Exhibit 10.19

 

CHANGE IN CONTROL AGREEMENT

 

August 5, 2008

 

Dear Vikram Simha:

 

In connection with your hiring as the Chief Technology Officer and Executive
Vice President of Engineering of Vital Images, Inc., a Minnesota corporation
(the “Company”), we hereby offer you valuable and unique benefits.  The Company
considers the establishment and maintenance of a sound and vital management to
be essential to protecting and enhancing the best interests of the Company and
its shareholders.  In this connection, the Company recognizes that, as is the
case with many publicly held corporations, the possibility of a Change in
Control may arise and that such possibility and the uncertainty and questions
which it may raise among management may result in the departure or distraction
of management personnel to the detriment of the Company and its shareholders.

 

Accordingly, the Board has determined that appropriate steps should be taken to
minimize the risk that Company management will depart prior to a Change in
Control, thereby leaving the Company without adequate management personnel
during such a critical period, and that appropriate steps also be taken to
reinforce and encourage the continued attention and dedication of members of the
Company’s management to their assigned duties without distraction in
circumstances arising from the possibility of a Change in Control.  In
particular, the Board believes it important, should the Company or its
shareholders receive a proposal for transfer of control, that you be able to
continue your management responsibilities without being influenced by the
uncertainties of your own personal situation.

 

The Board recognizes that continuance of your position with the Company involves
a substantial commitment to the Company in terms of your personal life and
professional career and the possibility of foregoing present and future career
opportunities, for which the Company receives substantial benefits.  Therefore,
to induce you to remain in the employ of the Company, this Agreement, which has
been approved by the Board, sets forth the benefits which the Company agrees
will be provided to you in the event your employment with the Company is
terminated in connection with a Change in Control under the circumstances
described below.

 

The following terms will have the meaning set forth below unless the context
clearly requires otherwise.  Terms defined elsewhere in this Agreement will have
the same meaning throughout this Agreement.

 

ARTICLE I.

DEFINITIONS

 

1.                                       “Affiliate” means (i) any corporation
more than 50% of whose outstanding securities ordinarily having the right to
vote at elections of directors is owned directly or indirectly by the Company or
(ii) any other form of business entity in which the Company, by virtue of a
direct or indirect ownership interest, has the right to elect a majority of the
members of such entity’s governing body.

 

2.                                       “Agreement” means this letter agreement
as amended, extended or renewed from time to time in accordance with its terms.

 

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3.                                       “Board” means the board of directors of
the Company duly qualified and acting at the time in question.  On and after the
date of a Change in Control, any duty of the Board in connection with this
Agreement is nondelegable and any attempt by the Board to delegate any such duty
is ineffective.

 

4.                                       “Cause” means:

 

a.                                       your gross misconduct;

 

b.                                      your willful and continued failure to
perform substantially your duties with the Company (other than any such failure
(1) resulting from your Disability or incapacity due to bodily injury or
physical or mental illness or (2) relating to changes in your duties after a
Change in Control which constitute Good Reason) after a demand for substantial
performance is delivered to you by the chair of the Board which specifically
identifies the manner in which you have not substantially performed your duties
and provides for a reasonable period of time within which you may take
corrective actions; or

 

c.                                       your conviction (including a plea of
nolo contendere) of willfully engaging in illegal conduct constituting a felony
or gross misdemeanor under federal or state law which is materially and
demonstrably injurious to the Company or which impairs your ability to perform
substantially your duties for the Company.

 

An act or failure to act will be considered “gross” or “willful” for this
purpose only if done, or omitted to be done, by you in bad faith and without
reasonable belief that it was in, or not opposed to, the best interests of the
Company.  Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Company’s board of directors (or a committee
thereof) or based upon the advice of counsel for the Company will be
conclusively presumed to be done, or omitted to be done, by you in good faith
and in the best interests of the Company.  It is also expressly understood that
your attention to matters not directly related to the business of the Company
will not provide a basis for termination for Cause so long as the Board did not
expressly disapprove in writing of your engagement in such activities either
before or within a reasonable period of time after the Board knew or could
reasonably have known that you engaged in those activities.  Notwithstanding the
foregoing, you may not be terminated for Cause unless and until there has been
delivered to you a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board at a meeting of
the Board called and held for the purpose (after reasonable notice to you and an
opportunity for you, together with your counsel, to be heard before the Board),
finding that in the good faith opinion of the Board you were guilty of the
conduct set forth above in clauses a., b. or c. of this definition and
specifying the particulars thereof in detail.

