Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS AGREEMENT (“Agreement”) is made and entered into as of September 6, 2006,
by and between KENNETH D. RARDIN (the “Executive”) and MERGE TECHNOLOGIES
INCORPORATED, a Wisconsin corporation (the “Company”).

R E C I T A L S:

A.            THE COMPANY IS ENGAGED IN THE PROVISION OF MEDICAL DIAGNOSTIC
IMAGING SOFTWARE AND PROFESSIONAL SERVICES FOR HEALTHCARE FACILITIES AND MEDICAL
EQUIPMENT MANUFACTURERS.  THE BUSINESS IN WHICH THE COMPANY IS ENGAGED IN FROM
TIME-TO-TIME DURING THE TERM OF THIS AGREEMENT, INCLUSIVE OF THOSE NEW LINES OF
BUSINESS, IF ANY, IN WHICH THE COMPANY IS WORKING TOWARD ENTERING FROM
TIME-TO-TIME ARE HEREINAFTER COLLECTIVELY REFERRED TO AS THE “BUSINESS”; AND

B.            THE COMPANY DESIRES TO EMPLOY THE EXECUTIVE AND THE EXECUTIVE
DESIRES TO ACCEPT SUCH EMPLOYMENT;

NOW THEREFORE, in consideration of the promises, mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive do
hereby agree as follows:

1.             EMPLOYMENT AND DUTIES. ON THE TERMS AND SUBJECT TO THE CONDITIONS
SET FORTH IN THIS AGREEMENT, THE COMPANY AGREES TO EMPLOY THE EXECUTIVE AS THE
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE COMPANY TO PERFORM SUCH DUTIES AS
ARE CONSISTENT WITH SUCH POSITION(S) AS MAY BE ASSIGNED, FROM TIME TO TIME, BY
THE BOARD OF DIRECTORS (THE “BOARD”) OF THE COMPANY AND TO RENDER SUCH
ADDITIONAL SERVICES AND DISCHARGE SUCH OTHER RESPONSIBILITIES AS THE BOARD MAY,
FROM TIME TO TIME, STIPULATE CONSISTENT WITH SUCH SENIOR MANAGEMENT POSITION.
THE BOARD HAS AGREED TO APPOINT EXECUTIVE AS A MEMBER OF THE BOARD AS SOON AS
POSSIBLE FOLLOWING THE DATE OF THIS AGREEMENT, AND, SUBJECT TO ITS FIDUCIARY
DUTIES, TO NOMINATE THE EXECUTIVE (DURING THE TERM OF THIS AGREEMENT) FOR
ELECTION AT EACH MEETING OF THE SHAREHOLDERS AT WHICH DIRECTORS ARE ELECTED. 
THE EXECUTIVE AGREES TO SERVE ON THE BOARD IF APPOINTED OR ELECTED.

2.             PERFORMANCE. THE EXECUTIVE ACCEPTS THE EMPLOYMENT DESCRIBED IN
SECTION 1 OF THIS AGREEMENT AND AGREES TO DEVOTE SUBSTANTIALLY ALL OF HIS
WORKING TIME AND EFFORTS TO THE FAITHFUL AND DILIGENT PERFORMANCE OF THE
SERVICES DESCRIBED HEREIN, INCLUDING THE PERFORMANCE OF SUCH OTHER SERVICES AND
RESPONSIBILITIES AS THE BOARD MAY, FROM TIME TO TIME, STIPULATE CONSISTENT WITH
SUCH EXECUTIVE MANAGEMENT POSITION.

3.             TERM.  THE TERM OF EXECUTIVE’S EMPLOYMENT WITH THE COMPANY UNDER
THIS AGREEMENT COMMENCED AS OF THE DATE HEREOF (THE “COMMENCEMENT DATE”).  THE
TERM OF EMPLOYMENT SHALL REMAIN IN EFFECT UNTIL AND UNLESS TERMINATED IN
ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT.  THE
PERIOD OF TIME IN WHICH EXECUTIVE IS EMPLOYED SHALL CONSTITUTE THE “EMPLOYMENT
PERIOD,” AND EACH CALENDAR YEAR OR PORTION OF A CALENDAR YEAR DURING THE
EMPLOYMENT PERIOD IS HEREINAFTER SOMETIMES REFERRED TO AS A “YEAR.”  THE BOARD
OR APPROPRIATE COMMITTEE THEREOF WILL REVIEW THE AGREEMENT AT ITS SOLE
DISCRETION, BUT NO LESS FREQUENTLY THAN EVERY THREE (3) YEARS SUBSEQUENT TO THE
DATE OF THIS AGREEMENT.

4.             SALARY. FOR ALL THE SERVICES TO BE RENDERED BY THE EXECUTIVE
HEREUNDER, COMMENCING SEPTEMBER 6, 2006, THE COMPANY AGREES TO PAY A SALARY AT A
RATE OF NO LESS THAN FOUR HUNDRED TWENTY-FIVE THOUSAND DOLLARS ($425,000) PER
YEAR, PAYABLE IN THE MANNER AND FREQUENCY IN WHICH THE COMPANY’S PAYROLL IS
CUSTOMARILY HANDLED, AND SUBJECT, AT THE SOLE DISCRETION OF THE BOARD, TO

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INCREASE AT THE TIME ANNUAL REVIEWS OF THE SALARIES OF OTHER SENIOR EXECUTIVE
OFFICERS ARE TO BE CONDUCTED (“SALARY”).

5.             BONUS. THE EXECUTIVE SHALL BE ELIGIBLE FOR AN ANNUAL PERFORMANCE
BONUS OF UP TO SEVENTY PERCENT (70%) OF SALARY.  IN THE FIRST TWELVE (12) MONTHS
OF THIS AGREEMENT 50% ($148,750) OF THIS BONUS TARGET SHALL BE GUARANTEED TO THE
EXECUTIVE; THE REMAINING 50% SHALL BE DEPENDENT ON ACHIEVEMENT OF DEFINED
COMPANY AND INDIVIDUAL PERFORMANCE TARGETS MUTUALLY AGREED UPON BY THE COMPANY
AND THE EXECUTIVE.  AFTER THIS INITIAL PERIOD, ACHIEVEMENT OF THE FULL BONUS
TARGET SHALL BE DEPENDENT ON ACHIEVEMENT OF DEFINED COMPANY AND INDIVIDUAL
PERFORMANCE TARGETS ESTABLISHED BY THE BOARD OR AN APPROPRIATE COMMITTEE THEREOF
FOLLOWING DISCUSSIONS WITH THE EXECUTIVE. BASED ON PERFORMANCE, THE BOARD IN ITS
DISCRETION MAY AWARD AN ADDITIONAL BONUS, ABOVE THE 70% TARGET.  FOR THE INITIAL
TWELVE (12) MONTH PERIOD, THE BONUS SHALL BE PAID WITHIN THIRTY (30) DAYS OF THE
LAST MONTH OF THE PERIOD, AND WOULD BE MADE IN LIEU OF ANY OTHER CORPORATE BONUS
PLAN IN PLACE FOR 2006 OR 2007.  FOR THE PERIOD FROM THE END OF THE INITIAL
TWELVE (12) MONTHS TO YEAR END 2007, THE BOARD AND THE EXECUTIVE SHALL MUTUALLY
AGREE TO A BONUS PLAN AND APPROPRIATE GOALS FOR SUCH PERIOD.  BEYOND YEAR END
2007, FOR EACH FULL YEAR THE ANNUAL PERFORMANCE BONUS IS TO BE PAID, IT SHALL BE
PAID WITHIN THIRTY (30) DAYS OF THE COMPLETION OF THE YEAR-END FINANCIAL
STATEMENTS FOR THAT YEAR, BUT IN NO EVENT LATER THAN MAY 31 OF THE FOLLOWING
YEAR. THE BOARD, OR AN APPROPRIATE COMMITTEE THEREOF, MAY CHANGE THE BONUS
TARGET ANNUALLY AND ANY DISPUTE AS TO WHETHER EXECUTIVE MET THE PERFORMANCE
TARGETS FOR A YEAR SHALL BE DETERMINED CONCLUSIVELY BY THE COMPENSATION
COMMITTEE OF THE BOARD. AS CHIEF EXECUTIVE OFFICER OF THE COMPANY, ADJUSTMENTS
TO THE COMPENSATION PACKAGE, INCLUDING BASE PAY, ANNUAL BONUS AND ANNUAL STOCK
OPTION AWARDS, WILL BE DETERMINED BY THE BOARD OR AN APPROPRIATE COMMITTEE
THEREOF FOLLOWING DISCUSSIONS WITH THE EXECUTIVE.

