**Exhibit 10.18**

 

**EMPLOYMENT AGREEMENT**

 

THIS AGREEMENT, made and entered into as of the 6th day of August, 2008, by and between VitalImages, Inc. (“Company”) and Vikram Simha (“Executive”).

 

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

 

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

 

WHEREAS, each of the parties acknowledge that they are receiving goodand valuable consideration 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 containedherein, the sufficiency of which is hereby acknowledged, the parties heretoagree as follows:

 

**ARTICLE I.**

 

**EMPLOYMENT AND TERM**

 

1.1           **EMPLOYMENT**.  Upon the terms subject to the conditionsherein contained, Company hereby employs Executive as Chief Technology Officerand Executive Vice President of Engineering, and Executive hereby accepts suchemployment, subject to the supervision of the President and Chief ExecutiveOfficer of the Company.  Executive shalldevote his best skill and efforts (reasonable sick leave and vacationsexcepted) to the performance of his 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 

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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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 forthe provision of services, Company agrees that it will pay Executive commencingAugust 6th, 2008, atthe rate of $240,000 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.                                       Executiveshall be eligible to participate in Company’s Management Incentive Plan (the “Plan”)as it is established annually by the Board of Directors.  Pursuant to the Plan, Executive’s incentivetarget for calendar year 2008 shall be thirty-five percent (35%) of Executive’sbase salary for calendar year 2008. Executive’s incentive compensation for calendar year 2008 under thePlan, if any, will be determined as soon as practical after December 31,2008, and will be paid to Executive in a lump sum, less any withholdings ordeductions, on or before March 31, 2009.

 

b.                                      TheCompany’s Board of Directors has approved that Executive shall be entitled to receive(i) a stock option grant exercisable for 150,000 shares, which shall vestas to 28% on August 6th,2009, and 2% will vest each month thereafter; and (ii) 15,000 shares ofrestricted stock, which shall vest as to 25% on the one-year anniversary ofgrant date of August 6th,2008, and as to additional increments of 25% on each anniversary thereafter, whichshall be more fully set forth in a Restricted Stock Agreement that you will beprovided separately.

 

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

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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requests must be accompanied by theappropriate documentation and shall be subject to review by Company’s Presidentand Chief Executive Officer.

 

**ARTICLE III.**

 

**DUTIES OF EXECUTIVE**

 

3.1           **SERVICES.**  Executive shall perform all duties andobligations charged to Executive by the President and Chief Executive Officerof Company, as the same may be determined from time to time.  The President and Chief Executive Officer shallassure adequate time, resources, and authority for Executive to reach goalsmutually agreed upon by Company and Executive.

 

3.2           **TIME ANDEFFORT**.  Executive shalldevote 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.**  Executiveshall act in accordance with so as to abide by the Articles of Incorporation ofCompany, the Bylaws of Company and all decisions of the Board of Directors ofCompany.

 

3.4           **CONFIDENTIALITYAND LOYALTY.**  Executiveacknowledges that during the course of his employment he has produced and mayproduce and have access to material, records, data, and information notgenerally available to the public (“Confidential Information”) regardingCompany, its customers and affiliates. Accordingly, during and subsequent to the termination of this Agreement,Executive shall hold in confidence and not directly or indirectly disclose,use, copy, or make lists of any such confidential information, except to theextent authorized in writing by Company, or as required by law or any competentadministrative agency or as otherwise is reasonable necessary or appropriate inconnection with the performance by Executive of his duties pursuant to thisAgreement.  Upon termination of hisemployment under this Agreement, Executive shall promptly deliver to Company (i) allrecords, manuals, books, documents, letters, reports, data, calculations, andall copies of 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 

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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within the scope of Employee’semployment by Company, or that involve the use of Confidential Information.  Accordingly, Executiveacknowledges and agrees that Company shall be the sole and exclusive owner ofany and all copyright(s) with respect to such works of authorship and thatExecutive shall not be entitled to any additional compensation over and abovethe compensation set forth herein or otherwise already received by Executiveunless otherwise agreed in writing by Company. If any work of authorship created hereunder or prior to hereto is notdeemed to be a “work made for hire,” Executive hereby assigns all right, title,and interest therein to Company. Executive is hereby notified thatthis assignment of Work Product does not include any invention where (i) Executivedid not use the equipment, supplies, facility or trade secret information ofCompany; (ii) Executive developed the invention on his own time; (iii) theinvention does not directly relate to the business of Company or Company’sactual or anticipated research or development; and (iv) the invention didnot result from any work performed for Company.