 

5.                                       “Change in Control” means any of the
following:

 

a.                                       the sale, exchange or other transfer,
directly or indirectly, of all or substantially all of the assets of the Company
to any Person in one transaction or in a series of related transactions which
occur during the twelve-month period ending on the date of the most recent
purchase or other acquisition by such Person;

 

b.                                      any Person is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of (1) 30 percent or more, but not more than 50 percent, of the
combined voting power of the outstanding securities of the Company ordinarily
having the right to vote at elections of directors, unless the transaction
resulting in such ownership has been approved in advance by the “continuing
directors” or (2) more than

 

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50 percent of the combined voting power of the outstanding securities of the
Company ordinarily having the right to vote at elections of directors
(regardless of any approval by the continuing directors);

 

d.                                      a merger or consolidation to which the
Company is a party if the shareholders of the Company immediately prior to the
effective date of such merger or consolidation have, solely on account of
ownership of securities of the Company at such time, “beneficial ownership” (as
defined in Rule 13d-3 under the Exchange Act) immediately following the
effective date of such merger or consolidation of securities of the surviving
company representing less than 50 percent of the combined voting power of the
surviving corporation’s then outstanding securities ordinarily having the right
to vote at elections of directors (regardless of any approval by the continuing
directors); or

 

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

 

For purposes of this Section 1(e), a “continuing director” means any individual
who is a member of the Board on August 1, 2008, while he or she is a member of
the Board, and any individual who subsequently becomes a member of the Board
whose election or nomination for election by the Company’s shareholders was
approved by a vote of at least a majority of the directors who are continuing
directors (either by a specific vote or by approval of the proxy statement of
the Company in which such individual is named as a nominee for director without
objection to such nomination).

 

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

 

6.                                       “Code” means the Internal Revenue Code
of 1986, as amended.  Any reference to a specific provision of the Code includes
a reference to such provision as it may be amended from time to time and to any
successor provision.

 

7.                                       “Company” means Vital Images, Inc.
and/or any Affiliate.

 

8.                                       “Confidential Information” means
information which is proprietary to the Company or proprietary to others and
entrusted to the Company, whether or not trade secrets. It includes information
relating to business plans and to business as conducted or anticipated to be
conducted, and to past or current or anticipated products or services.  It also
includes, without limitation, information concerning research, development,
purchasing, accounting, marketing and selling.  All information which you have a
reasonable basis to consider confidential is Confidential Information, whether
or not originated by you and without regard to the manner in which you obtain
access to that and any other proprietary information.

 

9.                                       “Date of Termination” following a
Change in Control (or prior to a Change in Control if your termination was
either a condition of the Change in Control or was at the request or insistence
of any Person related to the Change in Control) means:

 

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

 

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

 

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

 

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

 

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

 

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

 

11.                                 “Exchange Act” means the Securities Exchange
Act of 1934, as amended.  Any reference to a specific provision of the Exchange
Act or to any rule or regulation thereunder includes a reference to such
provision as it may be amended from time to time and to any successor provision.

 

12.                                 “Good Reason” means:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

h.                                      the termination of your employment by
the Company for any reason other than death,  Cause, Disability or Retirement
during the twelve (12) months following the month in which a Change in Control
occurs.

 

13.                                 “Notice of Termination” means a written
notice given on or after the date of a Change in Control (unless your
termination before the date of the Change in Control was either a condition of
the Change in Control or was at the request or insistence of any Person related
to the Change in Control) which indicates the specific termination provision in
this Agreement pursuant to which the notice is given.  Any purported termination
by the Company or by you for Good Reason on or after the date of a Change in
Control (or before the date of a Change in Control if your termination was
either a condition of the Change in Control or was at the request or insistence
of any Person related to the Change in Control) must be communicated by written
Notice of Termination to be effective; provided, that your failure to provide
Notice of Termination will not limit any of your rights under this Agreement
except to the extent the Company demonstrates that it suffered material actual
damages by reason of such failure.

 

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

 

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

 

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

 

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

 

ARTICLE II.

