclusive
procedures for any claims subject to the provisions of Sections 4.1 or
4.2 hereof.
4.5. Other Claims. Any claim on account of an Indemnifiable Loss which does not
result from a Third Party Claim shall be asserted by written notice from
the Indemnitee to the Indemnifying Party within sixty (60) days of first
learning of the breach under Section 4.1(iv) or Section 4.2(iv) hereof, as
the case may be. All such claims that are not timely asserted pursuant to
this Section shall be deemed to be forever waived. The Indemnitee's written
notice shall contain such information as the Indemnitee has regarding the
alleged breach. Such Indemnifying Party shall have a period of sixty (60)
days (or such shorter time period as may be required by law as indicated by
the Indemnitee in the written notice) within which to respond thereto. If
such Indemnifying Party does not respond within such 60-day period (or
lesser period), such Indemnifying Party shall be deemed to have accepted
responsibility to make payment for the amount of Indemnifiable Loss and
shall have no further right to contest the validity of such claim. If such
Indemnifying Party does respond within such 60-day (or lesser) period and
rejects such claim in whole or in part, such Indemnitee shall be free to
pursue such remedies as may be available under applicable law or under this
Agreement.
4.6. Contribution in Respect of Certain Indemnifiable Losses. If the
indemnification provided for in this Article 4 is unavailable to an
Indemnitee in respect of any Indemnifiable Loss arising out of, or related
to, information contained in the Information Statement or the Form 10, the
Indemnifying Party, in lieu of indemnifying such Indemnitee, shall
contribute to the amount paid or payable by such Indemnitee as a result of
such Indemnifiable Loss, in such proportion as is appropriate to reflect
the relative fault of Vital Images, its directors, officers, employees or
agents, on the one hand, and Bio-Vascular, its directors, officers,
employees or agents, on the other hand, in connection with the statements
or omissions which resulted in such Indemnifiable Loss. The relative fault
of such respective groups shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by either such group.
4.7. No Beneficiaries. Except to the extent expressly provided otherwise in
this Article 4, the indemnification provided for by this Article 4 shall
not inure to the benefit of any third party or parties and shall not
relieve any insurer who would otherwise be obligated to pay any claim of
the responsibility with respect thereto or, solely by virtue of the
indemnification provisions hereof, provide any such subrogation rights with
respect thereto and each party agrees to waive such rights against the
other to the fullest extent permitted.
ARTICLE
5.
CERTAIN ADDITIONAL MATTERS
5.1. Construction of Agreements. Notwithstanding any other provisions in this
Agreement to the contrary, in the event and to the extent that there is a
conflict between the provisions of this Agreement and the provisions of any
Related Agreement, the provisions of such Related Agreement shall control.
10
5.2. Consents, Etc. Bio-Vascular and Vital Images shall use their best efforts
to obtain any consent, approval or amendment required to novate and/or
assign all agreements, leases, licenses and other rights of any nature
whatsoever relating to the Vital Images Business to Vital Images, and to
have Bio-Vascular released and Vital Images substituted as guarantor under
any guarantees by Bio-Vascular of obligations of Vital Images; provided,
however, that Bio-Vascular shall not be obligated to pay any consideration
therefor (except for filing fees and other administrative charges) to any
third party from whom such consents, approvals and amendments are
requested.
5.3. No Representations or Warranties. Vital Images understands and agrees that
Bio-Vascular is not, in this Agreement, or in any Related Agreement or any
other agreement or document contemplated by this Agreement, representing or
warranting in any way as to the businesses and Liabilities retained,
transferred or assumed in connection with the Distribution, or that the
obtaining of the consents or approvals, the execution and delivery of any
ancillary or amendatory agreements or the making of the filings and
applications contemplated by this Agreement will satisfy the provisions of
all applicable agreements or the requirements of all applicable laws or
judgments, it being understood and agreed that, subject to Section 5.2
hereof, Vital Images shall bear the economic and legal risk or the business
and Liabilities retained or assumed hereunder by Vital Images, and the
legal and economic risk that any necessary consents or approvals are not
obtained or that any requirements of law or judgments are not complied with
or satisfied.
5.4. Officers and Directors. Vital Images and Bio-Vascular shall take all
necessary actions to elect or otherwise appoint, as of the Distribution
Date, individuals to be directors or officers (or both) of Vital Images, as
set forth in the Information Statement, and to cause the resignation of
individuals as officers and directors of each so that there are no common
directors or officers of Vital Images and Bio-Vascular as of the
Distribution Date, except as described in the Information Statement.
