SEVERANCE AGREEMENT AND GENERAL
RELEASE
This SEVERANCE
AGREEMENT AND GENERAL RELEASE (hereinafter referred to as the
“Agreement”) is made and entered into by and between
EMAGEON INC. (hereinafter referred to as
“Emageon”) and CHARLES A. JETT, JR .
(hereinafter referred to as “Employee”).
WHEREAS, on
August 10, 2004, Employee entered into an Employment Agreement
(the “Employment Agreement”) with Emageon whereby
Emageon employed Employee as Chief Executive Officer;
and
WHEREAS, on
July 8, 2008, Employee and Emageon entered into an Amendment
to Employment Agreement; and
WHEREAS, Emageon
has entered into an Agreement and Plan of Merger, dated
February 22, 2009 (as amended or supplemented from time to
time, the “Merger Agreement”), with AMICAS, Inc., a
Delaware corporation (“AMICAS”), and AMICAS Acquisition
Corp., a Delaware corporation and a direct wholly-owned subsidiary
of AMICAS (“Merger Sub”), pursuant to which AMICAS and
Merger Sub have agreed to commence a tender offer (the
“Offer”) for all of the outstanding shares of common
stock of Emageon (the “Shares”) and, following the
consummation of the Offer, to cause Merger Sub to be merged with
and into Emageon, with Emageon as the surviving corporation (the
“Merger”); and
WHEREAS, Employee
and Emageon have, in connection with the Merger Agreement, the
Offer and the Merger, mutually agreed to terminate Employee’s
employment with Emageon pursuant to the terms of the Employment
Agreement; and
WHEREAS, Employer
and Employee desire to enter into this Agreement to recite the
terms of Employee’s separation and to resolve any potential
disputes and release any potential claims held by the parties as of
the date hereof.
NOW, THEREFORE,
Emageon and Employee agree as follows:
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1.
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Termination of Employment
. Employee’s
employment with Emageon shall be terminated effective as of the
date on which the Minimum Tender Condition (as defined in the
Merger Agreement) shall have been satisfied and Merger Sub shall
have accepted for purchase and paid for the Shares tendered (and
not withdrawn) pursuant to the Offer (the “Separation
Date”); provided, that if the Separation Date has not
occurred by the Outside Date (as defined in the Merger Agreement),
this Agreement shall become void. Employee acknowledges that, as of
the Separation Date, his employment relationship with Emageon will
be permanently severed and that Emageon has no obligation to rehire
or re-employ him in the future.
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2.
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Payment for Accrued
Salary. Employee shall receive payment for
all of his base salary and any accrued and unused vacation through
the Separation Date, less all applicable statutory withholdings and
deductions, in accordance with Emageon’s usual practice for
making salary payments to employees. Employee acknowledges that he
is entitled to no additional payments for earned salary or accrued
but unused vacation time except as set forth in this
Agreement.
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3.
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Severance Benefits.
In consideration of the
promises set forth herein, upon the execution of this Agreement and
the expiration of the revocation period described in Section 16(5)
below, Emageon agrees to provide Employee with the following
severance benefits:
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(a)
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Emageon shall pay Employee as a lump
sum the amount of $1,235,500 less all applicable statutory
withholdings and deductions, which is the equivalent of (1)
Employee’s monthly base salary plus one-twelfth (1/12) of
Employee’s target annual bonus, multiplied by
(ii) twenty-four (24) months; and
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(b)
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Emageon shall pay Employee as a lump
sum (i) the amount of $23,203.44, which is equivalent to the
cost for Employee to maintain continuing family health and dental
insurance for twenty-four (24) months pursuant to an election
of coverage under the Consolidated Omnibus Benefits Reconciliation
Act of 1985, less the Employee’s share of insurance benefits
under Emageon’s current benefit plans; (ii) the amount
of $8,000 with respect to life insurance coverage; and
(iii) the amount of $33,942.31 for accrued, but unused
vacation; and
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(c)
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Employee will become fully vested in
all stock options, stock appreciation rights, restricted stock and
restricted stock units held by Employee as of the Separation Date,
subject to the terms and conditions of the plan and award
agreements with respect thereto.
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Employee hereby acknowledges that
the severance benefits provided for herein are conditioned upon his
execution of and compliance with this Agreement and constitute
value to which he is not already entitled. Employee further
acknowledges that he is entitled to no additional severance
benefits.
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The
severance benefits provided in this Section are payable to the
Employee within 10 days after his Separation Date; provided
that in all events such amounts shall be paid no later than the
later of (a) the end of the calendar year in which the
Separation Date occurs, or (b) the 15th day of the third
calendar month following such specified date, and provided further
that the Employee is not permitted to designate the taxable year of
the payment. Accordingly, it is the intent of Emageon that all
payments payable to the Employee pursuant to this Section shall be
exempt from Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) as short-term deferrals.
However, if Emageon reasonably determines that any payment to
Employee pursuant to this Agreement is not exempt as a short-term
deferral and must be delayed for six-months to avoid a violation of
Code Section 409A(a)(2)(B), such payment shall be paid on the
next business day following the six-month anniversary of the
Employee’s Separation Date.
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3A.
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Excise Tax Gross Up
Payment .
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(a)
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In
the event it shall be determined that any payment or distribution
by Emageon to or for the benefit of Employee (whether paid or
payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 3A (a
“Payment”) would be subject to the excise tax imposed
by Code Section 4999 or any interest or penalties are incurred
by Employee 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
Employee shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after
payment by Employee 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, Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the
Payments.
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(b)
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Subject to the provisions of
Section 3A(c), all determinations required to be made under
this Section 3A, 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 Employee
(other than the Emageon’s regular accounting firm) and
reasonably acceptable to Emageon (the “Accounting
Firm”) which shall provide detailed supporting calculations
both to Emageon and Employee within 15 business days of the receipt
of notice from Employee that there has been a Payment, or such
earlier time as is reasonably requested by Emageon. All fees and
expenses of the Accounting Firm shall be borne solely by Emageon.
Any Gross-Up Payment, as determined pursuant to this
Section 3A, shall be paid by Emageon to Employee within five
days of the receipt of the Accounting Firm’s determination.
Any determination by the Accounting Firm shall be binding upon
Emageon and Employee. As a result of the uncertainty in the
application of Code Section 4999 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 Emageon should
have been made (an “Underpayment”), consistent with the
calculations required to be made hereunder. In the event that the
Emageon exhausts its remedies pursuant to Section 3A(c) and
Employee 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 Emageon to or for the benefit of
Employee.
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(c)
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Employee shall notify Emageon in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by Emageon 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 Employee is informed in writing of such claim
and shall apprise Emageon of the nature of such claim and the date
on which such claim is requested to be paid. Employee shall not pay
such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to Emageon (or such shorter
period ending on the date that any payment of taxes with respect to
such claim is due). If Emageon notifies Employee in writing prior
to the expiration of such period that it desires to contest such
claim, Employee shall: (1) give Emageon any information reasonably
requested by Emageon relating to such claim, (2) take such
action in connection with contesting such claim as Emageon 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 Emageon,
(3) cooperate with Emageon in good faith in order effectively
to contest such claim, and (4) permit Emageon to participate
in any proceedings relating to such claim; provided, however, that
Emageon 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 Employee
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 3A(c), Emageon 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 Employee to
pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and Employee 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 Emageon shall determine; provided,
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however, that
if Emageon directs Employee to pay such claim and sue for a refund,
Emageon shall, if permitted by law, advance the amount of such
payment to Employee, on an interest-free basis and shall indemnify
and hold Employee harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest or penalties with
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