<PAGE>
As filed with the Securities and Exchange Commission on May 9, 1997
Registration No.333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
VITAL IMAGES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 42-1321776
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3100 WEST LAKE STREET, SUITE 100 55416
MINNEAPOLIS, MINNESOTA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
------------------------
INCENTIVE STOCK OPTION ADJUSTMENT PLAN
1990 MANAGEMENT INCENTIVE STOCK OPTION PLAN
1992 DIRECTOR STOCK OPTION ADJUSTMENT PLAN
1992 STOCK OPTION PLAN
1995 STOCK INCENTIVE ADJUSTMENT PLAN
CERTAIN NON-PLAN OPTIONS
CERTAIN NON-PLAN SECURITIES
(FULL TITLE OF THE PLAN)
------------------------
GREGORY S. FURNESS
CHIEF FINANCIAL OFFICER
3100 WEST LAKE STREET, SUITE 100
MINNEAPOLIS, MINNESOTA 55416
(NAME AND ADDRESS OF AGENT FOR SERVICE)
(612) 915-8000
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
IMMEDIATELY UPON THE FILING OF THIS REGISTRATION STATEMENT
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE(2) PRICE(2) FEE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, PAR VALUE
$.01 PER SHARE (3) .... 1,940,504 SHARES $1.50 $2,910,756 $882.05
=======================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416 under the Securities Act of 1933, as
amended, (the "Securities Act") this Registration Statement includes an
indeterminate number of additional shares as may be issuable as a result of
anti-dilution provisions described herein.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee and calculated pursuant to Rule 457(h) under the
Securities Act on the basis of the pro forma book value of the Registrant's
Common Stock on May 6, 1997.
(3) Each share of Common Stock includes one Preferred Stock Purchase Right.
================================================================================
<PAGE>
EXPLANATORY NOTE
As provided in Instruction C to Form S-8, any prospectus that is to be used
for reoffers and resales of restricted securities must be filed as a part of a
Registration Statement on Form S-8. Accordingly, the Prospectus that is to be
used for reoffers and resales of shares of Common Stock acquired prior to the
effective date of this Registration Statement pursuant to the grant of certain
non-plan restricted stock awards has been filed as a part of this Registration
Statement. These grants were made to a certain employee of Bio-Vascular, Inc.
("Bio-Vascular") or the Company in connection with the spin-off distribution of
all of the Company's issued and outstanding Common Stock to the shareholders of
Bio-Vascular. This Registration Statement became effective prior to the
Company's spin-off from Bio-Vascular, but subsequent to the effectiveness of the
Company's Registration Statement on Form 10, registering the Company's Common
Stock and certain Preferred Stock Purchase Rights under the Securities Exchange
Act of 1934, as amended.
<PAGE>
PROSPECTUS
4,714 Shares
VITAL IMAGES, INC.
Common Stock
_______________________
This Prospectus relates to 4,714 shares (the "Shares") of Common Stock, par
value $.01 per share (the "Common Stock"), of Vital Images, Inc. (the "Company")
that may be offered for sale for the account of a certain shareholder of the
Company as stated herein under the heading "Selling Shareholder."
The Selling Shareholder has advised the Company that sales of the Shares
offered hereunder by him, or by his pledgees, donees, transferees or other
successors in interest, may be made from time to time in the over-the-counter
market, through negotiated transactions or otherwise, at fixed prices that may
be changed, at market prices prevailing at the time of sale or at negotiated
prices. The Shares may be sold by one or more of the following methods: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this Prospectus;
and (c) ordinary brokerage transactions and transactions in which the broker
solicits purchasers. Sales may be made pursuant to this Prospectus to or
through broker-dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholder or the purchasers of
Common Stock for whom such broker-dealer may act as agent or to whom they may
sell as principal, or both (which compensation as to a particular broker-dealer
may be in excess of customary commissions). One or more supplemental
prospectuses will be filed pursuant to Rule 424 under the Securities Act of
1933, as amended (the "Securities Act"), to describe any material arrangements
for the sale of the Shares offered hereunder when such arrangements are entered
into by the Selling Shareholder and any other broker-dealers that participate in
the sale of the Shares.
The Selling Shareholder and any broker-dealers or other persons acting on
their behalf in connection with the sale of Common Stock hereunder may be deemed
to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit realized by them on the resale of
Common Stock as principals may be deemed to be underwriting commissions under
the Securities Act. As of the date hereof, there are no special selling
arrangements between any broker-dealer or other person and the Selling
Shareholder.
No period of time has been fixed within which the Shares may be offered or
sold. None of the proceeds from the sale of the Shares will be received by the
Company. The Company will pay all expenses with respect to this offering,
except for brokerage fees and commissions and transfer taxes for the Selling
Shareholder, which will be borne by the Selling Shareholder.
The shares of Common Stock offered hereby involve certain risks. See "Risk
Factors" beginning on page 3 of this Prospectus.
It is expected that the Common Stock will initially be traded in the over-
the-counter market on the OTC Electronic Bulletin Board, although the Company
intends to seek listing of the Common Stock on the Nasdaq SmallCap Market.
There can be no assurance, however, that the Company will be successful in
meeting the requirements for initial or continued listing on the Nasdaq SmallCap
Market.
_______________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________________
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus in
connection with the offer described in this Prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by the Company or the Selling Shareholder. Neither the delivery of
this Prospectus nor any sale made under this Prospectus shall under any
circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof or since the date of any documents
incorporated herein by reference. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy any securities other than the
securities to which it relates, or an offer or solicitation in any state to any
person to whom it is unlawful to make such offer in such state.
The date of this Prospectus is May 9, 1997.
1
<PAGE>
THE COMPANY
Vital Images, Inc. ("Vital Images" or the "Company") is engaged in the
business of developing, marketing and supporting medical visualization software
and systems for use in clinical diagnosis and surgical planning (the "Medical
Visualization Business"). Since its incorporation in 1988, the Company has
pioneered the use of computer-based visualization software, and, in particular,
three-dimensional visualization software. Initially, the Company focused on
developing powerful visualization software tools for use by engineers and
researchers in a variety of imaging applications, including gas and oil
exploration, microscopy and medical research. In 1994, the Company was acquired
by Bio-Vascular and consolidated its focus and dedicated its efforts to
developing and marketing high performance visualization software for medical
applications, designed for routine clinical use in clinical diagnosis and
surgical planning. In late 1996, Bio-Vascular announced a proposed spin-off
distribution of all of the issued and outstanding shares of Common Stock to
shareholders of Bio-Vascular (the "Distribution"), resulting in Vital Images
becoming an independent, publicly held company. The Distribution is effective
on May 12, 1997.
