EMPLOYMENT AGREEMENT
EXHIBIT
10.1
This Employment Agreement is made and entered into as of December 6, 2007, by and between
EMAGEON INC., a Delaware corporation (the “Company”), and XXXXX X. XXXXXXX, an individual resident
of the State of Georgia (the “Executive”), the terms and conditions of which are as follows:
SECTION 1. EFFECTIVE DATE; TERM OF EMPLOYMENT
(a) The Company shall employ Executive as Executive Vice President and Chief Operating Officer
during the term of his employment, subject to the terms and conditions set forth in this Employment
Agreement, and Executive hereby accepts such employment.
(b) The effective date of this Employment Agreement (the “Effective Date”) shall be December
6, 2007.
(c) Unless earlier terminated as provided herein, Executive’s employment under this Employment
Agreement shall be for a rolling, twelve (12) month term (the “Term”) commencing on the Effective
Date, and shall be deemed to automatically, without further action by either the Company or
Executive, extend each day for an additional day, such that the remaining term of the Employment
Agreement shall continue to be twelve months; provided, however, that either party may, by written
notice to the other, cause this Employment Agreement to cease to extend automatically and, upon
such notice, the “Term” of this Employment Agreement shall be the twelve months following the date
of such notice. If no such notice to cease to extend has been given and the Executive’s employment
is terminated by the Executive for Good Reason or by the Company without Cause, for purposes of
calculating the Severance Period as defined in Section 5(c)(2) below, the remaining Term of this
Employment Agreement shall be deemed to be twelve months from the Executive’s Date of Termination.
SECTION 2. POSITION AND DUTIES AND RESPONSIBILITIES
(a) Position. Executive shall serve as Executive Vice President and Chief Operating
Officer of the Company.
(b) Duties and Responsibilities. Executive’s duties and responsibilities shall be
those normally associated with the position of Executive Vice President and Chief Operating
Officer, plus any additional duties and responsibilities that the Chief Executive Officer (“CEO”)
or Board of Directors (the “Board”) of the Company from time to time may assign orally or in
writing to Executive. Executive shall report to the CEO and shall have such powers as may be
delegated to him by the CEO. Executive shall undertake to perform all Executive’s duties and
responsibilities for the Company in good faith and on a full-time basis and shall at all times act
in the course of Executive’s employment under this Employment Agreement in the best interest of the
Company, provided that Executive may serve on corporate, civic, educational or charitable boards or
committees, if such service does not materially conflict with or impair Executive’s ability to
discharge his fiduciary and other responsibilities to the Company under this Employment Agreement
and applicable law; provided, that Executive may only serve on a corporate board or board committee
with the approval of the Governance Committee of the Board.
SECTION 3. COMPENSATION AND BENEFITS
(a) Base Salary. Executive’s initial base salary shall be Three Hundred Thirty
Thousand Dollars ($330,000) per year (“Base Salary”), which Base Salary shall be payable in
accordance with the Company’s standard payroll practices and policies for executive officers and
shall be subject to such withholdings as required by law or as otherwise permissible under such
practices or policies. The Base Salary shall be subject to periodic increases (but not decreases)
as determined by the Compensation Committee of the Board.
(b) Annual Bonus and Other Incentive Compensation. During the Term, Executive shall
be eligible to receive an annual bonus based upon achieving targeted financial objectives or other
performance goals, in accordance with the annual bonus plan established by the Compensation
Committee of the Board. Executive shall also be eligible to participate in such other annual bonus
and incentive compensation programs as the Board shall make available to executive officers.
(c) Employee Benefit Plans. Executive shall be entitled to participate in the equity
compensation and employee benefit plans, programs and policies (including health, life, disability,
dental and retirement plans) maintained by the Company that cover executive officers in accordance
with the terms and conditions of such plans, programs and policies as in effect from time to time.
(d) Vacation. Executive shall be entitled to four (4) weeks of paid time off for
vacation in addition to paid time off for illness, holidays and personal reasons in accordance with
the Company’s plans, policies and practices in effect from time to time for executive officers.
Such paid vacation shall be taken at such time or times so as not to materially and adversely
interfere with the business of the Company.
(e) Business Expenses. Executive shall have the right to be promptly reimbursed for
Executive’s reasonable and appropriate business expenses which Executive incurs in connection with
the performance of Executive’s duties and responsibilities under this Employment Agreement in
accordance with the Company’s expense reimbursement policies and procedures for its executive
officers.