TERM OF AGREEMENT

 

This Agreement is effective immediately and will continue in effect until
July 31, 2009; provided, however; that commencing on July 31, 2009 and each
July 31 thereafter, the term of this Agreement will automatically be extended
for 12 additional months beyond the expiration date otherwise then in effect,
unless at least 90 calendar days prior to any such July 31, the Company or you
has given notice that this Agreement will not be extended; and, provided,
further; that if a Change in Control has occurred during the term of this
Agreement, this Agreement will continue in effect beyond the termination date
then in effect for a period of 12 months following the month during which the
Change in Control occurs or, if later, until the date on which the Company’s
obligations to you arising under or in connection with this Agreement have been
satisfied in full.

 

ARTICLE III.

CHANGE IN CONTROL BENEFITS

 

1.                                       Benefits upon a Change in Control
Termination.  You will become entitled to the payments and benefits described in
clauses (a) and (b) of this Section 1 of Article III, subject to the limitations
described in clause (c) of this Section 1 of Article III, and to the benefit of
the provisions described in clause (c), if and only if (i) your employment with
the Company is terminated by the Company for any reason other than death, Cause,
Disability or Retirement, or if you terminate your employment with the Company
for Good Reason; and (ii) the termination occurs either within the period
beginning on the date of a Change in Control and ending on the last day of the
twelfth month that begins after the month during which the Change in Control
occurs or prior to a Change in Control if your termination was either a
condition of the Change in Control or was at the request or insistence of a
Person related to the Change in Control.

 

a.                                       Cash Payment.  Within ten (10) business
days following the Date of Termination or, if later, within ten (10) business
days following the date of the Change in Control, the Company will

 

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

 

b.                                      Welfare Plans. The Company will maintain
in full force and effect, for the continued benefit of you and your dependents
for a period terminating 24 months after the Date of Termination, all insured
and self-insured employee welfare benefit Plans (including, without limitation,
medical, life, dental, vision and disability plans) in which you were eligible
to participate at any time during the 90-day period immediately preceding the
Change in Control, provided that your continued participation is possible under
the general terms and provisions of such Plans and any applicable funding media
and without regard to any discretionary amendments to such Plans by the Company
following the Change in Control (or prior to the Change in Control if amended as
a condition or at the request or insistence of a Person (other than the Company)
related to the Change in Control) and provided that you continue to pay an
amount equal to your regular contribution under such Plans for such
participation (based upon your level of benefits and employment status most
favorable to you at any time during the 90-day period immediately preceding the
Change in Control).  The continuation period under federal and state
continuation laws, to the extent applicable, will begin to run from the date on
which coverage pursuant to this clause (b) ends.  If, at the end of the 24-month
period, you have not previously received or are not then receiving equivalent
benefits from a new employer (including coverage for any pre-existing
conditions), the Company, pursuant to federal and state law, will provide, for a
period of eighteen (18) months (the “COBRA Period”), a continuation of your and
your dependents’ coverage under such Plans (the “COBRA Coverage”), provided that
you will be required to pay for such benefits during the COBRA Period, should
you elect to receive COBRA Coverage.

 

c.                                       Limitation on Payments and Benefits. 
Notwithstanding anything in this Agreement to the contrary, if any of the
payments or benefits to be made or provided in connection with this Agreement,
together with any other payments, benefits or awards which you have the right to
receive from the Company, or any corporation which is a member of an “affiliated
group” (as defined in section 1504(a) of the Code without regard to section
1504(b) of the Code) of which the Company is a member (“Affiliate”), constitute
an “excess parachute payment” (as defined in section 280G(b) of the Code), two
calculations will be performed.  In the first calculation, the payments,
benefits or awards will be reduced by the amount the Company deems necessary so
that none of the payments or benefits under the Agreement (including from the
existing Stock Option and Incentive Plan) are excess parachute payments.  In the
second calculation, the payments will not be reduced so as to eliminate an
excess parachute payment, but will be reduced by the amount of the applicable
excise tax as imposed by section 4999 of the Code.  The two calculations will be
compared and the calculation providing the largest net payment to the employee
will be utilized.  The calculations must be made in good faith by legal counsel
or a certified public accountant selected by the Company, and such determination
will be conclusive and binding upon you and the Company.  If a reduction in
payments or benefits is required by the comparison above, the payments or
benefits under the Agreement shall be reduced in the order that minimizes the
amount of total reduction in payments and benefits under the Agreement as a
result of this provision.