The Company's products are based on proprietary visualization algorithms and
display techniques involving "volume rendering" of imaging data. Volume
rendering is an advanced technique for displaying two- or three-dimensional
images on a computer monitor which has significant advantages over the
alternative technique, known as "surface rendering." Traditionally, volume
rendering has been largely overlooked by visualization companies because the
computer power necessary to perform volume rendering is, in general,
significantly more intensive than the requirements for surface rendering.
However, the Company's proprietary technologies offer volume rendering-based
systems which operate on standard computer workstations manufactured by Silicon
Graphics, Inc. ("Silicon Graphics").
The Company currently has two software products, VoxelView(R) and Vitrea(TM),
which provide clinicians with both two- and three-dimensional views inside the
human body for use in clinical diagnosis and surgical planning. VoxelView, the
Company's first medical visualization product, received 510(k) marketing
clearance from the U.S. Food and Drug Administration (the "FDA") in November
1995 and currently has approximately 350 user sites around the world. Vitrea,
an advanced version of the Company's technology for medical visualization
applications, received 510(k) marketing clearance from the FDA in December 1996,
and is currently expected to be commercially released in the second half of
calendar 1997.
The Company intends to offer Vitrea both as a software package and as an
integrated software and hardware system to radiologists, surgeons and other care
providers. Vitrea and the integrated Vitrea system are both designed for ready
integration into hospital radiology networks. Vitrea's primary advantage is
that it provides two- and three-dimensional viewing for routine diagnosis and
surgical planning, without requiring the user to be trained in computer graphics
techniques. A Vitrea user can view the image data in two or three dimensions
using visualization settings stored within the system, and optimized for their
specific clinical application. The user can interactively navigate around, or
"fly through," the image, allowing the user to view clinically relevant
anatomies and pathologies. Vital Images believes that no competitor has
developed this interactive "fly through" capability based on volume rendering
operating on a low-cost computer workstation. Vitrea also allows the user to
capture views by taking "snapshots," which can be downloaded into customized
reports for electronic transmission and archiving.
The Company currently offers VoxelView(R) as a visualization software package
targeted at the academic and research segments of the medical imaging market,
rather than the clinical market targeted for Vitrea(TM). Like Vitrea(TM),
VoxelView(R) employs interactive volume rendering to manipulate and display
imaging data from a wide variety of medical imaging sources. While VoxelView(R)
currently offers more features and greater functionality than Vitrea(TM), its
operation also requires the user to have more training and expertise in computer
graphics than are required to use Vitrea(TM). Because Vitrea(TM) is targeted
for clinical use, it has visualization settings stored within the software,
employs a built-in clinical workflow and is designed for use in specific
clinical visualization applications.
The Company's business strategy is to continue to develop and sell medical
visualization software and systems to end users and to seek opportunities to
integrate its technologies into medical imaging equipment developed and marketed
by other medical equipment manufacturers.
Vital Images was incorporated in Iowa in 1988, and reincorporated in
Minnesota in 1997. Its principal offices are located at 3100 West Lake Street,
Suite 100, Minneapolis, MN 55416, and its telephone number is (612) 915-8000.
2
<PAGE>
RISK FACTORS
The following factors should be considered in evaluating an investment in
the Common Stock. Vital Images also cautions readers that this Prospectus, and
the information incorporated herein by reference, includes certain forward-
looking statements and information that are based on management's beliefs as
well as on assumptions made by, and upon information currently available to,
management. When used in this Prospectus or in information incorporated herein
by reference, the words "expect," "anticipate," "intend," "plan," "believe,"
"seek" and "estimate" or similar expressions or the negative thereof are
intended to identify such forward-looking statements. However, this Prospectus
and the information incorporated herein by reference also contain other forward-
looking statements. Forward-looking statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions,
including, but not limited to, the following risk factors, which could cause
Vital Images' future results and shareholder values to differ materially from
those expressed in any forward-looking statements made by or on behalf of Vital
Images. Many of such factors are beyond Vital Images' ability to control or
predict. Readers are cautioned not to put undue reliance on forward-looking
statements. Vital Images disclaims any intent or obligation to update publicly
any forward-looking statements, whether as a result of new information, future
events or otherwise.
Historical Operating Losses; Uncertain Profitability Prospects
Vital Images had operating losses of $882,000 for the three months ended
January 31, 1997, and $2,545,000 for the year ended October 31, 1996, and, with
the exception of the fiscal year ended October 31, 1995, has incurred operating
losses each year since 1990. While Vital Images had operating income of
$252,000 for the year ended October 31, 1995, this income was entirely
attributable to a one-time license fee payment of $1,500,000 received by Vital
Images during that fiscal year as a result of granting a perpetual source code
license for its gas and oil exploration software product, VoxelGeo(R). At
January 31, 1997, Vital Images' accumulated deficit was $6,261,000. Vital
Images will likely continue to incur operating losses in the near term given the
early stage of the market for its medical visualization products, and there can
be no assurance that Vital Images will be profitable at any time in the future.
Transition to Medical Visualization Business; Early Stage of Industry and
Business
From its incorporation in 1988 until its acquisition by Bio-Vascular in
1994, Vital Images was focused on developing and supporting visualization
software tools for use by engineers and researchers in a variety of imaging
applications, including gas and oil exploration, microscopy and medical
research. Since its acquisition in 1994, Vital Images has consolidated its
focus and is now focused solely on developing, marketing and supporting
visualization software packages and systems for routine clinical use in medical
applications. While Vital Images has designed its Vitrea product in keeping
with this refined focus, there can be no assurance that Vital Images will be
successful in marketing Vitrea or any other product or that Vital Images will be
successful in making the transition from developing software tools for a variety
of technical applications to developing, marketing and supporting software
packages or integrated solutions for direct clinical application by medical
personnel.
