EX-10.24






Exhibit 10.24




SEPARATION AGREEMENT




This Agreement is between Merge Healthcare Incorporated, its subsidiaries and related entities,
which in this Agreement are referred to collectively as “Merge Healthcare” and Steven R. Norton,
referred to in this Agreement as Employee or “Norton.”



1. Background. Norton’s employment with Merge Healthcare terminated, and Norton
experienced a separation from service (as defined in section 409A of the Internal Revenue Code and
applicable guidance thereunder (hereafter referred to as “Section 409A”)), effective June 4, 2008
(the “Separation Date”). Both Norton and Merge Healthcare desire an amicable separation and to
fully and finally compromise and settle any differences that may exist between them on the terms
set forth in this Agreement. Merge Healthcare waives any notice and cure rights relating to
Norton’s termination of employment.



2. Employment Termination. Norton understands that his employment with Merge
Healthcare ended as of the Separation Date and as of such date he is no longer entitled to any of
the rights or benefits set forth in the Employment Agreement between Merge Healthcare and Norton,
dated June 8, 2007, and as amended June 3, 2008 (the “Employment Agreement”), other than as
specifically set forth in this Agreement.



3. Severance Pay and Benefits. In return for the execution of this Agreement, it
becoming effective (see paragraph 18), and Norton honoring all of its terms, and in lieu of and not
in addition to any rights or benefits set forth in the Employment Agreement or to which Norton may
otherwise be entitled to, all of which Norton acknowledges and agrees he is, other than as
specifically set forth herein, no longer entitled to, Merge Healthcare will provide Norton with the
following pay and benefits:




a. Severance pay equal to 80% of (i) twelve (12) months’ regular base pay (based on an
annual regular base pay of $300,000/year) plus (ii) $385,500, less applicable withholding
and deductions. Merge Healthcare and Norton acknowledge that pursuant to the Employment
Agreement, the severance pay would otherwise be paid in twenty four (24) substantially equal
installments on the 15th and final day of each month over a twelve (12) month
period from the Separation Date, with each installment treated as a separate “payment” for
purposes of Section 409A. Accordingly, the parties believe that any benefits that would
otherwise be payable (A) within 2-1/2 months after the end of Merge Healthcare’s taxable year
containing the Separation Date, or (B) within 2-1/2 months after the Employee’s taxable year
containing the Separation Date are exempt from Section 409A. Furthermore, to the extent the
severance pay benefits are not exempt from Section 409A under the preceding sentence, those
severance pay benefits are exempt from Section 409A as severance pay due to an involuntary
separation from service because severance benefits are payable under the Employment
Agreement only upon a separation that is “involuntary” for purposes of Section 409A and the
sum of the severance pay benefits not exempt under the preceding sentence is equal to or
less than the Involuntary Separation Amount (as defined in the Employment Agreement).
Accordingly, the parties believe that Norton’s severance pay benefits are exempt from
Section 409A pursuant to one of the two preceding sentences, and notwithstanding any
provision in the Employment Agreement to the contrary, Norton’s severance pay benefits shall
be paid in a lump sum on the first regular payroll date following the date on which this
Agreement becomes effective (see paragraph 18).




b. If Norton and/or any of his dependents who are qualified beneficiaries (within the
meaning of Code Section 4980B and any regulations thereunder) elect COBRA continuation
coverage under any group health plan maintained by Merge Healthcare, then for twelve (12)
calendar months following the Separation Date (the “severance period”), Merge Healthcare
shall pay the provider of such COBRA continuation coverage an amount toward such COBRA
continuation coverage premiums equal to 80% of the difference between Norton’s monthly COBRA
premium and the monthly active management employee premium for the same coverage under such
plan or for comparable coverage provided to the employees of Merge Healthcare under the then
applicable plan (the “COBRA supplement”). Norton shall be responsible for all other COBRA
continuation premiums and must make arrangements for providing such payments in accord with
the COBRA continuation requirements. Merge Healthcare shall pay the COBRA supplement to
such provider on or before the due date for the monthly premium for each month during the
severance period during which such coverage is continued by Norton.1




c. In addition, to the extent not already paid, Norton shall receive pay for any earned
but unused vacation as of the Separation Date. Such vacation pay shall be paid out in a
lump sum on the first regular payroll date following the Separation Date. The vacation
payout shall be provided irrespective of whether this Agreement becomes effective
notwithstanding anything to the contrary in this Agreement.




d. Norton acknowledges and agrees that he has forfeited any and all unexercised stock
options previously issued to Norton from Merge Healthcare and any option agreement that
exists between Norton and Merge Healthcare is, effective as of the Separation Date, hereby
terminated. 1




e. Nothing in this Agreement shall limit or reduce Norton’s eligibility for coverage
under any “tail” insurance policy for the directors and officers liability insurance policy
of Merge Healthcare applicable to directors and officers of Merge Healthcare immediately
prior to the Separation Date for any act or omission of Norton during his employment.




f. Merge Healthcare acknowledges that it believes that the payments described above
will not result in income under Section 409A to Norton and that, under current applicable
law and guidance, it will not report any such payments as Code Z income in Box 12 on
Norton’s Form W-2.