6.             PAID TIME OFF. THE EXECUTIVE SHALL BE ENTITLED TO PAID TIME OFF
FOR VACATION, ILLNESS, HOLIDAY AND PERSONAL REASONS IN ACCORDANCE WITH THE
COMPANY’S PAID TIME OFF POLICY AT THE RATE OFFERED TO THE MOST SENIOR EMPLOYEES
OF THE COMPANY WITH THE LONGEST TENURE, BUT PAID VACATION SHALL BE NO LESS THAN
TWENTY (20) DAYS PER CALENDAR YEAR.

7.             COMMUTING AND RELOCATION ALLOWANCE. THE EXECUTIVE UNDERSTANDS AND
AGREES THAT HIS DUTIES UNDER THIS AGREEMENT SHALL BE PRIMARILY PERFORMED, AND
THE CORPORATE HEADQUARTER OPERATIONS OF THE COMPANY SHALL BE CONDUCTED, FROM THE
COMPANY’ CORPORATE OFFICES LOCATED IN MILWAUKEE, WISCONSIN AS WELL AS FROM SUCH
OTHER OFFICES OF THE COMPANY AS MAY BE DETERMINED BY THE BOARD. FOR A MAXIMUM OF
NINE MONTHS FOLLOWING THE COMMENCEMENT DATE, THE COMPANY WILL REIMBURSE THE
EXECUTIVE FOR UP TO ONE WEEKLY ROUND TRIP AIRFARE FROM HIS CURRENT HOME TO THE
COMPANY’S HEADQUARTERS OFFICE AND FOR THE EXECUTIVE’S REASONABLE, NECESSARY AND
APPROPRIATE LIVING EXPENSES AT THE COMPANY’S HEADQUARTER LOCATION.  AFTER SUCH
NINE-MONTH PERIOD, THE EXECUTIVE WILL RELOCATE HIS HOME TO THE LOCATION OF
COMPANY’S HEADQUARTERS (OR SUCH OTHER OFFICE AS MAY BE AGREED UPON BY THE BOARD
AND THE EXECUTIVE) AND THE COMPANY SHALL REIMBURSE THE EXECUTIVE FOR THE
REASONABLE, NECESSARY AND APPROPRIATE COSTS OF SUCH RELOCATION, INCLUDING THREE
OR FOUR TRIPS FOR THE EXECUTIVE’S FAMILY, REAL ESTATE COMMISSIONS, CLOSING COSTS
AND MOVING EXPENSES.

8.             DISABILITY BENEFIT. IF AT ANY TIME DURING THE EMPLOYMENT PERIOD
THE EXECUTIVE IS UNABLE TO PERFORM FULLY THE MATERIAL AND SUBSTANTIAL DUTIES OF
THE EXECUTIVE’S REGULAR JOB POSITION HEREUNDER BY REASON OF ILLNESS, ACCIDENT,
OR OTHER DISABILITY (AS CONFIRMED BY COMPETENT MEDICAL EVIDENCE BY A PHYSICIAN
SELECTED JOINTLY BY THE BOARD AND THE EXECUTIVE), THE EXECUTIVE SHALL BE
ENTITLED TO RECEIVE PERIODIC PAYMENTS OF SALARY, BONUS AND ANY AND ALL BENEFITS
TO WHICH HE WOULD OTHERWISE BE ENTITLED PURSUANT TO SECTION 4, 5, 6, 9, 11, AND
12 OF THIS AGREEMENT BY REASON OF HIS EMPLOYMENT FOR A PERIOD OF NINETY (90)
DAYS. NOTWITHSTANDING THE FOREGOING PROVISION (I) THE AMOUNTS PAYABLE TO THE
EXECUTIVE PURSUANT TO THIS SECTION 8 SHALL BE REDUCED BY ANY AMOUNTS RECEIVED BY
THE EXECUTIVE WITH RESPECT TO ANY SUCH INCAPACITY PURSUANT TO ANY INSURANCE
POLICY, PLAN, OR OTHER EMPLOYEE BENEFIT PROVIDED TO THE

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EXECUTIVE BY THE COMPANY AND PAID FOR BY THE COMPANY; AND (II) IN NO EVENT WILL
THE TERMS OF THIS AGREEMENT SUPERSEDE ANY HEALTH OR DISABILITY BENEFIT TO WHICH
EXECUTIVE IS ENTITLED UNDER APPLICABLE LAW. FURTHERMORE, THE COMPANY WILL NOT
MATERIALLY REDUCE THE LONG-TERM DISABILITY INSURANCE BENEFITS FOR THE EXECUTIVE
FROM THE LEVEL CURRENTLY IN EFFECT.

9.             STOCK OPTIONS. THE EXECUTIVE WILL BE GRANTED 450,000 STOCK
OPTIONS UNDER THE COMPANY’S 2005 EQUITY INCENTIVE PLAN EFFECTIVE THE FIRST
BUSINESS DAY FOLLOWING THE TIME THE COMPANY IS CURRENT WITH ITS FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION (I.E., ALL FILINGS REQUIRED TO BE FILED BY
THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION HAVE EITHER BEEN FILED
OR ARE NOT YET PAST DUE) AND THE BOARD OR AN APPROPRIATE COMMITTEE THEREOF IS
ABLE TO GRANT THE OPTIONS.  THE PRICING OF THE OPTIONS WILL BE BASED ON THE FAIR
MARKET VALUE OF THE COMPANY’S COMMON STOCK AT THE CLOSE OF BUSINESS THE FIRST
BUSINESS DAY FOLLOWING THE TIME THE COMPANY IS CURRENT WITH ITS SEC FILINGS AND
THE COMPANY IS ABLE TO GRANT THE OPTIONS. THE VESTING SCHEDULE IS AS FOLLOWS:
25% IMMEDIATE VESTING UPON GRANT, AND 25% AT THE ANNIVERSARY DATE IN EACH OF THE
NEXT 3 YEARS.  THE OTHER TERMS AND CONDITIONS OF THE STOCK OPTIONS WILL BE SET
FORTH IN A SEPARATE OPTION AGREEMENT BETWEEN THE COMPANY AND THE EXECUTIVE.
ADDITIONAL STOCK OPTIONS MAY BE AWARDED IN THE FUTURE ON AN ANNUAL OR OTHER
BASIS PENDING RECOMMENDATION AND APPROVAL BY THE BOARD OR AN APPROPRIATE
COMMITTEE THEREOF.

