**Exhibit 10.19**

 

**CHANGE IN CONTROL AGREEMENT**

 

August 5, 2008

 

Dear Vikram Simha:

 

In connection with your hiring as the Chief Technology Officer andExecutive Vice President of Engineering of Vital Images, Inc., a Minnesotacorporation (the “Company”), we hereby offer you valuable and unique benefits.  The Company considers the establishment andmaintenance of a sound and vital management to be essential to protecting andenhancing the best interests of the Company and its shareholders.  In this connection, the Company recognizesthat, as is the case with many publicly held corporations, the possibility of aChange in Control may arise and that such possibility and the uncertainty andquestions which it may raise among management may result in the departure ordistraction of management personnel to the detriment of the Company and itsshareholders.

 

Accordingly, the Board has determined that appropriate steps should betaken to minimize the risk that Company management will depart prior to aChange in Control, thereby leaving the Company without adequate managementpersonnel during such a critical period, and that appropriate steps also betaken to reinforce and encourage the continued attention and dedication ofmembers of the Company’s management to their assigned duties withoutdistraction in circumstances arising from the possibility of a Change inControl.  In particular, the Boardbelieves it important, should the Company or its shareholders receive aproposal for transfer of control, that you be able to continue your managementresponsibilities without being influenced by the uncertainties of your ownpersonal situation.

 

The Board recognizes that continuance of your position with the Companyinvolves a substantial commitment to the Company in terms of your personal lifeand professional career and the possibility of foregoing present and futurecareer opportunities, for which the Company receives substantial benefits.  Therefore, to induce you to remain in theemploy 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 theevent your employment with the Company is terminated in connection with aChange in Control under the circumstances described below.

 

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

 

**ARTICLE I.**

**DEFINITIONS**

 

1.                                       “Affiliate”means (i) any corporation more than 50% of whose outstanding securitiesordinarily having the right to vote at elections of directors is owned directlyor indirectly by the Company or (ii) any other form of business entity inwhich the Company, by virtue of a direct or indirect ownership interest, hasthe 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 timein accordance with its terms.

 

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

 

4.                                       “Cause”means:

 

a.                                       yourgross misconduct;

 

b.                                      yourwillful and continued failure to perform substantially your duties with theCompany (other than any such failure (1) resulting from your Disability orincapacity due to bodily injury or physical or mental illness or (2) relatingto changes in your duties after a Change in Control which constitute GoodReason) after a demand for substantial performance is delivered to you by thechair of the Board which specifically identifies the manner in which you havenot substantially performed your duties and provides for a reasonable period oftime within which you may take corrective actions; or

 

c.                                       yourconviction (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 your ability to perform substantially your duties for theCompany.

 

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 badfaith and without reasonable belief that it was in, or not opposed to, the bestinterests of the Company.  Any act, orfailure to act, based upon authority given pursuant to a resolution dulyadopted by the Company’s board of directors (or a committee thereof) or basedupon the advice of counsel for the Company will be conclusively presumed to bedone, or omitted to be done, by you in good faith and in the best interests of theCompany.  It is also expressly understoodthat your attention to matters not directly related to the business of theCompany will not provide a basis for termination for Cause so long as the Boarddid not expressly disapprove in writing of your engagement in such activitieseither before or within a reasonable period of time after the Board knew orcould reasonably have known that you engaged in those activities.  Notwithstanding the foregoing, you may not beterminated for Cause unless and until there has been delivered to you a copy ofa resolution duly adopted by the affirmative vote of not less than a majorityof the entire membership of the Board at a meeting of the Board called and heldfor 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 thegood faith opinion of the Board you were guilty of the conduct set forth abovein clauses a., b. or c. of this definition and specifying the particularsthereof in detail.

