Document:

Exhibit

Exhibit 10.45
SEVERANCE AND
CHANGE OF CONTROL AGREEMENT
CHANGE OF CONTROL AGREEMENT by and between HOLOGIC, INC., a Delaware corporation (the “Company”), and Robert W. McMahon (the “Executive”), dated as of May 8, 2014.
WHEREAS, the Board of Directors of the Company (the “Board”), has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat, or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive’s full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive will be satisfied and which are competitive with those of other corporations;
WHEREAS, the Executive was hired as Chief Financial Officer of the Company with a start date of May 26, 2014;
WHEREAS, in recognition of the Executive’s hiring as Chief Financial Officer, the Company and Executive now desire to enter into this Severance and Change of Control Agreement, which is consistent with the change of control and severance protection provided to the Company’s most senior officers (the “Agreement”).
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto, each intending to be legally bound, do hereby agree as follows:
1. Certain Definitions.
(a) The “Effective Date” shall be the first date during the “Change of Control Period” (as defined in Section 1(b)) on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if the Executive’s employment with the Company is terminated or the Executive ceases to be an officer of the Company prior to the date on which a Change of Control occurs, and it is reasonably demonstrated that such termination of employment (1) was at the request of a third party who has taken steps reasonably calculated to effect the Change of Control or (2) otherwise arose in connection with or in anticipation of the Change of Control, then for all purposes of this Agreement the “Effective Date” shall mean the date immediately prior to the date of such termination of employment. If prior to the Effective Date, the Executive’s employment with the Company terminates, then the Executive shall have no further rights under this Agreement, except with respect to benefits under Section 6(e), if applicable, or unless such termination of Employment was in anticipation of the Change of Control in which case the termination shall be deemed to have occurred after the consummation of the Change of Control.

(b) The “Change of Control Period” is the period commencing on the date hereof and ending on December 31, 2016; provided, that commencing on December 31, 2014 and each December 31 thereafter (each such date to be referred to as the “Renewal Date”), the term of this Agreement shall automatically be extended, without any further action by the Company or the Executive, so as to terminate three years from such Renewal Date; provided, however that if the Company shall give notice in writing to the Executive at least thirty (30) days prior to a Renewal Date (the “Pending Renewal Date”), stating that the Change of Control Period shall not be extended, then the Change of Control Period shall expire two years from the Pending Renewal Date.
2. Change of Control. For the purpose of this Agreement, a “Change of Control” shall mean:
(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of the Voting Stock of the Company; provided, however, that any acquisition by the Company or its subsidiaries, or any employee benefit plan (or related trust) of the Company or its subsidiaries of 30% or more of Voting Stock shall not constitute a Change in Control; and provided, further, that any acquisition by a corporation with respect to which, following such acquisition, more than 50% of the Voting Stock of such corporation, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the Voting Stock immediately prior to such acquisition in substantially the same proportion as their ownership, immediately prior to such acquisition, of the Voting Stock, shall not constitute a Change in Control; or
(b) Any transaction which results in the Continuing Directors (as defined in the Certificate of Incorporation of the Company) constituting less than a majority of the Board of Directors of the Company (the “Board”); or
(c) The consummation of (i) a Merger with respect to which all or substantially all of the individuals and entities who were the beneficial owners of the Voting Stock immediately prior to such Merger do not, following such Merger, beneficially own, directly or indirectly, more than 50% of the Voting Stock of the corporation resulting from the Merger (the “Resulting Corporation”) as a result of the individuals’ and entities’ shareholdings in the Company immediately prior to the consummation of the Merger, (ii) a complete liquidation or dissolution of the Company or (iii) the sale or other disposition of all or substantially all (as defined under Delaware General Corporation Law) of the assets of the Company excluding a sale or other disposition of assets to a subsidiary of the Company. For purposes of this Agreement “Merger” means a reorganization, merger or consolidation involving the Company, including without limitation as a parent of a direct or indirect subsidiary of the Company effecting such transaction
Anything in this Agreement to the contrary notwithstanding, if an event that would, but for this paragraph, constitute a Change of Control results from or arises out of a purchase or other acquisition of the Company, directly or indirectly, by a corporation or other entity in which the Executive has a greater than ten percent (10%) direct or indirect equity interest, such event shall not constitute a Change of Control.
 
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3. Employment Period. Subject to the terms and conditions hereof, the Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company, for the period commencing on the Effective Date and ending on the last day of the thirty-sixth month following the month in which the Effective Date occurs (the “Employment Period”).
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 90-day period immediately preceding the Effective Date and (B) the Executive’s services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote his full business time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable to the Executive by the Company and its affiliated companies in respect of the twelve-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed at least annually and shall be increased at any time and from time to time as shall be substantially consistent with increases in base salary awarded in the ordinary course of business to other peer
 
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executives of the Company and its affiliated companies. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. As used in this Agreement, the term “affiliated companies” includes any company controlled by, controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year during the Employment Period, an annual cash bonus (the “Annual Bonus”; which shall include, without limitation, any other annual cash bonus plan or program provided to Executive such as the Short Term Incentive Plan or any other similar plan, but shall not include any cash sign-on, relocation, retention or other special bonus or payments) in cash at least equal to the greater of (a) the average (annualized for any fiscal year consisting of less than twelve full months or with respect to which the Executive has been employed by the Company for less than twelve full months) bonus (the “Average Annual Bonus”) paid or that has been earned and accrued, but unpaid to the Executive by the Company and its affiliated companies in respect of the three fiscal years immediately preceding the fiscal year in which the Effective Date occurs, (b) the Annual Bonus paid for the fiscal year immediately preceding the Effective Date, or (c) the target bonus associated with the Company achieving its 100 percent target payout level as determined in accordance with the terms of the Company’s bonus plans for senior executives for the fiscal year immediately preceding the Effective Date (the “Target Bonus”; the greater of clauses (a), (b) or (c) to be referred to as the “Highest Annual Bonus”) and shall not be reduced for the application of the Compensation Committee’s discretion to reduce such bonus or bonus funding, or increased to reflect additional amounts that may be paid or payable if the Company exceeds target. Each such Annual Bonus shall be paid no later than the 15th day of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus pursuant to any nonqualified plan of the Company. Notwithstanding anything herein to the contrary, any portion of Annual Base Salary or Annual Bonus electively deferred by the Executive pursuant to a qualified or a non-qualified plan including, but not limited to, the Hologic, Inc. Deferred Compensation Plan or any successor thereto (“DCP”) shall be included in determining the Annual Base Salary, Annual Bonus and the Average Annual Bonus. If the fiscal year of any successor to this Agreement, as described by Section 11(c) herein, is different than the Company’s fiscal year at the time of the Change of Control, then the Executive shall be paid (i) the Annual Bonus that would have been paid upon the end of Company’s fiscal year ending after the Change of Control, and (ii) a pro-rata Annual Bonus for any months of service performed following the end of the Company’s fiscal year, but prior to the first day of the successor’s fiscal year immediately following the Change of Control. The Annual Bonuses thereafter shall be based on the successor’s first full fiscal year beginning after the Change of Control and successive fiscal years thereafter. “Pro Rata Bonus” shall mean an amount equal to the Bonus Amount (average of the Annual Bonuses paid or that has been earned and accrued, but unpaid during the three full fiscal years ended prior to the Date of Termination) multiplied by a fraction the numerator of which is the number of months worked in the fiscal year through the Date of Termination and the denominator of which is 12. Any partial months shall be rounded to the nearest whole number using normal mathematical convention.
 