 

3.6           **COMPANYTO HOLD PROPRIETARY RIGHTS. **Furthermore,and without limiting the foregoing, Executive acknowledges and agrees that allproprietary rights, including, without limitation, all patent, trademark, tradesecret, copyright, and other rights, which may exist in connection with any andall inventions, ideas, and works created or conceived by Executive for Company,either before or after the date hereof, shall be the sole and exclusiveproperty of Company and Executive shall have no further rights therein and, tothe extent necessary, assigns all such rights to Company.  All patent, copyright, and other rights insuch inventions, ideas, and works shall be the property of Company, who shallhave the sole right to seek patent, copy, registered design or other protectionin connection therewith.  Executive shallat Company’s reasonable expense do all things and execute all such documents asCompany may reasonably require to vest in Company the rights and protectionherein described.

 

3.7            **RESTRICTION ON COMPETITION**.Executive agrees that Executive shall not, directly or indirectly, andregardless of whether Executive is acting as owner, partner, stockholder,employee, broker, agent, principal, trustee, corporate officer, director,consultant or in any other capacity, do any of the following:

 

(1) For aperiod of twelve (12) months from the date of Executive’s termination ofemployment with the Company, irrespective of the reasons for termination, 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, unless such employmentis by a large diversified entity and on a basis such that Executive will haveno involvement whatsoever with the provision of Competitive Products andServices during the Restricted Period. For purposes of this Agreement,Competitive Products and Services 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. This restriction applies worldwide, and Executiveagrees and acknowledges a worldwide 

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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restriction isreasonable in scope given the Company’s worldwide territory;

 

(2) For aperiod of twenty-four (24) months from the date of Executive’s termination ofemployment with the Company, irrespective of the reasons for termination,solicit customers or the business of any person, firm, corporation or otherentity who is or who was a customer or account of Company or any of Company’saffiliates and subsidiaries while Employee was employed by Company, includingbut not limited to resellers or distributors of Company products or services,or accept business from any person, firm, corporation or other entity who is orwho was a customer or account of Company or any of Company’s affiliates andsubsidiaries while Executive was employed by Company, for the purpose ofselling to such customer or account any Competitive Product or Service; and 

 

(3) For aperiod of twenty-four (24) months from the date of Executive’s termination ofemployment with the Company, irrespective of the reasons for termination,induce or seek to induce any person employed with Company or its affiliates asof the Separation Date to discontinue that person’s employment with Companyand/or solicit, recruit, hire or participate in any other person’s or entity’seffort to hire an employee of Company.

 

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 theissuance of an injunction in favor of Company enjoining the breach of any ofthe aforesaid covenants or agreements by any court of competentjurisdiction.  If any or all of theaforesaid covenants or agreements are held to be unenforceable because of thescope or duration of such covenant or agreement or the area covered thereby,the parties agree that the court making such determination shall have the powerto reduce or modify the scope, duration, and/or area of such covenant to theextent that allows the maximum scope, duration, and/or area permitted byapplicable 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 President and Chief Executive Officer.  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 payset forth in Section 4.2 below provided Executive agrees to release anyclaims he may have against the Company in exchange for receipt of severancepay.  For purposes of the Agreement, GoodReason shall mean the occurrence of any of the following events, which theCompany has not cured within thirty (30) days of notice thereof:

 

a.                                       Amaterial breach of this Agreement or any other written agreement with theExecutive by the Company;

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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b.                                      Amaterial adverse change in Executive’s status or position as an executiveofficer of the Company as a result of a material diminution in Executive’sduties, responsibilities, or authority as of the date of this Agreement (exceptin connection with the termination of Executive’s employment in accordance withSection 4.3 hereof);

 

c.                                       Areduction by the Company of the Executive’s base salary as the same may beincreased from time 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.                                       TheCompany’s requiring Executive to be based anywhere other than thatMinneapolis/St. Paul, Minnesota metropolitan statistical area, except forrequired travel on the Company’s business.

 

4.2           **TERMINATIONBY COMPANY**.  Company shallhave the right to terminate Executive’s employment without notice and with orwithout Cause, as that term is defined below. If Company terminates Executive’s employment without cause, Companyshall pay Executive nine (9) months of severance pay based on Executive’sbase salary at the time of termination provided Executive agrees to release anyclaims he may have against the company, pursuant to Company’s standard releaseagreement for such circumstances, in exchange for the receipt of severancepay.  Executive’s severance pay, if any,shall be payable in one lump sum, less any applicable withholdings ordeductions, within ten (10) days after the expirations of any applicablerescission periods.  If Companyterminates Executive’s employment with Cause, Executive shall not receiveseverance pay.

