**Exhibit 10.13**

** **

**EMPLOYMENT AGREEMENT**

 

THISAGREEMENT, made and entered into as of the 21st day of January 2008, byand between Vital Images, Inc. (“Company”) and Michael H. Carrel (“Executive”).

 

**W I T N E S S E T H:**

 

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

 

WHEREAS,each of the parties acknowledge that they are receiving good and valuableconsideration for entering into this Employee Agreement and Executiveacknowledges that this Employment Agreement, including the non-disclosureagreement set forth herein, was negotiated between the parties hereto and thatExecutive received bargained for consideration in the form of benefitsresulting to Executive from the terms and conditions of such employment, inexchange for entering into this Employment Agreement.

 

NOW,THEREFORE, in consideration of the mutual covenants contained herein, thesufficiency of which is hereby acknowledged, the parties hereto agree asfollows:

 

**ARTICLE I.**

 

**EMPLOYMENT AND TERM**

 

1.1                                 **EMPLOYMENT**.  Upon the terms subject to the conditionsherein contained, Company hereby employs Executive as President and ChiefExecutive Officer, and Executive hereby accepts such employment, subject to thesupervision of the Board of Directors of the Company.  Executive shall devote his best skill andefforts (reasonable sick leave and vacations excepted) to the performance ofhis duties under this Agreement.

 

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

 

1.3                                 **COMPLIANCE WITH COMMITMENTS AND OBLIGATIONS****.**    Executive represents and warrants as follows: (i) he is not a party to any other agreement or obligation for personal services; (ii) there exist no impediments or restraints, contractual or otherwise on Executive’s power, right or ability to enter into this Agreement and to perform his duties and obligations hereunder; and (iii) the performance of his obligations under this Agreement do not and will not violate or conflict with any agreement relating to confidentiality, non-competition or exclusive employment to which Executive is or was subject.

 

 

 

1.4                                 **INSIDER TRADING POLICY**.  Executive will be required, as a condition of employment with the Company, to sign and comply in every respect with the Company’s Insider Trading Policy, a copy of which is enclosed.

 

**ARTICLE II.**

 

**COMPENSATION**

 

2.1                                 **BASESALARY****.**  In exchange for the provision of services,Company agrees that it will pay Executive commencing January 9, 2008, atthe rate of $310,000 per year, payable in accordance with standard paypractices of Company, less any applicable withholdings or deductions.

 

2.2                                 **BENEFITS**.  In addition to the compensation set forthunder Section 2.1, Executive shall be entitled to participate in any ofCompany’s standard benefit policies or plans, including its Employee StockPurchase plan, according to their terms. Subject to the provisions of Section 4.1(d) of this Agreement,these policies may be modified or terminated from time to time by Company, butnot retroactively.  The written terms ofthe policies shall govern any questions of eligibility, coverage, or durationof coverage.

 

2.3                                 **INCENTIVECOMPENSATION**.  As anincentive to performance, Executive shall be eligible to receive initiativecompensation and/or benefits as follows:

 

a.                           Executive shallbe eligible to participate in Company’s Management Incentive Plan (the “Plan”)as it is established annually by the Board of Directors.  Pursuant to the Plan, Executive’s incentivetarget for calendar year 2008 shall be sixty-five percent (65%) of Executive’sbase salary for calendar year 2008, pro-rated to start date of January 9,2008.  Executive’s incentive compensationfor calendar year 2008 under the Plan, if any, will be determined as soon aspractical after December 31, 2008, and will be paid to Executive in a lumpsum, less any withholdings or deductions, on or before March 15, 2009.

 

b.                          The Company’sBoard of Directors has approved that Executive shall be entitled to receive (i) astock option grant exercisable for 150,000 shares, which shall becomeexercisable as to 28% of the underlying shares beginning one year after thegrant date and shall vest as to an additional 2% of the shares each monththereafter until fully vested; and shall expire five years after the grantdate.

 

2.4                                 **VACATION.**  Executive shall receive twenty (20) days ofvacation per year.