 

5.                                       “Changein Control” means any of the following:

 

a.                                       thesale, exchange or other transfer, directly or indirectly, of all orsubstantially all of the assets of the Company to any Person in one transactionor in a series of related transactions which occur during the twelve-monthperiod ending on the date of the most recent purchase or other acquisition bysuch Person;

 

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

 

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50 percent of the combined voting power of theoutstanding securities of the Company ordinarily having the right to vote atelections of directors (regardless of any approval by the continuingdirectors);

 

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

 

e.                                       thecontinuing directors cease for any reason to constitute at least a majority ofthe Board.

 

For purposes of this Section 1(e), a “continuingdirector” 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 whosubsequently becomes a member of the Board whose election or nomination forelection by the Company’s shareholders was approved by a vote of at least amajority of the directors who are continuing directors (either by a specificvote or by approval of the proxy statement of the Company in which suchindividual is named as a nominee for director without objection to suchnomination).

 

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

 

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

 

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

 

8.                                       “ConfidentialInformation” means information which is proprietary to the Company orproprietary to others and entrusted to the Company, whether or not tradesecrets. It includes information relating to business plans and to business asconducted or anticipated to be conducted, and to past or current or anticipatedproducts or services.  It also includes,without limitation, information concerning research, development, purchasing,accounting, marketing and selling.  Allinformation which you have a reasonable basis to consider confidential isConfidential Information, whether or not originated by you and without regardto the manner in which you obtain access to that and any other proprietaryinformation.

 

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

 

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

 

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

 

c.                                       ifyour employment is to be terminated by the Company for any reason other thanCause, Disability, death or Retirement, the date specified in the Notice ofTermination, which in no event may be a date earlier than 90 days after thedate on which a Notice of Termination is given, unless an earlier date has beenexpressly agreed to by you in writing either in advance of, or after; receivingsuch Notice of Termination; or

 

d.                                      ifyour employment is terminated by reason of death or Retirement, the date ofdeath or Retirement, respectively.

 

In the case of termination by the Company of youremployment for Cause, if you have not previously expressly agreed in writing tothe termination, then within 30 days after receipt by you of the Notice ofTermination with respect thereto, you may notify the Company that a disputeexists concerning the termination, in which event the Date of Termination willbe the date set either by mutual written agreement of the parties or by thejudge or arbitrators in a proceeding as provided in Article VII Section 6of this Agreement.  During the pendencyof any such dispute, you will continue to make yourself available to provideservices to the Company and the Company will continue to pay you your fullcompensation and benefits in effect immediately prior to the date on which theNotice of Termination is given (without regard to any changes to suchcompensation or benefits which constitute Good Reason) and until the dispute isresolved in accordance with Article VII Section 6 of thisAgreement.  You will be entitled toretain the full amount of any such compensation and benefits without regard tothe resolution of the dispute unless the judge or arbitrators decide(s) thatyour 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 ineffect immediately prior to the Change in Control or; in the absence of such aplan, means permanent and total disability as defined in section 22(e)(3) ofthe Code.

 

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

 

12.                                 “GoodReason” means:

 

a.                                       change in your status,position(s), duties or responsibilities as an executive of the Company as ineffect immediately prior to the Change in Control which, in your reasonablejudgment, is an adverse change (other than, if applicable, any such changedirectly 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 forGood Reason;

 

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

 

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c.                                       thefailure by the Company to continue in effect any Plan in which you (and/or yourfamily) are eligible to participate at any time during the 90-day periodimmediately preceding the Change in Control (or Plans providing you (and/oryour family) with at least substantially similar benefits) other than as aresult of the normal expiration of any such Plan in accordance with its termsas in effect immediately prior to the 90-day period immediately preceding thetime of the Change in Control, or the taking of any action, or the failure toact, 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 asfavorable a basis to you (and/or your family) as is the case on the date of theChange 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 yourfamily) of any material benefit enjoyed by you (and/or your family) at the timeof the Change in Control;

 

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

 