Additionally, the medical visualization industry in which Vital Images
markets its products is still in an early stage. The early stage of the
industry is attributable to the fairly recent availability of high performance
computers at reduced prices, the recent adoption of industry standards for the
generation, transmission and storage of medical imaging data, and changing
medical practices. Although Vital Images believes that the recent advances in
the affordability of high performance computers and in the development of
industry standards for imaging data will provide opportunities for growth in the
medical visualization industry, given the uncertainties associated with the
early stage of the industry, there can be no assurance that the industry will
continue to develop in the manner anticipated by Vital Images. Accordingly,
there can be no assurance that the medical visualization industry will provide
growth opportunities for Vital Images and its volume rendering software products
or that Vital Images' business strategies and focus on volume rendering
technology will be successful as the medical visualization industry continues to
evolve.
Although Vital Images has received FDA clearance to market VoxelView and
Vitrea for use as clinical diagnostic and surgical planning tools, there can be
no assurance of meaningful revenue from these early stage products in the near
term. The success of Vital Images' products will depend on its ability to
successfully commercialize and market its products, the ability and willingness
of physicians to use two- and three-dimensional
3
<PAGE>
imaging software in clinical diagnosis, surgical planning, patient screening,
and other diagnosis and treatment protocols, and the ability of Vital Images to
differentiate its volume rendering software from competing products employing
surface rendering or other technologies. There can be no assurance that Vital
Images will be able to succeed in its efforts to further develop, commercialize,
and achieve market acceptance for VoxelView or Vitrea or for any other product.
Absence of Continuing Bio-Vascular Funding; Need for Additional Capital
Prior to the Distribution, Vital Images participated in Bio-Vascular's
centralized funding and cash management, and cash requirements of Vital Images
were provided by Bio-Vascular. Following the Distribution, Bio-Vascular will no
longer provide such funds to finance Vital Images' operations or for any other
purposes. Accordingly, in anticipation of the Distribution, Bio-Vascular agreed
to assign to Vital Images $10,000,000 in cash, cash equivalents and marketable
securities, effective November 1, 1996. Subsequently, Bio-Vascular's Board of
Directors determined, effective as of the effective date of the Distribution
(the "Distribution Date"), to make such additional capital contributions to
Vital Images as necessary to bring Vital Images' cash, cash equivalents and
marketable securities balances to a combined $10,000,000. If Vital Images'
operations progress as anticipated, of which there can be no assurance, Vital
Images believes that the capital contribution made by Bio-Vascular, together
with cash flows from operations, should be sufficient to satisfy its cash
requirements for at least the next two years. The timing of Vital Images'
future capital requirements, however, will depend on a number of factors,
including the ability of Vital Images to successfully commercialize and market
its products; the ability and willingness of physicians to use two- and three-
dimensional imaging software in clinical diagnosis, surgical planning, patient
screening and other diagnosis and treatment protocols; the impact of competition
in the medical visualization business; the ability of Vital Images to
differentiate its volume rendering software from competing products employing
surface rendering or other technologies; and the ability to enhance existing
products and develop new products on a timely basis. To the extent that Vital
Images' operations do not progress as anticipated, additional capital will be
required sooner. There can be no assurance that any required additional capital
will be available on acceptable terms, or at all, and the failure to obtain any
such required capital would have a material adverse effect on Vital Images'
business.
Highly Competitive Industry; Risk of Technological Obsolescence
Vital Images faces intense competition in its Medical Visualization
Business. While the industry is in a relatively early stage, its development to
date has been characterized by rapid innovation and technological change. Vital
Images expects technology to continue to develop rapidly, and Vital Images'
success will depend to a large extent on its ability to maintain a competitive
position with its volume rendering technology. There can be no assurance that
Vital Images will be able to compete effectively in the marketplace or that
products developed by its competitors will not render its products obsolete or
non-competitive. Similarly, there can be no assurance that Vital Images'
competitors will not succeed in developing or marketing products that are viewed
as providing superior clinical performance or are less expensive relative to
Vital Images' products currently marketed or to be developed. Companies
competing with Vital Images in the medical visualization industry include large,
established manufacturers of medical imaging equipment. In addition to having
significantly greater capital and staff resources for research and development
that are critical to success in the rapidly changing medical visualization
industry, such companies also have well-established marketing and distribution
networks and may have a competitive advantage in marketing visualization tools
as an integrated part of their imaging products. Additionally, Vital Images
faces competition from other entities, such as picture archive and communication
systems ("PACS") vendors, hospital, radiology and clinical systems suppliers and
internal development projects sponsored by hospital radiology departments.
There can be no assurance that Vital Images will be able to compete effectively
with such manufacturers or competing entities.
Dependence on Single Platform
Vital Images' primary product offerings, VoxelView and Vitrea, are designed
to run on workstations manufactured and sold by Silicon Graphics. Additionally,
Vital Images' strategy includes the sale of its Vitrea software as part of an
integrated system including Silicon Graphics' hardware. While Vitrea is also
capable of running on other types of hardware, Vitrea's performance on other
hardware is currently reduced relative to its performance when operated on
Silicon Graphics workstations. In addition, other workstations capable of
running Vitrea may be significantly more expensive than those manufactured and
sold by Silicon Graphics. Accordingly, Vital Images' ability to market its
products is dependent to a significant degree on the availability of Silicon
4
<PAGE>
Graphics workstations and their use and acceptance by Vital Images' customers.
To the extent that Silicon Graphics workstations become unavailable to Vital
Images or that end-users of Vital Images' products utilize platforms
manufactured by other companies, Vital Images may encounter difficulty in
marketing its products. In any such event, Vital Images may be required to
engage in substantial research and development and sales and marketing efforts,
at potentially significant expense, to reconfigure and remarket its products to
run at optimal performance levels on workstations other than those manufactured
by Silicon Graphics. There can be no assurance that end-users of Vital Images'
products will not determine to use platforms other than those currently
compatible with Vital Images' products, and any such use could have a material
adverse effect on Vital Images' business, financial condition and results of
operations.
