<PAGE>

                                                                 EXHIBIT 10.18
 
                          INDEMNIFICATION AGREEMENT
                          -------------------------

     This Indemnification Agreement (the "Agreement") is made as of May 14, 1998
                                          ---------                             
by and between Raster Graphics, Inc., a Delaware corporation (the "Company"),
                                                                   -------   
and Kathy J. Bagby (the "Indemnitee") in its capacity as a consultant to the
                         ----------                                         
Company.  As used herein Indemnitee shall mean the officers, directors, members
and agents of Indemnitee.

                                  RECITALS
                                  --------

     The Company and Indemnitee recognize the increasing difficulty in obtaining
liability insurance for directors, officers, key employees and consultants, the
significant increases in the cost of such insurance and the general reductions
in the coverage of such insurance.  The Company and Indemnitee further recognize
the substantial increase in corporate litigation in general, subjecting
directors, officers and key employees to expensive litigation risks at the same
time as the availability and coverage of liability insurance has been severely
limited.  Indemnitee does not regard the current protection available as
adequate under the present circumstances, and Indemnitee is not willing to
continue to serve as consultant to the Company without additional protection.
The Company desires to attract the services of Indemnitee and to indemnify
Indemnitee so as to provide it with the maximum protection permitted by law.
For this purpose the Company and Indemnitee agree that Indemnitee is acting as
an "agent" of the Company within the meaning of Section 145 of the Delaware
General Corporation Law.

                                  AGREEMENT
                                  ---------

     In consideration of the mutual promises made in this Agreement, and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the Company and Indemnitee hereby agree as follows:

     1.   INDEMNIFICATION.
          --------------- 

          (a)   THIRD PARTY PROCEEDINGS.  The Company shall indemnify Indemnitee
                -----------------------                                         
if Indemnitee is or was a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while an
officer or director or by reason of the fact that Indemnitee is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement (if such settlement is approved in advance by the Company, which
approval shall not be unreasonably withheld) actually and reasonably incurred by
Indemnitee in connection with such action, suit or proceeding if Indemnitee
acted in good faith and in a manner Indemnitee reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe Indemnitee's
conduct was unlawful.  The termination of any action, suit or proceeding by
judgment, order, 
<PAGE>
 
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, or, with respect to any criminal
action or proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.

          (b)   PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY.  The Company
                --------------------------------------------- 
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action or proceeding
by or in the right of the Company or any subsidiary of the Company to procure
a judgment in its favor by reason of the fact that Indemnitee is or was a
director, officer, employee or agent of the Company, or any subsidiary of the
Company, by reason of any action or inaction on the part of Indemnitee while a
director, officer, employee or agent by reason of the fact that Indemnitee is
or was serving at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) and, to the fullest
extent permitted by law, amounts paid in settlement (if such settlement is
approved in advance by the Company, which approval shall not be unreasonably
withheld), in each case to the extent actually and reasonably incurred by
Indemnitee in connection with the defense or settlement of such action or suit
if Indemnitee acted in good faith and in a manner Indemnitee reasonably
believed to be in or not opposed to the best interests of the Company and its
stockholders, except that no indemnification under this Section 1(b) shall be
made in respect of any claim, issue or matter as to which Indemnitee shall
have been finally adjudicated by court order or judgment to be liable to the
Company in the performance of Indemnitee's duty to the Company and its
stockholders unless and only to the extent that the court in which such action
or proceeding is or was pending shall determine upon application that, in view
of all the circumstances of the case, Indemnitee is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.

          (c)   MANDATORY PAYMENT OF EXPENSES.  To the extent that Indemnitee
                -----------------------------   
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in Section 1(a) or Section 1(b) or the defense of
any claim, issue or matter therein, Indemnitee shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.

     2.   NO EMPLOYMENT RIGHTS.  Nothing contained in this Agreement is intended
          --------------------                                                  
to create in Indemnitee any right to continued employment.