4. Acknowledgement. Norton understands that the pay and benefits provided in this
Agreement will not be paid or provided unless he accepts this Agreement and it becomes effective
(see paragraph 18).



5. Release. Norton understands and agrees that his acceptance of this Agreement means
that, except as stated in paragraph 9, he is forever waiving and giving up any and all claims he
may have, whether known or unknown, against Merge Healthcare, its subsidiaries, related companies
and affiliates and each of their officers, directors, managers, employees, members, shareholders,
attorneys, accountants and agents (together the “Merge Parties”) for any personal monetary relief,
losses, claims, benefits or remedies that are based on any act or failure to act that occurred
before he signed this Agreement. Norton understands that this release and waiver of claims
includes, but is not limited to: (i) all claims relating to Norton’s employment and the
termination of that employment; (ii) any Merge Healthcare policy, practice, contract or agreement;
(iii) any tort or personal injury; (iv) any policies, practices, laws or agreements governing the
payment of wages, commissions or other compensation; (v) any laws governing employment
discrimination including, but not limited to, the Age Discrimination in Employment Act (“ADEA”),
the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act, the Employee
Retirement Income Security Act, the Americans with Disabilities Act, and any and all state or local
laws regarding discrimination; (vi) any laws governing whistle blowing or retaliation, including
but not limited to, the Sarbanes-Oxley Act; (vii) any laws or agreements that provide for punitive,
exemplary or statutory damages; and (viii) any laws or agreements that provide for the payment of
attorney fees, costs or expenses.



6. Non-Disparagement. Norton agrees not to make critical, negative or disparaging
remarks or written comments about the Merge Parties or Merge Healthcare’s products/services to
others. Merge Healthcare similarly agrees not to make any negative or disparaging remarks or
written comments about Norton.



7. Future Employment. Norton agrees that he is not now or hereafter entitled to
employment or reemployment with Merge Healthcare and he agrees not to knowingly seek such
employment, whether directly on his own or through an employment agency. Norton further agrees and
acknowledges that should he apply for any position in contradiction of this paragraph, Merge
Healthcare, its parent, subsidiaries, affiliates or related companies may completely ignore such
application and fail to consider it based on this paragraph. Nothing in this paragraph, however,
shall prevent Merge Healthcare from approaching Norton with employment opportunities if it so
desires.



8. Future Cooperation. Norton agrees to cooperate with Merge Healthcare in the future
and to provide to Merge Healthcare truthful information, testimony or affidavits requested in
connection with any matter that arose during his employment. This cooperation may be performed at
reasonable times and places and in a manner as to not interfere with any other employment or
material personal obligations Norton may have at the time of request. Merge Healthcare agrees to
reimburse Norton for reasonable expenses incurred in providing such cooperation, so long as such
expenses are approved in advance by Merge Healthcare. Any such reimbursable expenses shall be paid
by Merge Healthcare to Norton within sixty (60) days of receipt by Merge Healthcare of appropriate
documentation for the expenses, but not later than the last day of Norton’s taxable year following
the taxable year in which the expenses were incurred. The expenses paid by Merge Healthcare during
any taxable year of Norton will not affect the expenses paid by Merge Healthcare to Norton in
another taxable year. Norton’s right to reimbursement of such expenses is not subject to
liquidation or exchange for another benefit.



9. Claims Not Waived. Norton understands that this Agreement does not waive
any claims that he may have: (a) for compensation for illness or injury or medical expenses under
any worker’s compensation statute; (b) for benefits under any plan currently maintained by Merge
Healthcare that provides for retirement benefits; (c) under any law or any policy or plan currently
maintained by Merge Healthcare that provides health insurance continuation or conversion rights;
(d) any claim over the obligations in this Agreement or their enforcement; (e) any claim that by
law cannot be released or waived or (f) for “tail” insurance coverage referenced in Section 3(e)
above or to indemnification as in effect as of the Separation Date by Merge Healthcare under its
Articles of Incorporation or By-laws with respect to expenses or liabilities, actual or alleged,
covered thereby with respect to acts or omissions by Norton occurring during Norton’s employment by
Merge Healthcare.



10. Government Cooperation. Nothing in this Agreement prohibits Norton from
cooperating with any government agency.



11. Confidentiality & Non-Compete Obligation(s). Norton agrees and understands that
this Agreement does not supersede or otherwise limit or terminate his obligations under Sections
15-18 and the first Section 19 (as applicable to Sections 15-18) of the Employment Agreement; nor
does this Agreement reduce Norton’s obligations to comply with applicable laws relating to trade
secrets, confidential information or unfair competition. The provisions of Sections 15 through 18
and the first Section 19 (as applicable to Sections 15-18) of the Employment Agreement are
incorporated herein by reference and are explicitly reaffirmed and agreed to by Norton. Norton
acknowledges and agrees that the payments described in Section 3 hereof are, in part, additional
consideration for such obligations.



12. Non-admission. Norton and Merge Healthcare both acknowledge and agree that
nothing in this Agreement is meant to suggest that Merge Healthcare has violated any law or
contract or that Norton has any claim against Merge Healthcare.



