Document:

Exhibit 10.7

Exhibit    10. 7

EMPLOYMENT   AGREEMENT 

THIS EMPLOYMENT AGREEMENT  (this "Agreement")  is made  and entered into as of  the  ____ day of   __________________,  2004, by and between First M&F Corporation, Inc. (hereinafter referred to as "Employer"), and __________________ an individual resident of the State of _______________ (herein "Employee").
WHEREAS, Employer desires to employ Employee as an Executive of Merchants & Farmers Bank, one of the businesses operated by Employer,  according to the terms, covenants and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements set forth herein, it is hereby agreed as follows:
1.    EMPLOYMENT.  Employer hereby employs, engages and hires Employee, and Employee hereby accepts and agrees to such hiring, engagement and employment, as Chief Financial Officer of Merchants & Farmers Bank, to perform those duties specified by Employer in  accordance with the general supervision and direction of the Chairman of the Board of Directors of Merchants & Farmers Bank.
2.    BEST  EFFORTS.  Employee agrees that he will devote his full time to the duties and responsibilities required of such position; and that he will at all times faithfully, industriously and to the best of his ability, experience and talents perform all such duties and responsibilities to the reasonable satisfaction of Chairman of the Board. Such duties shall be rendered in accordance with the Employer's policies and at such place or places as the interest, needs, business or opportunity of Employer shall require. Employee shall not render any services or engage in any other undertaking on behalf of any party other than Employer unless otherwise specifically authorized in writing by the Chairman of the Board of Directors of First M & F Corporation, Inc.

3.    TERM  OF AGREEMENT.  The initial term  of this Agreement shall be for twelve (12) months from May _____, 2004. This Agreement shall be automatically renewed for a one-month term at the end of the initial one-year term and thereafter for successive one-month terms unless either party hereto gives written notice to the other, at least two (2) weeks prior to the end of such initial or any renewed term, of his or its intention not to renew this Agreement at the expiration of such term.
4.    COMPENSATION.   For all duties to be performed by Employee under this Agreement, Employee shall receive a base salary of $___________ per month and Employee may be eligible for bonuses as determined by the Board of  Directors of Merchants & Farmers Bank. This compensation may be modified, from time to time, by Employer in accordance with its evaluation of Employee's performance.
5.    BENEFITS.  Employee shall also be entitled to participate in any and all employee   benefit plans upon the same terms and conditions as all other employees of Employer.
7.    TERMINATION  OF EMPLOYMENT.  The employment of Employee may be terminated by Employer during the initial and any renewed term of this Agreement as follows:
(a)    Except   as  provided in 7(b) below, Employer may terminate Employee's employment for any reason, without cause, and at any time, without notice and without further obligation, by paying to Employee severance pay equal to four (4) months salary, or $________, less normal federal and state withholdings.
(b)    In the event that Employee's employment is terminated without cause as a result of a change of control of Employer within one year of such change in control, or if Executive voluntarily terminates his employment for good cause within two (2) years following such a change  in control, then Executive shall be paid two years' base salary. For purposes of this section, "change  in control" means that any person or group (as defined in Section 13(d)(3) of  the Securities   Exchange Act of 1934) other than the current owners becomes the owner or beneficial owner of 50% or more of the combined voting power of the then outstanding First M&F securities that may then be cast for the election of First M & F's directors (other than as a result of an issuance of securities  initiated by the Company or as a result of open market trading). If such a change in control occurs,  and if the Board of Directors thereafter materially and detrimentally modifies Employee's duties, functions, and responsibilities without his consent, or if his compensation is materially reduced,   then Employee may resign for good cause under this subsection of 

the agreement.
(b)    Employer may terminate Employee's employment without notice, without further  obligation and without severance pay, upon the occurrence or existence of any of the following  conditions:   (1) the breach of any term of this Agreement by Employee;  (2) the existence of just cause for Employee's termination;  (3) the death of Employee; or (4) the resignation by Employee other than by giving the notice required by Section 3 of this Agreement.    
(c)    As used in Section 5(b)(2), the term "just cause" includes, but is not limited to, violation of instructions of Employer's management, Employer's Standards of Conduct, or violation of any rule or regulation regarding employment.

