Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (together with Exhibit A, the “Agreement”) is entered
into effective as of April 22, 2013 (the “Effective Date”), by and among
Streamline Health Solutions, Inc., a Delaware corporation with its headquarters
in Atlanta, Georgia (the “Company”), and Robert E. Watson (“Executive”).

 

RECITALS:

 

WHEREAS, the Company and Executive previously entered into that certain
Employment Agreement dated as of January 31, 2011 (the “Initial Agreement”),
which expired on January 31, 2013, and the Company and Executive desire to enter
into a new employment agreement, as provided in this Agreement; and

 

WHEREAS, the Company and Executive hereby agree that Executive shall continue to
serve as the President and Chief Executive Officer (“CEO”) of the Company
pursuant to the terms and conditions set forth in this Agreement;

 

NOW, THEREFORE, in consideration of the premises and the agreements contained
herein, and for other good and valuable consideration, the receipt and adequacy
of which the parties hereby acknowledge, the parties agree as follows:

 

1.                                      EMPLOYMENT

 

The Company hereby agrees to continue to employ Executive, and Executive, in
consideration of such employment and other consideration set forth herein,
hereby agrees to continue employment, upon the terms and conditions set forth
herein.

 

2.                                      POSITION AND DUTIES

 

During the Term (as defined in Section 10) of this Agreement, Executive shall be
employed as the CEO of the Company and may also serve as an officer or as a
member of the Board of Directors (the “Board”) of the Company, and/or as an
officer or director of affiliates of the Company for no additional compensation,
as part of Executive’s services to the Company hereunder.  While employed
hereunder, Executive shall do all things necessary, legal and incident to the
above position, and otherwise shall perform such CEO-level functions as the
Board may establish from time to time.  In addition, during the Term, the
Company intends that Executive shall serve as a member of the Board, and,
subject to the Board’s exercise of its fiduciary duties, the Company intends
that the Board shall nominate Executive for re-election on each occasion during
the Term when his term as a director is scheduled to expire, provided that the
Company shall have no liability under this Agreement if Executive is not elected
by the shareholders to serve as a member of the Board or if, in accordance with
the exercise of its fiduciary duties, the Board elects not to nominate the
Executive for membership of the Board.

 

3.                                      COMPENSATION AND BENEFITS

 

Subject to such modifications as may be contemplated by Exhibit A and approved
from time to time by the Board or the Compensation Committee of the Board (the
“Committee”), and unless otherwise consented to by Executive, Executive shall
receive the compensation and benefits listed on the attached Exhibit A, which is
incorporated herein and expressly made a part of this Agreement.  Such
compensation and benefits shall be paid and provided by the Company in
accordance with the Company’s regular payroll, compensation and benefits
policies.

 

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4.                                      EXPENSES

 

The Company shall pay or reimburse Executive for all travel and out-of-pocket
expenses reasonably incurred or paid by Executive in connection with the
performance of Executive’s duties as an employee of the Company upon compliance
with the Company’s procedures for expense reimbursement, including the
presentation of expense statements or receipts or such other supporting
documentation as the Company may reasonably require.  All expenses eligible for
reimbursements in connection with the Executive’s employment with the Company
must be incurred by Executive during the term of employment and must be in
accordance with the Company’s expense reimbursement policies.  The amount of
reimbursable expenses incurred in one taxable year shall not affect the expenses
eligible for reimbursement in any other taxable year.  Each category of
reimbursement shall be paid as soon as administratively practicable, but in no
event shall any such reimbursement be paid after the last day of Executive’s
taxable year following the taxable year in which the expense was incurred.  No
right to reimbursement is subject to liquidation or exchange for other benefits.

 

5.                                      BINDING AGREEMENT

 

The Company warrants and represents to Executive that the Company, acting by the
officer executing this Agreement on behalf of the Company, has the full right
and authority to enter into this Agreement and to perform all of the Company’s
obligations hereunder.

 

6.                                      OUTSIDE EMPLOYMENT

 

Executive shall devote Executive’s full time and attention to the performance of
the duties incident to Executive’s position with the Company, and shall not have
any other employment with any other enterprise or substantial responsibility for
any enterprise which would be inconsistent with Executive’s duty to devote
Executive’s full time and attention to the Company matters; provided, however,
that, the foregoing shall not prevent Executive from participation in any
charitable or civic organization or, subject to Board consent, which consent
will not be unreasonably withheld, from service in a non-executive capacity on
the boards of directors of up to two other companies that does not interfere
with Executive’s performance of the duties and responsibilities to be performed
by Executive under this Agreement.

 

7.                                      CONFIDENTIAL INFORMATION AND TRADE
SECRETS

 

The Company is in the business of providing solutions, including comprehensive
suites of health information solutions relating to enterprise content
management, business analytics and integrated workflow systems, that help
hospitals, physician groups and other healthcare organizations improve
efficiencies and business processes across the enterprise to enhance and protect
revenues, offering a flexible, customizable way to optimize the clinical and
financial performance of any healthcare organization (the “Business”).

