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                                                                Exhibit 10.31

                                EMPLOYMENT AGREEMENT


       This Employment Agreement ("Agreement") is entered into as of January 1, 
1999, between Image Guided Technologies, Inc., a Colorado corporation (the 
"Company"), and Paul L. Ray ("Ray").

       In consideration of the mutual covenants and conditions set forth 
herein, the parties hereby agree as follows:

       1.     EMPLOYMENT.  The Company hereby employs Ray in the capacity of 
Chairman of the Board, Chief Executive Officer and President.  Ray accepts 
such employment and agrees to perform such services as are customary to such 
offices and as shall from time to time be assigned to him by the Board of 
Directors.

       2.     TERM.  Subject to earlier termination as provided in Section 5, 
the employment hereunder shall be for a period of two years, commencing on 
January 1, 1999 (the "Commencement Date") and ending on December 31, 2000, 
and shall be automatically renewed on the same terms and conditions for an 
additional one-year period unless either party notifies the other prior to 
the expiration of the initial term of its desire not to renew the Agreement.  
Ray's employment will be on a full-time basis requiring the devotion of such 
amount of his productive time as is necessary for the efficient operation of 
the business of the Company.

       3.     COMPENSATION AND BENEFITS.

              3.1    SALARY.  For the performance of Ray's duties hereunder, 
the Company shall pay Ray an annual salary of $175,000, payable (less 
required withholdings) no less frequently than twice monthly.

              3.2    BENEFITS.  Ray shall be entitled to such medical, 
disability and life insurance coverage and such vacation, sick leave and 
holiday benefits, if any, as are made available to the Company's top 
executive personnel, all in accordance with the Company's benefits program in 
effect from time to time.  Ray shall also be entitled to a $500 per month 
automobile allowance.

              3.3    REIMBURSEMENT OF EXPENSES.  Ray shall be entitled to be 
reimbursed for all reasonable expenses, including but not limited to expenses 
for travel, meals and entertainment, incurred by Ray in connection with and 
reasonably related to the furtherance of the Company's business.

              3.4    ANNUAL REVIEW.  On each anniversary of the Commencement 
Date, the Board of Directors will review Ray's performance and compensation 
hereunder (including salary, bonus and stock options and/or other equity 
incentives) and will consider whether to increase 

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such compensation, but will not have authority, as the result of such review, 
to decrease any portion of such compensation without the written consent of 
Ray.

              3.5    OPTIONS.  Notwithstanding anything to the contrary set 
forth in the stock option agreements for options heretofore granted to Ray by 
the Company, such options shall expire seven years from the date of grant and 
vested options shall remain exercisable during such seven year period despite 
earlier termination of his employment; such options, however, are subject to 
the terms and provisions of the stock option plans pursuant to which they 
were granted including those provisions with respect to termination in the 
event of a merger or sale of assets or dissolution or liquidation of the 
Company.  Options not vested on termination of his employment, shall expire 
and be of no further force or effect; provided, however, if his severance is 
paid over a period of time, his options will continue to vest over such 
severance period.

              3.6    BONUS.  Ray shall be entitled while employed hereunder 
to at least 25% of any bonus pool set aside for senior executives of the 
Company.

       4.     CHANGE OF CONTROL.  In the event of a Change of Control of the 
Company (as defined below), all options then granted to Ray which are 
unvested at the date of the Change of Control will be immediately vested.  In 
addition, in the event of a termination of Ray's employment hereunder for any 
reason (other than as set forth in Section 5.1(f)) following a Change of 
Control, the Company will pay Ray, in addition to the amounts required under 
Section 5.2(a), severance in accordance with Section 5.2(b) below.

       As used herein, a "Change of Control" of the Company shall be deemed 
to have occurred:

              (a)    Upon the consummation, in one transaction or a series of 
related transactions, of the sale or other transfer of voting power 
(including voting power exercisable on a contingent or deferred basis as well 
as immediately exercisable voting power) representing effective control of 
the Company to a person or group of related persons who, on the date of this 
Agreement, is not affiliated (within the meaning of the Securities Act of 
1933) with the Company, whether such sale or transfer results from a tender 
offer or otherwise; or

              (b)    Upon the consummation of a merger or consolidation in 
which the Company is a constituent corporation and in which the Company's 
shareholders immediately prior thereto will beneficially own, immediately 
thereafter, securities of the Company or any surviving or new corporation 
resulting therefrom having less than a majority of the voting power of the 
Company or any such surviving or new corporation; or

              (c)    Upon the consummation of a sale, lease, exchange or 
other transfer or disposition by the Company of all or substantially all its 
assets to any person or group of related persons.