10.           CHANGE IN CONTROL. IN THE EVENT OF A “CHANGE IN CONTROL” OF THE
COMPANY (“CHANGE IN CONTROL” OF THE COMPANY SHALL MEAN A CHANGE IN THE OWNERSHIP
OF FIFTY PERCENT (50%) OR MORE OF THE OUTSTANDING STOCK OF THE COMPANY IN A
SINGLE TRANSACTION OR SERIES OF TRANSACTIONS EFFECTED BY A THIRD PARTY OR THIRD
PARTIES ACTING IN CONCERT, A CHANGE OF FIFTY PERCENT (50%) OR MORE OF THE
MEMBERS OF THE BOARD IN A SINGLE TRANSACTION OR SERIES OF TRANSACTIONS EFFECTED
BY ANY THIRD PARTY OR THIRD PARTIES ACTING IN CONCERT, OTHER THAN PURSUANT TO
NOMINATION OF A NEW SLATE OF DIRECTORS WHERE THERE HAS BEEN NO MATERIAL CHANGE
IN BENEFICIAL OWNERSHIP OF THE COMPANY WITHIN 365 DAYS PRECEDING SUCH NOMINATION
OR A SALE OF SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS), ALL OF THE EXECUTIVE’S
OPTIONS WILL IMMEDIATELY VEST AND BECOME EXERCISABLE. IN THE EVENT OF A CHANGE
IN CONTROL (AS DESCRIBED ABOVE) AND IF THE EXECUTIVE IS:  (I) INVOLUNTARILY
TERMINATED WITHIN 120 DAYS PRIOR TO (PROVIDED IT IS REASONABLY LIKELY THAT SUCH
TERMINATION OF EMPLOYMENT AROSE IN CONNECTION WITH OR IN ANTICIPATION OF SUCH
CHANGE IN CONTROL) OR 365 DAYS FOLLOWING THE CHANGE IN CONTROL; OR (II)
VOLUNTARILY TERMINATES HIS EMPLOYMENT WITH THE COMPANY WITHIN 365 DAYS,
FOLLOWING EITHER:  (A) ANY REDUCTION IN EXECUTIVE’S RESPONSIBILITIES OR
AUTHORITY WITH RESPECT TO THE BUSINESS (INCLUDING ANY INVOLUNTARY LOSS OF THE
POSITION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE ENTITY CONTROLLING THE
BUSINESS AFTER THE CHANGE IN CONTROL); (B) A REDUCTION IN EXECUTIVE’S
COMPENSATION PACKAGE, INCLUDING THEN CURRENT SALARY, IN EFFECT IMMEDIATELY PRIOR
TO THE CHANGE IN CONTROL; OR (C) THE COMPANY’S PRINCIPAL PLACE OF BUSINESS IS
RELOCATED MORE THAN 30 MILES FURTHER FROM THE COMPANY’S THEN CURRENT
HEADQUARTERS LOCATION; THEN THE EXECUTIVE WILL BE ENTITLED TO (A) TWENTY-FOUR
(24) MONTHS THEN CURRENT SALARY AS A CHANGE IN CONTROL ALLOWANCE, TO BE PAID IN
A SINGLE PAYMENT WITHIN THIRTY (30) DAYS OF SUCH TERMINATION OF THE EXECUTIVE’S
EMPLOYMENT, PLUS (B) AN AMOUNT EQUAL TO TWO TIMES THE MAXIMUM AMOUNT OF THE
EXECUTIVE’S THEN CURRENT ANNUAL BONUS SET FORTH IN SECTION 5 WHICH COULD BE
EARNED ASSUMING THE ACHIEVEMENT OF THE HIGHEST PERFORMANCE TARGETS FOR EACH
MONTH OF THE CURRENT PLAN YEAR DURING WHICH THE EXECUTIVE WAS EMPLOYED TO BE
PAID IN A SINGLE PAYMENT WITHIN THIRTY (30) DAYS OF THE TERMINATION OF THE
EXECUTIVE’S EMPLOYMENT, AND (C) A CONTINUATION OF THE WELFARE BENEFITS OF HEALTH
CARE, LIFE AND ACCIDENTAL DEATH AND DISMEMBERMENT, AND DISABILITY INSURANCE
COVERAGE (COLLECTIVELY, “SUPPLEMENTAL BENEFITS”) FOR TWENTY-FOUR (24) MONTHS
AFTER THE EFFECTIVE DATE OF TERMINATION. THESE BENEFITS SHALL BE PROVIDED AT THE
SAME COST TO THE EXECUTIVE (IF ANY), AND AT THE SAME COVERAGE LEVEL, AS IN
EFFECT AS OF THE EXECUTIVE’S EFFECTIVE DATE OF TERMINATION. HOWEVER, IN THE
EVENT THE PREMIUM COST AND/OR LEVEL OF COVERAGE SHALL CHANGE FOR ALL MANAGEMENT
EMPLOYEES WITH RESPECT TO SUPPLEMENTAL BENEFITS, THE COST AND/OR COVERAGE LEVEL,
LIKEWISE, SHALL CHANGE FOR THE EXECUTIVE IN A CORRESPONDING MANNER. THE
CONTINUATION OF SUPPLEMENTAL BENEFITS SHALL BE DISCONTINUED IN THE EVENT THE
EXECUTIVE HAS AVAILABLE SUBSTANTIALLY SIMILAR WELFARE BENEFITS AT A COMPARABLE
COST FROM A SUBSEQUENT EMPLOYER.  FOR PURPOSES OF

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THIS AGREEMENT, NO CHANGE IN OWNERSHIP OR DIRECTORS AS A RESULT OF THE MERGER OF
THE COMPANY WITH CEDARA SOFTWARE CORP. SHALL BE CONSIDERED WHEN DETERMINING
WHETHER A CHANGE IN CONTROL HAS OCCURRED.

In addition, upon a “change of control” as defined above, the Company will
deposit Three Hundred Thousand Dollars ($300,000) into an interest-bearing
escrow account (the “Escrow”) to be held by a third party mutually acceptable to
the Executive and the Company. The Escrow shall be structured to ensure that the
Executive is not taxed on any funds in the Escrow until such funds are paid to
the Executive; provided, however, that in the event the Escrow cannot be so
structured, the Company shall not be required to establish the Escrow.  The cost
of such Escrow shall be paid by the Company.  The purpose of the Escrow shall be
to provide the Executive a “stay bonus” to help assure a smooth transition if
the acquiror in a change of control transaction requests that the Executive
continue his employment with the Company in an executive or managerial capacity
suitable for the Executive’s background, although not necessarily the same
position previously occupied by the Executive, but subject to the Executive’s
acceptance of such a position.  The compensation, bonus and benefits to be paid
to the Executive during such period following the change in control must be at
least the same as paid or provided prior to closing except for minor changes in
Supplemental Benefits, and shall be mutually acceptable to both parties.  The
Executive’s services pursuant to this paragraph shall be performed within 30
miles from the Company’s then current headquarters location, except for travel
consistent with the Executive’s position prior to the change in control. The
total amount in such Escrow, including interest thereon, will be paid to the
Executive twelve months following the change in control if the Executive has
substantially performed the services requested to be performed by the acquiror
following such change of control transaction.  If the acquiror does not request
the Executive’s service after the change in control, no amount shall be paid to
the Executive from the Escrow. If the acquiror requests less than a full year of
service, a pro rata amount of the Escrow shall be paid to the Executive based
upon the number of months or partial months worked divided by twelve.  At the
end of the stay bonus performance period the Executive shall have a period of
thirty days following the termination of such services or 365 days following the
change of control, whichever is later, to terminate his services with the
Company and be entitled to receive the change of control payments in addition to
the stay bonus described in this paragraph

11.           OTHER BENEFITS.

(A)           EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED HEREIN, DURING THE
EMPLOYMENT PERIOD, THE EXECUTIVE SHALL BE ELIGIBLE FOR ALL NON-WAGE BENEFITS THE
COMPANY PROVIDES GENERALLY FOR ITS EXECUTIVE EMPLOYEES.

(B)           THE EXECUTIVE SHALL BE ENTITLED TO, AND THE COMPANY SHALL USE
COMMERCIALLY REASONABLE EFFORTS TO PROCURE, DIRECTOR AND OFFICER LIABILITY
INSURANCE COVERAGE INSURING THE EXECUTIVE FOR ACTS AND OMISSIONS WHILE AN
OFFICER AND DIRECTOR OF THE COMPANY (WHICH INSURANCE SHALL COVER EXECUTIVE AFTER
THE TERMINATION OF HIS EMPLOYMENT HEREUNDER) ON A BASIS NO LESS FAVORABLE TO HIM
THAN THE COVERAGE PROVIDED TO OTHER OFFICERS AND DIRECTORS; PROVIDED, HOWEVER,
THAT IN THE EVENT THE COMPANY IS UNABLE TO SECURE SUCH COVERAGE, THE EXECUTIVE
SHALL BE ENTITLED TO TERMINATE THIS AGREEMENT FREE OF THE RESTRICTIONS SET FORTH
IN SUBSECTION 18(B) HEREOF; PROVIDED FURTHER THAT THE EXECUTIVE SHALL ONLY BE
ENTITLED TO TERMINATE HIS EMPLOYMENT AS CONTEMPLATED ABOVE FREE OF THE
RESTRICTIONS IMPOSED BY SUBSECTION 18(B) IF THE EXECUTIVE EFFECTS SUCH
TERMINATION WITHIN FORTY-FIVE (45) DAYS FOLLOWING RECEIPT OF NOTICE OF THE LACK
OF SUCH COVERAGE.  FOR THE AVOIDANCE OF DOUBT, IF THE EXECUTIVE TERMINATES HIS
EMPLOYMENT AS CONTEMPLATED BY THIS SUBSECTION 18(B), THEN HE SHALL NOT BE
ENTITLED TO ANY SEVERANCE BENEFITS UNDER THIS AGREEMENT.

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12.           BUSINESS EXPENSES.

(A)           REIMBURSEMENT. THE COMPANY SHALL REIMBURSE THE EXECUTIVE FOR THE
REASONABLE, ORDINARY, AND NECESSARY BUSINESS EXPENSES INCURRED BY HIM IN
CONNECTION WITH THE PERFORMANCE OF HIS DUTIES HEREUNDER, INCLUDING, BUT NOT
LIMITED TO, ORDINARY AND NECESSARY TRAVEL EXPENSES AND ENTERTAINMENT EXPENSES
AND MOBILE PHONE EXPENSES.