 

For the purpose of this Agreement, “Confidential Information” shall mean any
written or unwritten information which relates to and/or is used in the
Company’s Business (including, without limitation, the Company’s services,
processes, patents, systems, equipment, creations, designs, formats,
programming, discoveries, inventions, improvements, computer programs, data kept
on computers, engineering, research, development, applications, financial
information, information regarding services and products in development, market
information, including test marketing or localized marketing, other information
regarding processes or plans in development, trade secrets, training manuals,
know-how of the Company, and the customers, clients, suppliers and others with
whom the Company does or has in the past done, business (including any
information about the identity of the Company’s customers or

 

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suppliers and written customer lists and customer prospect lists), or
information about customer requirements, transactions, work orders, pricing
policies, plans or any other Confidential Information, which the Company deems
confidential and proprietary and which is generally not known to others outside
the Company and which gives or tends to give the Company a competitive advantage
over persons who do not possess such information or the secrecy of which is
otherwise of value to the Company in the conduct of its business — regardless of
when and by whom such information was developed or acquired, and regardless of
whether any of these are described in writing, reduced to practice,
copyrightable or considered copyrightable, patentable or considered patentable;
provided, however, that “Confidential Information” shall not include general
industry information or information which is publicly available or is otherwise
in the public domain without breach of this Agreement, information which
Executive has lawfully acquired from a source other than through his employment
with the Company, or information which is required to be disclosed pursuant to
any law, regulation or rule of any governmental body or authority or court order
(in which event Executive shall immediately notify the Company of such
requirement or order so as to give the Company an opportunity to seek a
protective order or other manner of protection prior to production or disclosure
of the information).  Executive acknowledges that Confidential Information is
novel, proprietary to and of considerable value to the Company.

 

Confidential Information shall also include confidential information of third
parties, clients or prospective clients that has been provided to the Company
and/or to Executive in conjunction with Executive’s employment, which
information the Company is obligated to treat as confidential.  Confidential
Information does not include information voluntarily disclosed to the public by
the Company, except where such public disclosure has been made by the Executive
without authorization from the Company, or which has been independently
developed and disclosed by others, or which has otherwise entered the public
domain through lawful means.

 

Executive acknowledges that all Confidential Information is the valuable, unique
and special asset of the Company and that the Company owns the sole and
exclusive right, title and interest in and to this Confidential Information.

 

(a)                                 To the extent that the Confidential
Information rises to the level of a trade secret under applicable law, then
Executive shall, during Executive’s employment and for as long thereafter as the
Confidential Information remains a trade secret (or for the maximum period of
time otherwise allowed under applicable law) protect and maintain the
confidentiality of these trade secrets and refrain from disclosing, copying or
using the trade secrets without the Company’s prior written consent, except as
necessary in Executive’s performance of Executive’s duties while employed with
the Company.

 

(b)                                 To the extent that the Confidential
Information defined above does not rise to the level of a trade secret under
applicable law, Executive shall not, during Executive’s employment and
thereafter for a period of two (2) years, disclose, or cause to be disclosed in
any way, Confidential Information, or any part thereof, to any person, firm,
corporation, association or any other operation or entity, or use the
Confidential Information on Executive’s own behalf, for any reason or purpose
except in the performance of his duties as an employee of the Company. 
Executive further agrees that, during Executive’s employment and thereafter for
a period of two (2) years, Executive will not distribute, or cause to be
distributed, Confidential Information to any third person or permit the
reproduction of Confidential Information, except on behalf of the Company in
Executive’s capacity as an employee of the Company.  Executive shall take all
reasonable care to avoid unauthorized disclosure or use of the Confidential
Information.  Executive agrees that all restrictions contained in this Section 7
are reasonable and valid under the circumstances and hereby waives all defenses
to the strict enforcement thereof by the Company.

 

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Executive agrees that, upon the request of the Company, or in any event
immediately upon termination of his employment for whatever reason, Executive
will immediately deliver up to the Company or its designee all Confidential
Information in Executive’s possession and/or control, and all notes, records,
memoranda, correspondence, files and other papers, and all copies thereof,
relating to or containing Confidential Information.  Executive does not have,
nor can Executive acquire, any property or other right in Confidential
Information.

 

8.                                      PROPERTY OF THE COMPANY

 

All ideas, inventions, discoveries, proprietary information, know-how, processes
and other developments and, more specifically improvements to existing
inventions, conceived by Executive, alone or with others, during the term of
Executive’s employment with the Company, whether or not during working hours and
whether or not while working on a specific project, that are within the scope of
the Company’s Business operations or that relate to any work or projects of the
Company, are and shall remain the exclusive property of the Company. Inventions,
improvements and discoveries relating to the Business of the Company conceived
or made by Executive, either alone or with others, while employed with the
Company are conclusively and irrefutably presumed to have been made during the
period of employment and are the sole property of the Company.  The Executive
shall promptly disclose in writing any such matters to the Company but to no
other person without the consent of the Company.  Executive hereby assigns and
agrees to assign all right, title and interest in and to such matters to the
Company.  Executive will, upon request of the Company, execute such assignments
or other instruments and assist the Company in the obtaining, at the Company’s
sole expense, of any patents, trademarks or similar protection, if available, in
the name of the Company.