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(iii) Incentive, Savings and Retirement Plans. In addition to Annual Base Salary and Annual Bonus payable as herein above provided, the Executive shall be entitled to participate during the Employment Period in all incentive, savings and retirement plans, practices, policies and programs applicable to other peer executives of the Company and its affiliated companies, but in no event shall such plans practices, policies and programs provide the Executive with incentive, savings and retirement benefits opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the one-year immediately preceding the Effective Date, or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) and applicable to other peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect at any time during the one-year period immediately preceding the Effective Date, or, if more favorable to the Executive, those provided generally at any time after the Effective Date to other peer executives of the Company and its affiliated companies.
(v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive upon submission of appropriate accountings in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect at any time during the one-year period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other peer executives of the Company and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect at any time during the one-year period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other peer executives of the Company and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Executive by the Company and its affiliated companies at any time during the one-year period immediately preceding the Effective Date or, if more favorable to the Executive, as provided at any time thereafter with respect to other peer executives of the Company and its affiliated companies.
 
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(viii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation of at least five (5) weeks and in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies as in effect at any time during the one-year period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other peer incentives of the Company and its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of “Disability” set forth below), it may give to the Executive written notice in accordance with Section 13(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executive’s duties. For purposes of this Agreement, “Disability” means the absence of the Executive from the Executive’s duties with the Company on a full-time basis for 180 consecutive business days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive’s legal representative (such agreement as to acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive’s employment during the Employment Period for “Cause”. For purposes of this Agreement, “Cause” means (i) an act or acts of personal dishonesty taken by the Executive and intended to result in substantial personal enrichment of the Executive at the expense of the Company, (ii) repeated violations by the Executive of the Executive’s obligations under Section 4(a) of this Agreement (other than as a result of incapacity due to physical or mental illness) which are demonstrably willful and deliberate on the Executive’s part, which are committed in bad faith or without reasonable belief that such violations are in the best interests of the Company and which are not remedied in a reasonable period of time after receipt of written notice from the Company or (iii) the conviction of the Executive of a felony involving moral turpitude. The Company shall provide the Executive with 30 days written notice of any determination of Cause and provide the Executive, for a period of 30 days following such notice, with the opportunity to appear before the Board, with or without legal representation, to present arguments and evidence on his behalf and following such presentation to the Board, the Executive may only be terminated for Cause if the Board (excluding the Executive if he is a member of the Board), by unanimous consent reasonably determines in good faith that his actions did, in fact, constitute for Cause.
 
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(c) Good Reason. The Executive’s employment may be terminated during the Employment Period by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” means:
(i) A material diminution in the Executive’s base compensation;
(ii) A material diminution in the Executive’s authority, duties and responsibilities as in effect immediately prior to the Change of Control or, if applicable, the Date of Termination;
(iii) A material diminution in the authority, duties and responsibilities of the supervisor to whom the Executive is required to report as in effect immediately prior to the Change of Control or, if applicable, the Date of Termination;
(iv) A material change in the geographic location in which Executive’s principal office was located immediately prior to the Change of Control or, if applicable, the Date of Termination;
(v) A material diminution in the budget over which the Executive had authority immediately prior to the of the Change of Control or, if applicable, the Date of Termination;
(vi) Any other action or inaction that constitutes a material breach by the Company of this Agreement or any other agreement under which the Executive provides services; provided, however, that Good Reason shall not exist unless the Executive has given written notice to the Company within ninety (90) days of the initial existence of the Good Reason event or condition(s) giving specific details regarding the event or condition; and unless the Company has had at least thirty (30) days to cure such Good Reason event or condition after the delivery of such written notice and has failed to cure such event or condition to the reasonable satisfaction of the Executive within such thirty (30) day cure period. The Executive’s separation from service must occur not more than one year following the initial existence of one or more of the conditions constituting Good Reason.
(d) Notice of Termination. Any termination by the Company for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 13(b) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than fifteen days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company from asserting such fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.
 
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(e) Date of Termination. “Date of Termination” means the date of receipt of the Notice of Termination or any later date (taking into account any applicable notice and cure period) specified therein, as the case may be; provided however, that (i) if the Executive’s employment is terminated by the Company other than for Cause, death or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination, and (ii) if the Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be.
6. Obligations of the Company upon Termination.
(a) Death. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than for (i) payment of the sum of the following amounts: (A) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (B) the product of (I) the Highest Annual Bonus and (II) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, and (C) any accrued and unpaid Annual Bonus amounts, compensation or vacation pay, in each case, to the extent not yet paid by the Company (the amounts described in subparagraphs (A), (B) and (C) are hereafter referred to as “Accrued Obligations” and shall be paid to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination), (ii) any other benefits or compensation payable under any employee benefit plan in accordance with the applicable plans’ terms, including, without limitation, any non-qualified plan or DCP; (iii) for the remainder of the Employment Period, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits to the Executive and/or the Executive’s family at least equal to those which would have been provided in accordance with the applicable plans, programs, practices and policies described in Section 4(b)(v) and (vi) of this Agreement as if the Executive’s employment had not been terminated in accordance with the most favorable plans, practices, programs or policies of the Company and its affiliated companies as in effect and applicable generally to other peer executives and their families during the one year period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families (such continuation of such benefits for the applicable period herein set forth and such transfer of the Individual Policy shall be hereinafter referred to as “Welfare Benefit Continuation”; for purposes of determining eligibility of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have remained employed until the end of the Employment Period and to have retired on the last day of such period), and (iv) payment to the Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date of Termination of an amount equal to the sum of the Executive’s Annual Base Salary and the Highest Annual Bonus. Subject to the provisions of Section 9 hereof, but, otherwise, anything herein to the contrary notwithstanding, the Executive’s family shall be entitled to receive benefits at least equal to the
 