(B)           ACCOUNTING. THE EXECUTIVE SHALL PROVIDE THE COMPANY WITH AN
ACCOUNTING OF HIS EXPENSES, WHICH ACCOUNTING SHALL CLEARLY REFLECT WHICH
EXPENSES ARE REIMBURSABLE BY THE COMPANY. THE EXECUTIVE SHALL PROVIDE THE
COMPANY WITH SUCH OTHER SUPPORTING DOCUMENTATION AND OTHER SUBSTANTIATION OF
REIMBURSABLE EXPENSES AS WILL CONFORM TO INTERNAL REVENUE SERVICE OR OTHER
REASONABLE REQUIREMENTS. ALL SUCH REIMBURSEMENTS SHALL BE PAYABLE BY THE COMPANY
TO THE EXECUTIVE PROMPTLY AFTER RECEIPT BY THE COMPANY OF APPROPRIATE
DOCUMENTATION THEREFOR.

13.           TERMINATION.

(A)           THIS AGREEMENT MAY BE TERMINATED BY THE COMPANY OR THE BOARD OR AN
APPROPRIATE COMMITTEE THEREOF AT ANY TIME FOR THE FOLLOWING REASONS:

(1)           FOR CAUSE, BY WRITTEN NOTICE TO THE EXECUTIVE.  “CAUSE” SHALL MEAN
TERMINATION FOR GROSS NEGLIGENCE RELATED TO THE PERFORMANCE OF THE EXECUTIVE’S
DUTIES, COMMISSION OF A FELONY, OR MATERIAL VIOLATION OF ANY SIGNIFICANT
POLICIES OF THE COMPANY, WHICH VIOLATION HAS NOT BEEN CURED OR SUBSTANTIALLY
MITIGATED BY THE EXECUTIVE AFTER NOTICE THEREOF HAS BEEN PROVIDED TO HIM AND HE
HAS BEEN GIVEN THREE (3) DAYS TO EFFECT SUCH CURE OR MITIGATION; OR

(2)           IN THE EVENT OF THE DEATH OR DISABILITY OF THE EXECUTIVE;
PROVIDED, HOWEVER, THE EXECUTIVE MAY ONLY BE TERMINATED FOR DISABILITY IF THE
EXECUTIVE IS ENTITLED TO RECEIVE DISABILITY BENEFITS AS CONTEMPLATED BY
SECTION 8; OR

(3)           WITHOUT CAUSE FOR ANY REASON BY PROVIDING TO THE EXECUTIVE THE
SEVERANCE BENEFITS SET FORTH IN SECTION 14.

(B)           THIS AGREEMENT MAY BE TERMINATED BY THE EXECUTIVE AT ANY TIME FOR
THE FOLLOWING REASONS:

(1)           THE EXECUTIVE’S RESIGNATION OR RETIREMENT FROM EMPLOYMENT WITH THE
COMPANY (THIS CLAUSE SHALL NOT BE CONSTRUED AS AN AGREEMENT TO EMPLOY THE
EXECUTIVE FOR A DEFINED TERM), EXCEPT FOR THE REASONS SPECIFIED IN SUBPARAGRAPH
(2) BELOW, UPON THIRTY (30) DAYS ADVANCE WRITTEN NOTICE TO THE COMPANY; OR

(2)           BY THE EXECUTIVE FOR “GOOD REASON,” DEFINED AS INCLUDING ONLY
CONSTRUCTIVE TERMINATION, A MATERIAL REDUCTION IN BASE SALARY, A MATERIAL
REDUCTION IN OPPORTUNITY FOR INCENTIVE COMPENSATION, A MATERIAL REDUCTION IN
RESPONSIBILITY (INCLUDING ANY INVOLUNTARY LOSS OF THE POSITION OF PRESIDENT AND
CHIEF EXECUTIVE OFFICER), THE BREACH BY THE COMPANY OF THE PROVISIONS OF
SUBSECTION 11(B), OR IF THE EXECUTIVE IS NO LONGER A MEMBER OF THE BOARD, BY
WRITTEN NOTICE FROM THE EXECUTIVE.

14.           SEVERANCE.  IN THE FIRST YEAR OF THIS AGREEMENT, IN THE EVENT THAT
THE EXECUTIVE IS TERMINATED PURSUANT TO SUBSECTION 13(A)(3) OR (B)(2) THE
COMPANY SHALL PAY THE EXECUTIVE, IN FULL SATISFACTION, RELEASE AND DISCHARGE OF
ANY CLAIM THE EXECUTIVE MAY HAVE RELATING TO HIS EMPLOYMENT AND

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THE TERMINATION THEREOF, INCLUDING BUT NOT LIMITED TO ANY AND ALL CLAIMS FOR
TERMINATION PAY, SEVERANCE PAY (IF APPLICABLE), ANY AND ALL CLAIMS UNDER THE
AMERICANS WITH DISABILITIES ACT, TITLE VII OF THE CIVIL RIGHTS ACT, THE FAIR
LABOR STANDARDS ACT, THE EMPLOYEE RETIREMENT INCOME SECURITY ACT, THE AGE
DISCRIMINATION IN EMPLOYMENT LAW, THE FAMILY MEDICAL LEAVE ACT AND ANY OTHER
APPLICABLE LEGISLATION OR COMMON LAW, (A) AN AMOUNT EQUAL TO TWELVE (12) MONTHS
OF HIS THEN CURRENT SALARY PLUS (B) THE GUARANTEED PORTION OF THE EXECUTIVE’S
BONUS, AND (C) A CONTINUATION OF THE SUPPLEMENTAL BENEFITS FOR TWELVE (12)
MONTHS AFTER THE EFFECTIVE DATE OF TERMINATION. THESE BENEFITS SHALL BE PROVIDED
AT THE SAME COST TO THE EXECUTIVE (IF ANY), AND AT THE SAME COVERAGE LEVEL, AS
IN EFFECT AS OF THE EXECUTIVE’S EFFECTIVE DATE OF TERMINATION. HOWEVER, IN THE
EVENT THE PREMIUM COST AND/OR LEVEL OF COVERAGE SHALL CHANGE FOR ALL MANAGEMENT
EMPLOYEES WITH RESPECT TO SUPPLEMENTAL BENEFITS, THE COST AND/OR COVERAGE LEVEL,
LIKEWISE, SHALL CHANGE FOR THE EXECUTIVE IN A CORRESPONDING MANNER.  THE AMOUNT
OF THE SEVERANCE ALLOWANCE PROVIDED FOR IN SUBSECTIONS (A) AND (B) OF THIS
SECTION 14 SHALL BE PAID OUT IN EQUAL INSTALLMENTS OVER THE SEVERANCE PERIOD.   
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, IN THE EVENT THE
EXECUTIVE ELECTS TO RECEIVE (PURSUANT TO THE OPERATION OF SECTION 10)
TWENTY-FOUR (24) MONTHS OF HIS THEN CURRENT SALARY FOLLOWING A CHANGE IN CONTROL
EVENT AND THE EXECUTIVE’S VOLUNTARY OR INVOLUNTARY TERMINATION, THEN EXECUTIVE
SHALL NOT BE ENTITLED TO ANY PAYMENT OF SEVERANCE PURSUANT TO THIS SECTION 14. 
IN THE EVENT A CHANGE IN CONTROL OCCURS AND THE EXECUTIVE IS NOT ENTITLED TO
TWENTY-FOUR (24) MONTHS OF HIS THEN CURRENT SALARY PURSUANT TO SECTION 10, THEN
THE EXECUTIVE SHALL CONTINUE TO BE ENTITLED TO RECEIVE SEVERANCE PAYMENTS PER
THIS SECTION 14.

After the first year of this Agreement, in the event that the Executive is
terminated pursuant to Subsection 13(a)(3) or (b)(2) the Company shall pay the
Executive, in full satisfaction, release and discharge of any claim the
Executive may have relating to his employment and the termination thereof,
including but not limited to any and all claims for termination pay, severance
pay (if applicable), any and all claims under the Americans with Disabilities
Act, Title VII of the Civil Rights Act, the Fair Labor Standards Act, the
Employee Retirement Income Security Act, the Age Discrimination in Employment
Law, the Family Medical Leave Act and any other applicable legislation or common
law, (A) an amount equal to twenty-four (24) months of his then current Salary
plus (B) an amount equal to two times the maximum amount of the Executive’s then
current annual bonus set forth in Section 5 which could be earned assuming the
achievement of the highest performance targets for each month of the current
plan year during which the Executive was employed, (C) all of the Executive’s
options will immediately vest and become exercisable, and (D) a continuation of
the Supplemental Benefits for twenty-four (24) months after the effective date
of termination. These benefits shall be provided at the same cost to the
Executive (if any), and at the same coverage level, as in effect as of the
Executive’s effective date of termination. However, in the event the premium
cost and/or level of coverage shall change for all management employees with
respect to Supplemental Benefits, the cost and/or coverage level, likewise,
shall change for the Executive in a corresponding manner.  The amount of the
severance allowance provided for in subsections (A) and (B) of this Section 14
shall be paid out in equal installments over the severance period.   
Notwithstanding anything to the contrary contained herein, in the event the
Executive elects to receive (pursuant to the operation of Section 10)
twenty-four (24) months of his then current salary following a change in control
event and the Executive’s voluntary or involuntary termination, then the
Executive shall not be entitled to any payment of severance pursuant to this
Section 14.  In the event a change in control occurs and the Executive is not
entitled to twenty-four (24) months of his then current salary pursuant to
Section 10, then the Executive shall continue to be entitled to receive
severance payments per this Section 14.