 

9.                                      PROTECTIVE COVENANTS

 

(a)                                 Non-Solicitation of Customers or Clients. 
During Executive’s employment and for a period of two (2) years following the
date of any voluntary or involuntary termination of Executive’s employment for
any reason, Executive agrees not to solicit, directly or by assisting others,
any business from any of the Company’s customers or clients, including actively
sought prospective customers or clients, with whom Executive has had material
contact during Executive’s employment with the Company, for the purpose of
providing products or services that are competitive with those provided by the
Company.  As used in this paragraph, “material contact” means the contact
between Executive and each customer, client or vendor, or potential customer,
client or vendor (i) with whom or which Executive dealt on behalf of the
Company, (ii) whose dealings with the Company were coordinated or supervised by
Executive, (iii) about whom Executive obtained confidential information in the
ordinary course of business as a result of Executive’s association with the
Company, or (iv) who receives products or services authorized by the Company,
the sale or provision of which products or services results or resulted in
compensation, commissions or earnings for Executive within two years prior to
the date of the employee’s termination.

 

(b)                                 Non-Piracy of Employees.  During Executive’s
employment and for a period of two (2) years following the date of any voluntary
or involuntary termination of Executive’s employment, Executive covenants and
agrees that Executive shall not, directly or indirectly, within the Territory,
as defined below: (i) solicit, recruit or hire (or attempt to solicit, recruit
or hire) or otherwise assist anyone in soliciting, recruiting or hiring, any
employee or independent contractor of the Company who performed work for the
Company within the last year of Executive’s employment with the Company, or
(ii) otherwise encourage, solicit or support any such employee or independent
contractor to leave his or her employment or engagement with the Company.

 

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(c)                                  Non-Compete.  During Executive’s employment
with the Company and for a period of two (2) years following the date of any
voluntary or involuntary termination of Executive’s employment for any reason,
and provided that the Company is not in default of its obligations specified in
Sections 11 and 13 hereof, Executive agrees not to, directly or indirectly,
compete with the Company, as an officer, director, member, principal, partner,
shareholder, owner, manager, supervisor, administrator, employee, consultant or
independent contractor, by working for a competitor to, or engaging in
competition with, the Business, in the Territory (as defined herein), in a
capacity in which Executive performs duties and responsibilities that are the
same as or  similar to the duties performed by Executive while employed by the
Company, provided that the foregoing shall not prohibit Executive from owning
not more than 5% of the outstanding stock of a corporation subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).  The “Territory” shall be defined to be that geographic area
comprised of the following states in the United States of America and the
Canadian provinces of Quebec and Alberta:

 

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Florida

Georgia

Hawaii

Idaho

Illinois

 

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

 

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

 

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

 

; provided, however, that the Territory described herein is a good faith
estimate of the geographic area that is now applicable as the area in which the
Company does or will do business during the term of Executive’s employment, and
the Company and Executive agree that this non-compete covenant shall ultimately
be construed to cover only so much of such Territory as relates to the
geographic areas in which the Company does business within the two-year period
preceding termination of Executive’s employment.

 

10.                               TERM

 

Unless earlier terminated pursuant to Section 11 herein, the term of this
Agreement shall be for a period beginning on the Effective Date and ending on
January 31, 2015 (the “Initial Term”).  Upon expiration of the Initial Term,
this Agreement shall automatically renew in successive one-year periods (each a
“Renewal Period”), unless Executive or the Company notifies the other party at
least 60 days prior to the end of the Initial Term or the applicable Renewal
Period that the Agreement shall not be renewed.  If this Agreement is renewed in
accordance with this Section 10, each Renewal Period shall be included in the
definition of “Term” for purposes of this Agreement.  Unless waived in writing
by the Company, the requirements of Section 7 (Confidential Information and
Trade Secrets), Section 8 (Property of the Company) and Section 9 (Protective
Covenants) shall survive the expiration or termination of this Agreement or
Executive’s employment for any reason.

 

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11.                               TERMINATION

 

(a)                                 Death.  This Agreement and Executive’s
employment hereunder shall be terminated on the death of Executive, effective as
of the date of Executive’s death.  In such event, the Company shall pay to the
estate of Executive the sum of (i) accrued but unpaid base salary earned prior
to Executive’s death (to be paid in accordance with normal practices of the
Company) and (ii) expenses incurred by Executive prior to his death for which
Executive is entitled to reimbursement under (and paid in accordance with)
Section 4 herein, and Executive shall be entitled to no severance or other
post-termination benefits.

 