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most favorable benefits provided by the Company and any of its affiliated companies to surviving families of peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to family death benefits, if any, as in effect with respect to other peer executives and their families at any time during the one year period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect on the date of the Executive’s death with respect to other peer executives of the Company and its affiliated companies and their families.
(b) Disability. If the Executive’s employment is terminated by reason of the Executive’s Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for (i) payment of the Accrued Obligations (which shall be paid in a lump sum in cash within 30 days of the Date of Termination), (ii) the timely payment and provision of the Welfare Benefit Continuation, and (iii) payment to the Executive in a lump sum in cash within 30 days of the Date of Termination of an amount equal to the sum of the Executive’s Annual Base Salary and the Highest Annual Bonus. Subject to the provisions of Section 9 hereof, but, otherwise, anything herein to the contrary notwithstanding, the Executive shall be entitled after the Disability Effective Date to receive disability and other benefits at least equal to the most favorable of those provided by the Company and its affiliated companies to disabled executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, as in effect with respect to other peer executives and their families at any time during the one year period immediately preceding the Effective Date or, if more favorable to the Executive and/or the Executive’s family, as in effect at any time thereafter with respect to other peer executives of the Company and its affiliated companies and their families.
(c) Cause, Other than for Good Reason. If the Executive’s employment shall be terminated by the Company for Cause or by the Executive other than for Good Reason (and other than by reason of his death or disability) during the Employment Period, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive Annual Base Salary through the Date of Termination. In such case, such amounts shall be paid to the Executive in a lump sum in cash within 30 days of the Date of Termination. The Executive shall, in such event, also be entitled to any benefits required by law that are not otherwise provided by this Agreement.
(d) Termination Following a Change of Control by the Company without Cause or by the Executive for Good Reason. If during the Employment Period the Executive is terminated by the Company without Cause or he resigns for Good Reason, then the Company shall pay the Executive the following:
(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination all Accrued Obligations; and
(ii) provide the Executive and his family with the Welfare Benefit Continuation for a period of one (1) year from the Date of Termination; and
 
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(iii) the Company shall pay to the Executive a lump sum amount in cash within 30 days after the Date of Termination equal to the (such amount shall be hereinafter referred to as the “Change of Control Payment”) to the product of (X) two point ninety nine (2.99) multiplied by the sum of (i) (Y) the Annual Base Salary for the fiscal year immediately preceding the Date of Termination and (ii) Highest Annual Bonus; and
(iv) notwithstanding any other provisions to the contrary contained herein or in any option agreement, restricted stock agreement, performance stock unit or other equity compensation agreement, between the Company and the Executive, or any stock option, restricted stock or other equity compensation plans sponsored by the Company, unless such agreement or plan expressly references and supersedes this Agreement, then all such unvested equity awards which Executive holds as of the Effective Date shall be immediately and automatically exercisable and/or vested, and the Executive shall have the right to exercise any such equity awards (to the extent applicable) for the longer of (A) the period of time provided for in the applicable equity award agreement or plan, or (B) the shorter of one year after the Date of Termination or the remaining term of the applicable equity award.
(e) Termination by the Company Without Cause or by Executive for Good Reason. If the Executive’s employment with the Company shall be terminated by the Company without Cause or by the Executive for Good Reason (as defined in Section 5(c) without regard to whether a Change of Control has occurred) at any time prior to the Effective Date, then the Executive shall be entitled to each and all of the following:
(i) the Company shall pay the Executive all Accrued Obligations;
(ii) the Company shall continue to pay the Executive his Base Salary and an amount equal to the Average Annual Bonus divided by the number of payroll periods during the one year severance period for the period of one (1) year from the Date of Termination in accordance with its normal payroll practices and subject to applicable tax withholding; and
(iii) provide the Executive and his family with the Welfare Benefit Continuation for a period of one (1) year from the Date of Termination.
(f) Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Executive in any subsequent employment.
(g) Other Severance Benefits. The severance pay and benefits provided for in Section 6(e) shall be in lieu of any other severance or termination pay to which the Executive may be entitled under any Company severance or termination plan, program, practice or arrangement. The Executive’s entitlement to any other compensation or benefits shall be determined in accordance with the Company’s employee benefit plans and other applicable programs, policies and practices then in effect.
 
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7. Non-exclusivity of Rights. Except as provided in Section 6, nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or other plans, programs, policies or practices, provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such rights as the Executive may have under any other agreements with the Company or any of its affiliated companies. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program except as explicitly modified by this Agreement.
8. Full Settlement.
(a) The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, except as provided in Section 6(d)(ii), such amounts shall not be reduced whether or not the Executive obtains other employment.
(b) Prior to the occurrence of a Change of Control, the Company agrees to reimburse the Executive for all legal fees and expenses which the Executive may reasonably incur as a result of any contest by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof, if the Executive prevails in such contest. Following a Change of Control, the Company agrees to pay promptly as incurred, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof.
(c) If there shall be any dispute between the Company and the Executive (i) in the event of any termination of the Executive’s employment by the Company, whether such termination was for Cause, or (ii) in the event of any termination of employment by the Executive, whether Good Reason existed, then, unless and until there is a final, nonappealable judgment by a court of competent jurisdiction declaring that such termination was for Cause or that the determination by the Executive of the existence of Good Reason was not made in good faith, the Company shall pay all amounts, and provide all benefits, to the Executive and/or the Executive’s family or other beneficiaries, as the case may be, that the Company would be required to pay or provide pursuant to Section 6(d) as though such termination were by the Company without Cause, or by the Executive with Good Reason; provided, however, that the Company shall not be required to pay any disputed amount pursuant to this paragraph except upon receipt of an undertaking by or on behalf of the Executive to repay all such amounts to which the Executive is ultimately adjudged by such court not to be entitled.
 