 

2.5                                 **BUSINESSEXPENSES.**  The Companywill reimburse Executive for all reasonable, ordinary, and necessary expensesincurred by him in the performance of his duties hereunder, provided thatExecutive accounts to Company for such expenses in a manner normally prescribedby Company for reimbursement of expenses. Such reimbursement requests must be accompanied by the appropriatedocumentation and shall be subject to review by the Chair of the Company’sBoard of Directors.

 

 

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**ARTICLE III.**

 

**DUTIES OF EXECUTIVE**

 

3.1                                 **SERVICES****.**  Executive shall perform all duties and obligationscharged to Executive by the Board of Directors of Company, as the same may bedetermined from time to time.  The Boardshall assure adequate time, resources, and authority for Executive to reachgoals mutually agreed upon by Company and Executive.

 

3.2                                 **TIMEAND EFFORT**.  Executiveshall devote his full time and effort to the business of Company.  Executive shall perform the duties andobligations required of Executive hereunder in a competent, efficient, andsatisfactory manner at such hours and work conditions as the performance ofthese duties may require.

 

3.3                                 **ARTICLESAND BY-LAWS****.**  Executive shall act in accordance with so asto abide by the Articles of Incorporation of Company, the Bylaws of Company andall decisions of the Board of Directors of Company.

 

3.4                                 **CONFIDENTIALITYAND LOYALTY****.**  Executive acknowledges that during the courseof his employment he has produced and may produce and have access to material,records, data, and information not generally available to the public (“ConfidentialInformation”) regarding Company, its customers and affiliates.  Accordingly, during and subsequent to thetermination of this Agreement, Executive shall hold in confidence and notdirectly or indirectly disclose, use, copy, or make lists of any such confidentialinformation, except to the extent authorized in writing by Company, or asrequired by law or any competent administrative agency or as otherwise isreasonable necessary or appropriate in connection with the performance byExecutive of his duties pursuant to this Agreement.  Upon termination of his employment under thisAgreement, Executive shall promptly deliver to Company (i) all records,manuals, books, documents, letters, reports, data, calculations, and all copiesof any of the foregoing which are the property of Company and (ii) allother property of Company and Confidential Information which in any of thesecases are in his possession or under his control.  Executive agrees to abide by Company’sreasonable policies as in effect from time to time, respecting avoidance ofinterests conflicting with those of Company.

 

3.5                                 **WORKSMADE FOR HIRE**.  Executiveacknowledges and agrees that any and all works of authorship by Executive madepursuant to this Agreement or any prior agreements are within the scope ofservices to be provided to Company and shall constitute “works made for hire”as defined by the Copyright Act of 1976, Title 17 of the United States Code, asnow enacted or hereinafter amended.  To the extent Employee retains any rights of anynature in any Work Product, Employee hereby assigns to Company all of Employee’sright, title, and interest (including but not limited to all patent, copyright,trade secret, and moral rights) in and to all Work Products prepared byEmployee, whether patentable or not, made or conceived in whole or in part byEmployee within the scope of Employee’s employment by Company, or that involvethe use of Confidential Information.  Accordingly,Executive acknowledges and agrees that Company shall be the sole and exclusiveowner of any and all copyright(s) with respect 

 

 

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to such works of authorship and that Executive shall not be entitled toany additional compensation over and above the compensation set forth herein orotherwise already received by Executive unless otherwise agreed in writing byCompany.  If any work of authorshipcreated hereunder or prior to hereto is not deemed to be a “work made for hire,”Executive hereby assigns all right, title, and interest therein toCompany.  Executive is hereby notified that this assignment of WorkProduct does not include any invention where (i) Executive did not use theequipment, supplies, facility or trade secret information of Company; (ii) Executivedeveloped the invention on his own time; (iii) the invention does notdirectly relate to the business of Company or Company’s actual or anticipatedresearch or development; and (iv) the invention did not result from anywork performed for Company.