13. Voluntary Agreement. Norton acknowledges and states that he has entered into this
Agreement knowingly and voluntarily.



14. Consulting an Attorney. Norton acknowledges that Merge Healthcare has encouraged
him to and he has consulted with an attorney of his own choice about this Agreement and every
matter that it covers before signing it.



15. Obligation to Pay Attorney Fees and Costs. Norton understands and agrees that if
he violates the commitments he has made in this Agreement, Merge Healthcare may seek to recover any
payments and/or benefits provided in this Agreement and that, except as provided in paragraph 16,
Norton will be responsible for paying the actual attorney fees and costs incurred by Merge
Healthcare in successfully enforcing this Agreement or in successfully defending a claim released
by paragraph 5.



Merge Healthcare understands and agrees that it will be responsible for paying the actual
attorney fees and costs incurred by Norton in successfully enforcing this Agreement or in
successfully defending a claim brought by Merge Healthcare against him under this Agreement.



Payment of such fees and costs shall be made by the reimbursing party to the reimbursed party
within sixty (60) days of the date on which the prevailing party was determined, but in no event
later than the last day of the reimbursed party’s taxable year following the taxable year in which
the prevailing party was determined. If Norton is the prevailing party, the expenses paid by Merge
Healthcare during any taxable year of Norton will not affect the expenses paid by Merge Healthcare
in another taxable year. Norton’s right to reimbursement if he is the prevailing party is not
subject to liquidation or exchange for another benefit.



For any litigation under this Agreement, Norton and Merge Healthcare agree that such matters
shall be litigated in the state or federal courts situated in Milwaukee, Wisconsin, to which
jurisdiction and venue all parties consent and is proper.



16. Exception to Attorney Fees Obligation. The obligation to pay Merge Healthcare’s
attorney fees and costs does not apply to an action by Norton regarding the validity of this
Agreement under the ADEA.



17. Complete Agreement. Except as provided in paragraph 11 above, Norton understands
and agrees that this document and Sections 14-18 and the first Section 19 (as applicable to
Sections 14-18) and the second Section 19 of his Employment Agreement comprise the entire agreement
between he and Merge Healthcare relating to his employment and the termination of his employment,
that this Agreement supersedes and displaces any prior agreements and discussions relating to such
matters and that he may not rely on any such prior agreements or discussions.



18. Effective Date and Revocation. This Agreement shall not be effective until seven
days after Norton signs it and returns it to Justin Dearborn, Chief Executive Officer of Merge
Healthcare. During that seven-day period Norton may revoke his acceptance of this Agreement by
delivering to Justin Dearborn a written statement stating he wishes to revoke this Agreement or not
be bound by it.



19. Final and Binding Effect. Norton understands that if this Agreement becomes
effective it will have a final and binding effect and that by signing and not timely revoking this
Agreement he may be giving up legal rights.



20. Representations. By signing this Agreement Norton represents that he has read
this entire document and understands all of its terms.



21. Return of Property. Norton acknowledges an obligation and agrees to return all
Merge Healthcare property, unless otherwise specified in this paragraph. This includes all files,
memoranda, documents, records, credit cards, keys and key cards, computers, laptops, personal
digital assistants, cellular telephones, Blackberry devices or similar instruments, other equipment
of any sort, badges, vehicles, and any other property of Merge Healthcare. In addition, Norton
agrees to provide any and all access codes or passwords necessary to gain access to any computer,
program or other equipment that belongs to Merge Healthcare or is maintained by Merge Healthcare or
on company property. Further, Norton acknowledges an obligation and agrees not to destroy, delete
or disable any company property, including items, files and materials on computers and laptops.



Norton shall be permitted to keep the laptop computer and Blackberry handset and related
accessories that had been assigned to him, so long as he first returns the laptop and Blackberry to
the IT Department for “cleansing” within 7 days of the date hereof.



22. 45-Day Consideration Period. Norton may consider whether to sign and accept this
Agreement for a period of forty-five days (45) from the day he received it. If this Agreement is
not signed, dated and returned to Justin Dearborn within forty-six (46) days, the offer of pay and
benefits described in paragraph 3 will no longer be available.



23. Comparative Data/Eligibility Criteria. Norton acknowledges that he has received
with this Agreement a list for his location of the job titles of those employees whose employment
is ending on or about the Separation Date and the ages of those employees and the employees whose
employment at the same location is not ending.



Date Agreement provided to Norton: July 17, 2008



	 	 	 
	
 
	 	ACCEPTED:
	ACCEPTED:

/s/ Steven R. Norton

	 	Merge Healthcare Incorporated

/s/ Steve Oreskovich
	 

	 	 
	Steve R. Norton

Dated: July 17, 2008

	 	Steve Oreskovich

Chief Financial Officer







	1	 	By way of example, if the monthly COBRA
continuation payment would be $250 and Rardin’s monthly active employee
insurance cost would have been $100, Merge Healthcare will reduce its monthly
COBRA continuation payment from $150 to $120 and Rardin shall be responsible
for the remaining $130 per month with respect to his COBRA continuation
coverage.