5.5. Existing Intercompany Arrangements. Except as otherwise provided in this
Agreement or in any Related Agreement, any and all agreements,
arrangements, commitments or understandings, whether or not in writing,
between Bio-Vascular and Vital Images will be terminated and of no further
force and effect as of the Distribution Date. Following the Distribution
Date, the parties shall discuss in good faith the provision of any services
and products to be provided by the other, but which inadvertently were not
the subject of this Agreement, the Transition Services Agreement or any
other Related Agreement. Nothing in this Section, however, will require or
authorize Bio-Vascular or Vital Images to provide and charge each other for
any services other than on the terms and conditions specified in the
Transition Services Agreement or the other Related Agreements.
5.6. Intercompany Accounts. Notwithstanding Section 5.5 hereof, any
intercompany receivable, payable or loan between Bio-Vascular and Vital
Images outstanding on the Distribution Date will not be deemed altered,
amended or terminated as a result of this Agreement or the consummation of
the transactions contemplated hereby and will continue in accordance with
its terms following the Distribution Date; provided, however, that all
Intercompany Debt will be contributed to the capital of Vital Images, as
provided in Section 2.5 hereof.
5.7. Qualification as Tax-Free Distribution.
(a) After the Distribution Date, neither Bio-Vascular or Vital Images will
take, or allow any Affiliate to take, any action which could
reasonably be expected to prevent the
11
Distribution from qualifying as a tax-free distribution within the
meaning of Section 355 of the Code.
(b) After the Distribution Date, Vital Images will not, nor allow any
Affiliate of Vital Images to, take any action or enter into any
transaction which could reasonably be expected to materially adversely
impact the anticipated tax consequences to Bio-Vascular, which are
known to Vital Images, of any transaction contemplated by this
Agreement; provided, however, that nothing in this Section 5.7(b)
shall prohibit Vital Images from taking any action, or entering into
any transaction (or permitting or causing any Affiliate to so act or
enter) in the ordinary course of business or in the ordinary course of
business dealing, or in connection with the settlement of any audit
issue or in connection with the filing of any tax return. After the
Distribution Date, Bio-Vascular shall not, nor allow any Affiliate to,
take any action or enter into any transaction which could reasonably
be expected to materially adversely impact the anticipated tax
consequences to Vital Images, which are known to Bio-Vascular, of any
transaction contemplated by this Agreement; provided, however, that
nothing in this Section 5.7(b) shall prohibit Bio-Vascular from taking
any action, or entering into any transaction (or permitting or causing
any Affiliate so to act or enter), in the ordinary course of business
or in the ordinary course of business dealing, or in connection with
the settlement of any audit issue or in connection with the filing of
any tax return.
ARTICLE
6.
ACCESS TO INFORMATION AND SERVICES
6.1. Provision of Corporate Records. Following the Distribution Date, all Books
and Records, will remain the property of Bio-Vascular, but will be made
available, upon reasonable notice and during normal business hours, to
Vital Images for review and duplication until the earlier of (i) notice
from Vital Images that such Books and Records are no longer needed by Vital
Images, or (ii) the seventh anniversary of the Distribution Date.
6.2. Access to Information. From and after the Distribution Date, Bio-Vascular
and Vital Images will afford to each other and to each other's authorized
accountants, counsel and other designated representatives reasonable access
and duplicating rights (with copying costs to be borne by the requesting
party) during normal business hours to all Books and Records and documents,
communications, items and matters, including computer data (collectively,
"Information") within each other's knowledge, possession or control,
relating to the Vital Images Business or Vital Images Employees, insofar as
such access is reasonably required by Bio-Vascular or Vital Images, as the
case may be, (and shall use reasonable efforts to cause persons or firms
possessing Information to give similar access). Information may be
requested under this Article 6 for any legitimate business purpose
including, without limitation, audit, accounting, claims, Actions,
litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations, but not for competitive purposes.
6.3. Production of Witnesses and Individuals. From and after the Distribution
Date, Bio-Vascular and Vital Images will use reasonable efforts to make
available to each other, upon written request, their respective officers,
directors, employees and agents for fact finding, consultation
12
and interviews and as witnesses to the extent that any such person may
reasonably be required in connection with any Actions in which the
requesting party may from time to time be involved. Bio-Vascular and Vital
Images agree to reimburse each other for reasonable out-of-pocket expenses
(but not labor charges or salary payments) incurred by the other in
connection with providing individuals and witnesses pursuant to this
Section 6.3.