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9. 280G Protection.
(a) In the event that the Executive shall become entitled to payment and/or benefits provided by this Agreement or any other amounts in the “nature of compensation” (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change of ownership or effective control covered by Section 280G(b)(2) of the Internal Revenue Code (the “Code”) or any person affiliated with the Company or such person) as a result of such change in ownership or effective control (collectively the “Company Payments”), and such Company Payments will be subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (and any similar tax that may hereafter be imposed by any taxing authority) the Company shall pay to the Executive the greater of the following, whichever gives the Executive the highest net after-tax amount (after taking into account federal, state, local and social security taxes at the maximum marginal rates) (x) the Company Payments or (y) one dollar less than the amount of the Company Payments that would subject the Executive to the Excise Tax. In the event that the Company Payments are required to be reduced pursuant to the foregoing sentence, then the Company Payments shall be reduced as mutually agreed between the Company and the Executive or, in the event the parties cannot agree, in the following order (1) any lump sum severance based on Base Salary or Annual Bonus, (2) any other cash amounts payable to the Executive, (3) any benefits valued as parachute payments; and (4) acceleration of vesting of any equity.
(b) For purposes of determining whether any of the Company Payments will be subject to the Excise Tax and the amount of such Excise Tax, (x) the Company Payments shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “parachute payments” in excess of the “base amount” (as defined under Code Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that, in the opinion of the Company’s independent certified public accountants appointed prior to any change in ownership (as defined under Section 280G(b)(2) of the Code) or tax counsel selected by such accountants or the Company (the “Accountants”) such Company Payments (in whole or in part) either expressly do not constitute “parachute payments,” represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the “base amount” or are otherwise not subject to the Excise Tax, and (y) the value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accountants. All determinations hereunder shall be made by the Accountants which shall provide detailed supporting calculations both to the Company and the Executive at such time as it is requested by the Company or the Executive. If the Accountants determine that payments under this Agreement must be reduced pursuant to this paragraph, they shall furnish the Executive with a written opinion to such effect. The determination of the Accountants shall be final and binding upon the Company and the Executive.
(c) In the event of any controversy with the Internal Revenue Service (or other taxing authority) with regard to the Excise Tax, the Executive shall permit the Company to control issues related to the Excise Tax (at its expense), provided that such issues do not potentially materially adversely affect the Executive, but the Executive shall control any other issues. In the event the issues are interrelated, the Executive and the. Company shall in good faith cooperate so as not to jeopardize resolution of either issue, but if the parties cannot agree the Executive shall
 
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make the final determination with regard to the issues. In the event of any conference with any taxing authority regarding the Excise Tax or associated income taxes, the Executive shall permit the representative of the Company to accompany the Executive, and the Executive and the Executive’s representative shall cooperate with the Company and its representative.
10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive’s employment by the Company or any of its affiliated companies and which shall not be or become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement). After termination of the Executive’s employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement.
11. Successors.
(a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. The Company shall provide written evidence to the Executive to document compliance with the foregoing sentence within ten (10) business days of the Effective Date. As used in this Agreement, “Company” shall mean the Company as herein before defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. In addition, the Executive shall be entitled, upon exercise of any outstanding stock options or stock appreciation rights of the Company, to receive in lieu of shares of the Company’s stock, shares of such stock or other securities of such successor as the holders of shares of the Company’s stock received pursuant to the terms of the merger, consolidation or sale.
12. Compliance With Section 409A of the Internal Revenue Code. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code (hereinafter referred to as “Section 409A”). This Agreement shall be administered in a manner consistent with its intent, and any provision that would cause the Agreement to fail to
 
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satisfy Section 409A shall have no force and effect until amended to comply with Section 409A. Notwithstanding any provision of this Agreement to the contrary, in the event any payment or benefit hereunder is determined to constitute non-qualified deferred compensation subject to Section 409A, then to the extent necessary to comply with Section 409A, such payment or benefits shall not be made, provided or commenced until six (6) months after the Executive’s “separation from service” as such phrase is defined for the purposes of Section 409A.
13. Release. The Executive agrees that, with the exception of the Accrued Obligations due to him in accordance with the terms hereunder, that the payment of any severance under this Agreement to the Executive by the Company, is subject to and conditioned on Executive executing a general release of the Company in a form and scope determined by the Company in its sole discretion (the “Release Agreement”), without Executive revoking such Release Agreement within fifty-two (52) days of the Date of Termination (the “Consideration Period”) and provided that (a) if the Date of Termination occurs in one calendar year and the Consideration Period (including the payment date) expires during the following calendar year, then notwithstanding anything herein to the contrary, the payments of severance under Section 6(e) will be paid by the Company to the Executive in the second calendar year; (b) the Executive continues to comply with the provisions of the Non-Competition Agreement; and (c) prior to the expiration of the Consideration Period (i) Executive provides satisfactory evidence to the Company that he has returned all Company property, confidential information and documentation to the Company, and (ii) provides the Company with a signed written resignation of Executive’s status as an officer of the Company or any of its affiliates, if applicable.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Robert W. McMahon (at the address on record with the company)
If to the Company:
Hologic, Inc.
35 Crosby Drive
Bedford, Massachusetts 01730-1401
Attention: Chief Executive Officer
 
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or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision hereof shall not be deemed to be a waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire understanding of the Company and the Executive with respect to the rights and other benefits that the Executive shall be entitled during the Employment Period, and in connection therewith shall supersede all prior oral and written communications with the Executive with respect thereto;  provided,  however, that the Offer Letter, and Employee Intellectual Property Rights and Non-Competition Agreement, option or other equity agreements or other employment agreement by and between the Company and Executive shall remain in full force and effect and if the Company’s separation policy would provide greater benefits to the Executive than this Agreement, then the Executive may elect to receive benefits under the Company’s separation policy in lieu of the benefits provided hereunder. Nothing herein shall affect the application of the Company’s separation policy in lieu of the benefits provided hereunder. Nothing herein shall affect the application of the Company’s separation policy prior to the Effective Date.
(g) The Executive and the Company acknowledge that, except as may otherwise be provided under this Agreement or any other written agreement between the Executive and the Company, prior to the Effective Date, the employment of the Executive by the Company is “at will” and may be terminated by either the Executive or the Company at any time. Notwithstanding anything contained herein, if during or prior to the Employment Period, the Executive shall terminate employment with the Company other than for Good Reason, then the Executive shall have no liability to the Company.
[Signature page follows]
 
-15-

IN WITNESS WHEREOF, the Executive has hereunto set his hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.
 