(b)                                 Continued Disability.  This Agreement and
Executive’s employment hereunder may be terminated, at the option of the
Company, upon a Continued Disability (as defined herein) of Executive.  For the
purposes of this Agreement, and unless otherwise required under Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”), “Continued
Disability” shall be defined as the inability or incapacity (either mental or
physical) of Executive to continue to perform Executive’s duties hereunder for a
continuous period of one hundred twenty (120) working days, or if, during any
calendar year of the Term hereof because of disability, Executive shall have
been unable to perform Executive’s duties hereunder for a total period of one
hundred eighty (180) working days regardless of whether or not such days are
consecutive. The determination as to whether Executive is unable to perform the
essential functions of Executive’s job shall be made by the Board or the
Committee in its reasonable discretion; provided, however, that if Executive is
not satisfied with the decision of the Board or the Committee, Executive will
submit to examination by three competent physicians who practice in the
metropolitan area in which the Company maintains its principal executive office,
one of whom shall be selected by the Company, another of whom shall be selected
by Executive, with the third to be selected by the physicians so selected. The
determination of a majority of the physicians so selected shall supersede the
determination of the Board or the Committee and shall be final and conclusive. 
In the event of the termination of Executive’s employment due to Continued
Disability, the Company will pay to Executive the sum of (i) accrued but unpaid
base salary earned prior to the date of the Executive’s termination of
employment due to Continued Disability (paid in accordance with the normal
practices of the Company), and (ii) expenses incurred by Executive prior to his
termination of employment for which Executive is entitled to reimbursement under
(and paid in accordance with) Section 4 herein, and Executive shall be entitled
to no severance or other post-termination benefits.

 

(c)                                  Termination by the Company for Good Cause,
by Executive Other Than for Good Reason, or upon Non-Renewal of the Term by
Executive.  Notwithstanding any other provision of this Agreement, the Company
may at any time terminate this Agreement and Executive’s employment thereunder
for Good Cause, Executive may at any time terminate his employment other than
for Good Reason (as defined in Section 11(d) herein), or Executive may notify
the Company that he will not renew the Term.  For this purpose, “Good Cause”
shall include the following: the current use of illegal drugs; conviction of any
crime which involves moral turpitude, fraud or misrepresentation; commission of
any act which would constitute a felony and which adversely impacts the business
or reputation of the Company; fraud; misappropriation or embezzlement of Company
funds or property; willful misconduct or grossly negligent or reckless conduct
which is materially injurious to the reputation, business or business
relationships of the Company; material violation or default on any of the
provisions of this Agreement; or material and continuous failure to meet
reasonable performance criteria or reasonable standards of conduct as
established from time to time by the Board, which failure continues for at least
30 days after written notice from the Company to Executive. Any alleged
termination by the Company for Good Cause shall be delivered in writing to
Executive stating the full basis for such cause along with any notice of such
termination.  If the employment of Executive is terminated by the Company for
Good Cause, if Executive terminates employment for any reason other than for
Good Reason (including but not limited to resignation), or if Executive notifies
the Company he will not renew the Term, then, the

 

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Company will pay to Executive the sum of (i) accrued but unpaid salary through
the termination date (paid in accordance with the normal practices of the
Company), and (ii) expenses incurred by Executive prior to his termination date
for which Executive is entitled to reimbursement under (and paid in accordance
with) Section 4 herein, and Executive shall be entitled to no severance or other
post-termination benefits.

 

(d)                                 Termination by the Company without Good
Cause, by Executive for Good Reason, or upon Non-Renewal of the Term by the
Company.  The Company may terminate this Agreement and Executive’s employment at
any time, including for reasons other than Good Cause (as “Good Cause” is
defined in Section 11(c) above), Executive may terminate his employment at any
time, including for Good Reason, or the Company may elect not to renew the
Term.  For the purposes herein, “Good Reason” shall mean (i) a material
diminution of Executive’s base salary; (ii) a material diminution in Employee’s
authority, duties, or responsibilities; (iii) any requirement that Executive
report to a corporate officer or employee instead of directly to the Board or
(within the normal purview of the position) the non-executive Chairman of the
Board; (iv) a material change in geographic location at which the Employee must
perform services as of the Effective Date, which is Atlanta, Georgia; or (v) any
other action or inaction that constitutes a material breach of the terms of this
Agreement; provided that Executive’s termination shall not be treated as a
resignation for Good Reason unless Executive provides the Company with notice of
the existence of the condition claimed to constitute Good Reason within 90 days
of the initial existence of such condition and the Company fails to remedy such
condition within 30 days following the Company’s receipt of such notice.  In the
event that (i) the Company terminates the employment of Executive during the
Term for reasons other than for Good Cause, death or Continued Disability,
(ii) Executive terminates employment for Good Reason, or (iii) the Company
elects not to renew the Term for the year following the Initial Term by giving
notice during the Initial Term of its intent not to renew, then the Company will
pay Executive the sum of (A) accrued but unpaid salary through the termination
date (paid in accordance with the normal practices of the Company), (B) expenses
incurred by Executive prior to his termination date for which Executive is
entitled to reimbursement under (and paid in accordance with) Section 4 herein,
(C) provided that Executive is not in default of his obligations under
Section 7, 8, or 9 herein, an amount equal to 1.25 times the aggregate of
(X) Executive’s annual base salary as in effect as of the date of such
termination from employment, and (Y) an amount equal to the higher of the bonus
paid to Executive for the fiscal year prior to the fiscal year during which
termination occurs or Executive’s target annual bonus for the fiscal year during
which termination occurs, and (D) the 2011 Options and the 2012 Option shall
become fully vested and remain exercisable until the earlier of the end of the
applicable option period or one hundred and eighty (180) days from the date of
Executive’s termination of employment, as described in Section 4 of Exhibit A
((A) through (D) collectively the “Separation Benefits”). In such event, the
payments described in (C) in the preceding sentence shall be made following
Executive’s execution (and non-revocation) of a form of general release of
claims as is acceptable to the Board or the Committee if the general release
form is provided to the Executive within one month of the Executive’s date of
termination.  In any event, that portion of the severance payment described in
clause (C) above that exceeds the “separation pay limit,” if any, shall be paid
to the Executive in a lump sum payment within thirty (30) days following the
date of Executive’s termination of employment (or such earlier date following
the date of Executive’s termination of employment, if any, as may be required
under applicable wage payment laws), but in no event later than the fifteenth
(15th) day of the third (3rd) month following the Executive’s date of
termination.    The “separation pay limit” shall mean two (2) times the lesser
of: (1) the sum of Executive’s annualized compensation based upon the annual
rate of pay for services provided to the Company for the calendar year
immediately preceding the calendar year in which Executive’s date of termination
occurs of employment  (adjusted for any increase during that calendar year that
was expected to continue indefinitely if Executive had not terminated
employment); and (2) the maximum dollar amount of compensation that may be taken
into account under a tax-qualified retirement plan under Code Section 401(a)(17)
for the year in which his termination of employment occurs. The lump-sum payment