 

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

 

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

 

2.                                       Disposition.  If, on or after the date
of a Change in Control, an Affiliate is sold, merged, transferred or in any
other manner or for any other reason ceases to be an Affiliate or all or any
portion of the business or assets of an Affiliate are sold, transferred or
otherwise disposed of and the acquiror is not the Company or an Affiliate (a
“Disposition”), and you remain or become employed by the acquiror or an
affiliate of the acquiror (as defined in this Agreement but substituting
“acquiror” for “Company”) in connection with the Disposition, you will be deemed
to have terminated employment on the effective date of the Disposition for
purposes of this section unless (a) the acquiror and its affiliates jointly and
severally expressly assume and agree, in a manner that is enforceable by you, to
perform the obligations of this Agreement to the same extent that the Company
would be required to perform if the Disposition had not occurred and (b) the
Successor guarantees, in a manner that is enforceable by you, payment and
performance by the acquiror.  This Section 2 of Article III shall be applied in
accordance with Code Section 409A and the regulations, notices and other
guidance of general applicability issued thereunder.

 

ARTICLE IV.

INDEMNIFICATION

 

Following a Change in Control, the Company will indemnify and reimburse you to
the full extent permitted by law and the Company’s articles of incorporation and
bylaws for damages, costs and expenses (including, without limitation,
judgments, fines, penalties, settlements and reasonable fees and expenses of
your counsel) incurred in connection with all matters, events and transactions
relating to your service to or status with the Company or any other corporation,
employee benefit plan or other entity with whom you served at the request of the
Company.

 

ARTICLE V.

CONFIDENTIALITY

 

You will not use, other than in connection with your employment with the
Company, or disclose any Confidential Information to any person not employed by
the Company or not authorized by the Company to receive such Confidential
Information, without the prior written consent of the Company; and you will use
reasonable and prudent care to safeguard and protect and prevent the
unauthorized disclosure of Confidential Information. Nothing in this Agreement
will prevent you from using, disclosing or authorizing the disclosure of any
Confidential Information: (a) which is or hereafter becomes part of the public
domain or otherwise becomes generally available to the public through no fault
of yours; (b) to the extent and upon the terms and conditions that the Company
may have previously made the Confidential Information available to certain
persons; or (c) to the extent that you are required to disclose such
Confidential Information by law or judicial or administrative process.

 

ARTICLE VI.

SUCCESSORS

 

The Company will seek to have any Successor, by agreement in form and substance
satisfactory to you, assent to the fulfillment by the Company of the Company’s
obligations under this Agreement. Failure of the Company to obtain such assent
at least three business days prior to the time a Person becomes a Successor (or
where the Company does not have at least three business days’ advance notice
that a Person may become a Successor, within one business day after having
notice that such Person may become or has become a Successor) will constitute
Good Reason for termination by you of your employment.  The date on which any

 

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such succession becomes effective will be deemed the Date of Termination and
Notice of Termination will be deemed to have been given on that date.  A
Successor has no rights, authority or power with respect to this Agreement prior
to a Change in Control.

 

ARTICLE VII.

OTHER PROVISIONS

 

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

 

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

 

3.                                       No Setoff.  The Company has no right to
delay or setoff payments or benefits owed to you under this Agreement against
amounts owed or claimed to be owed by you to the Company under this Agreement or
otherwise.

 

4.                                       Taxes.  All payments and benefits to be
made or provided to you in connection with this Agreement will be subject to
required withholding of federal, state and local income, excise and
employment-related taxes.

 

5.                                       Notices.  For the purposes of this
Agreement, notices and all other communications provided for in, or required
under, this Agreement must be in writing and will be deemed to have been duly
given when personally delivered or when mailed by United States registered or
certified mail, return receipt requested, postage prepaid and addressed to each
party’s respective address set forth on the first page of this Agreement
(provided that all notices to the Company must be directed to the attention of
the chair of the Board), or to such other address as either party may have
furnished to the other in writing in accordance with these provisions, except
that notice of change of address will be effective only upon receipt.

 

6.                                       Disputes.  If you so elect, any
dispute, controversy or claim arising under or in connection with this Agreement
will be settled exclusively by binding arbitration administered by the American
Arbitration Association in Minneapolis, Minnesota in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect.  Judgment may be entered on the arbitrator’s award in any court having
jurisdiction; provided, that you may seek specific performance of your right to
receive payment or benefits until the Date of Termination during the pendency of
any dispute or controversy arising under or in connection with this Agreement. 
The Company will be entitled to seek an injunction or restraining order in a
court of competent jurisdiction (within or without the State of Minnesota) to
enforce the provisions of Article V of this Agreement.

