outlined by the Board in its Corporate Policy Governance Manual and amendments adoptedthereto.3. Compensation and Benefits.     3.1 Salary. The Company shall pay the Employee, in periodic installments inaccordance with the Company’s customary payroll practices, an annual base salary of $270,000effective February 24, 2010.     3.2 Fringe Benefits. The Employee shall be entitled to participate in all bonus andbenefit programs that the Company establishes and makes available to its senior executives, if any,to the extent that Employee’s position, tenure, salary, age, health and other qualifications makehim eligible to participate. The Employee shall be entitled to four (4) weeks paid vacation peryear, to be taken at such times as may be approved by the Chief Executive Officer.     3.3 Reimbursement of Expenses. The Company shall reimburse the Employee for allreasonable travel, entertainment and other expenses incurred or paid by the Employee in connectionwith, or related to, the performance of his duties, responsibilities or services under thisRestated Agreement, in accordance with policies and procedures, and subject to limitations, adoptedby the Company or the Board from time to time. The Employee must submit to the Company receiptsand other details of each such expense, in the form required by the Company within sixty (60) daysafter the later of (i) the Employee’s incurrence of such expense or (ii) the Employee’s receipt ofthe invoice for such expense. If such expense qualifies for reimbursement, then the Company willreimburse the Employee the expense within thirty (30) days thereafter. In no event will suchexpense be reimbursed after the close of the calendar year following the calendar year in whichthat expense is incurred. The amount of reimbursements to which the Employee may become entitledin any one calendar year shall not affect the amount of expenses eligible for reimbursementhereunder in any other calendar year. The Employee’s right to reimbursement cannot be liquidatedor exchanged for any other benefit or payment.     3.4 Bonuses; Incentive Compensation. The Employee shall be eligible to receive anannual bonus (the “MIP Bonus”) up to a maximum amount equal to 45% of the Employee’s annual basesalary upon the achievement of certain milestones as set forth in an annual Management IncentivePlan. Additional milestones may be established to increase the MIP Bonus to a maximum amount equalto 90% of the Employee’s annual base salary. The specific annual milestones will be set each yearby the Compensation Committee of the Board of Directors. Any MIP Bonus awarded to the Employeeshall be paid by the 15th day of the third month following the close of the calendar year for whichsuch bonus is earned or as soon as administratively practicable thereafter, but in no event shallsuch payment be made prior to the first business day in January in the calendar year immediatelyfollowing the calendar year for which that bonus is earned or after April 30 of that calendar year.     3.5 Equity Grants. In addition to the stock options previously granted to theEmployee, the Employee shall be eligible for periodic grants of stock options or other equityawards under the Company’s equity award program, subject to the Employee’s continued employmenthereunder. The term, exercise price (if applicable), vesting period, any post-employmentprovisions (including post-employment exercise periods) and the remaining
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provisions of each stock option or other equity award granted pursuant to this Section 3.5shall, subject to the express provisions of this Restated Agreement, be determined by the Board (orcommittee thereof) at the time of grant.4. Termination of Employment Period. The employment of the Employee by the Companypursuant to this Restated Agreement shall terminate upon the occurrence of any of the following:     4.1 Expiration of the Employment Period;     4.2 At the election of the Company, for Cause (as defined below), immediately upon writtennotice by the Company to the Employee, which notice shall identify the Cause upon which thetermination is based. For the purposes of this Section 4.2, “Cause” shall mean that (i) theEmployee has repeatedly failed to perform his assigned duties for the Company after 10 days writtennotice and an opportunity to cure, (ii) the Employee has engaged in dishonesty, gross negligence ormisconduct materially detrimental to the Company’s interest, or (iii) the conviction of theEmployee of, or the entry of a pleading of guilty or nolo contendere by the Employee to, any crimeinvolving moral turpitude or any felony;     4.3 At the election of the Employee, for Good Reason (as defined below), immediately uponwritten notice by the Employee to the Company, which notice shall identify the Good Reason uponwhich the termination is based. For the purposes of this Section 4.3, “Good Reason” fortermination shall mean (i) a material adverse change in the Employee’s authority, duties orcompensation without the prior written consent of the Employee, (ii) a material breach by theCompany of the terms of this Restated Agreement, which breach is not remedied by the Company within10 days following written notice from the Employee to the Company notifying it of such breach or(iii) the relocation of the Employee’s place of work more than 50 miles from the Company’s currentexecutive offices;     4.4 Upon the death or disability of the Employee. As used in this Restated Agreement, theterm “disability” shall mean the inability of the Employee, due to a physical or mental disability,for a period of 90 days, whether or not consecutive, during any 360-day period, to perform theservices contemplated under this Restated Agreement, with or without reasonable accommodation asthat term is defined under state or federal law. A determination of disability shall be made by aphysician satisfactory to both the Employee and the Company; provided, that, if theEmployee and the Company do not agree on a physician, the Employee and the Company shall eachselect a physician and these two together shall select a third physician, whose determination as todisability shall be binding on all parties; or     4.5 At the election of either party, upon not less than 180 days’ prior written notice oftermination (the “Termination Notice Period”); provided, however, that if theCompany pays the severance amount set forth in Section 5.1(b) below, then the Termination NoticePeriod shall automatically end on the date the Severance Period (as defined below) begins.5. Effect of Termination.     5.1 Payments Upon Termination.
