EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “ Agreement ”), dated the 31 ^st day of July, 2009, amends and restates that certain employment agreement dated as of December 19, 2008 (the “ Prior Agreement ”), by and between NovaMed Management Services, LLC, a Delaware limited liability company (the “ Company ”) and a wholly owned subsidiary of NovaMed, Inc., and Thomas S. Hall (“ Employee ”).

A.           The Company is engaged in the business of:  (i) owning, operating and/or managing ambulatory surgery centers and other outpatient surgical facilities, optical dispensaries, wholesale optical laboratories, an optical supplies and equipment purchasing organization and a marketing services and products company that provides marketing services and products to eye care providers as well as marketing and lead-tracking software, websites, call center services and other marketing services to health care providers and manufacturers; and (ii) providing comprehensive eye care services to eye care providers and businesses ancillary thereto, including, without limitation, providing financial, administrative, information technology, marketing and managed care services and ophthalmic surgical equipment to ophthalmic and optometric providers (collectively, the “ Business ”).

B.           The Company currently employs Employee as the President and Chief Executive Officer of the Company on the terms and conditions contained in the Prior Agreement.

C.           In consideration for the continued employment of Employee, the parties hereto desire to modify the Prior Agreement, all on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises, the mutual covenants of the parties hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.1.         Engagement of Employee .  The Company agrees to continue to employ Employee, and Employee accepts such continued employment by the Company, under the terms and conditions set forth herein for the period beginning July 31, 2009 (the “ Effective Date ”) and ending on November 13, 2009 (the “ Initial Employment Period ”).  THE INITIAL EMPLOYMENT PERIOD AND ANY RENEWAL PERIOD (AS HEREINAFTER DEFINED) SHALL AUTOMATICALLY BE RENEWED AND EXTENDED ON THE SAME TERMS AND CONDITIONS CONTAINED HEREIN FOR CONSECUTIVE ONE-YEAR PERIODS (THE “ RENEWAL PERIODS ”), UNLESS NOT LATER THAN SIXTY (60) DAYS PRIOR TO THE END OF THE INITIAL EMPLOYMENT PERIOD OR ANY RENEWAL PERIOD, EITHER PARTY SHALL GIVE WRITTEN NOTICE TO SUCH OTHER PARTY ELECTING TO TERMINATE THIS AGREEMENT.  The Initial Employment Period and the Renewal Periods are hereinafter referred to as the “ Employment Period. ”  For purposes of this Agreement, any notice of termination electing not to renew this Agreement pursuant to this Section 1.1 shall be deemed: (i) a termination without Cause if such notice is delivered by the Company and Employee were willing and able to continue performing services under substantially similar terms and conditions; or (ii) a voluntary termination of employment if such notice is delivered by Employee; provided, however, that if the Employment Period is terminated pursuant to this Section 1.1 by Employee (except as provided in Section 3.4 ), then notwithstanding Article III , the Company shall have no further obligations hereunder or otherwise with respect to Employee’s employment from and after the expiration of the Employment Period (except payment of Employee’s Base Salary accrued through the expiration of the Employment Period).  Notwithstanding anything to the contrary contained herein, the Employment Period is subject to termination pursuant to Article III below.

1.2.         Duties and Powers .  During the Employment Period, Employee will have such responsibilities, duties and authorities, and will render such services or act in such other capacity for the Company and its affiliates as the Board of Directors (the “ Board ”) of NovaMed, Inc. (the “ Parent ”), the manager and parent of the Company (or any designated officer of the Parent or the Company), may from time to time direct.  Employee will devote his best efforts, energies and abilities and his full business time, skill and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company, and shall perform the duties and carry out the responsibilities assigned to him, to the best of his ability, in a diligent, trustworthy, businesslike and efficient manner for the purpose of advancing the Company.  Employee acknowledges that his duties and responsibilities will require his full-time business efforts and agrees that during the Employment Period he will not engage in any other business activity or have any business pursuits or interests except activities or interests which do not conflict with the business of the Company, the Parent and any of their affiliated entities or interfere with the performance of Employee’s duties hereunder.