	
					
	 
	 
	 
	 
	 

	HOLOGIC, INC.

	 
	 

	By:
	 
	/s/ Steve MacMillan

	Name:
	 
	Steve MacMillan

	Title:
	 
	Chief Executive Officer

	 

	EXECUTIVE

	 

	/s/ Robert W. McMahon

	 

	Robert W. McMahon

 
-16-ex10-1.htm

 

Exhibit 10.1 – Employment Agreement, between Farmers Capital Bank Corporation and J. David Smith, Jr. dated November 18, 2015.

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMET (the “Agreement”), is entered into this 18th day of November, 2015, between Farmers Capital Bank Corporation, a Kentucky bank holding company (the “Company”) and J. David Smith, Jr. (the “Executive”).

 

WITNESSETH

 

WHEREAS, Company desires to employ Executive as Senior Executive Vice President and Chief Operating Officer;

 

WHEREAS, Executive desires to be assured of a secure minimum compensation and fair and reasonable benefits from the Company for his services and the Company wishes to secure the continual employment of Executive; and

 

WHEREAS, the Company desires reasonable protection of its confidential business and customer information which it has developed over the years at substantial expense and assurance that Executive shall not compete with the Company for a reasonable period of time after termination of his employment with the Company, except as otherwise provided herein;

 

NOW, THEREFORE, BE IT RESOLVED, in consideration of the foregoing premises, the mutual covenants and undertakings herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, each intending to be legally bound, covenant and agree as follows:

 

1.    Employment. Upon the terms and subject to the conditions set forth in this Agreement, the Company employs Executive as the Company’s Senior Executive Vice President and Chief Operating Officer, and Executive accepts such employment.

 

2.    Positions. Executive agrees to serve as Senior Executive Vice President and Chief Operating Officer of the Company and to perform such duties in that office as may reasonably be assigned to him by the Company’s President and Chief Executive Officer and such duties which are of the character as those generally associated with that office. Executive shall devote substantially all his business time and efforts to the Company’s business and shall not engage in other business activities without the Company’s prior consent, whether or not such business activity is pursued for profit, gain or other pecuniary advantage. On December 15, 2015, and on each December 15 thereafter during the Employment Term (as hereinafter defined), the Executive shall deliver to the Company CEO a schedule identifying each of the business, charitable and civic positions or offices maintained by the Executive, thereby affording the Company CEO the opportunity to object to an outside activity on the part of the Executive. Executive may invest his assets in such form or manner as shall not require any services on his part in the operation of the affairs of the enterprises in which the investments are made. Executive may use his discretion in fixing his hours and schedule of work consistent with the proper discharge of his duties.

 

 

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3.    Term. Unless terminated earlier in accordance with the provisions of Section 7, Executive’s employment under this Agreement shall begin on January 1, 2016 (the “Effective Date”) and shall continue for forty-eight (48) months (the “Employment Term”). Thereafter, the Employment Term shall be automatically extended for subsequent twelve (12) month periods unless written notice to the contrary is given by either the Company or Executive at least (90) days prior to the expiration of the Employment Term or the expiration of any subsequent one (1)-year extension.

 

4.    Compensation. During the Employment Term, the Company shall pay Executive a base salary (the “Base Compensation”) (i) for the first twelve months of the Employment Term at the annual rate of $300,000.00, and (ii) thereafter at such annual rates (in no event to be less than $300,000.00) as the Company may determine (in its complete discretion), payable at regular intervals in accordance with the Company’s normal payroll practices in effect from time to time.

 

5.    Benefit Programs; Communication and Transportation Devices.

 

(a) During the Employment Term, Executive shall be entitled to participate in or receive benefits under (i) any life, health, hospitalization, medical, dental, disability or other insurance policy or plan, (ii) pension or retirement plan, (iii) bonus or profit-sharing plan or program, (iv) deferred compensation plan or arrangement, and (v) any other executive benefit plan, program or arrangement, made available by the Company on the date of this Agreement and from time to time in the future to the Company’s executives on a basis consistent with the terms, conditions and overall administration of the foregoing plans, programs or arrangement and with respect to which Executive is otherwise eligible to participate or receive benefits. With respect to compensated personal time off (“PTO”) benefits for Executive, during the Employment Term Executive shall be entitled to no fewer than 280 PTO hours per fiscal year being eligible to be carried forward into the next fiscal year (provided that at no time may total PTO hours available to Executive exceed 125% of his Annual Allotment).

 

(b) During the Employment Term, the Company will reimburse Executive for the monthly charges for telephone service and electronic data receipt and transmission on the smart phone purchased and used by Executive.

 

(c) The Company will reimburse the Executive for the monthly lease payment due for January and February, 2016, with respect to that certain Toyota Camry, Vehicle Identification Number 4T4BF1FK5DR278821 (the “Vehicle”). On or before the April 15, 2016 scheduled maturity date of the Vehicle lease, the Company shall (in conjunction with the Executive) exercise and/or fund the purchase option with respect to the Vehicle and make available for Executive the Vehicle during the Employment Term. 

 

6.    General Policies.

 

(a) So long as Executive is employed by the Company pursuant to this Agreement, Executive shall receive reimbursement from the Company, as appropriate, for all reasonable business expenses incurred in the course of his employment by the Company, upon submission to the Company of written vouchers and statements for reimbursement.

 

 

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(b) So long as Executive is employed by the Company pursuant to this Agreement, Executive shall be entitled to office space and working conditions consistent with his position as Senior Executive Vice President and Chief Operating Officer of the Company.