     3.   EXPENSES; INDEMNIFICATION PROCEDURE.
          ----------------------------------- 

          (a)   ADVANCEMENT OF EXPENSES.  The Company shall advance all expenses
                -----------------------                                         
incurred by Indemnitee in connection with the investigation, defense,
settlement or appeal of any civil or criminal action, suit or proceeding
referred to in Section l(a) or Section 1(b) hereof (including amounts actually
paid in settlement of any such action, suit or proceeding). Indemnitee hereby
undertakes to repay such amounts advanced only if, and to the extent that, it
shall

<PAGE>
 
ultimately be determined that Indemnitee is not entitled to be indemnified by 
the Company as authorized hereby.

          (b)   NOTICE/COOPERATION BY INDEMNITEE.  Indemnitee shall, as a
                --------------------------------                         
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in writing as soon as practicable of any claim made
against Indemnitee for which indemnification will or could be sought under this
Agreement.  Notice to the Company shall be directed to the Chief Executive
Officer of the Company and shall be given in accordance with the provisions of
Section 12(d) below.  In addition, Indemnitee shall give the Company such
information and cooperation as it may reasonably require and as shall be within
Indemnitee's power.

          (c)   PROCEDURE.  Any indemnification and advances provided for in
                ---------                                                   
Section 1 and this Section 3 shall be made no later than twenty (20) days after
receipt of the written request of Indemnitee.  If a claim under this Agreement,
under any statute, or under any provision of the Company's Certificate of
Incorporation or Bylaws providing for indemnification, is not paid in full by
the Company within twenty (20) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at any
time thereafter bring an action against the Company to recover the unpaid amount
of the claim and, subject to Section 11 of this Agreement, Indemnitee shall also
be entitled to be paid for the expenses (including attorneys' fees) of bringing
such action.  It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed, but the burden of
proving such defense shall be on the Company and Indemnitee shall be entitled to
receive interim payments of expenses pursuant to Section 3(a) unless and until
such defense may be finally adjudicated by court order or judgment from which no
further right of appeal exists.  It is the parties' intention that if the
Company contests Indemnitee's right to indemnification, the question of
Indemnitee's right to indemnification shall be for the court to decide, and
neither the failure of the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) to have made a determination that indemnification of
Indemnitee is proper in the circumstances because Indemnitee has met the
applicable standard of conduct required by applicable law, nor an actual
determination by the Company (including its Board of Directors, any committee or
subgroup of the Board of Directors, independent legal counsel, or its
stockholders) that Indemnitee has not met such applicable standard of conduct,
shall create a presumption that Indemnitee has or has not met the applicable
standard of conduct.

          (d)   NOTICE TO INSURERS.  If, at the time of the receipt of a
                ------------------       
notice of a claim pursuant to Section 3(b) hereof, the Company has director
and officer liability insurance in effect, the Company shall give prompt
notice of the commencement of such proceeding to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to
pay, on behalf of the Indemnitee, all amounts payable as a result of such
proceeding in accordance with the terms of such policies.

<PAGE>
 
          (e)   SELECTION OF COUNSEL.  In the event the Company shall be
                --------------------           
obligated under Section 3(a) hereof to pay the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume
the defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by Indemnitee and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred
by Indemnitee with respect to the same proceeding, provided that (i)
Indemnitee shall have the right to employ counsel in any such proceeding at
Indemnitee's expense; and (ii) if (A) the employment of counsel by Indemnitee
has been previously authorized by the Company, (B) Indemnitee shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense or (C) the Company
shall not, in fact, have employed counsel to assume the defense of such
proceeding, then the fees and expenses of Indemnitee's counsel shall be at the
expense of the Company.

     4.   ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.
          ------------------------------------------------- 

          (a)   SCOPE.  Notwithstanding any other provision of this Agreement,
                -----         
the Company hereby agrees to indemnify the Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not
specifically authorized by the other provisions of this Agreement, the
Company's Certificate of Incorporation, the Company's Bylaws or by statute. In
the event of any change, after the date of this Agreement, in any applicable
law, statute, or rule which expands the right of a Delaware corporation to
indemnify a member of its board of directors, officer, employee or agent, such
changes shall be deemed to be within the purview of Indemnitee's rights and
the Company's obligations under this Agreement. In the event of any change in
any applicable law, statute or rule which narrows the right of a Delaware
corporation to indemnify a member of its board of directors, officer, employee
or agent, such changes, to the extent not otherwise required by such law,
statute or rule to be applied to this Agreement shall have no effect on this
Agreement or the parties' rights and obligations hereunder.