 

3.6                                 **COMPANYTO HOLD PROPRIETARY RIGHTS****. **Furthermore, and without limiting the foregoing, Executive acknowledgesand agrees that all proprietary rights, including, without limitation, allpatent, trademark, trade secret, copyright, and other rights, which may existin connection with any and all inventions, ideas, and works created orconceived by Executive for Company, either before or after the date hereof,shall be the sole and exclusive property of Company and Executive shall have nofurther rights therein and, to the extent necessary, assigns all such rights toCompany.  All patent, copyright, andother rights in such inventions, ideas, and works shall be the property ofCompany, who shall have the sole right to seek patent, copy, registered designor other protection in connection therewith. Executive shall at Company’s reasonable expense do all things andexecute all such documents as Company may reasonably require to vest in Companythe rights and protection herein described.

 

3.7                                 **RESTRICTION ON COMPETITION****.**  In connection with thispromotion and the consideration described in this offer, whichExecutive acknowledges are adequate consideration for Executive’s obligationsdescribed below, Executive agree that Executive shall not, directly orindirectly, on behalf of himself or a third party, for a period of eighteen(18) months following Executive’s separation from employment with Company (the “SeparationDate”), do any of the following:

 

### 1.             Own,manage, operate, join, control, consult with, participate in the ownership,operation or control of, be employed by, or be connected in any manner with anyperson or entity which manufactures, sells, solicits, offers, offers toprovide, or provides any Competitive Products and Services.  Thisrestriction applies worldwide, and Executive agrees and acknowledges aworldwide restriction is reasonable in scope given Executive’s responsibilitiesand the Company’s worldwide territory;

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### 2.             Solicitcustomers or the business of any person, firm, corporation or other entity whois or who was a customer or account of Company or any of Company’s affiliatesand subsidiaries while Executive was employed by Company or accept businessfrom any person, firm, corporation or other entity who is or who was a customeror account of Company or any of Company’s affiliates and subsidiaries whileExecutive were employed by Company for the 

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### purpose of selling to such customer oraccount any Competitive Product or Service; and

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### 3.             Induceor seek to induce any person employed with Company or its affiliates as of theSeparation Date to discontinue that person’s employment with Company and/orsolicit, recruit, hire or participate in any other person’s or entity’s effortto hire an employee of Company.

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“CompetitiveProducts and Services”, as used herein, shall include all products and servicessimilar to or the same as those offered by Company to its customers involvingadvanced medical visualization and analysis software technologies beyond MIP(Minimum Intensity Projection) and MPR (Multi Planar Reformation) that allowfor analysis, manipulation, and distribution of images, such as radiologicalstudies, in 2D, 3D and 4D.

 

3.8                                 **REMEDIES****.**  Executive agrees and understands that anybreach of any of the covenants or agreements set forth in this ARTICLE III ofthis Agreement will cause Company irreparable harm for which there is noadequate remedy at law, and, without limiting whatever other rights andremedies Company may have under this paragraph, Executive consents to the issuanceof an injunction in favor of Company enjoining the breach of any of theaforesaid covenants or agreements by any court of competent jurisdiction.  If any or all of the aforesaid covenants oragreements are held to be unenforceable because of the scope or duration ofsuch covenant or agreement or the area covered thereby, the parties agree thatthe court making such determination shall have the power to reduce or modifythe scope, duration, and/or area of such covenant to the extent that allows themaximum scope, duration, and/or area permitted by applicable law.

 

**ARTICLE IV.**

 

**TERMINATION**

 

4.1                                 **RESIGNATIONOF EXECUTIVE**.  Executivemay resign his employment at any time for any reason upon fifteen (15) daysadvance written notice to the Chairman of the Board.  If Executive resigns his employment withoutGood Reason (as that term is defined below), he shall not be entitled toseverance pay.  If Executive resigns hisemployment for Good Reason, the Company shall pay Executive the severance payand medical insurance benefits set forth in Section 4.2 below providedExecutive agrees to release any claims he may have against the Company inexchange for receipt of severance pay and medical insurance benefits.  For purposes of the Agreement, Good Reasonshall mean the occurrence of any of the following events, which the Company hasnot cured within thirty (30) days of notice thereof:

 

a.                                       A materialbreach of this Agreement by the Company;

 

b.                                      A materialadverse change in Executive’s status or position as an executive officer of theCompany as a result of a material diminution in Executive’s duties,responsibilities, or authority as of the date of this 

 

 

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Agreement (except in connection with the termination of Executive’semployment in accordance with Section 4.3 hereof);