 

(c) All other matters relating to the employment of Executive by the Company not specifically addressed in this Agreement shall be subject to the general policies regarding executives of the Company in effect from time to time, so long as such general policies are not inconsistent with any of the provisions of this Agreement (in which event the provisions of this Agreement shall control).

 

7.    Termination of Employment. Subject to the respective continuing obligations of the parties, including but not limited to those set forth in Sections 8 and 9 hereof, Executive’s employment by the Company may be terminated prior to the expiration of the Employment Term as set forth below.

 

(a) Termination Due to Death. This agreement shall terminate automatically upon Executive’s death. In the event Executive’s employment is terminated due to Executive’s death, Executive’s estate or Executive’s beneficiaries, as the case may be, shall be entitled to the following:

 

(i)     A single sum payment made by the date of the Company’s next regularly scheduled payday immediately following the date of Executive’s death in an amount equal to the unpaid portion of Executive’s Base Compensation to the date of death which is due Executive but has not been paid; and

 

(ii)    The death benefit payable under the terms of any term life insurance policy which may be available to Executive and in which Executive participates under the Company’s general benefit plan, said payment to be made as provided in said plan;

 

(b) Termination Due to Disability. Either the Company or Executive may terminate this Agreement upon Executive’s Disability (as defined below). In no event shall a termination of Executive’s employment for Disability occur unless the party terminating the employment gives written notice to the other party in accordance with this Agreement. “Disability” shall mean: (i) Executive is unable to perform one or more of Executive’s material duties by reason of any medically determined physical or mental impairment; (ii) Executive’s inability to perform one or more of Executive’s material duties occurs after a reasonable attempt by the Company to accommodate Executive’s physical or mental impairment; and (iii) Executive’s physical or mental impairment can be medically expected to result in death or last for a continuous period of not less than 12 months.

 

In the event Executive’s employment is terminated due to Executive’s Disability, Executive shall be entitled to the continuation of Executive’s Base Compensation for a period of three (3) months following the date of Disability, commencing in the month immediately following termination of employment due to Disability and payable on the Company’s regularly scheduled paydays during said three (3) months. Notwithstanding the foregoing, if the Executive, at the time of termination of employment, is a “specified employee” as that term is defined in Treasury Reg. 1.409A-1(i), instead of being paid as set forth above, an amount representing Executive’s Base Compensation for a period of three (3) months shall be paid to the Executive in a single lump sum payment on the first business day of the seventh month following termination due to Disability.

 

 

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(c) Termination for Cause. The Company may terminate Executive’s employment for Cause (as defined below) at any time effective immediately upon written notice to Executive. For purposes of this Section 7(c) and Section 14(a), the term “Cause” shall mean that the Board of Directors of the Company has determined that any one or more of the following events have occurred:

 

(i)     Executive has been grossly negligent in the performance of his duties hereunder, has been made aware of such gross negligence, and (if the effects of such gross negligence are curable) has failed to fully cure the effect thereof within such reasonable period of time as the Company may designate.

 

(ii)    Executive has materially breached any provision of this Agreement, has been made aware of such material breach, and (if the effects of such material breach are curable) has failed to fully cure the effects thereof within such reasonable period of time as the Company may designate;

 

(iii)   Executive has materially breached any of Executive’s fiduciary duties to the Company or has made a material misrepresentation or omission, which material breach, misrepresentation or omission might reasonably be expected to have a materially advise effect on the Company, has been made aware of such material breach or misrepresentation, and (if the effects of such material breach or misrepresentation are curable) has failed to fully cure the effects thereof within such reasonable period of time as the Company may designate;

 

(iv)   Executive has filed a petition in bankruptcy (or a petition in bankruptcy has been filed against Executive), a trustee, receiver or similar custodian for all or any part of Executive’s property has been appointed, Executive has executed an assignment for the benefit of creditor or any action has been taken by or against Executive under any law, the purpose or effect of which is to relieve Executive from any of his debts or to extend the terms of payment to which Executive is otherwise subject;

 

(v)     Executive has repeatedly abused alcohol or drugs;

 

(vi)    Executive has engaged in fraud, embezzlement, theft, dishonesty, willful misconduct or deliberate injury to the Company or its affiliates or customer, suppliers or employees; or

 

(vii)   Executive has been convicted of a felony or any act of moral turpitude.

 

In the event Executive’s employment is terminated for Cause, Executive shall be entitled to a single sum payment by the date of the Company’s next regularly scheduled payday immediately following Executive’s date of termination equal to the unpaid portion of Executive’s Base Compensation which is due Executive but has not been paid through the date of the termination of Executive’s employment.

 

 

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(d) Permanent Cessation of Business. The Company may terminate Executive’s employment at any time effective immediately upon receipt of written notice to Executive of the permanent cessation, whether voluntary or involuntary, of the Company’s operations and business.

 

In the event Executive’s employment is terminated due to the permanent cessation of the Company’s business, Executive shall be entitled to a single sum payment by the date of the Company’s next regularly scheduled payday equal to the unpaid portion of Executive’s Base Compensation which is due Executive but has not been paid through the date of the termination of Executive’s employment.

 

8.    Confidentiality Covenants. In order to induce the Company to enter into this Agreement, Executive hereby agrees as follows:

 

(a) Confidential Information. Executive shall not disclose or use or otherwise exploit (for his own benefit or the benefit of any other person or entity) at any time, either during or after his association with the Company, any Confidential Information of which Executive becomes aware, whether or not any such information is developed by him, except to the extent such disclosure or use is required in the performance of assigned duties for the Company. Executive shall take all appropriate steps to safeguard Confidential Information and to protect it against disclosure, misuse, espionage, loss or theft. For purposes of this Agreement, “Confidential Information” shall mean all non-public, proprietary technical and commercial information respecting the company or any subsidiary or other affiliate, including, without limitation, manner of operations, financial information and lists and records of borrowers or depositors of the Company’s banking subsidiaries. 