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          (a) In the event the Employee’s employment is terminated pursuant to Section 4.1, Section 4.2,and Section 4.4 or by the Employee pursuant to Section 4.5, the Company shall pay to the Employeethe compensation and benefits otherwise payable to him under Section 3 through the last day of hisactual employment by the Company.          (b) In the event the Employee’s employment is terminated by the Employee pursuant to Section4.3 or by the Company pursuant to Section 4.5, the Employee shall be entitled to the followingpayments and benefits, provided the Employee executes a mutual general release and waiver in a formreasonably satisfactory to the Board (the “Release”) within 21 days (or 45 days if such longerperiod is required under law) and such Release becomes effective and enforceable in accordance withapplicable law after the expiration of any applicable revocation period:               (A) The Company shall continue to pay to the Employee his salary as in effect on the date oftermination for a period of 180 days (the “Severance Period”). Such salary continuation paymentsshall be made at periodic intervals in accordance with the Company’s normal payment practices forsalaried employees, beginning with the first pay date within the 60-day period following theEmployee’s Separation from Service due to such termination on which the requisite Release iseffective following the expiration of any applicable revocation period, but in no event will thefirst such payment be made later than the last day of such 60-day period on which the Release is soeffective.               (B) The Company shall pay a pro rata amount of the Employee’s target annual bonus for the yearof termination with such pro rata amount based on the sum of (1) the number of days of servicecompleted in the year of termination, plus (2) the Severance Period, to be paid within the 60-dayperiod following the Employee’s Separation from Service due to such termination on which therequisite Release is effective following the expiration of any applicable revocation period, but inno event will the first such payment be made later than the last day of such 60-day period on whichthe Release is so effective.               (C) Should the Employee elect under the Internal Revenue Code of 1986, as amended (the“Code”), Section 4980B to continue health care coverage under the Company’s group health plan forhimself, his spouse and his eligible dependents following such termination date, then the Companyshall provide such continued health care coverage at the Company’s expense until the earlier of (i)the expiration of the 180-day period measured from the date of such termination or (ii) the firstdate the Employee is covered under another employer’s heath benefit program which providessubstantially the same level of benefits without exclusion for pre-existing medical conditions.In the event the Company’s provision of such continued health care coverage results in therecognition of taxable income (whether for federal, state or local income tax purposes) by theEmployee, then the Company shall report such taxable income as taxable W-2 wages and collect theapplicable withholding taxes, and the Employee shall be responsible for the payment of anyadditional income and employment tax liability resulting from such coverage. To the extent thehealth care coverage under this Section 5.1(b)(C) is to be provided through a self-funded programmaintained by the Company, the Employee shall directly pay for the costs to obtain such health carecoverage and shall, within 30 days after each periodic payment for a reimbursable health carecoverage expense under this Section 5.1(b)(C), submit appropriate evidence of such payment to theCompany for reimbursement, and the
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Company shall pay such reimbursement on the 30th day following receipt of the submission.During the period such health care coverage remains in effect hereunder, the following provisionsshall govern the arrangement: (a) the amount of the health care costs eligible for reimbursement inany one calendar year of such coverage shall not affect the amount of such costs eligible forreimbursement in any other calendar year for which such reimbursement is to be provided hereunder;(ii) no costs shall be reimbursed after the close of the calendar year following the calendar yearin which those costs were incurred; and (iii) the Employee’s right to the reimbursement of suchcosts cannot be liquidated or exchanged for any other benefit. In the event the reimbursement ofhealth care coverage results in the recognition of taxable income (whether for federal, state orlocal income tax purposes) by the Employee, then the Company shall make an additional payment (the“Health Care Gross-Up Payment”) to the Employee in a dollar amount to fully cover all taxes payableby the Employee on the income recognized with respect to the reimbursed health care coverage,including taxes imposed upon the Health Care Gross-Up Payment. The Health Care Gross-Up Paymentshall be paid to the Employee at the time the related taxes are remitted to the tax authorities.               (D) The Company shall pay the Employee a lump sum cash payment, not to exceed $5,000, to coverthe cost to obtain post-employment continued coverage under life and accidental death ordismemberment insurance and disability insurance plans for a period of 180 days following the dateof termination. Such payment shall be made on the earlier of (i) the first business day of thefirst calendar month within the 60-day period measured from the Employee’s Separation from Service,that is coincident with or next following the date on which the required Release is effectivefollowing the expiration of any applicable revocation period or (ii) the last business day of such60-day period on which such Release is effective following the expiration of any applicablerevocation period.               (E) All outstanding options or other equity awards held by the Employee shall continue to vestfor a period of 180 days following such termination.          Any payments and benefits payable pursuant to this Section 5.1(b) shall immediately cease ifthe Employee fails to be reasonably cooperative, responsive or available for reasonable requests bythe Company to the Employee to assist the Company pertaining to areas of the Company’s businessthat the Employee is familiar with as a result of her employment. The payment to the Employee ofthe amounts payable under this Section 5.1(b) shall constitute the sole remedy of the Employee inthe event of a termination of the Employee’s employment in the circumstances set forth in thisSection 5.1(b).          (c) Change in Control. (i) In the event that there shall be a Change in Control (asdefined below) of the Company or in any person directly or indirectly presently controlling theCompany, as defined in paragraph (ii) below, all options to purchase shares of Common Stock of theCompany and other equity awards granted to the Employee shall vest and become immediatelyexercisable by the Employee for a period of not less than one year after the date of such Change inControl (or earlier termination of such equity awards).          (d) For purposes of this Restated Agreement, a Change in Control of the Company, or in anyperson directly or indirectly controlling the Company, shall mean:
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               (A) A Change in Control as such term is presently defined in Regulation 240.12b-2 under theSecurities Exchange Act of 1934, as amended (the “Exchange Act); or               (B) If any “person” (as such term is used in Section 13(d) and 14(d) of the Exchange Act)other than the Company or any “person” who on the date of this Restated Agreement is a director orofficer of the Company, becomes the “beneficial owner” (as defined in Rule 13(d)-3 under theExchange Act), directly or indirectly, of securities of the Company representing at least fifty(50%) percent of the voting power of the Company’s then outstanding securities, unless such personbecomes such a beneficial owner as a result of a transaction approved by a majority of the board ofdirectors of the Company; or               (C) If during the term of this Restated Agreement, individuals who at the beginning of suchperiod constitute the Board of Directors cease for any reason to constitute at least a majoritythereof, unless the election of each director who is not a director at the beginning of such periodhas been approved in advance by directors representing at least a majority of the directors then inoffice who were directors at the beginning of the period.     5.2 Section 409A. Certain payments contemplated by this Restated Agreement may be“deferred compensation” for purposes of Section 409A of the Code. Accordingly, the followingprovisions shall be in effect for purposes of avoiding or mitigating any adverse tax consequencesto the Employee under Code Section 409A.          (a) It is the intent of the parties that the provisions of this Restated Agreement comply withall applicable requirements of Code Section 409A. Accordingly, all provisions of this RestatedAgreement shall be interpreted and applied in a manner that does not result in a violation of theapplicable requirements or limitations of Code Section 409A and the applicable Treasury Regulationsthereunder and such provisions shall be deemed amended to comply with Code Section 409A and theapplicable Treasury Regulations thereunder.          (b) Notwithstanding any provision to the contrary in this Restated Agreement, no payments orbenefits to which the Employee may become entitled under Section 5 of this Restated Agreement shallbe made or provided to him prior to the ***earlier***of (i) the expiration of the six (6)-month periodmeasured from the date of his Separation from Service with the Company or (ii) the date of hisdeath, if the Employee is deemed, pursuant to the procedures established by the CompensationCommittee in accordance with the applicable standards of Code Section 409A and the TreasuryRegulations thereunder and applied on a consistent basis for all non-qualified deferredcompensation plans of the Employer Group subject to Code Section 409A, to be a “specified employee”at the time of such Separation from Service and such delayed commencement is otherwise required inorder to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of theapplicable Code Section 409A(a)(2) deferral period, all payments and benefits deferred pursuant tothis Section 4.3 (whether they would have otherwise been payable in a single sum or in installmentsin the absence of such deferral) shall be paid or reimbursed to the Employee in a lump sum, and anyremaining payments and benefits due under this Restated Agreement shall be paid or provided inaccordance with the normal payment dates specified for them herein. The specified employeessubject to such a delayed commencement date shall be identified on December 31 of each