Uncertain Protection for Intellectual Property; Possible Claims of Others
Although Vital Images has filed a patent application with respect to
certain aspects of its technology, it generally does not rely on patent
protection with respect to its products and technologies. Instead, Vital Images
relies primarily on a combination of trade secret and copyright law, employee
and third-party nondisclosure agreements and other protective measures to
protect intellectual property rights pertaining to its products and
technologies. There can be no assurance, however, that these measures will
provide meaningful protection of Vital Images' trade secrets, know-how or other
intellectual property in the event of any unauthorized use, misappropriation or
disclosure or that others will not independently develop similar technologies or
duplicate any technology developed by Vital Images. In addition, to the extent
that any patents are applied for, there can be no assurance that such
applications will result in issued patents or, if issued, that such patents will
be held to be valid or will otherwise be of value. While Vital Images does not
believe that its products and technologies infringe any existing patents or
intellectual property rights of third parties, there can be no assurance that
such infringement does not exist. The costs of defending an intellectual
property claim could be substantial and could adversely affect Vital Images,
even if it were ultimately successful in defending any such claims. If Vital
Images' products or technologies were found to infringe the rights of a third
party, Vital Images could be required to pay significant damages or license
fees or cease production, which could have a material adverse effect on Vital
Images' business.
Product Liability Risk; Limited Insurance Coverage
The manufacture and sale of products used in the practice of medicine
entail significant risk of product liability claims. While Vital Images
currently maintains $2,000,000 of product liability insurance, there can be no
assurance that these coverage limits will be adequate to protect Vital Images
from any liabilities it might incur in connection with sales of its products or
that Vital Images will be able to maintain this level of coverage in the future.
In addition, in order to compete in the medical visualization industry, Vital
Images will have to maintain a steady pace of new product rollouts and updates
or enhancements of existing products. Accordingly, Vital Images may require
increased product liability coverage as additional products and updates come to
the marketplace. Such insurance is expensive and in the future may not be
available on acceptable terms, if at all. A successful product liability claim
or series of such claims against Vital Images in excess of Vital Images'
insurance coverage could have a material adverse effect on its business.
Dependence on Key Employees
Vital Images depends upon the active participation of Dr. Vincent Argiro,
its founder and Executive Vice President and Chief Technology Officer, and
Andrew M. Weiss, its President and Chief Executive Officer. Loss of the
services of either of these individuals could have a material adverse effect on
Vital Images' future business. Furthermore, Vital Images' success as an
independent company will depend on its ability to enhance and develop markets
for its current products as well as to introduce new products to the
marketplace. This success will depend largely on its ability to attract and
retain other qualified scientific and management personnel. Vital Images
competes for such personnel with other companies, academic institutions,
government entities and organizations, many of which have substantially greater
capital resources and research and development capabilities than Vital Images.
There can be no assurance that Vital Images will be successful in recruiting or
retaining such personnel, and the inability of Vital Images to recruit and
retain such personnel would have a material adverse effect on Vital Images'
business.
Transition To Independent Company
5
<PAGE>
Vital Images has not operated as a stand-alone company since its
acquisition by Bio-Vascular in May 1994, and, following the Distribution, Bio-
Vascular will be under no duty to provide assistance to Vital Images except as
described in a Distribution Agreement and a Transition Services Agreement
entered into between Vital Images and Bio-Vascular. There can be no assurance
that Vital Images will be able successfully to manage its transition to an
independent company or to operate and develop its business and manage its growth
opportunities without the financial and managerial assistance provided by Bio-
Vascular since the acquisition.
Availability of Software Libraries
Vital Images' Vitrea product includes certain libraries owned by Duke
University which allow Vitrea to interface with industry-standard network
configurations. While Vital Images is currently negotiating a licensing
arrangement with Duke University for these libraries in anticipation of the
commercial release of Vitrea and expects that such an agreement will be reached
on satisfactory terms, there can be no assurance that an agreement will be
reached on such terms, if at all. Failure of Vital Images to successfully
negotiate a license agreement with Duke University could significantly delay or
prevent commercial release of Vitrea, and would have a material, adverse effect
on Vital Images' business.
Government Regulation
Vital Images' products are subject to regulation by the FDA and by
comparable agencies in foreign countries. In the United States, the FDA
regulates the development, introduction, manufacturing, labeling and
recordkeeping procedures for medical devices, including medical visualization
software and systems. The process of obtaining marketing clearance from the FDA
for new products and new applications for existing products can be time-
consuming and expensive. All of the products currently marketed by Vital Images
have received marketing clearance from the FDA pursuant to 510(k) pre-market
notifications filed with the assistance of Bio-Vascular. There can be no
assurance, however, that clearance will be granted with respect to future
products or enhancements or that FDA review will not involve delays that would
adversely affect Vital Images' ability to market such future products or
enhancements. In addition, there can be no assurance that future products or
enhancements will not be subject to the more lengthy and expensive pre-market
approval ("PMA") process with the FDA.
Even if regulatory approvals to market a product are obtained from the FDA,
these approvals may entail limitations on the indicated uses of the product.
Product approvals by the FDA can also be withdrawn due to failure to comply with
regulatory standards or the occurrence of unforeseen problems following initial
approval. The FDA could also limit or prevent the distribution of Vital Images'
products and has the power to require the recall of such products. FDA
regulations depend heavily on administrative interpretation, and there can be no
assurance that future interpretations made by the FDA or other regulatory bodies
will not adversely affect Vital Images. The FDA, various state agencies or
foreign regulatory agencies may inspect Vital Images and its facilities from
time to time to determine whether Vital Images is in compliance with various
regulations relating to specification, development, documentation, validation,
testing, quality control and product labeling. A determination that Vital
Images is in violation of such regulations could lead to imposition of civil
penalties, including fines, product recalls or product seizures and, in extreme
cases, criminal sanctions.
Vital Images intends to market its products both domestically and
internationally. International regulatory bodies have established varying
regulations governing product standards, packaging requirements, labeling
requirements, import restrictions, tariff regulations, duties and tax
requirements. The inability or failure of Vital Images to comply with the
varying regulations or the imposition of new regulations could restrict its
ability to sell its products internationally and could thereby adversely affect
Vital Images' business.
Limitations on Third-Party Reimbursement
Vital Images' products are purchased by hospitals, clinics and other users,
which bill various third party payors, such as government health programs,
private health insurance plans, managed care organizations and other similar
programs, for the health care goods and services provided to their patients.