6.4. Retention of Records. Except when a longer retention period is otherwise
required by law, agreed to in writing, or specifically provided for herein
or in any Related Agreement, Bio-Vascular and Vital Images will retain, for
seven (7) years following the date of this Agreement or such longer period
that may be deemed necessary, all material Information relating to Vital
Images. Notwithstanding the foregoing, in lieu of retaining any specific
Information, Bio-Vascular or Vital Images may offer in writing to deliver
such Information to the other and, if such offer is not accepted within
ninety (90) days, the offered Information may be destroyed or otherwise
disposed of at any time. If a recipient of such offer requests in writing
prior to the scheduled date for such destruction or disposal that any of
the Information proposed to be destroyed or disposed of be delivered to
such requesting party, the party proposing the destruction or disposal will
promptly arrange for the delivery of such of the Information as was
requested (at the cost of the requesting party).
6.5. Confidentiality.
(a) Each of Bio-Vascular and Vital Images will hold, and will cause its
officers, employees, agents, consultants, advisors and Affiliates to
hold, in strict confidence, and not to disclose, unless compelled to
disclose by judicial or administrative process or, in the opinion of
its independent legal counsel, by other requirements of law, all
confidential information concerning the other party.
(b) For purposes of this Section 6.5, confidential information about a
particular party (referred to herein as the "first party") shall mean
information known by the other party on the Distribution Date and
reasonably understood by the other party to be confidential and
related to the first party's business interests, or disclosed
confidentially by the first party to the other party after the
Distribution Date under the terms and for purposes of this Agreement
or any of the Related Agreements, except for:
(i) information which is or becomes publicly available through no
act of the other party, from and after the date of public
availability;
(ii) information disclosed to the other party by a third party,
provided: (A) under the circumstances of disclosure the other
party does not have a duty of non-disclosure owed to such third
party; (B) the third party's disclosure is not violative of a
duty of non-disclosure owed to another, including the first
party; and (C) the disclosure by the third party is not
otherwise unlawful; and
(iii) information developed by the other party independent of any
confidential information of the first party which is known by
the other party on the Distribution Date and/or disclosed by the
first party thereafter.
(c) The foregoing restrictions shall expire with respect to business
information which is confidential information five (5) years after the
date of disclosure of such information,
13
unless and to the extent Bio-Vascular and Vital Images agree to a
longer period for the foregoing restrictions with respect to specific
categories of confidential business information, in which case the
foregoing restrictions shall expire with respect to such information
on the expiration of such longer period. The date of disclosure in the
case of confidential business information known by a party on the
Distribution Date shall be the Distribution Date. Each of Bio-Vascular
and Vital Images shall not disclose to another, or use, except for
purposes of fulfilling their respective obligations under this
Agreement or the relevant Related Agreements, any business information
which is confidential information of Vital Images or confidential
information of Bio-Vascular, respectively. The foregoing restrictions
shall not expire until such time and to the extent that such
information ceases to be confidential information.
(d) Each party shall protect confidential information of the other party
by using the same degree of care, but no less than a reasonable degree
of care, to prevent the unauthorized disclosure of the other party's
confidential information as the party uses to protect its own
confidential information of a like nature.
(e) Each party shall ensure that its Affiliates, sublicensees and other
transferees (such as advisors, attorneys and other consultants) agree
to be bound by the same restrictions on use and disclosure of
confidential information as bind the party in advance of the
disclosure of confidential information to them.
6.6. Privileged Matters.
(a) Bio-Vascular and Vital Images agree that Vital Images will maintain,
preserve and assert all privileges, including, without limitation, any
privilege or protection arising under or relating to any attorney-
client relationship (including, without limitation, the attorney-
client and work product privileges), that existed prior to the
Distribution Date ("Privilege" or "Privileges"). Vital Images will not
waive any Privilege that could be asserted under applicable law
without the prior written consent of Bio-Vascular. The rights and
obligations created by this paragraph apply to all information as to
which, but for the Distribution, Bio-Vascular would have been entitled
to assert or did assert the protection of a Privilege ("Privileged
Information"), including but not limited to (i) any and all
information generated prior to the Distribution Date but which, after
the Distribution, is in the possession of Vital Images; (ii) all
communications subject to a Privilege occurring prior to the
Distribution Date between counsel for Bio-Vascular and any person who,
at the time of the communication, was an employee of Bio-Vascular,
regardless of whether such employee is or becomes an Vital Images
Employee; and (iii) all information generated, received or arising
after the Distribution Date that refers or relates to Privileged
Information generated, received or arising prior to the Distribution
Date.