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

 

f.                                         anypurported termination by the Company of your employment which is not properlyeffected pursuant to a Notice of Termination and pursuant to any otherrequirements of this Agreement, and for purposes of this Agreement, no suchpurported termination will be effective;

 

g.                                      anyrefusal by the Company to continue to allow you to attend to matters or engagein activities not directly related to the business of the Company which, at anytime prior to the Change in Control, you were not expressly prohibited inwriting by the Board from attending to or engaging in; or

 

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

 

13.                                 “Noticeof Termination” means a written notice given on or after the date of aChange in Control (unless your termination before the date of the Change inControl was either a condition of the Change in Control or was at the requestor insistence of any Person related to the Change in Control) which indicatesthe specific termination provision in this Agreement pursuant to which thenotice is given.  Any purported terminationby the Company or by you for Good Reason on or after the date of a Change inControl (or before the date of a Change in Control if your termination waseither a condition of the Change in Control or was at the request or insistenceof any Person related to the Change in Control) must be communicated by writtenNotice of Termination to be effective; provided, that your failure to provideNotice of Termination will not limit any of your rights under this Agreementexcept to the extent the Company demonstrates that it suffered material actualdamages 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 theCompany, any Affiliate or any employee benefit plan(s) sponsored by theCompany or an Affiliate.

 

15.                                 “Plan”means any compensation plan, program, policy or agreement (such as a stockoption, restricted stock plan or other equity-based plan), any bonus orincentive compensation plan, program, policy or agreement, any employee benefitplan, program, policy or agreement (such as a thrift, pension, profit sharing,medical, dental, disability, accident, life insurance, relocation, salarycontinuation, expense reimbursements, vacation or fringe benefits plan orpolicy) or any other plan, program, policy or agreement of the Company intendedto 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 ageof 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 businessdirectly, by merger, consolidation or other form of business combination, orindirectly, by purchase of the Company’s outstanding securities ordinarily havingthe right to vote at the election of directors or, all or substantially all ofits assets or otherwise.

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**ARTICLE II.**

**TERM OFAGREEMENT**

 

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 31thereafter, the term of this Agreement will automatically be extended for 12additional months beyond the expiration date otherwise then in effect, unlessat least 90 calendar days prior to any such July 31, the Company or youhas given notice that this Agreement will not be extended; and, provided,further; that if a Change in Control has occurred during the term of thisAgreement, this Agreement will continue in effect beyond the termination datethen in effect for a period of 12 months following the month during which theChange in Control occurs or, if later, until the date on which the Company’sobligations to you arising under or in connection with this Agreement have beensatisfied in full.

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**ARTICLE III.**

**CHANGE IN CONTROL BENEFITS**

 

1.                                       Benefitsupon a Change in Control Termination. You will become entitled to the payments and benefits described inclauses (a) and (b) of this Section 1 of Article III,subject to the limitations described in clause (c) of this Section 1of 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 bythe 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) thetermination occurs either within the period beginning on the date of a Changein Control and ending on the last day of the twelfth month that begins afterthe month during which the Change in Control occurs or prior to a Change inControl if your termination was either a condition of the Change in Control orwas at the request or insistence of a Person related to the Change in Control.

 

a.                                       CashPayment.  Within ten (10) businessdays following the Date of Termination or, if later, within ten (10) businessdays 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 equalto your annual base salary in effect on the date of the Change in Control.