 

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to be made to Executive pursuant to this Section 4(a)(ii) is intended to be
exempt from Code Section 409A under the exemption found in Regulation
Section 1.409A-1(b)(4) for short-term deferrals. The remaining portion of the
severance payment described in clause (C) above shall be paid in periodic
installments over the 15-month period commencing on the first post-termination
payroll date following expiration of the revocation period described above and
shall be paid in accordance with the normal payroll practices of the Company.   
Notwithstanding the foregoing, in no event shall such remaining portion of the
severance payment described in clause (C) above be paid to Executive later than
December 31 of the second calendar year following the calendar year in which
Executive’s date of termination of employment occurs. The payments to be made to
Executive pursuant to the immediately preceding sentence are intended to be
exempt from Code Section 409A under the exemption found in Regulation
Section 1.409A-1(b)(9)(iii) for separation pay plans (i.e., the so-called “two
times” pay exemption).  For the sake of clarity, if the Company allows the
renewal of the Term for the first year following the Initial Term, then no
subsequent election not to renew shall trigger any rights to severance or other
benefits.

 

(e)                                  Payment of COBRA Premiums; Other Benefit
Programs.  In the event that (i) the  Company terminates Executive’s employment
for any reason other than Good Cause, (ii) Executive terminates his employment
for Good Reason, or (iii) the Company gives notice during the Initial Term of
its election not to renew the Term beyond the Initial Term, then, provided that
Executive timely elects to receive continued coverage under the Company’s group
medical and dental insurance plans pursuant to the Consolidated Omnibus Budget
Reconciliation Act of 1986, as amended (“COBRA”), and does not default on his
obligations under Section 7, 8, or 9 hereof, for the period commencing on the
date of Executive’s termination and continuing until the earlier of the end of
the 18-month period following his termination date or the first of the month
immediately following the Company’s receipt of notice from Executive terminating
such coverage, Executive (and any qualified dependents) will be entitled to
coverage under such plans (as may be amended during the period of coverage) in
which Executive was participating immediately prior to the date of his
termination of employment (the “COBRA Coverage”).  The cost of the premiums for
such coverage will be borne by the Company, except that Executive will reimburse
the Company for premiums becoming due each month with respect to such coverage
in an amount equal to the difference between the amount of such premiums and the
portion thereof currently being paid by the Executive.  Executive’s portion of
such premiums will be payable by the first of each month commencing the first
month following the month in which his termination of employment occurs, as part
of the Company’s regular payroll.  The period during which Employee is being
provided with health insurance under this Agreement at the Company’s expense
will be credited against Employee’s period of COBRA coverage, if any.  Further,
if at any time during the period Executive is entitled to premium payments under
this Section 11(e), Executive becomes entitled to receive health insurance from
a subsequent employer, the Company’s obligation to continue premium payments to
Executive shall terminate immediately.  For the sake of clarity, if the Company
allows the renewal of the Term for the first year following the Initial Term,
then no subsequent election not to renew shall trigger any rights to severance
or other benefits.

 

12.                               ADVICE TO PROSPECTIVE EMPLOYERS

 

If Executive seeks or is offered employment by any other company, firm or person
during his employment or during the post-termination restricted periods, he will
notify the prospective employer of the existence and terms of the
non-competition and confidentiality agreements set forth in Sections 7 and 9 of
this Agreement.  Executive may disclose the language of Sections 7 and 9, but
may not disclose the remainder of this Agreement.