1.3.         No Violation .  Employee represents and warrants that the execution of this Agreement by Employee and the performance by Employee of his duties as an employee of the Company will not violate, conflict with or result in a breach or default under any agreements, arrangements or understandings to which Employee is or was a party, or by which he is or was bound, nor will the performance of Employee’s duties as an employee of the Company be limited, restricted or impaired in any manner as a result of any agreements, arrangements or understandings to which Employee is or was a party.

2.1.         Base Salary .  During the Employment Period, the Company will pay Employee a base salary at the rate of $553,725 per annum (which annual base salary, as increased from time to time in accordance with this Section 2.1 , shall be referred to herein as the “ Base Salary ”), payable in regular installments in accordance with the Company’s general payroll practices for salaried employees.  If the Employment Period is terminated pursuant to Section 3 (subject to any severance provisions in Section 3.3 or Section 3.4 ), Employee’s Base Salary for any partial year will be prorated based upon the number of days elapsed in such year during which services were actually performed by Employee.  The Board or any designated officer shall perform an annual review of Employee’s Base Salary based on Employee’s performance of his duties and the Company’s other compensation policies; provided that any increase in the Base Salary shall require approval of the Board or its Compensation Committee.

2.2.         Discretionary Bonus .  Following the end of each fiscal year, the Board or its Compensation Committee, in its sole discretion, may elect to cause the Company to award to Employee a bonus for such year, in an amount to be determined by the Board or its Compensation Committee, based on such performance targets as shall be established, and adjusted from time to time, by the Board or its Compensation Committee.  The Company shall pay Employee the discretionary bonus, if at all, during the taxable year following the fiscal year with respect to which the discretionary bonus applies.

2.3.         Benefits .  In addition to the Base Salary payable to Employee hereunder, Employee will be entitled to the following benefits during the Employment Period, unless otherwise altered by the Board with respect to all management employees of the Company (collectively, the “ Benefits ”):

(a)           hospitalization, disability, life and health insurance, to the extent offered by the Company and subject to the Company’s policies in effect from time to time, and in amounts consistent with Company policy, for all management employees, as reasonably determined by the Board;

(b)           four (4) weeks paid vacation each year with salary, consistent with Company policy for all management employees;

(c)           reimbursement for reasonable out-of-pocket business expenses incurred by Employee in the ordinary course of his duties, subject to the Company’s policies in effect from time to time with respect to travel, entertainment and other expenses, including without limitation, requirements with respect to reporting and documentation of such expenses, payable by no later than the last day of Employee’s taxable year following the taxable year in which the expense was incurred;

(d)           other benefit arrangements to the extent made generally available by the Company to its management employees; and

(e)           participation in the Parent’s Stock Incentive Plan or an equivalent plan such that Employee is granted options to purchase an amount of the common equity interest in the Parent consistent with the determination of the Board or its Compensation Committee pursuant to such plan.

2.4.         Taxes, etc .  All compensation payable to Employee hereunder is stated in gross amount and shall be subject to all applicable withholding taxes, other normal payroll and any other amounts required by law to be withheld.

3.1.         Termination By Employee or the Company .  The Employment Period (i) shall automatically terminate immediately upon Employee’s resignation or death, or (ii) may be terminated immediately by the Company as set forth herein for Cause or without Cause, or by reason of Employee’s Permanent Disability.

“ Cause ” as used herein means the occurrence of any of the following events:

(a)           a material breach by Employee of any of the terms and conditions of this Agreement; provided that Employee shall have a reasonable period of time during which to cure such material breach following the date on which Employee receives the Company’s written notice of such material breach;

(b)           Employee’s material failure or willful refusal to substantially perform his duties; provided that Employee shall have a reasonable period of time during which to cure such failure following the date on which Employee receives the Company’s written notice of such failure;

(c)           Employee’s failure, as notified by the Company in writing, to comply with any of the Company’s written guidelines or procedures promulgated by the Company and furnished to Employee, including, without limitation, any guidelines or procedures relating to marketing or community relations; provided that Employee shall have a reasonable period of time during which to cure such failure following the date on which Employee receives the Company’s written notice of such failure; or

(d)           the determination by the Board in the exercise of its reasonable judgment that Employee has committed an act or acts constituting a felony or other act involving dishonesty, disloyalty or fraud against the Company.