(f) Directors’ and Officers’ Insurance. Effective as of the Effective Date, the
Company shall take all reasonable steps to ensure that Executive has been provided with adequate
coverage under a directors’ and officers’ liability insurance policy.
SECTION 4. TERMINATION OF EMPLOYMENT
(a) Death. Executive’s employment shall terminate automatically upon Executive’s
death.
(b) Disability. The Company shall have the right to terminate Executive’s employment
on or after the date Executive incurs a Disability. The term “Disability” as used in this
Employment Agreement shall have the meaning ascribed to such term in the Company’s long-term
disability plan covering the Executive, or in the absence of such plan, a meaning consistent with
Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”).
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The existence of a Disability shall be determined by the Compensation Committee of the Board
in good faith based upon the information provided to the Committee.
(c) Termination by the Company. The Company may terminate Executive’s employment at
any time with or without Cause. The term “Cause” as used in this Employment Agreement shall mean
any of the following reasons:
(1) Executive’s willful and continued breach of his duties after written demand for
performance has been made (other than any such failure resulting from incapacity due to
physical or mental illness, and specifically excluding any failure by Executive, after
reasonable efforts, to meet performance expectations and any failure by Executive to follow
directions or take any action that Executive considers in good faith to be in violation of
any applicable professional or ethical rules or obligations);
(2) Executive’s willfully engaging in illegal conduct or gross misconduct that is
demonstrably and materially injurious to the Company;
(3) Executive’s material breach of this Employment Agreement, any other material
agreement with the Company, or any Company policy, where such breach proves to be
demonstrably and materially injurious to the Company;
(4) Executive’s breach of any of the covenants contained in Section 7 of this
Employment Agreement relating to confidentiality, non-solicitation or non-competition; or
(5) Executive’s conviction of a felony or a serious misdemeanor involving moral
turpitude, theft or dishonesty.
With respect to paragraphs (1), (2) and (3) above, Executive shall not be deemed to have been
involuntarily terminated for Cause unless and until there shall have been delivered to him a copy
of a resolution duly adopted by the affirmative vote of not less than a majority of the entire
membership of the Board at a meeting of the Board (after reasonable notice to Executive and an
opportunity for him, together with his counsel, to be heard before the Board), finding that, in the
good faith opinion of the Board, Executive was guilty of conduct set forth above in paragraphs (1),
(2), or (3) and specifying the particulars thereof in detail. For purposes of this Employment
Agreement, no act or failure to act by Executive shall be deemed to be “willful” unless done or
omitted to be done by Executive not in good faith and without reasonable belief that Executive’s
action or omission was in the best interests of the Company.
(d) Termination by the Executive. The Executive shall have the right to resign at any
time, with or without Good Reason. The term “Good Reason” shall mean the occurrence (without
Executive’s express written consent) of any one of the following acts by the Company, or failures
by the Company to act, unless, in the case of any act or failure to act described below, such act
or failure to act is corrected by the Company prior to the Date of Termination specified in the
notice of termination given in respect thereof:
(1) a material reduction in Executive’s duties or responsibilities; provided, however,
that the fact that Executive’s employment after a merger, acquisition or other
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corporate transaction shall be with a non-publicly traded subsidiary of an entity
resulting from such merger, acquisition or other corporate transaction, if that is the case,
shall not of itself be deemed a material reduction in Executive’s duties or responsibilities
for purposes of this paragraph;
(2) a material reduction in Executive’s Base Salary or the initial target bonus
percentage for Executive as established by the Compensation Committee of the Board upon the
effective date of this Agreement;
(3) the relocation of Executive’s office from its location on the Effective Date to a
location more than 35 miles away; or
(4) the Company’s material breach of any other provision of this Employment Agreement.
Executive’s right to terminate the Executive’s employment for Good Reason shall not be
affected by the Executive’s incapacity due to physical or mental illness, except for a Disability
as defined in Section 4(b) above. Executive’s continued employment shall not constitute consent
to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder.
Any claim of Good Reason shall be communicated by the Executive to the Company in writing
within 90 days of the date of the event(s) giving rise to Executive’s claim of Good Reason and
shall specifically identify the factual details concerning such event(s) giving rise to Executive’s
claim of Good Reason under this Section 4(d). The Company shall have an opportunity of at least 30
days to cure any claimed event of Good Reason prior to the specified Date of Termination.
(e) Expiration of Term. Executive’s employment shall automatically terminate upon the
expiration of the Term of this Employment Agreement.