 

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13.          CHANGE IN CONTROL

 

(a)                                 In the event of a Change in Control (as
defined herein) of the Company, (i) all stock options, restricted stock, and all
other equity awards granted to Executive prior to the Change in Control shall
immediately vest in full, (ii) if, within 90 days prior to a Change of Control,
the Company terminates the employment of Executive for reasons other than for
Good Cause, death or Continued Disability, Executive terminates employment for
Good Reason, or the Company elects not to renew the Term, then, the Company
shall provide the Separation Benefits and the COBRA Coverage, and, in addition
to the benefit described in clause (D) of the Separation Benefits, all other
stock options, restricted stock, and other equity awards granted to Executive
shall immediately vest in full as of the date of termination and shall remain
exercisable until the earlier of the end of the applicable option period or one
hundred and eighty (180) days from the date of Executive’s termination of
employment, and (iii) if, within 12 months following a Change in Control, the
Company terminates the employment of Executive for reasons other than for Good
Cause, death or Continued Disability, Executive terminates employment for Good
Reason, or the Company elects not to renew the Term, then, (a) the Company shall
provide the Separation Benefits and the COBRA Coverage, and (b) all stock
options, restricted stock, and other equity awards granted to Executive shall
immediately vest in full as of the date of termination and shall remain
exercisable until the earlier of the end of the applicable option period or one
hundred and eighty (180) days from the date of Executive’s termination of
employment.  In the event Executive seeks to terminate his employment for Good
Reason, such termination shall not be treated for purposes of this Section 13 as
a termination for Good Reason unless Executive provides the Company with notice
of the existence of the condition claimed to constitute Good Reason within 90
days of the initial existence of such condition and the Company fails to remedy
such condition within 30 days following the Company’s receipt of such notice. 
For purposes of this Section 13(a) only, the payments described in clause (C) of
the Separation Benefits shall be revised as follows: the phrase “an amount equal
to 2 times the aggregate of” shall be substituted for the phrase “an amount
equal to 1.25 times the aggregate of”, and such payments are intended to be
exempt from Code Section 409A under the short-term deferral and two times pay
exemptions.

 

(b)                                 For purposes of this Agreement, “Change in
Control” means any of the following events:

 

(i)                                     A change in control of the direction and
administration of the Company’s business of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, as in effect on the date hereof and any
successor provision of the regulations under the 1934 Act, whether or not the
Company is then subject to such reporting requirements; or

 

(ii)                                  Any “person” (as such term is used in
Section 13(d) and Section 14(d)(2) of the 1934 Act but excluding any employee
benefit plan of the Company) is or becomes the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of securities of the
Company representing more than one half of the combined voting power of the
Company’s outstanding securities then entitled to vote for the election of
directors; or

 

(iii)                               The Company shall sell all or substantially
all of the assets of the Company; or

 

(iv)                              The consummation of a merger, reorganization,
consolidation or similar business combination that constitutes a change in
control as defined in the Company’s 2005 Plan or other successor Stock Plan
and/or results in the occurrence of any event described in Sections 13(b) (i),
(ii) or (iii) above.

 

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(c)                                  Notwithstanding anything to the contrary
contained in this Agreement, in the event any amounts payable hereunder would be
considered to be excess parachute payments for purposes of the amount payable
following the occurrence of a Change of Control that is treated as a “change in
the ownership or effective control” of the Company or “in the ownership of a
substantial portion of the assets” of the Company for purposes of Code
Sections 280G and 4999, those payments that are treated for purposes of Code
Section 280G as being contingent on a “change in the ownership or effective
control” (as that phrase is used for purposes of Code Section 280G) of the
Company shall be reduced, if and to the extent necessary, so that no payments
under this Agreement are treated as excess parachute payments.

 

14.                               ACKNOWLEDGEMENTS

 

The Company and Executive each hereby acknowledge and agree as follows:

 

(a)                                 The covenants, restrictions, agreements and
obligations set forth herein are founded upon valuable consideration, and, with
respect to the covenants, restrictions, agreements and obligations set forth in
Sections 7, 8 and 9 hereof, are reasonable in duration, the activities
proscribed, and geographic scope;

 

(b)                                 In the event of a breach or threatened
breach by Executive of any of the covenants, restrictions, agreements and
obligations set forth in Sections 7, 8 and/or 9, monetary damages or the other
remedies at law that may be available to the Company for such breach or
threatened breach will be inadequate and, without prejudice to the Company’s
right to pursue any other remedies at law or in equity available to it for such
breach or threatened breach, including, without limitation, the recovery of
damages from Executive, the Company will be entitled to injunctive relief from a
court of competent jurisdiction and/or the arbitrator; and

 

(c)                                  The time period, proscribed activities, and
geographical area set forth in Section 9 hereof are each divisible and
separable, and, in the event that the covenants not to compete contained therein
are judicially held invalid or unenforceable as to such time period, scope of
activities, and/or geographical area, they will be valid and enforceable to such
extent and in such geographical area(s) and for such time period(s) which the
court determines to be reasonable and enforceable.  Executive agrees that in the
event any court of competent jurisdiction determines that the above covenants
are invalid or unenforceable to join with the Company in requesting that court
to construe the applicable provision by limiting or reducing it so as to be
enforceable to the extent compatible with the then applicable law.  Furthermore,
any period of restriction or covenant herein stated shall not include any period
of violation or period of time required for litigation to enforce such
restriction or covenant.

 

15.                               NOTICES

 

Any notice or communication required or permitted hereunder shall be given in
writing and shall be sufficiently given if delivered personally or sent by
telecopy to such party addressed as follows:

 

(a)                                 In the case of the Company, if addressed to
it as follows:

 

Streamline Health Solutions, Inc.

1230 Peachtree Street NE

Suite 1000

Atlanta, Georgia 30309

Attn:  Chief Financial Officer

 

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(b)                                 In the case of Executive, if addressed to
Executive at the most recent address on file with the Company.