Payors may deny reimbursement if they determine that a product used in a
procedure was not used in accordance with established payor protocol regarding
cost-effective treatment methods or was used for an unapproved indication.
Third party payors are increasingly challenging the prices charged for medical
services and, in some instances, have put pressure on service providers to lower
their prices or reduce their services. Vital Images is unable to predict what
changes will be made in the reimbursement methods used by third party healthcare
payors. There can be no assurance that
6
<PAGE>
procedures in which Vital Images' products are used will be considered cost
effective by third party payors, that reimbursement for such procedures will be
available or, if available, that payors' reimbursement levels will not adversely
affect Vital Images' ability to sell its products on a profitable basis. In
addition, there have been and may continue to be proposals by legislators,
regulators and third party payors to curb further these costs in the future.
Failure by hospitals and other users of Vital Images' products to obtain
reimbursement from third party payors, changes in third party payors' policies
towards reimbursement for procedures using Vital Images' products or legislative
action could have a material adverse effect on Vital Images' business.
International Operations
Vital Images sells its products to international customers as well as
domestic customers. Because foreign markets may be influenced by factors that
are different from those prevailing in the United States, there can be no
assurance that Vital Images' products will be accepted in international markets
or that Vital Images will be able to compete successfully in such markets.
International sales are also subject to certain political and economic risks,
including political instability, currency controls, trade restrictions,
regulatory requirements, exchange rate fluctuations and changes in import and
export regulations, any of which could have a material adverse effect on Vital
Images' business.
Absence of Public Market for the Vital Images Common Stock
There has never been a public market for Vital Images Common Stock. While
it is expected that a "when-issued" trading market will develop on or about the
record date for the Distribution, until the Vital Images Common Stock is fully
distributed and an orderly trading market develops, the prices at which trading
in Vital Images Common Stock occurs may fluctuate significantly. In addition,
there can be no assurance that an active trading market in Vital Images Common
Stock will develop or be sustained in the future. In the event trading does
occur, the prices at which shares of the Vital Images Common Stock trade will be
determined by the marketplace and may be influenced by many factors, including,
among others, Vital Images' performance and prospects, the depth and liquidity
of the market for Vital Images Common Stock, investor perception of Vital
Images, its business and the medical visualization industry, Vital Images'
dividend policy, general financial and other market conditions, and domestic and
international economic conditions. In addition, the over-the-counter market has
experienced extreme price and volume fluctuations that have affected the market
price of many stocks and that, at times, could be viewed as unrelated or
disproportionate to the operating performance of such companies. Such
fluctuations have also affected the share prices of many newly public issues and
of medical technology companies. Such volatility and other factors may have a
materially adverse effect on the market price for shares of Vital Images Common
Stock.
Possibility of Substantial Sales of Vital Images Common Stock
The planned Distribution will involve the distribution on the Distribution
Date of an aggregate of approximately 4,773,769 shares of Vital Images Common
Stock to the shareholders of Bio-Vascular as of the Record Date, representing
all of the issued and outstanding shares of Vital Images Common Stock as of that
date. Substantially all of such shares of Vital Images Common Stock will be
eligible for immediate resale in the public market. Neither Bio-Vascular nor
Vital Images is able to predict whether substantial amounts of Vital Images
Common Stock will be sold in the open market following the Distribution. Any
sales of substantial amounts of Vital Images Common Stock in the public market,
or the perception that such sales might occur, whether as a result of the
Distribution or otherwise, could materially adversely affect the market price of
Vital Images Common Stock.
Certain Anti-Takeover Considerations
Vital Images' Articles authorize the Board of Directors, without any action
by shareholders, to establish the rights and preferences of up to 5,000,000
shares of undesignated preferred stock. Vital Images is also subject to certain
"anti-takeover" provisions of the Minnesota Business Corporation Act. In
addition, Vital Images has adopted a Shareholder Rights Plan (the "Rights
Agreement") designed to protect Vital Images and its shareholders from
unsolicited attempts or inequitable offers to acquire Vital Images. These
measures may, in certain circumstances, deter or discourage takeover attempts
and other changes in control of Vital Images not approved by its Board of
Directors. As a result, Vital Images' shareholders may lose opportunities to
dispose of their shares at the higher prices typically available in takeover
attempts or that may be available under a merger proposal. In addition, these
measures may have the effect of permitting Vital Images' current directors to
retain their positions
7
<PAGE>
and place them in a better position to resist changes that shareholders may wish
to make if they are dissatisfied with the conduct of Vital Images' business.
Effects of Trading in the Over-the-Counter Market
It is expected that Vital Images Common Stock will initially be traded in
the over-the-counter market on the OTC Electronic Bulletin Board. Consequently,
the liquidity of Vital Images Common Stock will likely be impaired, not only in
the number of shares that may be bought and sold, but also through delays in the
timing of transactions, and coverage by security analysts and the news media, if
any, of Vital Images is also likely to be reduced. As a result, prices for
shares of Vital Images Common Stock may be lower than might otherwise prevail if
Vital Images Common Stock were traded on Nasdaq or a national securities
exchange.
Applicability of "Penny Stock Rules"
Federal regulations under the Securities Exchange Act of 1934, as amended,
(the "Exchange Act"), regulate the trading of so-called "penny stocks" (the
"Penny Stock Rules"), which are generally defined as any security not listed on
a national securities exchange or Nasdaq, priced at less than $5.00 per share
and offered by an issuer with limited net tangible assets and revenues. In
addition, equity securities listed on Nasdaq which are priced at less than $5.00
are deemed penny stocks for the limited purpose of Section 15(b)(6) of the
Exchange Act. Therefore, during the time in which Vital Images Common Stock is
traded in the over-the-counter market, as well as during any time in which Vital
Images Common Stock is quoted on Nasdaq and is priced below $5.00 per share, if
such quotation occurs at all, trading of Vital Images Common Stock will be
subject to the provisions of Section 15(b)(6) of the Exchange Act which make it
unlawful for any broker-dealer to participate in a distribution of any penny
stock without the consent of the Securities and Exchange Commission if, in the
exercise of reasonable care, the broker-dealer is aware of or should have been
aware of the participation of a previously sanctioned person. Accordingly, it
may be more difficult for broker-dealers to sell Vital Images Common Stock and
shareholders of Vital Images may therefore have difficulty in selling their
shares in the future in the secondary trading market.