“ Permanent Disability ” as used herein shall mean that Employee is unable to perform, with or without reasonable accommodation, by reason of physical or mental incapacity, the essential functions of his or her position.  The Board shall determine, according to the facts then available, whether and when a Permanent Disability has occurred.  Such determination shall not be arbitrary or unreasonable, and shall be final and binding on the parties hereto.

3.2.         Termination by Employee .  Employee has the right to terminate his employment under this Agreement at any time, for any or no reason, upon ninety (90) days written notice to the Company; provided, however, that such ninety (90) day notice is not required for a termination of employment during the Window Period (as defined in Section 3.4(g) ).

3.3.         Compensation After Termination .

(a)          Except as described in Section 3.4 hereof, or except as may be specifically required by law, if the Employment Period is terminated (i) by the Company for Cause or due to the death or Permanent Disability of Employee, or (ii) by Employee (including a termination resulting from Employee’s election not to renew this Agreement under Section 1.1 hereof), then the Company shall have no further obligations hereunder or otherwise with respect to Employee’s employment from and after the termination or expiration date (except payment of Employee’s Base Salary accrued through the date of termination or expiration), and the Company shall continue to have all other rights available hereunder (including, without limitation, all rights under Article IV hereof) at law or in equity;

(b)          Except as described in Section 3.4 hereof, if the Employment Period is terminated by the Company without Cause (including a termination resulting from the Company’s election not to renew this Agreement under Section 1.1 hereof):  (i) Employee shall be entitled to receive all items described in Section 3.3(a) above; and (ii) subject to the conditions hereinafter set forth, Employee shall be entitled to receive as severance compensation, the following (collectively, the “ Severance Pay ”):  (A) Employee’s then-current monthly Base Salary hereunder for a period of eighteen (18) months (such time period to be hereinafter referred to as the “ Severance Period ” (unless modified by Section 3.4 )), payable, beginning 30 days  following the Termination Date, in regular installments in accordance with the Company’s general payroll practices for salaried employees; (B) the bonus, if any, to which Employee would have been entitled under Section 2.2 hereof at the end of the year during which the termination without Cause occurs had such termination not occurred, which bonus shall be (1) prorated based on the amount of time that Employee was employed by the Company during the year (not including the Severance Period) for which such bonus is being calculated, and (2) determined and paid to Employee contemporaneously with the determination and payment of bonuses for comparable employees of the Company during the calendar year next following the year in which the Termination Date occurs; and (C) continuation of the welfare benefits described in Section 2.4(a) for the Severance Period, to the extent permissible under the terms of the relevant benefit plans.  The bonus described in subclause (B) above shall not be the “Target Bonus” (as defined in Section 3.4(b) ), but rather the bonus that would have been payable pursuant to Section 2.2 hereof, as modified by this Section 3.3(b) .  Employee’s right to receive Severance Pay hereunder is conditioned upon: (x) Employee executing and delivering to the Company, before any payment is due or scheduled to begin, a written separation agreement and general release of all claims, in form and substance acceptable to the Company, which shall among other things, contain a general release by Employee of all claims arising out of his employment and termination of employment by the Company (a “ Release Agreement ”); and (y) Employee’s compliance with all of his obligations which survive termination of this Agreement, including without limitation those described in Article IV below.  The Severance Pay is intended to be in lieu of all other payments to which Employee might otherwise be entitled in respect of his termination without Cause.  The Company shall have no further obligations hereunder or otherwise with respect to Employee’s employment from and after the date of termination of employment with the Company for any reason (the “ Termination Date ”), and the Company shall continue to have all other rights available hereunder (including without limitation, all rights hereunder (including without limitation, all rights under Article IV hereof) at law or in equity.