(f) Date of Termination. Executive’s Date of Termination shall be the earliest to
occur of (i) the date specified in the notice of termination (which, unless otherwise required by
this Employment Agreement, may be immediate) as the date upon which Executive’s employment with the
Company is to cease, (ii) the date of Executive’s death, (iii) in the event of Executive’s
Disability, the date determined by the Board, or (iv) the last day of the Term of this Employment
Agreement. In the case of termination by Executive for Good Reason, the Date of Termination shall
not be less than thirty (30) days nor more than sixty (60) days from the date the notice of
termination is given, unless the Company specifies an earlier Date of Termination. In the case of
a voluntary termination by Executive without Good Reason, the Date of Termination shall not be less
than sixty (60) days from the date the notice of termination is given, unless the Company specifies
an earlier Date of Termination.
SECTION 5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
(a) Termination for Death, Disability, Cause or Expiration of Term. If Executive’s
employment terminates because of the Executive’s death or Disability or the expiration of the Term
of this Employment Agreement, or if the Company terminates the Executive’s employment for Cause,
the Company’s only obligation under this Employment Agreement shall be to pay
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Executive, or, if Executive dies, Executive’s estate, any earned but unpaid Base Salary then
in effect under Section 3(a), through Executive’s Date of Termination; provided that Executive
shall have such rights under the Company’s benefit plans as are provided in such plans.
(b) Executive’s Voluntary Termination Without Good Reason. If the Executive resigns
his employment without Good Reason, the Company’s only obligation under this Employment Agreement
shall be to pay Executive any earned but unpaid Base Salary then in effect under Section 3(a),
through Executive’s Date of Termination; provided that Executive shall have such rights under the
Company’s benefit plans as are provided in such plans.
(c) Termination by Company Without Cause; Termination by Executive For Good Reason.
If the Company terminates Executive’s employment other than for Cause, death or Disability or if
Executive resigns for Good Reason, the Company shall (in lieu of any severance benefits under any
Company severance program) pay or provide to Executive compensation and benefits as follows:
(1) Executive will continue to receive his Base Salary as then in effect through his
Date of Termination.
(2) Subject to the special payment rules in subsection (6) below, Executive shall
receive, no later than 30 days after Executive’s Date of Termination, a lump sum payment
equal to (i) Executive’s monthly Base Salary plus 1/12 of Executive’s target annual bonus
for the year in which Executive’s Date of Termination occurs, calculated as if all target
financial and other performance goals were attained, multiplied by (ii) the number of months
in the Severance Period. The “Severance Period” shall be the 12-month period commencing on
Executive’s Date of Termination.
The lump sum payment under this paragraph (2) shall not alter the amounts Executive is
entitled to receive under the benefit plans described in paragraph (3) below. Benefits
under such plans shall be determined as if Executive had continued to receive his Base
Salary over the applicable Severance Period rather than in a lump sum.
(3) Pursuant to COBRA, Executive may elect to continue the group health and dental care
coverage provided to Executive at his Date of Termination, including any spousal or
dependent coverage in effect on such Date of Termination. Subject to the special payment
rules for specified employees in subsection (6) below, within 30 days after Executive’s Date
of Termination, the Company will pay to Executive an amount equal to the full monthly COBRA
premium for the group health and dental coverage Executive had in place on the Date of
Termination less the monthly cost Executive was paying for such coverages at the time of
termination, multiplied by the number of full or partial months during the Severance Period.
In addition, subject to the special payment rules in subsection (6) below, if the Company
maintains any individual executive life insurance policy (or policies) for Executive, the
Company shall pay the Executive within 30 days after Executive’s Date of Termination, a lump
sum payment equal to the monthly amount of the premiums for such policy or policies as of
the Date of Termination, multiplied by the number of full or partial months during the
Severance Period. If the terms of any benefit plan referred to in this paragraph (3), or
the laws applicable to such
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plan do not permit continued participation by Executive, then the Company will pay
Executive within 30 days after his Date of Termination a lump sum amount equal to the
estimated costs of such coverage(s) for the applicable Severance Period, as determined by
the Company in good faith.
(4) Executive will become fully vested in all stock options, stock appreciation rights,
restricted stock and restricted stock units held by the Executive as of the Executive’s Date
of Termination. To the extent necessary, this Employment Agreement is hereby deemed an
amendment of any such outstanding stock option or other equity award.
(5) Except as expressly provided herein, all other fringe benefits provided to
Executive as an active employee of the Company (e.g., long-term disability, AD&D, etc.),
shall cease on his Date of Termination (except to the extent Executive has already qualified
for benefits under any such program), provided that any conversion or extension rights
applicable to such benefits shall be made available to Executive at his Date of Termination
or when such coverages otherwise cease.