 

(b) Intellectual Property. In the event that Executive as part of his duties on behalf of the Company generates, authors, or contributes to any invention, design, new development, device, method or process, whether or not patentable or reduced to practice or compromising Confidential Information, any copyright work, whether or not comprising Confidential Information, or any other Confidential Information, relating to the Company (hereinafter collectively referred to as “Intellectual Property”) Executive acknowledges that such Intellectual Property is the exclusive property of the Company. Any copyrightable work prepared in whole or in part by Executive shall be deemed “a work made for hire” under Section 201(b) of the 1976 Copyright Act, and the Company shall own all of the rights comprised in the copyright therein. Executive shall promptly and fully disclose all such Intellectual Property to the Company and shall cooperate with the Company to protect the Company’s interests in such Intellectual Property, including, without limitation, providing reasonable assistance in the securing of patent protection and copyright registrations and signing all documents where reasonably requested by the Board of Directors of the Company, even if such request occurs after the Employment Term.

 

(c) Assignment of Intellectual Property. Executive further agrees that:

 

(i)     He will assign to the Company any Intellectual Property conceived or reduced to practice by him during Employment Term and related to the Company or any of its affiliates:

 

 

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(ii)    He will execute all papers and perform all acts that the Company deems necessary or advisable for the preparation, prosecution, issuance, procurement or maintenance of patent applications and patents of the United States or foreign countries for said Intellectual Property;

 

(iii)    He will execute any and all papers and documents that shall be required or necessary to vest title in the Company to said Intellectual Property; and

 

(iv)    All models, drawings, memoranda and other materials or records made or used by Executive in connection with his duties shall be the property of the Company and shall be left with the Company at the expiration or termination of this Agreement. 

 

(d) Rights Cumulative. The rights and remedies of the Company under this Section 8 are in addition to, and cumulative of, any other rights and remedies that the Company may have, whether by law or by equity.

 

9.    Non-Compete Covenants.

 

(a) Acknowledgments. Executive acknowledges that (i) his services as a Company executive have been of a special, unique and extraordinary character and that his position with the Company and any of its subsidiaries placed him in a position of confidence and trust with the customers of the Company and its subsidiaries and allowed him access to Confidential Information, (ii) he would not have had significant contact with any customers of the Company or any of its subsidiaries if not for his service as an executive of the Company or any of its banking subsidiaries and the name, reputation and goodwill of the Company or its subsidiaries, (iii) the nature and period of restrictions imposed by the covenants contained in this Section 9 are fair, reasonable and necessary to protect and preserve for the Company (A) the customer relationships developed by the Company and its subsidiaries through significant time and expense and (B) the benefits of the undersigned’s service as executive of the Company or any of its subsidiaries, (iv) the Company and its affiliates (including, without limitation, its subsidiaries) would sustain great and irreparable loss and damage if the undersigned were to breach any of such covenants, (v) the Company and its affiliates (including, without limitation, its subsidiaries) conduct their business actively in and throughout the entire Territory (as herein defined) and (vi) the Territory is reasonably sized.

 

(b) Covenants. Having acknowledged the foregoing, Executive covenants and agrees with the Company, in consideration of the benefits to Executive under this Agreement, that he will not, directly or indirectly, from the date hereof through the date three years following cessation of the Employment Term for any reason whatsoever, engage in any of the following:

 

(i)     attempt in any manner to cause or otherwise encourage any employee of the Company or any affiliate to leave the employ of the Company or such affiliate (as applicable);

 

 

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(ii)    with the exception of the provision of legal services by the Executive (which shall not be prohibited by any provision of this Agreement), (A) engage in or (B) own, manage, operate, join, control, assist, participate in or be connected with, directly or indirectly, as an officer, director, shareholder, member, partner, proprietor, employee, agent, consultant, independent contractor or otherwise, any person or entity which is, at the time, directly or indirectly engaged in any portion of the Financial Industry within the Territory or in competition within the Territory with any aspect of the business activities of the Company or any affiliate thereof (provided, however, that the undersigned may own, solely as a passive investment, securities of any person which are traded on a national securities exchange or in the over-the-counter market if the undersigned does not own more than one percent (1%) of any class of securities of such person or entity);

 

(iii)   solicit, divert, or take away, or attempt to solicit, divert or take away, the Financial Industry business or relationship of any of the customers of the Company or any of its affiliates, or any prospective customer which were solicited by the Company or an affiliate while the undersigned was an executive of the Company or any of its subsidiaries, for the purpose of selling to or servicing for any such customer or prospective customer any Financial Industry product or service; or

 

(iv)   cause or attempt to cause any of the foregoing customers or prospective customers of the Company or a Company affiliate to refrain from maintaining or acquiring from or through the Company (or any of its affiliates) any Financial Industry product or service, and will not assist any other person or person or entity or entities to do so.

 

Executive covenants further that, without limitation as to time, he will not directly or indirectly disclose or use or otherwise exploit for his own benefit, or the benefit of any other person or entity, any Confidential Information.

 

(c) Definitions. For purposes of this Agreement,

 

(i)     the “Territory” shall mean that area comprised of all points in the Commonwealth of Kentucky. The undersigned shall be prohibited from maintaining a business address within such Territory if he is engaged in any of the activities enumerated in subsection 9(b)(ii) hereof at such address, and he shall also be prohibited from engaging in any of the activities enumerated in subsection 9(b)(ii) hereof within such Territory even if the undersigned maintains a business or residential address outside said Territory; and

 

(ii)    the “Financial Industry” shall mean the banking, mortgage banking and/or finance business, and any and all activities and enterprises incidental or related thereto.

 

(d) Rights Cumulative. The rights and remedies of the Company and its affiliates under this Section are in addition to, and cumulative of, any other rights and remedies that the Company or any of its affiliates may have by law with respect to this Agreement. The parties further agree that in the event of a breach by the undersigned of subsection 9(b), the period set forth in subsection 9(b) hereof shall not begin until the undersigned permanently ceased his breach thereof.

 

 

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10.    Notice of Termination. Any termination of Executive’s employment with the Company as contemplated by Section 7 hereof, except in the circumstances of Executive’s death, shall be communicated by a written “Notice of Termination” by the terminating party to the other party hereto.

 

11.    Suspension of Company Obligations. If Executive is suspended and/or temporarily prohibited from participating in the conduct of the Company’s of any affiliate’s affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1818€(3) and (g)(1)), the Company’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company shall (i) pay Executive all or part of the compensation withheld while its obligations under this Agreement were suspended and (ii) reinstate (in whole or in part) any obligations which were suspended. 