       5.     TERMINATION.

              5.1    TERMINATION EVENTS.  The employment hereunder will 
terminate upon the occurrence of any of the following events:

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                     (a)    Ray dies;

                     (b)    The Company, by written notice to Ray or his 
personal representative, discharges Ray due to the inability to perform the 
duties assigned to him hereunder for a continuous period exceeding 90 days by 
reason of injury, physical or mental illness or other disability, which 
condition has been certified by a physician; provided, however, that prior to 
discharging Ray due to such disability, the Company shall give a written 
statement of findings to Ray or his personal representative setting forth 
specifically the nature of the disability and the resulting performance 
failures, and Ray shall have a period of thirty (30) days thereafter to 
respond in writing to the Board of Directors' findings;

                     (c)    Ray is discharged by the Board of Directors of 
the Company for cause.  As used in this Agreement, the term "cause" shall 
mean:

                            (i)    Ray's conviction of (or pleading guilty or 
NOLO CONTENDERE to) a felony or any misdemeanor involving dishonesty or moral 
turpitude; or

                            (ii)   (a)  The willful and continued failure of 
Ray to substantially perform his duties with the Company (other than any such 
failure resulting from illness or disability) after a demand for substantial 
performance is requested by the Company's Board of Directors, which 
specifically identifies the manner in which it is claimed Ray has not 
substantially performed his duties, or (b) Ray is willfully engaged in 
misconduct which has a direct and material adverse monetary affect on the 
Company.  For purposes of this subpart (ii) no act or failure to act on Ray's 
part shall be considered "willful" unless done, or omitted to be done, by Ray 
not in good faith and without reasonable belief that Ray's action or omission 
was in the best interest of the Company. No termination shall be effected for 
cause pursuant to this subpart (ii) unless Ray has been provided with 
specific information as to the acts or omissions which form the basis of the 
allegation of cause, and Ray has had an opportunity to be heard, with counsel 
if he so desired, before the Board of Directors and such Board determines in 
good faith that Ray was guilty of conduct constituting "cause" as herein 
defined, specifying the particulars thereof in detail;

                     (d)    Ray is discharged by the Board of Directors of 
the Company without cause, which the Company may do at any time upon notice 
to Ray, or if the Agreement is not renewed by the Company at the end of the 
two year period as provided in Section 2;

                     (e)    Ray voluntarily terminates his employment due to 
either (i) a default by the Company in the performance of any of its 
obligations hereunder, or (ii) an Adverse Change in Duties (as defined 
below), which default or Adverse Change in Duties remains unremedied by the 
Company for a period of ten days following its receipt of written notice 
thereof from Ray; or

                     (f)    Ray voluntarily terminates his employment for any 
reason other than the Company's default or an Adverse Change in Duties, which 
Ray may do at any time with 

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at least 30 days advance notice, or if the Agreement is not renewed by Ray at 
the end of the two year period as provided in Section 2.

       As used herein, "Adverse Change in Duties" means an action or series 
of actions taken by the Company, without Ray's prior written consent, which 
results in:

                     (1)    A change in Ray's reporting responsibilities, 
titles, job responsibilities or offices which, in Ray's reasonable judgment, 
results in a diminution of his status, control or authority; or

                     (2)    The assignment to Ray of any positions, duties or 
responsibilities which, in Ray's reasonable judgment, are inconsistent with 
Ray's positions, duties and responsibilities or status with the Company or 
which require Ray to travel more than previously required; or

                     (3)    A requirement by the Company that Ray be based or 
perform his duties anywhere other than (i) at the Company's corporate office 
location on the date of this Agreement, or (ii) if the Company's corporate 
office location is moved after the date of this Agreement, at a new location 
that is no more than 60 miles from such prior location; or 

                     (4)    A failure by the Company (i) to continue in 
effect any material benefit, whether or not qualified, or other compensation, 
bonus or incentive plan in effect on the date of this Agreement or 
subsequently adopted, or (ii) to continue Ray's participation in such 
benefits or plans at the same level or to the same extent as on the 
Commencement Date or, with respect to subsequently adopted benefits or plans, 
on the date of initial implementation thereof, or (iii) to provide for Ray's 
participation in any newly adopted benefits or plans at a level or to an 
extent commensurate, in Ray's reasonable judgment, with that of other top 
executives of the Company.

              5.2     EFFECTS OF TERMINATION.

                     (a)    Upon termination of Ray's employment hereunder 
for any reason, the Company will promptly pay Ray all compensation owed to 
Ray and unpaid through the date of termination (including, without 
limitation, salary and employee expense reimbursements).

                     (b)    In addition, if Ray's employment is terminated 
under Section 4 or Section 5.1(a), (b), (d) or (e), the Company shall also 
pay Ray, upon such termination of employment, severance equal to the product 
of the number of Ray's complete years of service with the Company times three 
times Ray's then monthly salary (but not more than 20 times his monthly 
salary); such severance to be paid, at the Company's option, immediately on 
Ray's last day of full employment in one lump sum or monthly at his then 
monthly salary commencing on the next month following his last day of full 
employment until paid in full. For example, if Ray has worked five complete 
years with the Company, Ray would be entitled to severance of 5 x 3 x 
$175,000/12 or $218,750.  Ray's employment with the Company began on January 
1, 1994.  Such severance will be paid to Ray's estate in the event of his 
death.  In addition, if Ray's employment is terminated pursuant to Section 4 
or Section 5.1(a), (b), (d) or (e), as long as Ray 

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does not have other medical insurance, the Company will pay Ray's medical, 
dental and optical insurance for the 18-month COBRA election period.