It is the intent of the parties that all payments of Severance or Change in
Control Benefits under this Agreement be made in accordance with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and the regulations prescribed thereunder.  In the event the
Company or the Executive determines in good faith that the time or form of any
such payment needs to be restructured in order to comply with Section 409A, the
Company shall restructure the time or form

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of payment in order to so comply, provided that the restructuring of the time or
form of payment must be agreed to by the Executive, which agreement shall not be
unreasonably withheld.

15.           SURRENDER OF PROPERTIES. UPON TERMINATION OF THE EXECUTIVE’S
EMPLOYMENT WITH THE COMPANY, REGARDLESS OF THE CAUSE THEREFOR, THE EXECUTIVE
SHALL PROMPTLY SURRENDER TO THE COMPANY ALL PROPERTY PROVIDED HIM BY THE COMPANY
FOR USE IN RELATION TO HIS EMPLOYMENT, AND, IN ADDITION, THE EXECUTIVE SHALL
SURRENDER TO THE COMPANY ANY AND ALL CONFIDENTIAL SALES MATERIALS, LISTS OF
CUSTOMERS AND PROSPECTIVE CUSTOMERS, PRICE LISTS, FILES, PATENT APPLICATIONS,
RECORDS, MODELS, OR OTHER MATERIALS AND INFORMATION OF OR PERTAINING TO THE
COMPANY OR ITS CUSTOMERS OR PROSPECTIVE CUSTOMERS OR THE PRODUCTS, BUSINESS, AND
OPERATIONS OF THE COMPANY IN HIS POSSESSION.

16.           INVENTIONS AND SECRECY. EXCEPT AS OTHERWISE PROVIDED IN THIS
SECTION 16 THE EXECUTIVE:

(A)           SHALL HOLD IN A FIDUCIARY CAPACITY FOR THE BENEFIT OF THE COMPANY
ALL SECRET OR CONFIDENTIAL INFORMATION, KNOWLEDGE, OR DATA OF THE COMPANY OR ITS
BUSINESS OR PRODUCTION OPERATIONS OBTAINED BY THE EXECUTIVE DURING HIS
EMPLOYMENT BY THE COMPANY, WHICH SHALL NOT BE GENERALLY KNOWN TO THE PUBLIC OR
RECOGNIZED AS STANDARD PRACTICE (WHETHER OR NOT DEVELOPED BY THE EXECUTIVE) AND
SHALL NOT, DURING HIS EMPLOYMENT BY THE COMPANY AND AFTER THE TERMINATION OF
SUCH EMPLOYMENT FOR ANY REASON, COMMUNICATE OR DIVULGE ANY SUCH INFORMATION,
KNOWLEDGE OR DATA TO ANY PERSON, FIRM OR CORPORATION OTHER THAN THE COMPANY OR
PERSONS, FIRMS OR CORPORATIONS DESIGNATED BY THE COMPANY;

(B)           SHALL PROMPTLY DISCLOSE TO THE COMPANY ALL INVENTIONS, IDEAS,
DEVICES, AND PROCESSES MADE OR CONCEIVED BY HIM ALONE OR JOINTLY WITH OTHERS,
FROM THE TIME OF ENTERING THE COMPANY’S EMPLOY UNTIL SUCH EMPLOYMENT IS
TERMINATED, RELEVANT OR PERTINENT IN ANY WAY, WHETHER DIRECTLY OR INDIRECTLY, TO
THE COMPANY’S BUSINESS OR PRODUCTION OPERATIONS OR RESULTING FROM OR SUGGESTED
BY ANY WORK WHICH HE MAY HAVE DONE FOR THE COMPANY OR AT ITS REQUEST;

(C)           SHALL, AT ALL TIMES DURING HIS EMPLOYMENT WITH THE COMPANY, ASSIST
THE COMPANY (ENTIRELY AT THE COMPANY’S EXPENSE) TO OBTAIN AND DEVELOP FOR THE
COMPANY’S BENEFIT PATENTS ON SUCH INVENTIONS, IDEAS, DEVICES AND PROCESSES,
WHETHER OR NOT PATENTED; AND

(D)           SHALL DO ALL SUCH ACTS AND EXECUTE, ACKNOWLEDGE AND DELIVER ALL
SUCH INSTRUMENTS AS MAY BE NECESSARY OR DESIRABLE IN THE OPINION OF THE COMPANY
TO VEST IN THE COMPANY THE ENTIRE INTEREST IN SUCH INVENTIONS, IDEAS, DEVICES,
AND PROCESSES REFERRED TO ABOVE.

The foregoing to the contrary notwithstanding, the Executive shall not be
required to assign or offer to assign to the Company any of the Executive’s
rights in any invention for which no equipment, supplies, facility, or trade
secret information of the Company was used and which was developed entirely on
the Executive’s own time, unless:  (A) the invention related to (i) the Business
of the Company; or (ii) the Company’s actual or demonstrably anticipated (with
the realistic prospect of occurring) research or development; or (B) the
invention results from any work performed by the Executive for the Company. The
Executive acknowledges his prior receipt of written notification of the
limitation set forth in the preceding sentence on the Executive’s obligation to
assign or offer to assign to the Company the Executive’s rights in inventions.

17.           CONFIDENTIALITY OF INFORMATION: DUTY OF NON-DISCLOSURE.

(A)           THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HIS EMPLOYMENT BY THE
COMPANY UNDER THIS AGREEMENT NECESSARILY INVOLVES HIS UNDERSTANDING OF AND
ACCESS TO CERTAIN TRADE SECRETS

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AND CONFIDENTIAL INFORMATION PERTAINING TO THE BUSINESS OF THE COMPANY.
ACCORDINGLY, THE EXECUTIVE AGREES THAT AFTER THE DATE OF THIS AGREEMENT AT ALL
TIMES HE WILL NOT, DIRECTLY OR INDIRECTLY, WITHOUT THE EXPRESS CONSENT OF THE
COMPANY, DISCLOSE TO OR USE FOR THE BENEFIT OF ANY PERSON, CORPORATION OR OTHER
ENTITY, OR FOR HIMSELF ANY AND ALL FILES, TRADE SECRETS OR OTHER CONFIDENTIAL
INFORMATION CONCERNING THE INTERNAL AFFAIRS OF THE COMPANY, INCLUDING, BUT NOT
LIMITED TO, INFORMATION PERTAINING TO ITS CUSTOMERS, PROSPECTIVE CUSTOMERS,
SERVICES, PRODUCTS, EARNINGS, FINANCES, OPERATIONS, METHODS OR OTHER ACTIVITIES,
PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT APPLY TO INFORMATION WHICH IS OF
PUBLIC RECORD OR IS GENERALLY KNOWN, DISCLOSED OR AVAILABLE TO THE GENERAL
PUBLIC OR THE INDUSTRY GENERALLY, OR KNOWN BY EXECUTIVE PRIOR TO HIS EMPLOYMENT
WITH THE COMPANY. FURTHER, THE EXECUTIVE AGREES THAT HE SHALL NOT, DIRECTLY OR
INDIRECTLY, REMOVE OR RETAIN, WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE
COMPANY, AND UPON TERMINATION OF THIS AGREEMENT FOR ANY REASON SHALL RETURN TO
THE COMPANY, ANY CONFIDENTIAL FIGURES, CALCULATIONS, LETTERS, PAPERS, RECORDS,
COMPUTER DISKS, COMPUTER PRINT-OUTS, LISTS, DOCUMENTS, INSTRUMENTS, DRAWINGS,
DESIGNS, PROGRAMS, BROCHURES, SALES LITERATURE, OR ANY COPIES THEREOF, OR ANY
INFORMATION OR INSTRUMENTS DERIVED THEREFROM, OR ANY OTHER SIMILAR INFORMATION
OF ANY TYPE OR DESCRIPTION, HOWEVER SUCH INFORMATION MIGHT BE OBTAINED OR
RECORDED, ARISING OUT OF OR IN ANY WAY RELATING TO THE BUSINESS OF THE COMPANY
OR OBTAINED AS A RESULT OF HIS EMPLOYMENT BY THE COMPANY. THE EXECUTIVE
ACKNOWLEDGES THAT ALL OF THE FOREGOING ARE PROPRIETARY INFORMATION, AND ARE THE
EXCLUSIVE PROPERTY OF THE COMPANY. THE COVENANTS CONTAINED IN THIS SECTION 17
SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.