 

b.                                      WelfarePlans. The Company will maintain in full force and effect, for thecontinued benefit of you and your dependents for a period terminating 24 monthsafter the Date of Termination, all insured and self-insured employee welfarebenefit Plans (including, without limitation, medical, life, dental, vision anddisability plans) in which you were eligible to participate at any time duringthe 90-day period immediately preceding the Change in Control, provided thatyour continued participation is possible under the general terms and provisionsof such Plans and any applicable funding media and without regard to anydiscretionary amendments to such Plans by the Company following the Change inControl (or prior to the Change in Control if amended as a condition or at therequest or insistence of a Person (other than the Company) related to theChange in Control) and provided that you continue to pay an amount equal toyour regular contribution under such Plans for such participation (based uponyour level of benefits and employment status most favorable to you at any timeduring the 90-day period immediately preceding the Change in Control).  The continuation period under federal andstate continuation laws, to the extent applicable, will begin to run from thedate on which coverage pursuant to this clause (b) ends.  If, at the end of the 24-month period, youhave not previously received or are not then receiving equivalent benefits froma new employer (including coverage for any pre-existing conditions), theCompany, pursuant to federal and state law, will provide, for a period ofeighteen (18) months (the “COBRA Period”), a continuation of your and yourdependents’ coverage under such Plans (the “COBRA Coverage”), provided that youwill be required to pay for such benefits during the COBRA Period, should youelect to receive COBRA Coverage.

 

c.                                       Limitationon Payments and Benefits. Notwithstanding anything in this Agreement to the contrary, if any ofthe payments or benefits to be made or provided in connection with thisAgreement, together with any other payments, benefits or awards which you havethe right to receive from the Company, or any corporation which is a member ofan “affiliated group” (as defined in section 1504(a) of the Code withoutregard 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) ofthe Code), two calculations will be performed. In the first calculation, the payments, benefits or awards will bereduced by the amount the Company deems necessary so that none of the paymentsor benefits under the Agreement (including from the existing Stock Option andIncentive Plan) are excess parachute payments. In the second calculation, the payments will not be reduced so as toeliminate an excess parachute payment, but will be reduced by the amount of theapplicable excise tax as imposed by section 4999 of the Code.  The two calculations will be compared and thecalculation providing the largest net payment to the employee will beutilized.  The calculations must be madein good faith by legal counsel or a certified public accountant selected by theCompany, and such determination will be conclusive and binding upon you and theCompany.  If a reduction in payments orbenefits is required by the comparison above, the payments or benefits underthe Agreement shall be reduced in the order that minimizes the amount of totalreduction in payments and benefits under the Agreement as a result of thisprovision.

 

d.                                      409ARestrictions.  Notwithstanding theforegoing, if any of the payments or other benefits described in this Article IIIare subject to the requirements of Code Section 409A and the Companydetermines 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 notbe paid or commence earlier than the first day of the seventh month following theDate of Termination.

 

2.                                       Disposition.  If, on or after the date of a Change inControl, an Affiliate is sold, merged, transferred or in any other manner orfor any other reason ceases to be an Affiliate or all or any portion of thebusiness or assets of an Affiliate are sold, transferred or otherwise disposedof and the acquiror is not the Company or an Affiliate (a “Disposition”), andyou remain or become employed by the acquiror or an affiliate of the acquiror(as defined in this Agreement but substituting “acquiror” for “Company”) inconnection with the Disposition, you will be deemed to have terminatedemployment on the effective date of the Disposition for purposes of thissection unless (a) the acquiror and its affiliates jointly and severallyexpressly assume and agree, in a manner that is enforceable by you, to performthe obligations of this Agreement to the same extent that the Company would berequired to perform if the Disposition had not occurred and (b) theSuccessor guarantees, in a manner that is enforceable by you, payment andperformance by the acquiror.  This Section 2of Article III shall be applied in accordance with Code Section 409Aand the regulations, notices and other guidance of general applicability issuedthereunder.

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**ARTICLE IV.**

**INDEMNIFICATION**

 

Following a Change in Control, the Company will indemnify and reimburseyou to the full extent permitted by law and the Company’s articles ofincorporation and bylaws for damages, costs and expenses (including, withoutlimitation, judgments, fines, penalties, settlements and reasonable fees andexpenses of your counsel) incurred in connection with all matters, events andtransactions relating to your service to or status with the Company or anyother corporation, employee benefit plan or other entity with whom you servedat the request of the Company.