 

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

 

d.                                      Withoutreplacement by a plan providing benefits to Executive equal to or greater thanthose discontinued or by payment of cash in lieu of such benefits, the failureby the Company to continue in effect, within its maximum stated term, anyemployee benefit plan in which Executive is participating in prior to the dateof this Agreement or taking of any action by the Company that would adverselyaffect Executive’s participation or materially reduce Executive’s benefitsunder all such plans; provided, however, that Good Reason shall not includechanges, modifications, and terminations of the Company’s standard benefitpolicies and plans which are generally applicable to the Company’s officers andemployees; or

 

e.                                       The Company’srequiring Executive to be based anywhere other than that Minneapolis/St. Paul,Minnesota metropolitan statistical area, except for required travel on theCompany’s business.

 

4.2                                 **TERMINATIONBY COMPANY**.  Companyshall have the right to terminate Executive’s employment without notice andwith or without Cause, as that term is defined below.  If Company terminates Executive’s employmentwithout cause, Company shall pay Executive twelve (12) months of severance paybased on Executive’s base salary at the time of termination provided Executiveagrees to release any claims he may have against the company in exchange forthe receipt of severance pay and medical insurance benefits.  Executive’s severance pay, if any, shall bepayable in one lump sum, less any applicable withholdings or deductions, on thefirst business day of the seventh sequential month after Executive’s date oftermination, provided that any applicable rescission periods have expired bysuch date.  If Company terminatesExecutive’s employment with Cause, Executive shall not receive severance pay ormedical insurance benefits.

 

Medical Insurance Benefits.  If Executive is eligible for severance payhereunder, Company, pursuant to federal and state law, will also provide, for aperiod of twelve (12) months following Executive’s termination date (“BenefitsPeriod”), a continuation of the group medical and dental insurance coverage onthe same basis as it was previously provided to Executive by Company.  Through the earlier of (i) Executive’sparticipation in equivalent group medical and dental insurance benefits with anew employer or (ii) the end of the Benefits Period, Company will pay thatportion of the premium for group medical and dental insurance that it paidduring Executive’s employment, with the remainder to be paid by Executive.  After such conclusion, Executive will berequired to pay for all such benefits for the remainder of the period in whichExecutive is eligible for COBRA, if any, should Executive elect to continueCOBRA coverage.

 

 

 

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4.3                                 **TERMINATIONFOR CAUSE****.**  Notwithstanding anything contained in this Agreementto the contrary, Company shall have the right to terminate the employment ofExecutive for Cause.  Cause means:

 

a.                                       Executive’sgross misconduct;

 

b.                                      Executive shallinexcusably violate or willfully refuse to obey the lawful and reasonableinstructions of the Board of Directors of the Company; or

 

c.                                       Executive’sconviction (including a plea of nolo contendere) of willfully engaging inillegal conduct constituting a felony or gross misdemeanor under federal orstate law which is materially and demonstrably injurious to the Company orwhich impairs Executive’s ability to perform substantially his duties for theCompany.

 

Anact, or failure to act, will be considered “gross” or “willful” for thispurpose only if done, or omitted to be done, by Executive in bad faith andwithout reasonable belief that it was in, or not opposed to, the best interestsin the Company.  Any act, or failure toact, based upon authority given pursuant to a resolution duly adopted by the Company’sBoard of Directors (or a committee thereof) or based upon the advice of counselfor the Company will be conclusively presumed to be done, or omitted to bedone, by Executive in good faith and in the best interests of the Company.  It is also expressly understood thatExecutive’s attention to matters not directly related to business of theCompany will not provide a basis for termination for Cause so long as the Boarddid not expressly disapprove in writing of Executive’s engagement in suchactivities either before or within a reasonable period of time after the Boardknew or could have reasonably known the Executive engaged in thoseactivities.  Notwithstanding theforegoing, Executive may not be terminated for Cause unless and until there hasbeen delivered to him a copy of a resolution duly adopted by the affirmativevote of not less than a majority of the entire membership of the Board at ameeting of the Board called and held for the purpose (after reasonable noticeto Executive and an opportunity for him, together with his counsel, to be heardbefore the Board), finding that in the good faith opinion of the BoardExecutive was guilty of the conduct set forth above in clauses a., b., or c. ofthis definition and specifying the particulars thereof in detail.