Additionally, during the time that the Vital Images Common Stock trades
below $5.00 per share and is not listed on Nasdaq or any national securities
exchange, trading, if any, of Vital Images Common Stock will be subject to the
full range of the Penny Stock Rules. Under these rules, broker-dealers must
take certain steps prior to selling a "penny stock," which steps include: (i)
obtaining financial and investment information from the investor; (ii) obtaining
a written suitability questionnaire and purchase agreement signed by the
investor; and (iii) providing the investor a written identification of the
shares being offered and the quantity of the shares. If the Penny Stock Rules
are not followed by the broker-dealer, the investor has no obligation to
purchase the shares. The application of the comprehensive Penny Stock Rules
make it more difficult for broker-dealers to sell Vital Images Common Stock and
shareholders of Vital Images may have difficulty in selling their shares in the
future in the secondary trading market.
Dividend Policy
The payment and amount of cash dividends on Vital Images Common Stock after
the Distribution will be subject to the discretion of Vital Images' Board of
Directors. It is currently contemplated that Vital Images will not pay cash
dividends on the Vital Images Common Stock in the foreseeable future. Vital
Images' dividend policy will be reviewed by Vital Images' Board of Directors at
such future times as may be appropriate, and payment of dividends on Vital
Images Common Stock will depend upon Vital Images' financial position, capital
requirements, profitability and such other factors as Vital Images' Board of
Directors deems relevant.
Tax Consequences
Bio-Vascular has received an opinion from its tax advisor to the effect
that it appears that there is substantial authority for viewing the Distribution
as a non-taxable transaction for Bio-Vascular and its shareholders for federal
income tax purposes. Bio-Vascular has not requested, and does not anticipate
requesting, a ruling from the Internal Revenue Service with respect to the
federal income tax consequences of the Distribution. Because no ruling will be
received, and because the opinion of Bio-Vascular's tax advisor is based only on
a "substantial authority" standard, there can be no assurance that the
Distribution will qualify as a tax-free transaction.
SELLING SHAREHOLDER
8
<PAGE>
This Prospectus relates to the offering of 4,714 shares of Common Stock of
the Company by the Selling Shareholder named below. The shares being offered by
the Selling Shareholder hereunder were acquired pursuant to the grant of certain
non-plan restricted stock awards in connection with the Distribution. The
following table sets forth certain information, as of May 7, 1997, and as
adjusted to reflect the sale of the shares offered hereby, with respect to the
beneficial ownership of the Common Stock by the Selling Shareholder. Unless
otherwise noted below, each Selling Shareholder possesses sole voting and
investment power with respect to the shares shown opposite such Selling
Shareholder's name.
<TABLE>
<CAPTION>
Shares of Beneficial Ownership of Common
Common Stock Stock After Offering (1)(2)(3)
Beneficially Number of ------------------------------
Owned Before Shares to Number Percent
Name Offering (1)(2) be Sold of Shares of Class (4)
- ---- --------------- ------- --------- -----------
<S> <C> <C> <C> <C>
Vincent Argiro 236,510 4,714 231,796 4.86
Total 4,714
</TABLE>
______________________________________
* Less than one percent (1%).
(1) Based upon questionnaires received from each selling shareholder, or a
representative of the selling shareholder, in connection with the
preparation of the Registration Statement on Form S-8, of which this
Prospectus is a part.
(2) Shares not outstanding but deemed beneficially owned by virtue of the right
of a person or member of a group to acquire them within 60 days are treated
as outstanding only when determining the amount and percentage owned by
such person or group.
(3) This assumes all shares being offered and registered hereunder are sold,
although no Selling Shareholder is obligated to sell any shares.
(4) Based upon 4,773,769 shares of Common Stock outstanding as of May 7, 1997.
9
<PAGE>
VALIDITY OF COMMON STOCK
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Oppenheimer Wolff & Donnelly, Minneapolis, Minnesota.
EXPERTS
The financial statements of the Company as of October 31, 1996 and 1995, and
for each of the three years in the period ended October 31, 1996, incorporated
by reference in this Prospectus, have been audited by Coopers & Lybrand L.L.P.,
independent accountants. Such financial statements have been incorporated by
reference in this Prospectus in reliance upon the report of Coopers & Lybrand
L.L.P., incorporated by reference herein, and upon the authority of such firm as
experts in accounting and auditing. To the extent that Coopers & Lybrand L.L.P.
audits and reports on the financial statements of the Company issued at future
dates and consents to the use of their report thereon, such financial statements
also will be incorporated by reference in this Prospectus in reliance upon their
report and said authority.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information filed by the Company pursuant to the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
regional offices of the Commission located at Seven World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can also be
obtained from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission also maintains a Website at http://www.sec.gov that contains reports,
proxy and information statements, registration statements and other information
that has been or will be filed by the Company.
The Company has filed with the Commission a Registration Statement on Form
S-8 under the Securities Act. This Prospectus does not contain all of the
information, exhibits and undertakings set forth in the Registration Statement,
certain portions of which are omitted as permitted by the Rules and Regulations
of the Commission. Copies of the Registration Statement and the exhibits are on
file with the Commission and may be obtained, upon payment of the fee prescribed
by the Commission, or may be examined, without charge, at the offices of the
Commission set forth above. For further information, reference is made to the
Registration Statement and its exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Registration Statement on Form 10 (File No. 0-22229),
containing audited financial statements for the Company's fiscal year ended
October 31, 1996, and the descriptions of the Company's Common Stock and
Preferred Stock Purchase Rights also contained therein, including any amendments
or reports filed for the purpose of updating such descriptions, are hereby
incorporated by reference in this Prospectus.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering hereunder shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained herein or in a document all or any
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide, without charge, to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents (other than exhibits to such documents unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus
10
<PAGE>
incorporates). Requests should be directed to Vital Images, Inc., 3100 West Lake
Street, Suite 100, Minneapolis, Minnesota, 55416, Attention: Gregory S. Furness,
Chief Financial Officer, telephone (612) 915-8000.