                     (c)    Upon termination of Ray's employment hereunder 
for any reason, Ray agrees that for the number of months equal to three times 
the number of Ray's complete years of service with the Company (but not more 
than 20 months) following the Termination Event:

                            (i)    Ray will not directly or indirectly, 
whether for his own account or as an individual, employee, director, 
consultant or advisor, or in any other capacity whatsoever, provide services 
to any person, firm, corporation or other business enterprise which is 
involved in the design, development, marketing or sale of optical localizers, 
image guided surgical products or minimally invasive surgical instruments 
unless he obtains the prior written consent of the Board of Directors.

                            (ii)   Ray will not directly or indirectly 
encourage or solicit, or attempt to encourage or solicit, any individual to 
leave the Company's employ for any reason or interfere in any other manner 
with the employment relationships at the time existing between the Company 
and its current or prospective employees.

                            (iii)  Ray will not induce or attempt to induce 
any customer, supplier, distributor, licensee or other business relation of 
the Company to cease doing business with the Company or in any way interfere 
with the existing business relationship between any such customer, supplier, 
distributor, licensee or other business relation and the Company.

                     (d)  In addition to Section 5.1(c) above, Ray agrees to 
comply with the provisions of Sections 7.6 and 7.7 of that certain Asset 
Purchase Agreement, dated December 18, 1998, between Brimfield Precision, 
Inc., the Company and Brimfield Acquisition Corp.

       Ray acknowledges that monetary damages may not be sufficient to 
compensate the Company for any economic loss which may be incurred by reason 
of breach of the foregoing restrictive covenants.  Accordingly, in the event 
of any such breach, the Company shall, in addition to any remedies available 
to the Company at law, be entitled to obtain equitable relief in the form of 
an injunction precluding Ray from continuing to engage in such breach. 

       If any restriction set forth in this paragraph is held to be 
unreasonable, then Ray and the Company agree, and hereby submit, to the 
reduction and limitation of such prohibition to such area or period as shall 
be deemed reasonable.

       6.     GENERAL PROVISIONS.

              6.1    ASSIGNMENT.  Ray may not assign or delegate any of his 
rights or obligations under this Agreement.

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              6.2    ENTIRE AGREEMENT.  This Agreement contains the entire 
agreement between the parties with respect to the subject matter hereof and 
supersedes any and all prior agreements between the parties relating to such 
subject matter.  Ray's employment agreement with the Company, dated as of 
January 1, 1996, as amended, is hereby terminated and is of no further force 
and effect.

              6.3    MODIFICATIONS.  This Agreement may be changed or 
modified only by an agreement in writing signed by both parties hereto.

              6.4    SUCCESSORS AND ASSIGNS.  The provisions of this 
Agreement shall inure to the benefit of, and be binding upon, the Company and 
its successors and assigns and Ray and Ray's legal representatives, heirs, 
legatees, distributees, assigns and transferees by operation of law, whether 
or not any such person shall have become a party to this Agreement and have 
agreed in writing to join and be bound by the terms and conditions hereof.

              6.5    GOVERNING LAW.  This Agreement shall be governed by, and 
construed in accordance with, the laws of Colorado.

              6.6    SEVERABILITY.  If any provision of the Agreement is held 
by a court of competent jurisdiction to be invalid, void or unenforceable, 
the remaining provisions shall nevertheless continue in full force and effect.

              6.7    FURTHER ASSURANCES.  The parties will execute such 
further instruments and take such further actions as may be reasonably 
necessary to carry out the intent of this Agreement.

              6.8    NOTICES.  Any notices or other communications required 
or permitted hereunder shall be in writing and shall be deemed received by 
the recipient when delivered personally or, if mailed, five (5) days after 
the date of deposit in the United States mail, certified or registered, 
postage prepaid and addressed, in the case of the Company, to 5710-B Flatiron 
Parkway, Suite B, Boulder, CO 80301, and in the case of Ray, to the address 
shown for Ray on the signature page hereof, or to such other address as 
either party may later specify by at least ten (10) days advance written 
notice delivered to the other party in accordance herewith.

              6.9    NO WAIVER.  The failure of either party to enforce any 
provision of this Agreement shall not be construed as a waiver of that 
provision, nor prevent that party thereafter from enforcing that provision or 
any other provision of this Agreement.

              6.10   LEGAL FEES AND EXPENSES.  In the event of any disputes 
under this Agreement, each party shall be responsible for their own legal 
fees and expenses which it may incur in resolving such dispute.

              6.11   COUNTERPARTS.  This Agreement may be executed in 
counterparts, each of which shall be deemed to be an original, but all of 
which together shall constitute one and the same instrument.

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       IN WITNESS WHEREOF, the Company and Ray have executed this Agreement 
effective as of the date first above written.


COMPANY                                RAY

Image Guided Technologies, Inc.


By:  /s/ A. Clinton Allen              /s/ Paul L. Ray
   --------------------------          -------------------------
     A. Clinton Allen                  Paul L. Ray
     Director                          Address: 594 Wildhorse Circle
                                                Boulder, CO 80304