 

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

 

4.4.                              **SURVIVINGRIGHTS**. Notwithstanding the termination of Executive’s employment, the partiesshall be required to carry out any provisions hereof which contemplateperformance subsequent to such termination; and such termination shall notaffect any liability or other obligation which shall have accrued prior to suchtermination, including, but not limited to, any liability for loss or damage onaccount of a prior default.

 

4.5.                              **COOPERATIONAND NON-DISPARAGEMENT****.**    Executive agrees that, during the term ofthis Agreement and for three (3) years following the termination of hisemployment, Executive will (i) assist and cooperate with the Companyregarding any claims or disputes involving matters within the knowledge orresponsibilities of 

 

 

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Executive; and (ii) not in any way or by any means disparage theCompany, the members of the Company’s Board of Directors or the Company’sofficers and employees.

 

4.6.                              **DISCLOSURE****.**    Executive agrees that, during the term ofthis Agreement and for three (3) years following the termination of hisemployment, Executive will inform any new employer or other person or entitywith whom he enters into a business relationship, before accepting employmentor entering into a business relationship, of the post-employment restrictionsand obligations contained in this Agreement, including but not limited to theexistence of Articles 3.7, and 4.5 above.

 

**ARTICLE V.**

 

**GENERAL PROVISIONS**

 

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

 
|   |   | a.     |   | If  to Company, to:   |   | Vital  Images, Inc.           |
|--------|--------|--------|--------|-----------------------|--------|------------------------------------|
|   |   |   |   |                  |   | 5850  Opus Parkway, Suite 300 |
|   |   |   |   |                  |   | Minnetonka,  MN 55343              |
|   |   |   |   |                  |   | Attention:  Chairman of the Board  |
|   |   |   |   |                  |   |                               |
|   |   | b.     |   | If  to Executive, to: |   | Michael  H. Carrel                 |
|   |   |   |   |                  |   |                               |
|   |   |   |   |                  |   |                               |
|   |   |   |   |                  |   |                               |

 

 

5.2                                 **WAIVER,MODIFICATION, or AMENDMENT**.  No waiver, modification, or amendment of anyterm, condition, or provision of this Agreement shall be valid or of any effectunless made in writing, signed by the party to be bound or its duly authorizedrepresentative and specifying with particularity the nature and extent of suchwaiver, modification, or amendment.  Anywaiver by any party of any default of the other shall not effect, or impair anyright arising from, any subsequent default. Nothing herein shall limit the rights and remedies of the parties heretounder and pursuant to this Agreement, except as hereinbefore set forth.

 

5.3                                 **ENTIREAGREEMENT**.  ThisAgreement contains the entire understanding of the parties hereto in respect oftransactions contemplated hereby and supersedes all prior agreements andunderstandings between the parties with respect to such subject matter.

 

5.4                                 **INTERPRETATIONAND SEVERANCE**.  Theprovisions of this Agreement shall be applied and interpreted in a mannerconsistent with each other so as to carry out the 

 

 

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purposes and intent of the parties hereto, but if for any reason anyprovision hereof is determined to be unenforceable or invalid, such provisionor such part thereof as may be unenforceable or invalid shall be deemed severedfrom this Agreement and the remaining provisions shall be carried out with thesame force and effect as if the severed provision or part thereof had not beena part of this Agreement.

 

5.5                                 **GOVERNINGLAW**.  This Agreement shall beconstrued and enforced in accordance with the laws of the State of Minnesota.

 

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

 

INWITNESS WHEREOF, the parties hereto have executed this Agreement as of the dayand year first above written.

 
|   | VITAL  IMAGES, INC.: |
|--------|----------------------|
|   |                 |
|   | By                   | /s/  Douglas M. Pihl |
|   |                 | Douglas  M. Pihl |
|   |                 | Chairman |
|   |                 |   |
|   |                 |   |
|   | EXECUTIVE:           |
|   |                 |
|   | By                   | /s/  Michael H. Carrel |
|   |                 | Michael  H. Carrel |

 

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