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calendar year. If the Employee is so identified on any such December 31, he shall havespecified employee status for the twelve (12)-month period beginning on April 1 of the followingcalendar year. For purposes of this Restated Agreement, including (without limitation) thisSection 5.3(b), “**Separation from Service**” shall mean a separation from service as defined underTreasury Regulation Section 1.409A-1(h).     5.3 Survival. The provisions of Sections 5.1(b), 5.2, 8.3, 8.5 and 8.9 shall survivethe termination of this Restated Agreement.6. Non-Competition and Non-Solicitation. The Employee shall execute, if not previouslyexecuted and still in effect, simultaneously with the execution of this Restated Agreement, orotherwise upon the request of the Company, the Company’s customary form of Non-Competition andNon-Solicitation Agreement and form of Invention Assignment and Confidential Information Agreement,substantially in the form attached hereto as Exhibit A and Exhibit B, respectively.7. Other Agreements. The Employee represents that his performance of all the terms of thisRestated Agreement and the performance of his duties as an employee of the Company do not and willnot breach any agreement with any prior employer or other party to which the Employee is a party(including without limitation any nondisclosure or non-competition agreement). Any agreement towhich the Employee is a party relating to nondisclosure, non-competition or non-solicitation ofemployees or customers is listed on Schedule A attached hereto.8. Miscellaneous.     8.1 Notices. Any notices delivered under this Restated Agreement shall be deemed dulydelivered four business days after it is sent by registered or certified mail, return receiptrequested, postage prepaid, or one business day after it is sent for next-business day delivery viaa reputable nationwide overnight courier service, in each case to the address of the recipient setforth on the signature page hereto. Either party may change the address to which notices are to bedelivered by giving notice of such change to the other party in the manner set forth in thisSection 8.1.     8.2 Pronouns. Whenever the context may require, any pronouns used in this RestatedAgreement shall include the corresponding masculine, feminine or neuter forms, and the singularforms of nouns and pronouns shall include the plural, and vice versa.     8.3 Entire Agreement. This Restated Agreement constitutes the entire agreementbetween the parties and supersedes all prior agreements and understandings, whether written ororal, relating to the subject matter of this Restated Agreement (including, without limitation, thePrior Employment Agreement). Notwithstanding the foregoing, to the extent there is aninconsistency in the terms of this Agreement and the Employee’s executive retention agreement,option agreement(s), equity award agreement(s) or such other agreements relating to the subjectmatter of this Restated Agreement, the provision(s) in the agreement that are most favorable to theEmployee shall govern.     8.4 Amendment. This Restated Agreement may be amended or modified only by a writteninstrument executed by both the Company and the Employee.
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     8.5 Governing Law. This Restated Agreement shall be governed by and construed inaccordance with the laws of the Commonwealth of Pennsylvania (without reference to the conflicts oflaws provisions thereof). Any action, suit or other legal proceeding arising under or relating toany provision of this Restated Agreement shall be commenced only in a court of the Commonwealth ofPennsylvania (or, if appropriate, a federal court located within Pennsylvania), and the Company andthe Employee each consents to the jurisdiction of such a court. The Company and the Employee eachhereby irrevocably waive any right to a trial by jury in any action, suit or other legal proceedingarising under or relating to any provision of this Restated Agreement.     8.6 Successors and Assigns. This Restated Agreement shall be binding upon and inureto the benefit of both parties and their respective successors and assigns, including anycorporation with which, or into which, the Company may be merged or which may succeed to theCompany’s assets or business; provided, however, that the obligations of theEmployee are personal and shall not be assigned by him. Notwithstanding the foregoing, if theCompany is merged with or into a third party which is engaged in multiple lines of business, or ifa third party engaged in multiple lines of business succeeds to the Company’s assets or business,then for purposes of this Restated Agreement, the term “Company” shall mean and refer to thebusiness of the Company as it existed immediately prior to such event and as it subsequentlydevelops and not to the third party’s other businesses.     8.7 Waivers. No delay or omission by the Company in exercising any right under thisRestated Agreement shall operate as a waiver of that or any other right. A waiver or consent givenby the Company on any one occasion shall be effective only in that instance and shall not beconstrued as a bar or waiver of any right on any other occasion.     8.8 Captions. The captions of the sections of this Restated Agreement are forconvenience of reference only and in no way define, limit or affect the scope or substance of anysection of this Restated Agreement.     8.9 Severability. In case any provision of this Restated Agreement shall be invalid,illegal or otherwise unenforceable, the validity, legality and enforceability of the remainingprovisions shall in no way be affected or impaired thereby.[Signature Page Follows]
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     THE EMPLOYEE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS RESTATED AGREEMENT, HAS HAD A FULLOPPORTUNITY TO REVIEW THIS RESTATED AGREEMENT AND CONSULT WITH COUNSEL AND UNDERSTANDS AND AGREESTO ALL OF THE PROVISIONS IN THIS RESTATED AGREEMENT.     IN WITNESS WHEREOF, the parties hereto have executed this Restated Agreement as of the day andyear set forth above.      BIOCLINICA, INC.