(6) It is the intent of the Company that all payments payable to the Executive pursuant
to this Section 5 shall be exempt from Section 409A of the Code as short-term deferrals.
However, if, at the time of Executive’s Date of Termination, Executive is a “specified
employee” and if the Company reasonably determines that any payment to Executive pursuant to
this Employment Agreement is not exempt as a short-term deferral and must be delayed for
six-months to avoid a violation of Section 409A(a)(2)(B) of the Code, such payment shall be
paid on the next business day following the six-month anniversary of the Executive’s Date of
Termination. For purposes of this Employment Agreement, whether Executive is a “specified
employee” shall be determined under the rules set forth in Section 409A of the Code and the
regulations and other guidance promulgated thereunder, plus any policies and elections
properly made by the Company in accordance with such guidance.
(d) Release of Claims. To be entitled to any of the compensation and benefits
described above in Section 5(c), the Executive shall sign a release of claims in the form required
by the Company. No payments shall be made under Section 5(c) until such release has been properly
executed and delivered to the Company and until the expiration of the revocation period, if any,
provided under the release. If the release is not properly executed by the Executive and delivered
to the Company within the reasonable time periods specified in the release, the Company’s
obligations under Section 5(c) will terminate.
(e) Full Settlement; No Obligation to Mitigate. The Company’s obligation to make the
payments provided for in this Employment Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against Executive or others. In no event shall
Executive be obligated to seek other employment or take any other action by way of mitigation of
the amounts payable to Executive under any of the provisions of this Employment Agreement and,
except as explicitly provided herein, such amounts shall not be reduced whether or not Executive
obtains other employment.
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SECTION 6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Employment Agreement to the contrary notwithstanding and except as set
forth below, in the event it shall be determined that any payment or distribution by the Company to
or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Employment Agreement or otherwise, but determined without regard to any
additional payments required under this Section 6) (a “Payment”) would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with
respect to such excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the “Excise Tax”), then Executive shall be entitled to
receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by
Executive of all taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be used in arriving at such determination, shall be made by
a certified public accounting firm selected by Executive (other than the Company’s regular
accounting firm) and reasonably acceptable to the Company (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and Executive within 15 business days
of the receipt of notice from Executive that there has been a Payment, or such earlier time as is
reasonably requested by the Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 6, shall be
paid by the Company to Executive within five days of the receipt of the Accounting Firm’s
determination. Any determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 6(c) and Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit
of Executive.
(c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a Gross-Up Payment (or an
additional Gross-Up Payment). Such notification shall be given as soon as practicable but no later
than ten business days after Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the 30-day period following the date
on which he gives such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the
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Company notifies Executive in writing prior to the expiration of such period that it desires
to contest such claim, Executive shall:
(1) give the Company any information reasonably requested by the Company relating to
such claim,
(2) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,
(3) cooperate with the Company in good faith in order effectively to contest such
claim, and
(4) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation of the foregoing provisions of this Section 6(c), the
Company shall control all proceedings taken in connection with such contest (to the extent
applicable to the Excise Tax and the Gross-Up Payment) and, at its sole option, may pursue or forgo
any and all administrative appeals, proceedings, hearings and conferences with the taxing authority
in respect of such claim and may, at its sole option, either direct Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner, and Executive agrees
to prosecute such contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs Executive to pay such claim and xxx for a refund, the Company
shall, if permitted by law, advance the amount of such payment to Executive, on an interest-free
basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes for the taxable year
of Executive with respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by Executive of an amount advanced by the Company pursuant to
Section 6(c), Executive becomes entitled to receive any refund with respect to such claim,
Executive shall (subject to the Company’s complying with the requirements of Section 6(c) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by Executive of an amount
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advanced by the Company pursuant to Section 6(c), a determination is made that Executive shall
not be entitled to any refund with respect to such claim and the Company does not notify Executive
in writing of its intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
(e) Notwithstanding the foregoing, (i) each Gross-Up Payment required to be made by the
Company to Executive hereunder and each repayment of a Gross-Up Payment required to be made by
Executive to the Company hereunder shall be paid no later than the end of the calendar year next
following the calendar year in which Executive remits the corresponding taxes to the Internal
Revenue Service, and (ii) each reimbursement of expenses related to a tax audit or litigation
addressing the existence or amount of a tax liability required to be made by the Company to
Executive hereunder and each repayment of such a reimbursement required to be made by Executive to
the Company hereunder shall be paid no later than the end of the calendar year next following the
calendar year in which Executive remits to the Internal Revenue Service the taxes that are the
subject of the audit or litigation or, where as a result of the audit or litigation no taxes are
due or are remitted but other reimbursable costs and/or expenses have been incurred, the end of the
calendar year following the calendar year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the litigation.