 

Medical Insurance Benefits.  If Executiveis eligible for severance pay hereunder, Company, pursuant to federal and statelaw, will also provide, for a period of nine (9) months following Executive’stermination date (“Benefits Period”), a continuation of the group medical anddental insurance coverage on the same basis as it was previously provided toExecutive 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 byExecutive.  After such conclusion, Executive will be required to pay forall such benefits for the remainder of the period in which Executive iseligible for COBRA, if any, should Executive elect to continue COBRA coverage.

 

Notwithstanding anything in this Agreement to the contrary, if all orany portion of the severance pay described in this Section 4.2 is subjectto the requirements of Code Section 

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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409A and the Company determines that Executive is a “specified employee”as defined in Code Section 409A as of the date of Executive’s terminationof employment, such payments shall not be paid or commence earlier than thefirst day of the seventh month following the date of Executive’s termination ofemployment.

 

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

 

a.                                       Executive’sgross misconduct;

 

b.                                      Executiveshall inexcusably violate or willfully refuse to obey the lawful and reasonableinstructions of the President and Chief Executive Officer or the Board ofDirectors 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.

 

An act, or failure to act, will be considered “gross” or “willful” forthis purpose 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 theCompany’s Board of Directors (or a committee thereof) or based upon the adviceof counsel for the Company will be conclusively presumed to be done, or omittedto be done, by Executive in good faith and in the best interests of theCompany.  It is also expressly understoodthat Executive’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.

 

Where the 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.

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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4.4.          **SURVIVINGRIGHTS**.  Notwithstandingthe termination of Executive’s employment, the parties shall be required tocarry out any provisions hereof which contemplate performance subsequent tosuch termination; and such termination shall not affect any liability or otherobligation which shall have accrued prior to such termination, including, butnot limited to, any liability for loss or damage on account of a prior default.

 

4.5.          **COOPERATIONAND NON-DISPARAGEMENT.**   Executive agrees that, during the term of this Agreement and for three (3) yearsfollowing the termination of his employment, Executive will (i) assist andcooperate with the Company regarding any claims or disputes involving matterswithin the knowledge or responsibilities of Executive; and (ii) not in anyway or by any means disparage the Company, the members of the Company’s Boardof Directors or the Company’s officers 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 3.4, 3.5, 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: President and CEO      |
|   |                 |                              |
| b.     | If to Executive, to: | Vikram Simha                      |
|   |                 | 49 Trefry Lane                    |
|   |                 | Stow, MA 01775                    |

 

5.2           **WAIVER,MODIFICATION, or AMENDMENT**. No waiver, modification, or amendment of any term, condition, orprovision of this Agreement shall be valid or of any effect unless made inwriting, signed by the party to be bound or its duly authorized representativeand specifying with particularity the nature and extent of such waiver,modification, or amendment.  Any waiverby any party of any default of the other shall not effect, or impair any rightarising from, any subsequent default. Nothing herein shall 

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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limit the rights and remedies of the partieshereto under and pursuant to this Agreement, except as hereinbefore set forth.  Notwithstanding anything in this Agreement tothe contrary, the Company expressly reserves the right to amend this Agreementto the extent necessary to comply with Code Section 409A, as it may beamended from time to time, and the regulations, notices and other guidance ofgeneral applicability issued thereunder.

 

5.3           **ENTIREAGREEMENT**.  This Agreementtogether with the offer letter dated August 5, 2008 contains the entireunderstanding of the parties hereto in respect of transactions contemplatedhereby and supersedes all prior agreements and understandings between theparties 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 purposes and intent of theparties hereto, but if for any reason any provision hereof is determined to beunenforceable or invalid, such provision or such part thereof as may beunenforceable or invalid shall be deemed severed from this Agreement and theremaining provisions shall be carried out with the same force and effect as ifthe severed provision or part thereof had not been a part of this Agreement.

 

5.5           **GOVERNINGLAW**.  This Agreement shallbe construed and enforced in accordance with the laws of the State ofMinnesota.

 

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.

 

 

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

 

 
|   | VITAL IMAGES, INC.: |
|--------|---------------------|
|   |                |   |
|   |                |   |
|   | By             |   /s/ Michael H. Carrel |
|   |                | Michael H. Carrel |
|   |                | President and Chief Executive Officer |
|   |                |   |
|   |                |   |
|   | EXECUTIVE:          |
|   |                |   |
|   |                |   |
|   | By             |   /s/ Vikram Simha |
|   |                | Vikram Simha |

 
| VS |   | Executive |
|----|--------|-----------|
| MC |   | Company   |

 

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