 

Any such notice delivered personally or by telecopy shall be deemed to have been
received on the date of such delivery.  Any address for the giving of notice
hereunder may be changed by notice in writing.

 

16.                               ASSIGNMENT, SUCCESSORS AND ASSIGNS

 

This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective legal representatives, successors and assigns.  The
Company may assign or otherwise transfer its rights under this Agreement to any
successor or affiliated business or corporation (whether by sale of stock,
merger, consolidation, sale of assets or otherwise), but this Agreement may not
be assigned, nor may his duties hereunder be delegated, by Executive.  In the
event that the Company assigns or otherwise transfers its rights under this
Agreement to any successor or affiliated business or corporation (whether by
sale of stock, merger, consolidation, sale of assets or otherwise), for all
purposes of this Agreement, the “Company” shall then be deemed to include the
successor or affiliated business or corporation to which the Company, assigned
or otherwise transferred its rights hereunder.

 

17.                               MODIFICATION

 

This Agreement may not be released, discharged, abandoned, changed or modified
in any manner, except by an instrument in writing signed by each of the parties
hereto.

 

18.                               SEVERABILITY

 

The invalidity or unenforceability of any particular provision of this Agreement
shall not affect any other provisions hereof and the parties shall use their
best efforts to substitute a valid, legal and enforceable provision, which,
insofar as practical, implements the purpose of this Agreement.  If the parties
are unable to reach such agreement, then the provisions shall be modified as set
forth in Section 14(c) above.  Any failure to enforce any provision of this
Agreement shall not constitute a waiver thereof or of any other provision
hereof.

 

19.                               COUNTERPARTS

 

This Agreement may be signed in counterparts (and delivered via facsimile
transmission or by digitally scanned signature delivered electronically), and
each of such counterparts shall constitute an original document and such
counterparts, taken together, shall constitute one and the same instrument.

 

20.                               ENTIRE AGREEMENT

 

This constitutes the entire agreement among the parties with respect to the
subject matter of this Agreement and supersedes all prior and contemporaneous
agreements, understandings, and negotiations, whether written or oral, with
respect to such subject matter.

 

21.                               DISPUTE RESOLUTION

 

Except as set forth in Section 14 above, any and all disputes arising out of or
in connection with the execution, interpretation, performance or non-performance
of this Agreement or any agreement or other instrument between, involving or
affecting the parties (including the validity, scope and enforceability of this
arbitration clause), shall be submitted to and resolved by arbitration.  The
arbitration

 

11

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shall be conducted pursuant to the terms of the Federal Arbitration Act and the
Employment Arbitration Rules and Mediation Procedures of the American
Arbitration Association.  Either party may notify the other party at any time of
the existence of an arbitrable controversy by certified mail, and the parties
shall attempt in good faith to resolve their differences within fifteen (15)
days after the receipt of such notice.  If the dispute cannot be resolved within
the fifteen-day period, either party may file a written demand for arbitration
with the American Arbitration Association.  The place of arbitration shall be
Atlanta, Georgia.

 

 

 

 

Initialed by Executive

 

Initialed by Company

 

22.                               GOVERNING LAW; FORUM SELECTION

 

The provisions of this Agreement shall be governed by and interpreted in
accordance with the laws of the State of Georgia and the laws of the United
States applicable therein.  The Executive acknowledges and agrees that Executive
is subject to personal jurisdiction in state and federal courts in Fulton
County, Georgia, and waives any objection thereto.

 

23.                               CODE SECTION 409A

 

Notwithstanding any other provision in this Agreement to the contrary, if and to
the extent that Code Section 409A is deemed to apply to any benefit under this
Agreement, it is the general intention of the Company that such benefits shall,
to the extent practicable, comply with, or be exempt from, Code Section 409A,
and this Agreement shall, to the extent practicable, be construed in accordance
therewith.  Deferrals of benefits distributable pursuant to this Agreement that
are otherwise exempt from Code Section 409A in a manner that would cause Code
Section 409A to apply shall not be permitted unless such deferrals are in
compliance with Code Section 409A.  In the event that the Company (or a
successor thereto) has any stock which is publicly traded on an established
securities market or otherwise and Executive is determined to be a “specified
employee” (as defined under Code Section 409A), any payment that is deemed to be
deferred compensation under Code Section 409A to be made to the Executive upon a
separation from service may not be made before the date that is six months after
Executive’s separation from service (or death, if earlier).  To the extent that
Executive becomes subject to the six-month delay rule, all payments that would
have been made to Executive during the six months following his separation from
service that are not otherwise exempt from Code Section 409A, if any, will be
accumulated and paid to Executive during the seventh month following his
separation from service, and any remaining payments due will be made in their
ordinary course as described in this Agreement.  For the purposes herein, the
phrase “termination of employment” or similar phrases will be interpreted in
accordance with the term “separation from service” as defined under Code
Section 409A if and to the extent required under Code Section 409A.  Further,
(i) in the event that Code Section 409A requires that any special terms,
provisions or conditions be included in this Agreement, then such terms,
provisions and conditions shall, to the extent practicable, be deemed to be made
a part of this Agreement, and (ii) terms used in this Agreement shall be
construed in accordance with Code Section 409A if and to the extent required. 
Further, in the event that this Agreement or any benefit thereunder shall be
deemed not to comply with Code Section 409A, then neither the Company, the
Board, the Committee nor its or their designees or agents shall be liable to any
participant or other person for actions, decisions or determinations made in
good faith.