SECTION 7. COVENANTS BY EXECUTIVE.
(a) General. Executive and the Company understand and agree that the purpose of the
provisions of this Section 7 is to protect legitimate business interests of the Company, as more
fully described below, and is not intended in an unreasonable manner to impair or infringe upon
Executive’s right to work or earn a living after termination or expiration of this Employment
Agreement. Executive hereby acknowledges that Executive has received and will continue to receive
good and valuable consideration for the restrictions set forth in this Section 7 in the form of the
compensation and benefits provided for herein as well as other consideration. Therefore, Executive
shall be subject to the restrictions set forth in this Section 7.
(b) Definitions. The following capitalized terms used in this Section 7 shall have
the meanings assigned to them below, which definitions shall apply to both the singular and plural
forms of such terms:
(1) “Competitive Services” means the business of providing intelligent visual medical
systems, and providing enterprise-level information technology solutions for the clinical
analysis and management of digital medical images. A “Company Competitor” is a Person that
sells, licenses or otherwise offers Competitive Services to its customers, clients or end
users.
(2) “Person” means any individual or any corporation, partnership, joint venture,
limited liability company, association or other entity or enterprise.
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(3) “Principal or Representative” means a principal, owner, partner, stockholder, joint
venturer, investor, lender, member, trustee, director, advisor, officer, manager, employee,
agent, representative or consultant.
(4) “Protected Customers” mean customers of the Company within the United States or
prospective customers of the Company within the United States that have been actively
solicited by the Company. After Executive’s Date of Termination, Protected Customers shall
include only those customers and prospective customers of the Company with whom Executive
had material contact during his employment with the Company (with “material contact” meaning
direct personal contact or direct supervisory contact with other employees or personnel of
the Company who in turn had direct personal contact with the prospective customers), or
about whom Executive learned or had ready access to Confidential Information, during the one
year period immediately prior to the Date of Termination of the Executive.
(5) “Restricted Period” means the period of time beginning on the Effective Date and
ending on the date that is twelve months after Executive’s Date of Termination.
(c) The Company’s Property.
(1) Upon the termination of Executive’s employment for any reason or, if earlier, upon
the Company’s request, Executive shall promptly return all “Property” which had been
entrusted or made available to Executive by the Company.
(2) The term “Property” means all records, files, memoranda, reports, price lists,
customer lists, drawings, plans, sketches, keys, codes, computer hardware and software and
other property of any kind or description prepared, used or possessed by Executive during
Executive’s employment by the Company and, if applicable, any of its affiliates (and any
duplicates of any such property) together with any and all information, ideas, concepts,
discoveries, and inventions and the like conceived, made, developed or acquired at any time
by Executive individually or, with others during Executive’s employment which relate to the
Company business, products or services.
(d) Trade Secrets.
(1) Executive agrees that Executive will hold in a fiduciary capacity for the benefit
of the Company, and any of its affiliates, and will not directly or indirectly use or
disclose, any “Trade Secret” that Executive may have acquired during the term of Executive’s
employment by the Company or any of its affiliates for so long as such information remains a
Trade Secret.
(2) The term “Trade Secret” means information, including, but not limited to, technical
or nontechnical data, formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans, product plans, or a list
of actual or potential customers or suppliers that (a) derives economic value, actual or
potential, from not being generally known to, and not being generally readily ascertainable
by proper means by any other person who can obtain economic value from
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its disclosure or use and (b) is the subject of reasonable efforts by the Company and
any of its affiliates to maintain its secrecy.
(3) This Section 7(d) and Section 7(e) are intended to provide rights to the Company
which are in addition to, and not in lieu of, those rights the Company has under the common
law or applicable statutes for the protection of Trade Secrets. Any provision under
applicable trade secret law that provides the Company with more liberal or generous
protection of its Trade Secrets shall prevail over any narrower protection afforded by this
Agreement.
(e) Confidential Information.