 

**ARTICLE V.**

**CONFIDENTIALITY**

 

You will not use, other than in connection with your employment withthe Company, or disclose any Confidential Information to any person notemployed by the Company or not authorized by the Company to receive suchConfidential Information, without the prior written consent of the Company; andyou will use reasonable and prudent care to safeguard and protect and preventthe unauthorized disclosure of Confidential Information. Nothing in thisAgreement will prevent you from using, disclosing or authorizing the disclosureof any Confidential Information: (a) which is or hereafter becomes part ofthe public domain or otherwise becomes generally available to the public throughno fault of yours; (b) to the extent and upon the terms and conditionsthat the Company may have previously made the Confidential Informationavailable to certain persons; or (c) to the extent that you are requiredto disclose such Confidential Information by law or judicial or administrativeprocess.

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**ARTICLE VI.**

**SUCCESSORS**

 

The Company will seek to have any Successor, by agreement in form andsubstance satisfactory to you, assent to the fulfillment by the Company of theCompany’s obligations under this Agreement. Failure of the Company to obtainsuch assent at least three business days prior to the time a Person becomes aSuccessor (or where the Company does not have at least three business days’advance notice that a Person may become a Successor, within one business dayafter having notice that such Person may become or has become a Successor) willconstitute 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 ofTermination and Notice of Termination will be deemed to have been given on thatdate.  A Successor has no rights,authority or power with respect to this Agreement prior to a Change in Control.

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**ARTICLEVII.**

**OTHERPROVISIONS**

 

1.                                       BindingAgreement.  This Agreement inures tothe benefit of, and is enforceable by, you, your personal and legalrepresentatives, executors, administrators, successors, heirs, distributees,devisees and legatees. If you die while any amount would still be payable toyou under this Agreement if you had continued to live, all such amounts, unlessotherwise provided in this Agreement, will be paid in accordance with the termsof this Agreement to your devisee, legatee or other designee or; if there be nosuch designee, to your estate.

 

2.                                       NoMitigation.  You will not be requiredto mitigate the amount of any payments or benefits the Company becomesobligated to make or provide to you in connection with this Agreement byseeking other employment or otherwise. The payments or benefits to be made orprovided to you in connection with this Agreement may not be reduced, offset orsubject to recovery by the Company by any payments or benefits you may receivefrom other employment or otherwise.

 

3.                                       NoSetoff.  The Company has no right todelay or setoff payments or benefits owed to you under this Agreement againstamounts owed or claimed to be owed by you to the Company under this Agreementor otherwise.

 

4.                                       Taxes.  All payments and benefits to be made orprovided to you in connection with this Agreement will be subject to requiredwithholding of federal, state and local income, excise and employment-relatedtaxes.

 

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

 

6.                                       Disputes.  If you so elect, any dispute, controversy orclaim arising under or in connection with this Agreement will be settledexclusively by binding arbitration administered by the American ArbitrationAssociation in Minneapolis, Minnesota in accordance with the CommercialArbitration Rules of the American Arbitration Association then ineffect.  Judgment may be entered on thearbitrator’s award in any court having jurisdiction; provided, that you mayseek specific performance of your right to receive payment or benefits untilthe Date of Termination during the pendency of any dispute or controversyarising under or in connection with this Agreement.  The Company will be entitled to seek aninjunction or restraining order in a court of competent jurisdiction (within orwithout the State of Minnesota) to enforce the provisions of Article V ofthis Agreement.