11
<PAGE>
PART II
INFORMATION REQUIRED
IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Company's Registration Statement on Form 10 (File No. 0-22229),
containing audited financial statements for the Company's fiscal year ended
October 31, 1996, and the descriptions of the Company's Common Stock and
Preferred Stock Purchase Rights also contained therein, including any amendments
or reports filed for the purpose of updating such descriptions, are hereby
incorporated by reference in this Registration Statement.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all shares of Common Stock offered pursuant to this
Registration Statement have been sold or that de-registers all shares of Common
Stock then remaining unsold, shall be deemed to be incorporated by reference in
this Registration Statement and to be a part hereof from the date of filing of
such documents.
The financial statements of the Company incorporated by reference in this
Registration Statement have been audited by Coopers & Lybrand L.L.P.,
independent accountants, for the periods indicated in such firm's report
thereon, which report is included in the Company's Registration Statement on
Form 10. The financial statements audited by Coopers & Lybrand L.L.P. have been
incorporated herein by reference in reliance on such firm's report given on
their authority as experts in accounting and auditing. To the extent that
Coopers & Lybrand L.L.P. audits and reports on the financial statements of the
Company issued at future dates, and consents to the use of their report thereon,
such financial statements will also be incorporated by reference in the
Registration Statement in reliance upon their report and said authority.
Item 4. Description of Securities.
The description of the Company's Common Stock and the Preferred Stock
Purchase Rights to be offered pursuant to this Registration Statement has been
incorporated by reference into this Registration Statement as described in Item
3 of this Part II.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Article X of the Company's Articles of Incorporation, and Article VI,
Section 1 of its By-laws provide that the Company will indemnify such persons,
for such expenses and liabilities, in such manner, under such circumstances, and
to such extent, as permitted by Minnesota Statutes Section 302A.521 as enacted
and as amended.
Section 302A.521 of the Minnesota Business Corporation Act provides that a
Minnesota business corporation shall indemnify any director, officer, employee
or agent of the corporation made or threatened to be made a party to a
proceeding, by reason of the former or present official capacity (as defined) of
the person, against judgments, penalties, fines, settlements and reasonable
expenses incurred by the person in connection with the proceeding if certain
statutory standards are met. "Proceeding" means a threatened, pending or
completed civil, criminal, administrative, arbitration or investigative
proceeding, including one by or in the right of the corporation. Section
302A.521 contains detailed terms regarding such right of indemnification and
reference is made thereto for a complete statement of such indemnification
rights.
II-1
<PAGE>
Item 7. Exemption from Registration Claimed.
The shares to be reoffered or resold pursuant to this Registration Statement
were issued without registration under the Securities Act in reliance on Section
4(2) of the Securities Act for transactions not involving a public offering. In
determining that such exemption was available, the Company relied on the fact
that, as an offering only to employees, directors and consultants of the Company
or Bio-Vascular, its parent entity at the time of the offering, the shares were
being issued through direct communication only to a limited number of investors
having both knowledge of and access to most relevant information regarding the
Company and that the certificates evidencing such shares bear a legend
restricting transfer in non-registered transactions.
<TABLE>
<CAPTION>
Item 8. Exhibits.
<S> <C>
4.1 Articles of Incorporation of the Company (incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form 10 (File No.
0-22229)).
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form 10 (File No. 0-22229)).
4.3 Form of the Company's Common Stock Certificate (incorporated by reference
to Exhibit 4.3 to the Company's Registration Statement on Form 10 (File
No. 0-22229)).
4.4 Rights Agreement dated effective as of May 1, 1997 between the Company
and American Stock Transfer and Trust Company, which includes as Exhibit
B the form of Rights Certificate (incorporated by reference to Exhibit
4.4 to the Company's Registration Statement on Form 10 (File No.
0-22229)).
4.5 Form of Certificate of Designation, Preferences and Rights of the
Company's Series A Junior Preferred Stock (incorporated by reference to
Exhibit 4.5 to the Company's Registration Statement on Form 10 (File No.
0-22229)).
5.1 Opinion and Consent of Oppenheimer Wolff & Donnelly (filed herewith
electronically).
23.1 Consent of Oppenheimer Wolff & Donnelly (included in Exhibit 5.1).
23.2 Consent of Coopers & Lybrand L.L.P. (filed herewith electronically).
24.1 Power of Attorney (included on page II-5 of this Registration Statement).
99.1 Incentive Stock Option Adjustment Plan (incorporated by reference to
Exhibit 10.5 to the Company's Registration Statement on Form 10 (File No.
0-22229)).
99.2 1990 Management Incentive Stock Option Plan (incorporated by reference to
Exhibit 10.6 to the Company's Registration Statement on Form 10 (File No.
0-22229)).
99.3 1992 Stock Option Plan (incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement on Form 10 (File No. 0-22229)).
99.4 1992 Director Stock Option Adjustment Plan (incorporated by reference to
Exhibit 10.8 to the Company's Registration Statement on Form 10 (File No.
0-22229)).
99.5 1995 Stock Incentive Adjustment Plan (incorporated by reference to
Exhibit 10.9 to the Company's Registration Statement on Form 10 (File No.
0-22229)).
</TABLE>
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
II-2
<PAGE>
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, except as to
certain insurance policies, the registrant has been advised that in the opinion
of the Securities and Exchange commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on May 9, 1997.
VITAL IMAGES, INC.
By: /s/ Andrew M. Weiss
-------------------------------------
Andrew M. Weiss
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Andrew M. Weiss and Gregory S. Furness, and each of
them, as his or her true and lawful attorney-in-fact and agent, each with full
powers of substitution and re-substitution, for him and in his or her name,
place and stead, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on May 9, 1997 by the following persons
in the capacities indicated.
/s/ Andrew M. Weiss President, Chief Executive Officer
- ------------------------------ (Principal Executive Officer) and Director
Andrew M. Weiss
/s/ Gregory S. Furness Vice President, Finance, Chief
- ------------------------------ Financial Officer, Treasurer and Secretary
Gregory S. Furness (Principal Financial and Accounting Officer)
Chairman of the Board of Directors
- ------------------------------
Edward E. Strickland
Director
- ------------------------------
Vincent A. Argiro, Ph.D
/s/ Richard W. Perkins Director
- ------------------------------
Richard W. Perkins
/s/ Douglas M. Pihl Director
- ------------------------------
Douglas M. Pihl
/s/ Sven A. Wehrwein Director
- ------------------------------
Sven A. Wehrwein
II-4
<PAGE>
VITAL IMAGES, INC.