(1) Executive, while employed under this Employment Agreement and thereafter during the
Restricted Period, shall hold in a fiduciary capacity for the benefit of the Company and any
of its affiliates, and shall not directly or indirectly use or disclose, any “Confidential
Information” that Executive may have acquired (whether or not developed or compiled by
Executive and whether or not Executive is authorized to have access to such information)
during the term of, and in the course of, or as a result of Executive’s employment by the
Company or any of its affiliates. Notwithstanding anything to the contrary in this
Agreement, the foregoing durational limitation shall not apply to any Confidential
Information that constitutes a “Trade Secret” and Executive’s obligation to hold in
confidence and not use such Trade Secret Confidential Information shall continue for as long
as the information retains its status as a Trade Secret.
(2) The term “Confidential Information” means any secret, confidential or proprietary
information possessed by the Company or any of its affiliates relating to their business,
including, without limitation, Trade Secrets, customer lists, details of client or
consultant contracts, current and anticipated customer requirements, pricing policies, price
lists, market studies, business plans, operational methods, marketing plans or strategies,
legal advice and communications with the Company’s counsel, product development techniques
or flaws, computer software programs (including object code and source code), data and
documentation data, base technologies, systems, structures and architectures, inventions and
ideas, past current and planned research and development, compilations, devices, methods,
techniques, processes, financial information and data, business acquisition plans and new
personal acquisition plans (not otherwise included in the definition of a Trade Secret under
this Employment Agreement) that has not become generally available to the public by the act
of one who has the right to disclose such information without violating any right of the
Company or any of its affiliates. Confidential Information may include, but not be limited
to, future business plans, licensing strategies, advertising campaigns, information
regarding customers, executives and independent contractors and the terms and conditions of
this Employment Agreement.
(f) Non-Solicitation of Employees. Executive (i) while employed under this Employment
Agreement shall not, either directly or indirectly, solicit or attempt to induce any other officer,
employee or independent contractor of the Company or any of its affiliates to terminate his or her
employment or other relationship with the Company or any of its affiliates
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and shall not assist any other person or entity in such a solicitation (regardless of whether
any such officer, employee or independent contractor would commit a breach of contract by
terminating his or her employment), and (ii) during that part of the Restricted Period following
Executive’s Date of Termination, shall not, either directly or indirectly, solicit or attempt to
induce any other officer, employee or independent contractor of the Company or any of its
affiliates with whom Executive had contact, knowledge of, or association in the course of
Executive’s employment with the Company or any of its affiliates as the case may be, during the
twelve month period immediately preceding the beginning of the Restricted Period, to terminate his
or her employment or other relationship with the Company or any of its affiliates and shall not
assist any other person or entity in such a solicitation (regardless of whether any such officer,
employee or independent contractor would commit a breach of contract by terminating his or her
employment).
(g) Non-Solicitation of Customers. Executive understands and agrees that the
relationship between the Company and each of its “Protected Customers” constitutes a valuable asset
of the Company and may not be converted to Executive’s own use and that any such actions by
Executive would constitute a material breach of this Employment Agreement as well as a breach of
Executive’s duties of loyalty to the Company as a senior executive officer. Accordingly, Executive
hereby agrees that, during the Restricted Period, Executive shall not, without the prior written
consent of the Company, directly or indirectly, on Executive’s own behalf or as a Principal or
Representative of any Person, solicit or attempt to solicit a Protected Customer for the purpose of
providing or selling or having a Company Competitor provide Competitive Services to the Protected
Customer.
(h) Non-Competition. During the Term and during the Restricted Period, Executive
shall not, without the Company’s express prior written consent, directly or indirectly, on
Executive’s own behalf or as a Principal or Representative of any Person other than the Company or
an affiliate of the Company provide services to, invest in, lend funds to, advise, consult with,
represent, be employed by or contract with a Company Competitor where such relationship involves
substantial similarity to one or more material aspects of Executive’s relationship with Company and
where it could reasonably be concluded that such relationship is adverse to the legitimate business
interests of the Company or Executive’s contractual commitments to and corporate duties of loyalty
to the Company (a “Competing Position”). After Executive’s Date of Termination, the foregoing
restrictions shall apply only to affiliations or relationships with a Company Competitor whose
primary business location is in the continental United States. The parties acknowledge that the
Company’s business extends throughout and beyond the continental United States and that as the
Company’s Executive Vice President and Chief Operating Officer, Executive can be deemed to be
providing services to the Company and serving the Company throughout this entire geographic area.
Nothing in the foregoing covenants shall prevent or limit Executive from owning a passive interest
of not more than one percent (1%) of the equity of a Company Competitor if the equity is listed and
traded on the New York Stock Exchange or NASDAQ provided that neither such ownership nor any
contract or other right gives Executive control of the entity in which Executive owns equity.