 

12

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24.                               WITHHOLDING.

 

The Company may withhold from any amounts payable under the Agreement such
federal, state, local or foreign taxes as shall be required to be withhold
pursuant to any applicable law or regulation.

 

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
effective as of the date first above written.

 

 

STREAMLINE HEALTH SOLUTIONS, INC.

 

 

 

 

 

By:

/s/ Jonathan R. Phillips

 

 

Jonathan R. Phillips

 

 

Chairman of the Board

 

 

 

 

 

EXECUTIVE

 

 

 

 

 

/s/ Robert E. Watson

 

Robert E. Watson

 

13

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EXHIBIT A TO EMPLOYMENT AGREEMENT (“AGREEMENT”) DATED APRIL 22, 2013, BETWEEN
STREAMLINE HEALTH SOLUTIONS,  INC. AND ROBERT E. WATSON — COMPENSATION AND
BENEFITS(1)

 

1.                                      Base Salary.  Base Salary shall be paid
at an annualized rate (retroactive to February 1, 2013) of $325,000, which shall
be subject to annual review and adjustment by the Compensation Committee of the
Board (the “Committee”) and/or the Board but shall not be reduced below
$325,000.  Such amounts shall be payable to Executive in accordance with the
normal payroll practices of the Company.

 

2.                                      Annual Bonus.  Target annual bonus and
target goals shall be set by the Committee annually.  Target annual bonus will
be 65% of Executive’s then current annual base salary.  The annual bonus will be
paid pursuant to such and conditions as are established by the Committee and, to
the extent payable under a bonus plan subject to such terms and conditions as
may be set out in such plan.  The annual bonus shall, if payable, be paid in
cash no later than March 14 of the calendar year following the calendar year
during which Executive’s right to the annual bonus vests.

 

3.                                      Benefits.  Executive shall be eligible
to participate in the Company’s benefit plans on the same terms and conditions
as provided for other Company executives, and subject to all terms and
conditions of such plans as they may be amended from time to time.

 

4.                                      Stock Options.

 

(a)                                 Vesting and Post-Termination Exercise
Provisions with respect to 2011 Options and 2012 Option.  The Company has
previously granted to Executive two stand-alone inducement nonqualified stock
options pursuant to a certain stock option agreement dated January 31, 2011
between the Company and Executive for 250,000 shares of the Company’s common
stock (the “Common Stock”) at an option price of $2.00 per share, and a certain
stock option agreement dated January 31, 2011 between the Company and Executive
for 150,000 shares of the Common Stock at an option price of $3.00 per share
(collectively, the “2011 Options,” and such agreements, the “2011 Option
Agreements”).  The Company also has previously granted to Executive an incentive
stock option under the Company’s 2005 Incentive Compensation Plan, as amended
(the “2005 Plan”), pursuant to a certain stock option agreement dated April 4,
2012 between the Company and Executive for 50,000 shares of the Common Stock at
an option price of $2.00 per share (the “2012 Option,” and such agreement, the
“2012 Option Agreement”).  The Company and Executive hereby agree that the 2011
Options and the 2011 Option Agreements and the 2012 Option and the 2012 Option
Agreement shall be deemed amended as follows, with the remaining provisions of
such 2011 Option Agreements and the 2012 Option Agreement being unchanged:

 

With respect to the 2011 Options, 2011 Option Agreements, 2012 Option, and 2012
Option Agreement, in the event that the employment of Executive terminates for
any reason other than Good Cause,  then, notwithstanding any other vesting or
post-termination exercise restrictions contained in the 2011 Option Agreements
or the 2012 Option Agreement, (A) the 2011 Options and the 2012 Option shall
become fully vested as of the date of the Executive’s termination of employment,
and (B) the 2011 Options and 2012 Option shall remain exercisable until the
earlier of the end of the applicable

 

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(1)  Terms not defined herein have the meanings given such terms in the
Agreement.

 

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option period or one hundred and eighty (180) days from the date of Executive’s
termination of employment.  The Company assumes no responsibility to provide
additional notice to Executive regarding the termination of the 2011 Options or
the 2012 Option.

 

(b)                                 Grant of new stock option.   The Company
hereby grants Executive a new stock option (the “New Option”) for 100,000 shares
of Common Stock at an option price equal to 100% of the fair market value of the
Common Stock (as determined under the 2005 Plan or other applicable stock plan)
on the grant date of the New Option.  Such New Option shall be granted under the
2005 Plan or other stock plan.  Such New Option shall be designated as an
incentive stock option under Code Section 422 to the extent it so qualifies,
shall have a 10-year term, shall vest monthly in 36 equal installments
commencing on the first month after the grant date (such vesting to be subject
to the continued employment of Executive) and shall be subject to such other
terms and conditions as apply under the 2005 Plan or other applicable stock plan
and related option agreement.

 

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