(B)           THE EXECUTIVE AGREES AND ACKNOWLEDGES THAT THE COMPANY DOES NOT
HAVE ANY ADEQUATE REMEDY AT LAW FOR THE BREACH OR THREATENED BREACH BY THE
EXECUTIVE OF HIS COVENANT, AND AGREES THAT THE COMPANY SHALL BE ENTITLED TO
INJUNCTIVE RELIEF TO BAR THE EXECUTIVE FROM SUCH BREACH OR THREATENED BREACH IN
ADDITION TO ANY OTHER REMEDIES WHICH MAY BE AVAILABLE TO THE COMPANY AT LAW OR
IN EQUITY.

18.           COVENANT NOT TO COMPETE.

(A)           DURING EMPLOYMENT PERIOD.  DURING THE EMPLOYMENT PERIOD, THE
EXECUTIVE SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, WHICH
CONSENT MAY BE WITHHELD AT THE SOLE AND REASONABLE DISCRETION OF THE COMPANY,
ENGAGE IN ANY OTHER BUSINESS ACTIVITY FOR GAIN, PROFIT, OR OTHER PECUNIARY
ADVANTAGE (EXCEPTING THE INVESTMENT OF FUNDS IN SUCH FORM OR MANNER AS WILL NOT
REQUIRE ANY SERVICES ON THE PART OF THE EXECUTIVE IN THE OPERATION OF THE
AFFAIRS OF THE COMPANIES IN WHICH SUCH INVESTMENTS ARE MADE) OR ENGAGE IN OR IN
ANY MANNER BE CONNECTED OR CONCERNED, DIRECTLY OR INDIRECTLY, WHETHER AS AN
OFFICER, DIRECTOR, STOCKHOLDER, PARTNER, OWNER, EMPLOYEE, CREDITOR, OR
OTHERWISE, WITH THE OPERATION, MANAGEMENT, OR CONDUCT OF ANY BUSINESS THAT
COMPETES WITH THE BUSINESS OF THE COMPANY. THE EXECUTIVE MAY DEVOTE REASONABLE
TIME TO CHARITABLE OR COMMUNITY ACTIVITIES OR SERVE ON CORPORATE, CIVIC,
EDUCATIONAL OR CHARITABLE BOARDS OR COMMITTEES PROVIDED THAT SUCH ACTIVITIES ARE
APPROVED IN ADVANCE BY THE BOARD (OR BY THE CHAIRPERSON OF A COMMITTEE SELECTED
BY THE BOARD) IN ITS SOLE DISCRETION AND DO NOT INTERFERE IN A MATERIAL MANNER
WITH THE PERFORMANCE OF THE EXECUTIVE’S RESPONSIBILITIES UNDER THIS AGREEMENT.

(B)           FOLLOWING TERMINATION OF EMPLOYMENT PERIOD.  WITHIN THE
TWENTY-FOUR (24) MONTHS PERIOD IMMEDIATELY FOLLOWING THE END OF THE EMPLOYMENT
PERIOD, REGARDLESS OF THE REASON THEREFORE, THE EXECUTIVE SHALL NOT ENGAGE IN
THE FOLLOWING, BUT ONLY TO THE EXTENT THAT THESE ACTIVITIES COMPETE IN A SIMILAR
BUSINESS TO THE COMPANY, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY, WHICH
CONSENT MAY BE WITHHELD AT THE SOLE DISCRETION OF THE COMPANY: (A) ENGAGE IN OR
IN ANY MANNER BE CONNECTED OR CONCERNED, DIRECTLY OR INDIRECTLY, WHETHER AS AN
OFFICER, DIRECTOR, STOCKHOLDER, PARTNER, OWNER, EMPLOYEE, CREDITOR, OR OTHERWISE
WITH THE OPERATION, MANAGEMENT, OR CONDUCT OF ANY BUSINESS SIMILAR TO THE
BUSINESS BEING CONDUCTED AT THE TIME OF SUCH TERMINATION;

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(B) DIRECTLY SOLICIT, CONTACT, INTERFERE WITH, OR DIVERT ANY CUSTOMER SERVED BY
THE COMPANY FOR THE BUSINESS, OR ANY PROSPECTIVE CUSTOMER IDENTIFIED BY OR ON
BEHALF OF THE COMPANY, DURING THE EXECUTIVE’S EMPLOYMENT WITH THE COMPANY; OR
(C) DIRECTLY SOLICIT ANY EMPLOYEE THEN EMPLOYED BY THE COMPANY OR PREVIOUSLY
EMPLOYED BY THE COMPANY WITHIN THE TWO YEAR PERIOD PRECEDING TERMINATION OF THE
EXECUTIVE’S EMPLOYMENT WITH THE COMPANY TO JOIN THE EXECUTIVE, WHETHER AS A
PARTNER, AGENT, EMPLOYEE OR OTHERWISE, IN ANY ENTERPRISE ENGAGED IN A BUSINESS
SIMILAR TO THE BUSINESS OF THE COMPANY BEING CONDUCTED AT THE TIME OF SUCH
TERMINATION.

(C)           ACKNOWLEDGMENT.  THE EXECUTIVE ACKNOWLEDGES THAT THE RESTRICTIONS
SET FORTH IN SECTION 18 ARE REASONABLE IN SCOPE AND ESSENTIAL TO THE
PRESERVATION OF THE BUSINESS OF THE COMPANY AND PROPRIETARY PROPERTIES AND THAT
THE ENFORCEMENT THEREOF WILL NOT IN ANY MANNER PRECLUDE THE EXECUTIVE, IN THE
EVENT OF THE EXECUTIVE’S TERMINATION OF EMPLOYMENT WITH THE COMPANY, FROM
BECOMING GAINFULLY EMPLOYED IN SUCH MANNER AND TO SUCH EXTENT AS TO PROVIDE A
STANDARD OF LIVING FOR HIMSELF, THE MEMBERS OF HIS FAMILY, AND THOSE DEPENDENT
UPON HIM OF AT LEAST THE SORT AND FASHION TO WHICH HE AND THEY HAVE BECOME
ACCUSTOMED AND MAY EXPECT.

(D)           SEVERABILITY.  THE COVENANTS OF THE EXECUTIVE CONTAINED IN SECTION
18 OF THIS AGREEMENT SHALL EACH BE CONSTRUED AS AN AGREEMENT INDEPENDENT OF ANY
OTHER PROVISION IN THIS AGREEMENT, AND THE EXISTENCE OF ANY CLAIM OR CAUSE OF
ACTION OF THE EXECUTIVE AGAINST THE COMPANY, WHETHER PREDICATED ON THIS
AGREEMENT OR OTHERWISE, SHALL NOT CONSTITUTE A DEFENSE TO THE ENFORCEMENT BY THE
COMPANY OF SUCH COVENANTS. BOTH PARTIES HEREBY EXPRESSLY AGREE AND CONTRACT THAT
IT IS NOT THE INTENTION OF EITHER PARTY TO VIOLATE ANY PUBLIC POLICY, OR
STATUTORY OR COMMON LAW, AND THAT IF ANY SENTENCE, PARAGRAPH, CLAUSE, OR
COMBINATION OF THE SAME OF THIS AGREEMENT IS IN VIOLATION OF THE LAW, SUCH
SENTENCE, PARAGRAPH, CLAUSE OR COMBINATION OF THE SAME SHALL BE VOID, AND THE
REMAINDER OF SUCH PARAGRAPH AND THIS AGREEMENT SHALL REMAIN BINDING ON THE
PARTIES TO MAKE THE COVENANTS OF THIS AGREEMENT BINDING ONLY TO THE EXTENT THAT
IT MAY BE LAWFULLY DONE. IN THE EVENT THAT ANY PART OF ANY COVENANT OF THIS
AGREEMENT IS DETERMINED BY A COURT OF LAW TO BE OVERLY BROAD THEREBY MAKING THE
COVENANT UNENFORCEABLE, THE PARTIES HERETO AGREE, AND IT IS THEIR DESIRE, THAT
SUCH COURT SHALL SUBSTITUTE A JUDICIALLY ENFORCEABLE LIMITATION IN ITS PLACE,
AND THAT AS SO MODIFIED THE COVENANT SHALL BE BINDING UPON THE PARTIES AS IF
ORIGINALLY SET FORTH HEREIN.