(i) Non-Disparagement. The Executive agrees not to make false, misleading or
disparaging statements regarding the Company, its management (including individual executives or
managers) or practices, and agrees not to take any action that disrupts or impairs the
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Company’s normal, ongoing business operations, or that xxxxx the Company’s reputation with its
employees, customers, suppliers, or the public. Executive understands that the foregoing provision
does not apply on occasions when Executive is subpoenaed or ordered by a court or other
governmental authority to testify or give evidence and must, of course, respond truthfully, or to
conduct otherwise protected by the Xxxxxxxx-Xxxxx Act.
(j) Reasonable and Continuing Obligations. Executive agrees that Executive’s
obligations under this Section 7 are obligations which will continue beyond the date Executive’s
employment terminates and that such obligations are reasonable and necessary to protect the
Company’s legitimate business interests. The Company in addition shall have the right to take such
other action as the Company deems necessary or appropriate to compel compliance with the provisions
of this Section 7.
(k) Remedy for Breach. Executive agrees that the remedies at law of the Company for
any actual or threatened breach by Executive of the covenants in this Section 7 would be inadequate
and that the Company shall be entitled to seek specific performance of the covenants in this
Section 7, including entry of an ex-parte , temporary restraining order in state or federal court,
preliminary and permanent injunctive relief against activities in violation of this Section 7, or
both, or other appropriate judicial remedy, writ or order, in addition to any damages and legal
expenses which the Company may be legally entitled to recover. Executive acknowledges and agrees
that the covenants in this Section 7 shall be construed as agreements independent of any other
provision of this or any other agreement between the Company and Executive, and that the existence
of any claim or cause of action by Executive against the Company, whether predicated upon this
Employment Agreement or any other agreement, shall not constitute a defense to the enforcement by
the Company of such covenants.
(l) Severability of Covenants. Executive acknowledges and agrees that the Restrictive
Covenants are reasonable and valid in time and scope and in all other respects. The covenants set
forth in this Employment Agreement shall be considered and construed as separate and independent
covenants. Should any part or provision of any covenant be held invalid, void or unenforceable,
such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any
other part or provision of this Employment Agreement. If any portion of the foregoing provisions
is found to be invalid or unenforceable because its duration, the territory, the definition of
activities or the definition of information covered is considered to be invalid or unreasonable in
scope, the invalid or unreasonable term shall be redefined, or a new enforceable term provided,
such that the intent of the Company and Executive in agreeing to the provisions of this Employment
Agreement will not be impaired and the provision in question shall be enforceable to the fullest
extent of the applicable laws.
(m) Reformation. The parties hereunder agree that it is their intention that the
provisions of this Section 7 be enforced in accordance with their terms to the maximum extent
possible under applicable law. The parties further agree that, in the event any tribunal of
competent jurisdiction shall find that any provision hereof is not enforceable in accordance with
its terms, the tribunal shall reform these covenants such that they shall be enforceable to the
maximum extent permissible at law.
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SECTION 8. MISCELLANEOUS
(a) Non-Exclusivity of Rights. Nothing in this Employment Agreement shall prevent or
limit Executive’s continuing or future participation in any employee benefit plan, program, policy
or practice provided by the Company and for which Executive may qualify, except as specifically
provided herein. Amounts which are vested benefits or which Executive is otherwise entitled to
receive under any employee benefit plan, policy, practice or program of the Company, its
subsidiaries or any of its affiliated companies at or subsequent to the Date of Termination (other
than severance benefits) shall be payable in accordance with such plan, policy, practice or program
except as explicitly modified by this Employment Agreement.
(b) Notices. Notices and all other communications shall be in writing and shall be
deemed to have been duly given when personally delivered or when mailed by United States registered
or certified mail. Notices to the Company shall be sent to: Emageon Inc., 0000 Xxxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000. Attention: General Counsel. Notices and communications to
Executive shall be sent to the address Executive most recently provided to the Company.
(c) No Waiver. No failure by either the Company or Executive at any time to give
notice of any breach by the other of, or to require compliance with, any condition or provision of
this Employment Agreement shall be deemed a waiver of any provisions or conditions of this
Employment Agreement.
(d) Alabama Law. This Employment Agreement shall be governed by Alabama law without
reference to the choice of law principles thereof.