3.4.         Compensation After Termination Following a Change in Control .

(a)          If the Employment Period is terminated following a Change in Control (as defined below) (i) by the Company for Cause or due to the death or Permanent Disability of Employee or (ii) by Employee (including a termination resulting from Employee’s election not to renew this Agreement under Section 1.1 hereof) other than for Good Reason (as defined below) or during the Window Period (as defined below), then the Company shall have no further obligations hereunder or otherwise with respect to Employee’s employment from and after the termination or expiration date (except payment of Employee’s Base Salary accrued through the date of termination or expiration), and the Company shall continue to have all other rights available hereunder (including without limitation, all rights under Article IV hereof) at law or in equity.

(b)          If the Employment Period is terminated following a Change in Control (i) by the Company without Cause (including a termination resulting from the Company’s election not to renew this Agreement under Section 1.1 hereof) or (ii) by Employee for Good Reason, then subject to the conditions described in Section 3.4(d) below, Employee shall be entitled to receive the following as Severance Pay in lieu of any amounts payable under Section 3.3 : (A) two (2) times the sum of Employee’s Base Salary and Target Bonus, payable in either a lump sum within 30 days following the Termination Date, if the Termination Date occurs no later than the second anniversary of the effective date of the Change in Control, or in regular installments beginning within 30 days following the Termination Date in accordance with the Company’s general payroll practices for salaried employees, if the Termination Date occurs after the second anniversary of the effective date of the Change in Control; and (B) continuation of the welfare benefits described in Section 2.4(a) for twenty-four (24) months (the “ Severance Period ”) to the extent permissible under the terms of the relevant benefit plans.  For purposes of this Agreement, “ Target Bonus ” shall mean the greater of (x) an amount equal to the bonus that would have been payable to Employee following the calendar year in which the Termination Date occurs pursuant to the Company’s Executive Compensation Plan (the “ Executive Plan ”), based on attaining one hundred percent (100%) of Employee’s applicable target measure established pursuant to the Executive Plan or (y) seventy-five percent (75%) of Base Salary.  The Target Bonus shall not be adjusted based on whether the Company anticipates attaining such target measure as of the Termination Date, whether the target measure is ultimately attained or whether any bonus amounts payable under the Executive Plan would have ultimately been approved by either the Compensation Committee or the Board.

(c)          If the Employment Period is terminated following a Change in Control by Employee for any reason or no reason during the Window Period, then subject to the conditions described in Section 3.4(d) below, Employee shall be entitled to receive the following as Severance Pay in lieu of any amounts payable under Section 3.3 : (i) one (1) times the sum of Employee’s Base Salary and Target Bonus, payable within thirty (30) days following the Termination Date and (ii) continuation of the welfare benefits described in Section 2.4(a) for twelve (12) months (the “ Severance Period ”) to the extent permissible under the terms of the relevant benefit plans.

(d)          Employee’s right to receive any Severance Pay under Section 3.4(b) or Section 3.4(c) above is conditioned upon (i) Employee executing and delivering to the Company, before any payment is due or scheduled to begin, a Release Agreement which shall, among other things, contain a general release by Employee of all claims arising out of his employment and termination of employment by the Company; (ii) Employee’s compliance with all terms of that separation agreement and general release; and (iii) Employee’s compliance with all of his obligations which survive termination of this Agreement, including without limitation those described in Article IV below.  The Severance Pay is intended to be in lieu of all other payments to which Employee might otherwise be entitled in respect of his termination without Cause.  The Company shall have no further obligations hereunder or otherwise with respect to Employee’s employment from and after the Termination Date, and the Company shall continue to have all other rights available hereunder (including without limitation, all rights under Article IV hereof) at law or in equity.

(e)          For the purpose of this Agreement, a “ Change in Control ” means the first to occur of any of the following, construed in accordance with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code” ):

(i)           the date any Person or Group (as defined below) acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by the Person or Group), other than from the Parent, ownership of 30% or more of the combined voting power of the then outstanding voting securities of the Parent entitled to vote generally in the election of directors; provided , however , that any acquisition by the Parent or any of its subsidiaries, or any corporation with respect to which, following such acquisition, more than 50% of the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the voting securities of the Parent in substantially the same portion as their ownership, immediately prior to such acquisition, of the combined voting power of the then outstanding voting securities of the Parent entitled to vote generally i