(E)           CORPORATE OPPORTUNITIES.  THE EXECUTIVE ACKNOWLEDGES THAT HE HAS
VARIOUS FIDUCIARY DUTIES TO THE COMPANY, INCLUDING THE DUTY NOT TO VIOLATE THE
CORPORATE OPPORTUNITY DOCTRINE.  SUCH DOCTRINE, IN GENERAL, PROHIBITS THE
EXECUTIVE FROM DIVERTING TO HIMSELF OPPORTUNITIES WHICH BY RIGHT BELONG TO THE
COMPANY. THE EXECUTIVE ACKNOWLEDGES THAT HE OWES A DUTY TO THE COMPANY TO
ADVANCE ITS LEGITIMATE INTERESTS WHEN THE OPPORTUNITY TO DO SO ARISES.  THE
EXECUTIVE ACKNOWLEDGES THAT HE IS PROHIBITED FROM (A) TAKING FOR HIMSELF
PERSONALLY OPPORTUNITIES THAT ARE DISCOVERED THROUGH THE USE OF CORPORATE
PROPERTY, INFORMATION OR POSITION; (B) USING CORPORATE PROPERTY, INFORMATION, OR
POSITION FOR PERSONAL GAIN; AND (C) COMPETING WITH THE COMPANY, WITHOUT THE
EXPRESS CONSENT OF THE COMPANY.  IN THE EVENT THE EXECUTIVE SEEKS A WAIVER OF
ANY OPPORTUNITY WHICH SHOULD FIRST BE OFFERED TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES PURSUANT TO WISCONSIN LAW, HE SHALL FIRST SEEK THE APPROVAL OF THE
EXECUTIVE COMMITTEE OR SUCH OTHER COMMITTEE, OR FULL BOARD, TO WHICH THE
EXECUTIVE COMMITTEE REFERS SUCH DECISION.  THE EXECUTIVE AGREES TO ABSTAIN FROM
VOTING AS A DIRECTOR ON ANY SUCH MATTER.

19.           EXCISE TAX EQUALIZATION PAYMENT.

(A)           EXCISE TAX EQUALIZATION PAYMENT.  NOTWITHSTANDING ANYTHING
CONTAINED IN THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE EXECUTIVE AND THE
COMPANY TO THE CONTRARY, IN THE EVENT THAT THE EXECUTIVE BECOMES ENTITLED TO
SEVERANCE BENEFITS OR ANY OTHER PAYMENT OR

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BENEFIT UNDER THIS AGREEMENT, OR UNDER ANY OTHER AGREEMENT WITH OR PLAN OR
COMPENSATION ARRANGEMENT WITH THE COMPANY, ITS SUBSIDIARIES OR AFFILIATES (IN
THE AGGREGATE, THE “TOTAL PAYMENTS”), IF ALL OR ANY PART OF THE TOTAL PAYMENTS
WILL BE SUBJECT TO THE TAX (THE “EXCISE TAX”) IMPOSED BY SECTION 4999 OF THE
CODE (OR ANY SIMILAR TAX THAT MAY HEREAFTER BE IMPOSED), THE COMPANY SHALL PAY
TO THE EXECUTIVE IN CASH AN ADDITIONAL AMOUNT (THE “GROSS-UP PAYMENT”) SUCH THAT
THE NET AMOUNT RETAINED BY THE EXECUTIVE AFTER DEDUCTION OF ANY EXCISE TAX UPON
THE TOTAL PAYMENTS AND ANY FEDERAL, STATE, AND LOCAL INCOME OR EMPLOYMENT TAX,
PENALTIES, INTEREST, AND EXCISE TAX UPON THE GROSS-UP PAYMENT PROVIDED FOR BY
THIS SECTION 19 (INCLUDING FICA AND FUTA), SHALL BE EQUAL TO THE TOTAL PAYMENTS.
SUCH PAYMENT SHALL BE MADE BY THE COMPANY TO THE EXECUTIVE AS SOON AS
PRACTICABLE FOLLOWING THE EFFECTIVE DATE OF CHANGE IN CONTROL BUT IN NO EVENT
BEYOND THIRTY (30) DAYS FROM SUCH DATE OR THE DETERMINATION THAT THE EXCISE TAX
IS REQUIRED TO BE IMPOSED.

(B)           TAX COMPUTATION.  FOR PURPOSES OF DETERMINING WHETHER ANY OF THE
TOTAL PAYMENTS WILL BE SUBJECT TO THE EXCISE TAX AND THE AMOUNTS OF SUCH EXCISE
TAX.

(1)           THE CHANGE IN CONTROL OR SEVERANCE BENEFITS AND ANY OTHER PAYMENTS
OR BENEFITS RECEIVED OR TO BE RECEIVED BY THE EXECUTIVE IN CONNECTION WITH THE
CHANGE IN CONTROL OF THE COMPANY OR THE EXECUTIVE’S TERMINATION OF EMPLOYMENT
(WHETHER PURSUANT TO THE TERMS OF THIS AGREEMENT OR ANY OTHER PLAN, ARRANGEMENT,
OR AGREEMENT WITH THE COMPANY AND SUBSIDIARIES OR AFFILIATES, OR WITH ANY PERSON
WHOSE ACTIONS RESULT IN A CHANGE IN CONTROL OF THE COMPANY OR ANY PERSON
AFFILIATED WITH THE COMPANY OR SUCH PERSONS) SHALL BE TREATED AS “PARACHUTE
PAYMENTS” WITHIN THE MEANING OF SECTION 280G(B)(2) OF THE CODE, AND ALL “EXCESS
PARACHUTE PAYMENTS” WITHIN THE MEANING OF SECTION 280G(B)(1) SHALL BE TREATED AS
SUBJECT TO THE EXCISE TAX, UNLESS IN THE OPINION OF A NATIONALLY RECOGNIZED TAX
COUNSEL SELECTED BY THE COMPANY’S INDEPENDENT AUDITORS AND REASONABLY ACCEPTABLE
TO THE EXECUTIVE:  (A) THE SEVERANCE BENEFITS AND SUCH OTHER PAYMENTS OR
BENEFITS (IN WHOLE OR IN PART) DO NOT CONSTITUTE PARACHUTE PAYMENTS; (B) SUCH
EXCESS PARACHUTE PAYMENTS (IN WHOLE OR IN PART) REPRESENT REASONABLE
COMPENSATION FOR SERVICES ACTUALLY RENDERED WITHIN THE MEANING OF SECTION
280G(B)(4) OF THE CODE IN EXCESS OF THE BASE AMOUNT WITHIN THE MEANING OF
SECTION 280G(B)(3) OF THE CODE; OR (C) ARE OTHERWISE NOT SUBJECT TO THE EXCISE
TAX;

(2)           THE AMOUNT OF THE TOTAL PAYMENTS WHICH SHALL BE TREATED AS SUBJECT
TO THE EXCISE TAX SHALL BE EQUAL TO THE LESSER OF:  (A) THE TOTAL AMOUNT OF THE
TOTAL PAYMENTS OR (B) THE AMOUNT OF EXCESS PARACHUTE PAYMENTS WITHIN THE MEANING
OF SECTION 280G(B)(1) (AFTER PAYING CLAUSE (1) ABOVE; AND

(3)           THE VALUE OF ANY NON-CASH BENEFITS OR ANY DEFERRED PAYMENT OR
BENEFIT SHALL BE DETERMINED BY THE COMPANY’S INDEPENDENT AUDITORS IN ACCORDANCE
WITH THE PRINCIPLES OF SECTIONS 280G(D)(3) AND (4) OF THE CODE.

For purposes of determining the amount of the Gross-Up Payment, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is to
be made, and state and local income taxes at the highest marginal rate of
taxation in the state and locality of the Executive’s residence on the date of
the change in control or termination.

(C)           SUBSEQUENT RECALCULATION.  IN THE EVENT THE INTERNAL REVENUE
SERVICE ADJUSTS THE COMPUTATION OF THE COMPANY UNDER SECTION 19 HEREIN SO THAT
THE EXECUTIVE DID NOT RECEIVE THE GREATEST NET BENEFIT, THE COMPANY SHALL
REIMBURSE THE EXECUTIVE FOR THE FULL AMOUNT NECESSARY TO

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MAKE THE EXECUTIVE WHOLE, PLUS A MARKET RATE OF INTEREST, AS DETERMINED BY THE
NATIONAL TAX COUNSEL REFERRED TO ABOVE.

(D)           COSTS OF CALCULATIONS.  THE COMPANY AGREES TO BEAR ALL COSTS
ASSOCIATED WITH THIS SECTION 19.