(b) Upon receipt by Vital Images or any of its Affiliates of any subpoena,
discovery or other request that arguably calls for the production or
disclosure of Privileged Information, or if Vital Images obtains
knowledge that any current or former employee of Vital Images has
received any subpoena, discovery or other request which arguably calls
for the production or disclosure of Privileged Information, Vital
Images will promptly notify Bio-Vascular of the existence of the
request and will provide Bio-Vascular a reasonable opportunity to
review the information and to assert any rights it may have under this
14
Section 6.6 or otherwise to prevent the production or disclosure of
Privileged Information. Vital Images will not produce or disclose any
information arguably covered by a Privilege under this Section 6.6
unless (i) Bio-Vascular has provided its express written consent to
such production or disclosure; or (ii) a court of competent
jurisdiction has entered a final, non-appealable order finding that
the information is not entitled to protection under any applicable
privilege.
(c) Bio-Vascular's delivery of copies of the Books and Records and other
information to Vital Images, and Bio-Vascular's agreement to permit
Vital Images to possess copies of Privileged Information occurring or
generated prior to the date of this Agreement, are made in reliance on
Vital Images' agreement, as set forth in this Section 6.6, to maintain
the confidentiality of Privileged Information and to assert and
maintain all applicable Privileges. The access to information being
granted pursuant to Sections 6.1 and 6.2 hereof, the agreement to
provide witnesses and individuals pursuant to Section 6.3 hereof and
transfer of Privileged Information to Vital Images pursuant to this
Agreement shall not be deemed a waiver of any Privilege that has been
or may be asserted under this Section 6.6 or otherwise. Nothing in
this Distribution Agreement shall operate to reduce, minimize or
condition the rights granted to Bio-Vascular in, or the obligations
imposed upon Vital Images by, this Section 6.6.
(d) If there is a reasonable likelihood that the waiver by Bio-Vascular of
any Privilege could expose Vital Images to liability or could
otherwise adversely affect Vital Images, Bio-Vascular will consult
with Vital Images prior to such waiver, and Bio-Vascular will assert
or preserve the Privilege, as applicable, if reasonably practical and
if Bio-Vascular's interests will not be adversely affected by its
assertion or preservation of the Privilege.
ARTICLE
7.
INSURANCE
7.1. Policies and Rights of Vital Images. Before, on and after the Distribution
Date, Vital Images shall have any and all rights of an insured party under
each of the Shared Policies, specifically including, but not limited to,
rights of indemnity and the right(s) to be defended by or at the expense of
insurer(s), with respect to all injuries, losses, liabilities, damages and
expenses incurred or claimed to have been incurred on or prior to the
Distribution Date by any party in or in connection with the conduct of
Vital Images or, to the extent any claim is made against Vital Images, Bio-
Vascular, and which injuries, losses, liabilities, damages and expenses may
arise out of insured or insurable occurrences or events under one or more
of the Shared Policies; provided, however, that nothing in this clause is
intended to effectuate or shall be deemed to constitute or reflect the
assignment of the Shared Policies, or any of them, to Vital Images.
7.2. Post-Distribution Date Claims. If, subsequent to the Distribution Date, any
person, corporation, firm or entity shall assert a claim against Vital
Images with respect to any injury, loss, liability, damage or expense
incurred or claimed to have been incurred prior to the Distribution Date
in, or in connection with, the conduct of Vital Images or, to the extent
any claim is made against Vital Images, Bio-Vascular, and which injury,
loss, liability, damage or expense may arise out of insured or insurable
occurrences or events under one or more of the Shared Policies, Bio-
15
Vascular shall at the time such claim is asserted be deemed to assign,
without need of further documentation, to Vital Images any and all rights
of an insured party under the applicable Shared Policy(ies) with respect to
such asserted claim, specifically including rights of indemnity and the
right(s) to be defended by or at the expense of the insurer(s); provided,
however, that nothing in this sentence is intended to effectuate or shall
be deemed to constitute or reflect the assignment of the Shared Policies,
or any of them, to Vital Images.
7.3. Administration and Reserves. Subject to any contrary provisions of any
Related Agreement, from and after the Distribution Date:
(a) Vital Images shall be entitled to any reserves established by Bio-
Vascular or any of its subsidiaries, or the benefit of reserves held
by any insurance carrier, with respect to the Liabilities of Vital
Images; and
(b) Bio-Vascular shall be entitled to any reserves established by Bio-
Vascular or any of its subsidiaries, or the benefit of reserves held
by any insurance carrier, with respect to Bio-Vascular's Liabilities.