 

12.    Removal. If Executive is removed and/or permanently prohibited from participating in the conduct of the Company’s or any affiliate’s affairs by an order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. § 1818(e)(4) or (g)(1)), all obligations of the Company under this Agreement shall terminate as of the effective date of the order, but vested rights of the parties shall not be affected.

 

13.    Regulatory Oversight.

 

(a) All the obligations under this Agreement may be terminated, except to the extent determined that the continuation of the Agreement is necessary for the continued operation of the Company, by order of any state or federal banking regulatory agency with supervision of the Company or any of its affiliates, unless stayed by appropriate proceedings, and the Company shall not be under any obligation to perform any of its obligations hereunder if it is informed in writing by any state or federal banking agency with supervision of the Company or any of its affiliates that performance of any of such obligations would constitute an unsafe or unsound banking practice. 

 

(b) If the Company is in default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act [12 U.S.C. § 1813(x)(1)]), all obligations under this Agreement shall terminate as of the date of default, but this provision shall not affect any vested rights of the parties.

 

(c) Notwithstanding anything herein to the contrary, any payments made to Executive pursuant to the Agreement, or otherwise, shall be subject to and conditional upon compliance with 12 U.S.C. § 1828(k) and any regulation promulgated thereunder.

 

14.    Legal Fees. If a dispute arises regarding the interpretation or enforcement of this Agreement and Executive obtains a final judgment in his favor in a court of competent jurisdiction, all reasonable legal fees and expenses incurred by Executive in contesting or disputing any such termination or seeking to obtain or enforce any right or benefit provided for in this Agreement or otherwise pursuing this claim shall be paid by the Company, to the extent permitted by law.

 

 

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15.    Death. Should Executive die after termination of his employment with Company while any amounts are payable to him hereunder, this Agreement shall inure to the benefit of and be enforceable by Executive’s executors, administrators, heirs, distributes, devisees and legatees and all amounts payable hereunder shall be paid in accordance with the terms of this Agreement to Executive’s devisee, legatee or other designee or, if there is no such designee, to his estate.

 

16.    Notices. For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	
If to Executive: 
	
J. David Smith, Jr.

442 N. Limestone Street

Lexington, KY 40508

 

 

	
If to the Company: 
	
 Lloyd C. Hillard, Jr.

President and CEO

Farmers Capital Bank Corporation

202 West Main Street

Frankfort, KY 40601

 

	
With a Copy to Counsel     

For the Company:
	
S. Ryan Newcomb

Farmers Capital Bank Corporation

SVP and General Counsel

202 West Main Street

Frankfort, KY 40601

 

or to such other address as either party hereto may have furnished to the other party in writing in accordance herewith, except that notices or change of address shall be effective only upon receipt.

 

17.    Governing Law. The validity, interpretation, and performance of this Agreement shall be governed by the laws of the Commonwealth of Kentucky, without reference to choice of law principles or rules thereof, except to the extent that federal law shall be deemed to apply.

 

18.    Successors and Assigns. The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and in substance satisfactory to Executive, in the exercise of his reasonable judgment, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a material, intentional breach of this Agreement. As used in this Agreement, “Company” shall mean Company as hereinbefore defined and any successor to its business or assets as aforesaid.

 

 

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19.    Modification. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Company and Executive. No waiver by any party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of dissimilar provisions or conditions at the same or any prior subsequent time. No agreements or representation, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

 

20.    Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement which shall remain in full force and effect.

 

21.    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same agreement.

 

22.    Assignment. This Agreement is personal in nature and no party hereto shall, without consent of the other party, assign or transfer this Agreement or any rights or obligations hereunder except as provided in Section 18 above.

 

23.    Enforcement. Executive acknowledges that the restrictions contained in Sections 8 and 9, in view of the nature of the business in which the Company and its affiliates are engaged, are reasonable and necessary in order to protect the legitimate business interest of the company and that any violation of Section 8 or 9 would result in irreparable injury to the Company. In the event of a breach or a threatened breach by Executive of Section 8 or 9 of this Agreement, the Company shall be entitled to an injunction restraining Executive from the commission of such breach, and to recover its attorneys’ fees, costs and expenses related to the breach or threatened breach. Nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of money damages. These covenants and disclosures shall each be construed as independent of any other provisions in this Agreement, and the existence of any claim or cause of action by 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 and agreements. If any provision of this Agreement, including Section 8 or 9, is invalid in part or in whole, it shall be deemed to have been amended, whether as to time, area covered or otherwise, as and to the extent required for its validity under applicable law and, as so amended, shall be enforceable. The parties shall execute all documents necessary to evidence such amendment.

 

24.    Document Review. The Company and Executive hereby acknowledge and agree that each (i) has read this Agreement in its entirety prior to executing it, (ii) understands the provision and effects of this Agreement, (iii) has consulted with such attorneys, accountants and financial and other advisors as it or he has deemed appropriate in connection with their respective execution of this Agreement, and (iv) has executed this Agreement voluntarily and knowingly. EXECUTIVE HEREBY UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT HAS BEEN PREPARED BY CORPORATE LEGAL COUNSEL OF THE COMPANY AND THAT HE HAS NOT RECEIVED ANY ADVICE, COUNSEL OR RECOMMENDATION WITH RESPECT TO THIS AGREEMENT FROM SUCH COUNSEL.

 

 

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25.    Withholding Taxes. The company shall have the right to deduct from any payments to Executive hereunder all taxes which under any applicable federal, state or local laws the Company is required to withhold.

 

26.    Entire agreement. This Agreement, together with any understanding or modifications thereof as agreed to in writing by the parties, shall constitute the entire agreement between the parties hereto.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered as of the 18th day of November, 2015.

 

 

	
 
	
 FARMERS CAPITAL BANK CORPORATION
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
By: 
	
/s/ Terry Bennett 
	
 

	
 
	
 
	
Terry Bennett
	
 

	
 
	
 
	
Chairman of the Board of Directors
	
 

	 	 	 	 
	 	 	 	 
	 	By:	/s/ Lloyd C. Hillard, Jr.	 
	 	 	Lloyd C. Hillard, Jr.	 
	 	 	President and CEO	 
	 	 	 	 
	 	 	 	 
	 	 	EXECUTIVE	 
	 	 	 	 
	 	 	 	 
	 	 	/s/ J. David Smith, Jr.	 
	 	 	J. David Smith, Jr.	 

 

 

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