20.           GENERAL PROVISIONS.

(A)           GOODWILL. THE COMPANY HAS INVESTED SUBSTANTIAL TIME AND MONEY IN
THE DEVELOPMENT OF ITS PRODUCTS, SERVICES, TERRITORIES, ADVERTISING AND
MARKETING THEREOF, SOLICITING CLIENTS AND CREATING GOODWILL. BY ACCEPTING
EMPLOYMENT WITH THE COMPANY, THE EXECUTIVE ACKNOWLEDGES THAT THE CUSTOMERS ARE
THE CUSTOMERS OF THE COMPANY, AND THAT ANY GOODWILL CREATED BY THE EXECUTIVE
BELONGS TO AND SHALL INURE TO THE BENEFIT OF THE COMPANY.

(B)           NOTICES.  ANY NOTICE REQUIRED OR PERMITTED HEREUNDER SHALL BE MADE
IN WRITING (I) EITHER BY ACTUAL DELIVERY OF THE NOTICE INTO THE HANDS OF THE
PARTY THEREUNDER ENTITLED, OR (II) BY DEPOSITING THE NOTICE WITH A NATIONALLY
RECOGNIZED OVERNIGHT DELIVERY SERVICE, ALL SHIPPING COSTS PREPAID AND ADDRESSED
TO THE PARTY TO WHOM THE NOTICE IS TO BE GIVEN AT THE PARTY’S RESPECTIVE ADDRESS
SET FORTH BELOW, OR SUCH OTHER ADDRESS AS THE PARTIES MAY FROM TIME TO TIME
DESIGNATE BY WRITTEN NOTICE AS HEREIN PROVIDED.

As addressed to the Company:

Merge Technologies Incorporated

6737 W. Washington Street, Suite 2250

Milwaukee, Wisconsin 53214-5650

Attention:  Chairman, Board of Directors

As addressed to the Executive:

Kenneth D. Rardin

At the home address on record with the Company

The notice shall be deemed to be received on the date of its actual receipt by
the party entitled thereto.

(C)           AMENDMENT AND WAIVER.  NO AMENDMENT OR MODIFICATION OF THIS
AGREEMENT SHALL BE VALID OR BINDING UPON THE COMPANY UNLESS MADE IN WRITING AND
SIGNED BY AN OFFICER OF THE COMPANY DULY AUTHORIZED BY THE BOARD OR UPON THE
EXECUTIVE UNLESS MADE IN WRITING AND SIGNED BY HIM. THE WAIVER BY THE COMPANY OF
THE BREACH OF ANY PROVISION OF THIS AGREEMENT BY THE EXECUTIVE SHALL NOT OPERATE
OR BE CONSTRUED AS A WAIVER OF ANY SUBSEQUENT BREACH BY HIM.

(D)           ENTIRE AGREEMENT.  THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES WITH RESPECT TO THE EXECUTIVE’S DUTIES AND COMPENSATION AS
AN EXECUTIVE OF THE COMPANY, AND THERE ARE NO REPRESENTATIONS, WARRANTIES,
AGREEMENTS OR COMMITMENTS BETWEEN THE PARTIES HERETO WITH RESPECT TO HIS
EMPLOYMENT NO PRESUMPTION SHALL BE MADE IN FAVOR OR AGAINST EITHER PARTY BASED
UPON WHO HAS SERVED AS DRAFTSMAN OF THIS AGREEMENT.

(E)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE
OF WISCONSIN.

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(F)            SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT SHALL, FOR ANY
REASON, BE HELD UNENFORCEABLE, SUCH PROVISION SHALL BE SEVERED FROM THIS
AGREEMENT UNLESS, AS A RESULT OF SUCH SEVERANCE, THE AGREEMENT FAILS TO REFLECT
THE BASIC INTENT OF THE PARTIES. IF THE AGREEMENT CONTINUES TO REFLECT THE BASIC
INTENT OF THE PARTIES, THEN THE INVALIDITY OF SUCH SPECIFIC PROVISION SHALL NOT
AFFECT THE ENFORCEABILITY OF ANY OTHER PROVISION HEREIN, AND THE REMAINING
PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.

(G)           ASSIGNMENT.  THE EXECUTIVE MAY NOT UNDER ANY CIRCUMSTANCES
DELEGATE ANY OF HIS RIGHTS AND OBLIGATIONS HEREUNDER WITHOUT FIRST OBTAINING THE
PRIOR WRITTEN CONSENT OF THE COMPANY.   THIS AGREEMENT AND ALL OF THE COMPANY’S
RIGHTS AND OBLIGATIONS HEREUNDER MAY BE ASSIGNED OR TRANSFERRED BY IT, IN WHOLE
OR IN PART, TO BE BINDING UPON AND INURE TO THE BENEFIT OF ANY SUBSIDIARY OR
SUCCESSOR OF THE COMPANY, PROVIDED EITHER THE SUCCESSOR HAS A NET WORTH GREATER
THAN THE COMPANY AT THE TIME OF ASSIGNMENT OR THE COMPANY REMAINS PRIMARILY
LIABLE WITH RESPECT TO THE OBLIGATIONS SO ASSIGNED.

(H)           COSTS OF ENFORCEMENT, LITIGATION.  IN THE EVENT OF ANY SUIT OR
PROCEEDING SEEKING TO ENFORCE THE TERMS, COVENANTS, OR CONDITIONS OF THIS
AGREEMENT, THE PREVAILING PARTY SHALL, IN ADDITION TO ALL OTHER REMEDIES AND
RELIEF THAT MAY BE AVAILABLE UNDER THIS AGREEMENT OR APPLICABLE LAW, RECOVER HIS
OR ITS REASONABLE ATTORNEYS’ FEES AND COSTS AS SHALL BE DETERMINED AND AWARDED
BY THE COURT.  ANY CONTROVERSY OR DISPUTE WITH RESPECT TO THE TERMS OF SECTION
15, 16, 17, 18 OR 19 OF THIS AGREEMENT WILL SURVIVE TERMINATION OF THIS
AGREEMENT AND SHALL BE LITIGATED IN THE STATE OF FEDERAL COURTS OF COMPETENT
JURISDICTION SITUATED IN MILWAUKEE, WISCONSIN, TO WHICH JURISDICTION AND VENUE
ALL PARTIES CONSENT.

(I)            MITIGATION.  THE EXECUTIVE SHALL NOT BE OBLIGATED TO SEEK OTHER
EMPLOYMENT IN MITIGATION OF THE AMOUNTS PAYABLE UNDER THIS AGREEMENT, AND THE
OBTAINING OF ANY SUCH OTHER EMPLOYMENT SHALL IN NO EVENT EFFECT ANY REDUCTION OF
THE COMPANY’S OBLIGATIONS TO MAKE PAYMENTS HEREUNDER.  NOTWITHSTANDING THE
FOREGOING, IF EXECUTIVE RECEIVES THE PAYMENTS DESCRIBED IN SECTION 10 BY
TERMINATING HIS EMPLOYMENT FOLLOWING A CHANGE IN CONTROL AND EXECUTIVE
SUBSEQUENTLY BECOMES RE-EMPLOYED BY THE COMPANY OR BY THE PARTY OR PARTIES
EFFECTING THE CHANGE IN CONTROL, THE AMOUNTS EARNED ON RE-EMPLOYMENT (UP TO A
PERIOD OF ONE YEAR’S COMPENSATION) SHALL BE REPAID TO THE COMPANY.

21.           EXECUTIVE ACKNOWLEDGEMENT.  THE EXECUTIVE ACKNOWLEDGES THAT:

(A)           THE EXECUTIVE HAS HAD SUFFICIENT TIME TO REVIEW THIS AGREEMENT
THOROUGHLY;

(B)           THE EXECUTIVE HAS READ AND UNDERSTANDS THE TERMS OF THIS AGREEMENT
AND THE OBLIGATIONS HEREUNDER;

(C)           THE EXECUTIVE HAS RECEIVED THE GOOD AND ADEQUATE CONSIDERATION FOR
ENTERING INTO THIS AGREEMENT; AND

(D)           THE EXECUTIVE HAS BEEN GIVEN AN OPPORTUNITY TO OBTAIN INDEPENDENT
LEGAL ADVICE CONCERNING THE INTERPRETATION AND EFFECT OF THIS AGREEMENT.

[SIGNATURES FOLLOW ON NEXT PAGE]

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IN WITNESS WHEREOF, this Agreement is entered into as of the day and year first
above written.

COMPANY:

 

 

 

MERGE TECHNOLOGIES INCORPORATED

 

 

 

 

 

By:

/s/ MICHAEL D. DUNHAM

 

 

 

Michael D. Dunham

 

 

 

Chairman of the Board of Directors

 

 

 

 

 

 

EXECUTIVE:

 

 

 

 

 

By:

/s/ KENNETH D. RARDIN

 

 

 

Kenneth D. Rardin

 

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