7.4. Allocation of Insurance Proceeds. Insurance Proceeds received with respect
to claims, costs and expenses under the Policies shall be paid to Vital
Images with respect to the Liabilities of Vital Images and to Bio-Vascular
with respect to Bio-Vascular's Liabilities. Payment of the allocable
portions of indemnity costs of Insurance Proceeds resulting from the
liability policies will be made to the appropriate party upon receipt from
the insurance carrier. In the event that the aggregate limits on any of the
Shared Policies are exceeded, the parties agree to provide an equitable
allocation of Insurance Proceeds received after the Distribution Date based
upon their respective bona fide claims. The parties agree to use their best
efforts to cooperate with respect to insurance matters.
7.5. Agreement for Waiver of Conflict and Shared Defense. In the event that
Insured Claims of both Vital Images and Bio-Vascular exist relating to the
same occurrence, Vital Images and Bio-Vascular agree to jointly defend and
to waive any conflict of interest necessary to the conduct of that joint
defense. Nothing in this paragraph shall be construed to limit or otherwise
alter in any way the indemnity obligations of the parties to this
Agreement, including those created by this Agreement, by operation of law
or otherwise.
ARTICLE
8.
DISPUTE RESOLUTION
8.1. Negotiation and Binding Arbitration. Except with respect to matters
involving Section 6.6 hereof (Privileged Matters) and except as may
expressly be provided in any other agreement between the parties entered
into pursuant hereto, if a dispute, controversy or claim (collectively, a
"Dispute") between Bio-Vascular and Vital Images arises out of or relates
to this Agreement, a Related Agreement or any other agreement entered into
pursuant hereto or thereto, including, without limitation, the breach,
interpretation or validity of any such agreement or any matter involving an
Indemnifiable Loss, Bio-Vascular and Vital Images agree to use the
following procedures, in lieu of either party pursuing other available
remedies and as the sole remedy (except as provided in Section 8.4 below),
to resolve the Dispute.
16
8.2. Initiation. A party seeking to initiate the procedures will give written
notice to the other party, briefly describing the nature of the Dispute. A
meeting will be held between the parties within ten (10) days of the
receipt of such notice, attended by individuals with decision-making
authority regarding the Dispute, to attempt in good faith to negotiate a
resolution of the Dispute.
8.3. Submission to Arbitration. If, within thirty (30) days after such meeting,
the parties have not succeeded in negotiating a resolution of the Dispute,
they will agree to submit the Dispute to binding arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association, by a sole arbitrator selected by the parties. The arbitration
will be held in St. Xxxx, Minnesota and governed by the Minnesota
equivalent of the Federal Arbitration Act, 9 U.S.C. (S)(S) 1-16, and
judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction thereof. The costs of arbitration will be
apportioned between Bio-Vascular and Vital Images as determined by the
arbitrator in such manner as the arbitrator deems reasonable, taking into
account the circumstances of the Dispute, the conduct of the parties during
the proceeding, and the result of the arbitration.
8.4. Equitable Relief. Nothing herein will preclude either party from seeking
equitable relief to prevent any immediate, irreparable harm to its
interests, including multiple breaches of this Agreement or the relevant
Related Agreement by the other party. Otherwise, these procedures are
exclusive and will be fully exhausted prior to the initiation of any
litigation. Either party may seek specific enforcement of any arbitrator's
decision under this Article 8.
8.5. Consolidation. The arbitrator may consolidate an arbitration under this
Agreement with any arbitration arising under or relating to the Related
Agreements or any other agreement between the parties entered into pursuant
hereto, as the case may be, if the subject of the Disputes thereunder arise
out of or relate essentially to the same set of facts or transactions. Such
consolidated arbitration will be determined by the arbitrator appointed for
the arbitration proceeding that was commenced first in time.
ARTICLE
9.
MISCELLANEOUS
9.1. Entire Agreement. This Agreement, including the Exhibits and the
agreements and other documents referred to herein, shall constitute the
entire agreement between Bio-Vascular and Vital Images with respect to the
subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
9.2. Expenses. Except as otherwise expressly provided in this Agreement, any
Related Agreement or any other agreement being entered into between Bio-
Vascular and Vital Images in connection with this Agreement, Bio-Vascular
and Vital Images shall each pay their own costs and expenses incurred in
connection with the Distribution and the consummation of the transactions
contemplated by this Agreement.