 

7.                                       Jurisdiction.  Except as specifically provided otherwise inthis Agreement, the parties agree that any action or proceeding arising underor 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 thispurpose and agree not to assert that such courts are an inconvenient forum

 

8.                                       RelatedAgreements.  To the extent that anyprovision of any other Plan or agreement between the Company and you limits,qualifies or is inconsistent with any provision of this Agreement, then forpurposes of this Agreement, while such other Plan or agreement remains inforce, the provision of this Agreement will control and such provision of suchother Plan or agreement will be deemed to have been superseded, and to be of noforce or effect, as if such other agreement had been formally amended to theextent necessary to accomplish such purpose. Nothing in this Agreement prevents or limits your continuing or futureparticipation in any Plan provided by the Company and for which you mayqualify, and nothing in this Agreement limits or otherwise affects the rightsyou may have under any Plans or other agreements with the Company.  Amounts which are vested benefits or whichyou are otherwise entitled to receive under any Plan or other agreement withthe Company at or subsequent to the Date of Termination will be payable inaccordance with such Plan or other agreement.

 

9.                                       NoEmployment or Service Contract. Nothing in this Agreement is intended to provide you with any right tocontinue in the employ of the Company for any period of specific duration orinterfere with or otherwise restrict in any way your rights or the rights ofthe Company, which rights are hereby expressly reserved by each, to terminateyour employment at any time for any reason or no reason whatsoever, with orwithout cause.

 

10.                                 Fundingand Payment.  Benefits payable underthis Agreement will be paid only from the general assets of the Company.  No person has any right to or interest in anyspecific assets of the Company by reason of this Agreement.  To the extent benefits under this Agreementare not paid when due to any individual, he or she is a general unsecuredcreditor of the Company with respect to any amounts due.  The Company with whom you were employedimmediately before your Date of Termination has primary responsibility forbenefits to which you or any other person are entitled pursuant to this Agreementbut to the extent such Company is unable or unwilling to provide such benefits,the Company and each other Affiliate are jointly and severally responsibletherefor to the extent permitted by applicable law.  If you were simultaneously employed by morethan one Company immediately before your Date of Termination, each such Companyhas primary responsibility for a portion of the benefits to which you or anyother person are entitled pursuant to this Agreement that bears the same ratioto the total benefits to which you or such other person are entitled pursuantto this Agreement as your base pay from the Company immediately before yourDate of Termination bears to your aggregate base pay from all such Companies.

 

11.                                 Survival.  The respective obligations of, and benefitsafforded to, the Company and you which by their express terms or clear intentsurvive termination of your employment with the Company or termination of thisAgreement, as the case may be, including without limitation the provisions ofArticles III, IV, V and VI and Sections 3, 4, 5 and 6 of Article VII ofthis Agreement, will survive termination of your employment with the Company ortermination of this Agreement, as the case may be, and will remain in fullforce and effect according to their terms.

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**ARTICLE VIII.**

**MISCELLANEOUS**

 

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

 

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this Agreement of, or of compliance with, anycondition or provision of this Agreement to be performed by such party will bedeemed a waiver of similar or dissimilar provisions or conditions at the sameor at any prior or subsequent time. Notwithstanding anything in this Agreement to the contrary, the Companyexpressly reserves the right to amend this Agreement to the extent necessary tocomply with Code Section 409A, as it may be amended from time to time, andthe regulations, notices and other guidance of general applicability issuedthereunder.

 

2.                                       EntireAgreement.  No agreements orrepresentations, oral or otherwise, express or implied, with respect to thesubject matter to this Agreement have been made by any party which are notexpressly set forth in this Agreement.

 

3.                                       GoverningLaw.  This Agreement and the legalrelations 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 internallaws of the State of Minnesota (without regard to the conflict of laws principlesof any jurisdiction).

 

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

 

5.                                       FurtherActs.  The parties to this Agreementagree to perform, or cause to be performed, such further acts and deeds and toexecute and deliver or cause to be executed and delivered, such additional orsupplemental documents or instruments as may be reasonably required by theother party to carry into effect the intent and purpose of this Agreement.

 

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

 

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

 

If this letter correctly sets forth our agreement on the subject matterdiscussed above, kindly sign and return to the Company the enclosed copy ofthis 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                        |
|        |                                     |  |  |  |

 

11

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