REGISTRATION STATEMENT
ON FORM S-8
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Item No. Description Method of Filing
- -------- ----------- ----------------
<C> <S> <C>
4.1 Articles of Incorporation
of the Company............. Incorporated by reference to Exhibit 3.1
to the Company's Registration Statement
on Form 10 (File No. 0-22229).
4.2 Bylaws of the Company...... Incorporated by reference to Exhibit 3.2
to the Company's Registration Statement
on Form 10 (File No. 0-22229).
4.3 Form of the Company's
Common Stock Certificate... Incorporated by reference to Exhibit 4.3
to the Company's Registration Statement
on Form 10 (File No. 0-22229).
4.4 Rights Agreement, dated
effective as of May 1,
1997 between the Company
and American Stock
Transfer and Trust
Company, which includes as
Exhibit B the form of
Rights Certificate......... Incorporated by reference to Exhibit 4.4
to the Company's Registration Statement
on Form 10 (File No. 0-22229).
4.5 Form of Certificate of
Designation, Preferences
and Rights of the
Company's Series A Junior
Preferred Stock............ Incorporated by reference to Exhibit 4.5
to the Company's Registration Statement
on Form 10 (File No. 0-22229).
5.1 Opinion and Consent
of Oppenheimer Wolff &
Donnelly................... Filed herewith electronically.
23.1 Consent of Oppenheimer
Wolff & Donnelly........... Included in Exhibit 5.1.
23.2 Consent of Coopers &
Lybrand L.L.P.............. Filed herewith electronically.
24.1 Power of Attorney.......... Included on page 5 of this Registration
Statement.
99.1 Incentive Stock Option
Adjustment Plan............ Incorporated by reference to Exhibit
10.5 to the Company's Registration
Statement on Form 10 (File No. 0-22229).
99.2 1990 Management Incentive
Stock
</TABLE>
E-1
<PAGE>
<TABLE>
<S> <C> <C>
Option Plan................ Incorporated by reference to Exhibit
10.6 to the Company's Registration
Statement on Form 10 (File No. 0-22229).
99.3 1992 Stock Option Plan..... Incorporated by reference to Exhibit
10.7 to the Company's Registration
Statement on Form 10 (File No. 0-22229).
99.4 1992 Director Stock
Option Adjustment Plan..... Incorporated by reference to Exhibit
10.8 to the Company's Registration
Statement on Form 10 (File No. 0-22229).
99.5 1995 Stock Incentive
Adjustment Plan............ Incorporated by reference to Exhibit
10.9 to the Company's Registration
Statement on Form 10 (File No. 0-22229).
</TABLE>
E-2
<PAGE>
Exhibit 5.1
May 9, 1997
Vital Images, Inc.
3100 West Lake Street, Suite 100
Minneapolis, MN 55416
Re: Registration Statement on Form S-8
Incentive Stock Option Adjustment Plan;
1990 Management Incentive Stock Option Plan;
1992 Director Stock Option Adjustment Plan;
1992 Stock Option Plan;
1995 Stock Incentive Adjustment Plan;
Certain Non-plan Options; And
Certain Non-plan Securities
Ladies and Gentlemen:
We have acted as counsel to Vital Images, Inc., a Minnesota corporation
(the "Company"), in connection with the registration by the Company of 1,940,504
shares (the "Shares") of its Common Stock, $.01 par value, pursuant to the
Company's Registration Statement on Form S-8 for the Company's Incentive Stock
Option Adjustment Plan; the Company's 1990 Management Incentive Stock Option
Plan; the Company's 1992 Director Stock Option Adjustment Plan; the Company's
1992 Stock Option Plan; the Company's 1995 Stock Incentive Adjustment Plan;
certain of the Company's non-plan options; and certain of the Company's non-plan
securities, under which 425,000; 370,000; 157,000; 500,000; 205,000; 278,790;
and 4,714 shares, respectively, are to be registered, to be filed with the
Securities and Exchange Commission on May 9, 1997 (the "Registration
Statement"). Of the Shares to be registered, 4,714 Shares already have been
issued pursuant to certain restricted stock awards (the "Issued Shares") and
1,935,790 Shares remain to be issued (the "Remaining Shares").
In acting as counsel for the Company and arriving at the opinions expressed
below, we have examined and relied upon originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of
<PAGE>
Vital Images, Inc.
May 9, 1997
Page 2
officers and representatives of the Company, certificates of public officials
and other documents as we have deemed necessary or appropriate as a basis for
the opinions expressed herein.
In connection with our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents tendered to us as originals, the
legal capacity of natural persons and the conformity to original documents of
all documents submitted to us as certified or photostatic copies.
Based on the foregoing, and subject to the qualifications and limitations
set forth herein, it is our opinion that:
1. The Company had the corporate authority to issue the Issued Shares and
has the corporate authority to issue the Remaining Shares, in the
manner and under the terms set forth in the Registration Statement.
2. The Issued Shares have been duly authorized and, at the time of their
issuance, were validly issued, fully paid and nonassessable.
3. The Remaining Shares have been duly authorized and, when issued,
delivered and paid for in accordance with the terms of the plans, non-
plan options and restricted stock awards referred to in the
Registration Statement, will be validly issued, fully paid and
nonassessable.
We express no opinion with respect to laws other than those of the State of
Minnesota and the federal laws of the United States of America, and we assume no
responsibility as to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to its use as part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit in
connection with the Registration Statement as described above. It is not to be
used, circulated, quoted or otherwise referred to for any other purpose.
Very truly yours,
OPPENHEIMER WOLFF & DONNELLY
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated December 16, 1996, on our audits of the financial
statements of Vital Images, Inc. as of October 31, 1996 and 1995, and for each
of the three years in the period ended October 31, 1996, which report is
included in the Company's Form 10 filing, as amended. We also consent to the
references to our firm under the caption "Incorporation of Certain Documents by
Reference" and under the caption "Experts" in the Prospectus filed as a part of
the registration statement.
COOPERS & LYBRAND L.L.P.
Minneapolis, Minnesota
May 8, 1997