9.3. Governing Law. This Agreement, the Related Agreements and any other
agreement entered into in connection with the Distribution, shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Minnesota (regardless of the laws that might otherwise
17
govern under applicable principles of conflict of laws) as to all matters,
including, without limitation, matters of validity, construction, effect,
performance and remedies.
9.4. Jurisdiction and Venue. Subject to the arbitration provisions of this
Agreement, each party consents to the personal jurisdiction of the state
and federal courts located in the State of Minnesota and hereby waives any
argument that venue in any such forum is not convenient or proper.
9.5. Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly
given (i) on the date of service if served personally on the party to whom
notice is given; (ii) on the day of transmission if sent via facsimile
transmission to the facsimile number given below, provided telephonic
confirmation of receipt is obtained promptly after completion of
transmission; (iii) on the business day after delivery to an overnight
courier service or the express mail service maintained by the United States
Postal Service, provided receipt of delivery has been confirmed; or (iv) on
the fifth day after mailing, provided receipt of delivery is confirmed, if
mailed to the party to whom notice is to be given, by registered or
certified mail, postage prepaid, properly addressed and return-receipt
requested, to the party as follows:
If to Bio-Vascular: Bio-Vascular, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
Attn: Chief Executive Officer
Facsimile No. (000) 000-0000
If to Vital Images: Vital Images, Inc.
0000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attn: Chief Financial Officer
Facsimile No. (000) 000-0000
Any party may change its address by giving the other party written notice
of its new address in the manner set forth above.
9.6. Modification of Agreement. No modification, amendment or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by each of the parties hereto and then such
modification, amendment or waiver shall be effective only in the specific
instance and for the purpose for which given.
9.7. Termination. This Agreement may be terminated and the Distribution
abandoned at any time prior to the Distribution Date by, and in the sole
discretion of, Bio-Vascular without the approval of Vital Images. In the
event of such termination, neither party (or any of its directors of
officers) shall have any liability of any kind to the other party.
9.8. Successors and Assigns.
(a) This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties and their respective
successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned
18
by either party without the prior written consent of the other party,
and such consent shall not be unreasonably withheld.
(b) The obligations of Bio-Vascular and Vital Images under Articles 4 and
7 hereof shall survive the sale or other transfer by either of them of
any of their respective assets or businesses or the assignment by
either of them of any of their respective Liabilities.
9.9. No Third Party Beneficiaries. Except for certain parties entitled to
indemnification under Sections 4.1 and 4.2 hereof and listed therein, this
Agreement is solely for the benefit of the parties hereto and is not
intended to confer upon any other person except the parties hereto any
rights or remedies hereunder.
9.10. Titles and Headings; Interpretation. The titles and headings to Articles
and Sections herein are inserted for convenience of reference only and are
not intended to constitute a part of or to affect the meaning or
interpretation of this Agreement. As used in this Agreement, the term
"person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof. Whenever any words are
used herein in the masculine gender, they shall be construed as though
they were also used in the feminine gender in all cases where they would
so apply.
9.11. Exhibits. The Exhibits to this Agreement shall be construed with and as
an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein.
9.12. Severability. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable, the enforceability
of the remaining provisions hereof shall not in any way be affected or
impaired thereby. It is hereby stipulated and declared to be the intention
of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions hereof without including any of
such which may hereafter be declared invalid, void or unenforceable. In
the event that any such term, provision, covenant or restriction is
hereafter held to be invalid, void or unenforceable, the parties hereto
agree to use their best efforts to find and employ an alternate means to
achieve the same or substantially the same result as that contemplated by
such term, provision, covenant or restriction.
9.13. No Waiver. Neither the failure nor any delay on the part of any party
hereto to exercise any right under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any right
preclude any other or further exercise of the same or any other right, nor
shall any waiver of any right with respect to any occurrence be construed
as a waiver of such right with respect to any other occurrence.
9.14. Survival. All covenants and agreements of the parties contained in this
Agreement will survive the Distribution Date.
9.15. Counterparts. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall
become a binding agreement when one or more counterparts have been signed
by each party and delivered to the other party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered on their behalf as of the date first written above.
BIO-VASCULAR, INC.
By:
-------------------------------
Its:
-------------------------------
VITAL IMAGES, INC.
By:
-------------------------------
Its:
-------------------------------
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