          (b)   NONEXCLUSIVITY.  The indemnification provided by this Agreement
                --------------                                                 
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's Certificate of Incorporation, its Bylaws, any agreement, any
vote of stockholders or disinterested members of the Company's Board of
Directors, the General Corporation Law of the State of Delaware, or otherwise,
both as to action in Indemnitee's official capacity and as to action in another
capacity while holding such office.  The indemnification provided under this
Agreement shall continue as to Indemnitee for any action taken or not taken
while serving in an indemnified capacity even though he, she or it may have
ceased to serve in any such capacity at the time of any action, suit or other
covered proceeding.

      5.  PARTIAL INDEMNIFICATION.  If Indemnitee is entitled under any
          -----------------------     
provision of this Agreement to indemnification by the Company for some or a
portion of the expenses, judgments, fines or penalties actually or reasonably
incurred in the investigation, defense, appeal or settlement of any civil or
criminal action, suit or proceeding, but not, however, for the total

<PAGE>
 
amount thereof, the Company shall nevertheless indemnify Indemnitee for the
portion of such expenses, judgments, fines or penalties to which Indemnitee is
entitled.

      6.  MUTUAL ACKNOWLEDGMENT.  Both the Company and Indemnitee acknowledge
          ---------------------                                              
that in certain instances, Federal law or public policy may override applicable
state law and prohibit the Company from indemnifying its directors and officers
under this Agreement or otherwise.  For example, the Company and Indemnitee
acknowledge that the Securities and Exchange Commission (the "SEC") has taken
                                                              ---            
the position that indemnification is not permissible for liabilities arising
under certain federal securities laws, and federal legislation prohibits
indemnification for certain ERISA violations. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the SEC to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

      7.  OFFICER AND DIRECTOR LIABILITY INSURANCE.  The Company shall, from
          ----------------------------------------     
time to time, make the good faith determination whether or not it is
practicable for the Company to obtain and maintain a policy or policies of
insurance with reputable insurance companies providing Indemnitee coverage for
losses from wrongful acts, or to ensure the Company's performance of its
indemnification obligations under this Agreement. Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. In all policies of director and
officer liability insurance, Indemnitee shall be named as an insured in such a
manner as to provide Indemnitee the same rights and benefits as are accorded
to the most favorably insured of the Company's directors, if Indemnitee is a
director; or of the Company's officers, if Indemnitee is not a director of the
Company but is an officer; or of the Company's key employees, if Indemnitee is
not an officer or director but is a key employee. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided
by such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
parent or subsidiary of the Company. Indemnitee shall be given thirty (30)
days advance written notice if the Company determines it will terminate such
insurance coverage of Indemnitee.

      8.  SEVERABILITY.  Nothing in this Agreement is intended to require or
          ------------                                                      
shall be construed as requiring the Company to do or fail to do any act in
violation of applicable law.  The Company's inability, pursuant to court order,
to perform its obligations under this Agreement shall not constitute a breach of
this Agreement.  The provisions of this Agreement shall be severable as provided
in this Section 8.  If this Agreement or any portion hereof shall be invalidated
on any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.
<PAGE>
 
      9.   EXCEPTIONS.  Any other provision herein to the contrary
           ----------                                   
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

           (a)   CLAIMS INITIATED BY INDEMNITEE.  To indemnify or advance
                 ------------------------------   
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with
respect to proceedings brought to establish or enforce a right to
indemnification under this Agreement or any other statute or law or otherwise
as required under Section 145 of the Delaware General Corporation Law, but
such indemnification or advancement of expenses may be provided by the Company
in specific cases if the Board of Directors finds it to be appropriate;

           (b)   LACK OF GOOD FAITH.  To indemnify Indemnitee for any expenses
                 ------------------                                           
incurred by Indemnitee with respect to any proceeding instituted by Indemnitee
to enforce or interpret this Agreement, if a court of competent jurisdiction
determines that each of the material assertions made by Indemnitee in such
proceeding was not made in good faith or was frivolous;

           (c)   INSURED CLAIMS.  To indemnify Indemnitee for expenses or
                 --------------                                          
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) to the
extent such expenses or liabilities have been paid directly to Indemnitee by an
insurance carrier under a policy of officers' and directors' liability insurance
maintained by the Company; or

           (d)   CLAIMS UNDER SECTION 16(b).  To indemnify Indemnitee for
                 --------------------------      
expenses or the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.