 

7.                                       Jurisdiction.  Except as specifically
provided otherwise in this Agreement, the parties agree that any action or
proceeding arising under or in connection with this Agreement must be brought in
a court

 

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of competent jurisdiction in the State of Minnesota, and hereby consent to the
exclusive jurisdiction of said courts for this purpose and agree not to assert
that such courts are an inconvenient forum

 

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

 

9.                                       No Employment or Service Contract. 
Nothing in this Agreement is intended to provide you with any right to continue
in the employ of the Company for any period of specific duration or interfere
with or otherwise restrict in any way your rights or the rights of the Company,
which rights are hereby expressly reserved by each, to terminate your employment
at any time for any reason or no reason whatsoever, with or without cause.

 

10.                                 Funding and Payment.  Benefits payable under
this Agreement will be paid only from the general assets of the Company.  No
person has any right to or interest in any specific assets of the Company by
reason of this Agreement.  To the extent benefits under this Agreement are not
paid when due to any individual, he or she is a general unsecured creditor of
the Company with respect to any amounts due.  The Company with whom you were
employed immediately before your Date of Termination has primary responsibility
for benefits to which you or any other person are entitled pursuant to this
Agreement but to the extent such Company is unable or unwilling to provide such
benefits, the Company and each other Affiliate are jointly and severally
responsible therefor to the extent permitted by applicable law.  If you were
simultaneously employed by more than one Company immediately before your Date of
Termination, each such Company has primary responsibility for a portion of the
benefits to which you or any other person are entitled pursuant to this
Agreement that bears the same ratio to the total benefits to which you or such
other person are entitled pursuant to this Agreement as your base pay from the
Company immediately before your Date of Termination bears to your aggregate base
pay from all such Companies.

 

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

 

ARTICLE VIII.

MISCELLANEOUS

 

1.                                       Modification and Waiver.  No provision
of this Agreement may be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in a writing signed by you and
the chair of the Board. No waiver by any party to this Agreement at any time of
any breach by another party to

 

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this Agreement of, or of compliance with, any condition or provision of this
Agreement to be performed by such party will be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time.  Notwithstanding anything in this Agreement to the contrary, the Company
expressly reserves the right to amend this Agreement to the extent necessary to
comply with Code Section 409A, as it may be amended from time to time, and the
regulations, notices and other guidance of general applicability issued
thereunder.

 

2.                                       Entire Agreement.  No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter to this Agreement have been made by any party which are not
expressly set forth in this Agreement.

 

3.                                       Governing Law.  This Agreement and the
legal relations among the parties as to all matters, including, without
limitation, matters of validity, interpretation, construction, performance and
remedies, will be governed by and construed exclusively in accordance with the
internal laws of the State of Minnesota (without regard to the conflict of laws
principles of any jurisdiction).

 

4.                                       Headings.  Headings are for purposes of
convenience only and do not constitute a part of this Agreement.

 

5.                                       Further Acts.  The parties to this
Agreement agree to perform, or cause to be performed, such further acts and
deeds and to execute and deliver or cause to be executed and delivered, such
additional or supplemental documents or instruments as may be reasonably
required by the other party to carry into effect the intent and purpose of this
Agreement.

 

6.                                       Severability.  The invalidity or
unenforceability of all or any part of any provision of this Agreement will not
affect the validity or enforceability of the remainder of such provision or of
any other provision of this Agreement, which will remain in full force and
effect.

 

7.                                       Counterparts.  This Agreement may be
executed in several counterparts, each of which will be deemed to be an
original, but all of which together will constitute one and the same instrument.

 

If this letter correctly sets forth our agreement on the subject matter
discussed above, kindly sign and return to the Company the enclosed copy of this
letter which will then constitute our agreement on this subject.

 

Sincerely,

 

VITAL IMAGES, INC.

 

 

 

By:

/s/ Michael H. Carrel

 

 

 

Name:

Michael Carrel

 

 

 

Title:

CEO

 

 

 

 

 

Agreed to this 6 day of Aug, 2008.

 

 

 

 

 

 /s/ Vikram Simha

 

Vikram Simha

 

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