(e) Assignment. This Employment Agreement shall be binding upon and inure to the
benefit of the Company and any successor to all or substantially all of the business or assets of
the Company. The Company may assign this Employment Agreement to any affiliate or successor, and
no such assignment shall be treated as a termination of Executive’s employment under this
Employment Agreement. Executive’s rights and obligations under this Employment Agreement are
personal and shall not be assigned or transferred.
(f) Other Agreements. This Employment Agreement supercedes, replaces and merges any
and all previous agreements and understandings regarding all the terms and conditions of
Executive’s employment relationship with the Company, and this Employment Agreement constitutes the
entire agreement between the Company and Executive with respect to such terms and conditions.
(g) Amendment. No amendment to this Employment Agreement shall be effective unless it
is in writing and signed by the Company and by Executive.
(h) Invalidity. If any part of this Employment Agreement is held by a court of
competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be
unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable
part shall be deemed not to be part of this Employment Agreement.
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(i) Disputes; Legal Fees; Indemnification.
(1) Disputes — All claims by Executive for compensation and benefits under this
Employment Agreement shall be in writing and shall be directed to and be determined by the
Board. Any denial by the Board of a claim for benefits under this Employment Agreement
shall be provided in writing to Executive within 30 days of such decision and shall set
forth the specific reasons for the denial and the specific provisions of this Employment
Agreement relied upon. The Board shall afford a reasonable opportunity to Executive for a
review of its decision denying a claim and shall further allow Executive to appeal in
writing to the Board a decision of the Board within sixty (60) days after notification by
the Board that Executive’s claim has been denied. To the extent permitted by applicable
law, any further dispute or controversy arising under or in connection with this Employment
Agreement shall be settled exclusively by arbitration in Birmingham, Alabama, in accordance
with the commercial arbitration rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
(2) Legal Fees. If Executive terminates his employment for Good Reason or if
the Company involuntarily terminates Executive without Cause, then, in the event Executive
incurs legal fees and other expenses in seeking to obtain or to enforce any rights or
benefits provided by this Employment Agreement, the Company will reimburse Executive’s fees
and expenses as incurred quarterly, including, without limitation, reasonable attorneys’
fees and expenses, experts’ fees and expenses, investigative fees, and travel expenses, in
connection with such dispute, provided that (i) Executive provides the Company with written
documentation substantiating the amount of such fees and expenses, and (ii) Executive
prevails on at least one material issue in such dispute or an arbitrator does not determine
that Executive’s legal positions were frivolous or without legal foundation. The Company
will make such reimbursement payments quarterly based on the written substantiation
documentation submitted by Executive to the Company during the prior quarter. In no event
will any reimbursement be made later than the end of the calendar year next following the
calendar year in which the expense was incurred by Executive. Executive must provide such
written substantiation in time for the Company to make such reimbursement by such deadline.
In the event Executive does not so prevail or in the event of a determination by the
arbitrator that his legal positions were frivolous or without legal foundation (in either
case, a “Resolution”), Executive will repay to the Company any amounts previously reimbursed
by it within a reasonable period of time not to exceed 60 days following the date of the
Resolution. The amount of expenses eligible for reimbursement under this Section 8(i)(2)
during a calendar year will not affect the amount of expenses eligible for reimbursement
under this Section 8(i)(2) in another calendar year, and the right to such reimbursement is
not subject to liquidation or exchange for another benefit from the Company. Except to the
extent provided in the preceding sentence, each party shall pay its own legal fees and other
expenses associated with any dispute under this Employment Agreement.
(3) Indemnification. During the Term of this Employment Agreement and after
Executive’s termination, the Company shall indemnify Executive and hold Executive harmless
from and against any claim, loss or cause of action arising from or
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out of Executive’s performance as an officer, director or employee of the Company or
any of its subsidiaries or other affiliates or in any other capacity, including any
fiduciary capacity, in which Executive serves at the Company’s request, in each case to the
maximum extent permitted by law and under the Company’s Articles of Incorporation and
By-Laws (the “Governing Documents”), provided that in no event shall the protection afforded
to Executive hereunder be less than that afforded under the Governing Documents as in effect
on the date of this Employment Agreement except for changes mandated by law.
IN WITNESS WHEREOF, the Company and Executive have executed this Employment Agreement as of
the date first above written to be effective on the Effective Date.
| EMAGEON INC. | ||||||
| By: | /s/ Xxxxxxx X. Xxxx, Xx. | |||||
| Its: | President & Chief Executive Officer | |||||
| EXECUTIVE: | ||||||
| /s/ Xxxxx X. Xxxxxxx | ||||||
| Xxxxx X. Xxxxxxx | ||||||
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