      10.  CONSTRUCTION OF CERTAIN PHRASES.
           ------------------------------- 

           (a)   For purposes of this Agreement, references to the "Company"
                                                                    ------- 
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that if Indemnitee is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, Indemnitee shall stand in the same position under the provisions
of this Agreement with respect to the resulting or surviving corporation as
Indemnitee would have with respect to such constituent corporation if its
separate existence had continued.

           (b)   For purposes of this Agreement, references to "other 
                                                                -----
enterprises" shall include employee benefit plans; references to "fines" shall
-----------                                                       -----
include any excise taxes assessed on Indemnitee with respect to an employee
benefit plan; and references to "serving at the request of the Company" shall
                                 -------------------------------------    
include any service as a director, officer, employee or agent of the Company
which imposes duties on, or involves services by, such director, officer,
employee or agent with respect to an employee benefit plan, its participants,
or beneficiaries; and if Indemnitee acted in

<PAGE>
 
good faith and in a manner Indemnitee reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan,
Indemnitee shall be deemed to have acted in a manner "not opposed to the best
                                                      -----------------------
interests of the Company" as referred to in this Agreement.
------------------------

      11.  ATTORNEYS' FEES.  In the event that any action is instituted by
           ---------------                                                
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous.  In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.

      12.  MISCELLANEOUS.
           ------------- 

           (a)   GOVERNING LAW.  This Agreement and all acts and transactions
                 -------------                                               
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflict of law.

           (b)   ENTIRE AGREEMENT; ENFORCEMENT OF RIGHTS.  This Agreement sets
                 ---------------------------------------                      
forth the entire agreement and understanding of the parties relating to the
subject matter herein and merges all prior discussions between them.  No
modification of or amendment to this Agreement, nor any waiver of any rights
under this Agreement, shall be effective unless in writing signed by the parties
to this Agreement.  The failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of any rights of such party.

           (c)   CONSTRUCTION.  This Agreement is the result of negotiations
                 ------------                                               
between and has been reviewed by each of the parties hereto and their respective
counsel, if any;  accordingly, this Agreement shall be deemed to be the product
of all of the parties hereto, and no ambiguity shall be construed in favor of or
against any one of the parties hereto.

           (d)   NOTICES.  Any notice, demand or request required or permitted
                 -------  
to be given under this Agreement shall be in writing and shall be deemed
sufficient when delivered personally or sent by telegram or forty-eight (48)
hours after being deposited in the U.S. mail, as certified or registered mail,
with postage prepaid, and addressed to the party to be notified at such
party's address as set forth below or as subsequently modified by written
notice.

           (e)   COUNTERPARTS.  This Agreement may be executed in two or more
                 ------------                                                
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.

<PAGE>
 
           (f)   SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon
                 ----------------------       
the Company and its successors and assigns, and inure to the benefit of
Indemnitee and Indemnitee's heirs, legal representatives and assigns.

           (g)   SUBROGATION.  In the event of payment under this Agreement, the
                 -----------  
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
to effectively bring suit to enforce such rights.

     The parties hereto have executed this Agreement as of the day and year set
forth on the first page of this Agreement.

                              RASTER GRAPHICS, INC.

                                       /s/ Rak Kumar
                              By:      ______________________________________

                                       President and CEO
                              Title:   ______________________________________

                              Address:  3025 Orchard Parkway
                                        San Jose, California  95134

AGREED TO AND ACCEPTED:


KATHY J. BAGBY

/s/ Kathy J. Bagby
___________________________________ 
(SIGNATURE)

ADDRESS:

470 University Ave.
Los Altos, CA 94022