8.    RESTRICTIVE  COVENANTS.

(a)    If  Employee voluntarily terminates his employment, or if his employment is terminated involuntarily for cause, at any time, whether or not during the term of this agreement,  Employee covenants and agrees that for a period of twelve (12) months after the termination of his employment, he shall not, in any way, individually, or in any other manner, either directly or indirectly, engage in the financial services business or any branch thereof, nor will he permit his name to be used in connection with any such business for the solicitation of any account or business  sold or serviced by Employer and/or its related entities.
(b)    If Employee is involuntarily terminated without  cause, whether or not during the term of this agreement, Employee covenants and agrees that for the period of time during which Employee receives severance pay, Employee shall not, in any way, individually, or in any other  manner; either directly or indirectly, engage in the financial services business or any branch thereof,  nor will Employee solicit or permit Employee's name to be used in connection with any such business for the solicitation of any account or business sold or serviced by Employer and/or its related entities.
(c)    For the period of twelve (12) months from and after any termination of his employment,  regardless of whether such is voluntary or involuntarily, for or without cause, Employee agrees to refrain from directly or indirectly inducing to leave Employer's employment any  of Employer's other employees or other persons associated with the representation of Employer.

(d)            Employee's covenants under this Section 6 shall be construed as an agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action of Employee against Employer or any of its related entities, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Employer of these covenants.
(e)    It is agreed and understood between the parties hereto that any breach or violation of  any of the restrictive covenants will result in immediate and irreparable injury to the Employer and will authorize recourse to injunction and/or specific performance as well as to all other legal or equitable remedies to which such injured party may be entitled hereunder.
(f)    In the event there is any successful judicial or arbitral action taken to enforce Employer's rights under this paragraph, Employee shall pay to Employer all costs and expenses, including but not limited to all attorneys' fees and costs incurred by Employer in connection with enforcement of Employer's rights under this section of the Agreement.
10.    NO  OTHER  EMPLOYMENT.  Employee shall devote all of his time, attention, knowledge and skill solely to the business and interest of Employer, and Employer shall be entitled to all of the benefits, profits or other issues arising from or incident to all work, services and advice of Employee. Without prior written approval from the Chairman of the Board of Merchants & Farmers Bank Employee shall not, during the initial or any renewed term hereof, be interested directly or indirectly, in any manner, as partner, officer, director, stockholder, advisor, employee or in any other capacity in any other business similar to Employer's  business.
11.    NONDISCLOSURE  OF INFORMATION.
(a)    Employee recognizes and acknowledges that his position with Employer permits his  access to certain trade secrets and confidential and proprietary business information of Employer and its related entities (collectively the "Proprietary Information"). For purposes of this Agreement,   the term Proprietary Information shall include but not be limited to any customer lists, computer programs, tapes, intra-office memoranda, letters, reports, specifications, pricing information, processes, data and any other information concerning any matter affecting or relating to the business of Employer and its related entities and their manner of operation, whether or not such information may in fact be confidential, together with any information classified as a "trade secret" by the Mississippi Uniform Trade Secrets Act, § 75-26-1 et 

seq. of Miss. Code Ann. of 1972 (the "Act").
(b)    Employee agrees to use his best efforts and utmost diligence to protect the Proprietary Information. Except as may be required by Employer in connection with and during Employee's employment with Employer, or with the express written permission of the President of Merchants & Farmers Bank and the Chairman of the Board of Merchants & Farmers Bank, Employee shall not, either during his employment with Employer or thereafter, directly or indirectly,  use for "improper  means" (as defined in the Act), including for Employee's own benefit or for the benefit of another, or cause the "misappropriation" (as defined in the Act) or disclose to any "person" (as defined in the Act), in any manner whatsoever, any of the Proprietary Information  (whether or not acquired, learned, obtained or developed  by Employee alone, by Employee in conjunction with others, or by another person).
(c)    Employee further agrees that any document, record, tape or other material embodying or reflecting any Proprietary Information, including but not limited to all copies and reproductions of any such document, record, tape or other material, shall be the property of Employer and shall be delivered to Employer upon termination of Employee's employment or at any other time upon request by the Chairman of the Board of Merchants & Farmers Bank or the Chairman of the Board of Merchants & Farmers Bank.
(d)    In the event there is any successful judicial or arbitral action taken to enforce Employer's rights under this paragraph, Employee shall pay to Employer all costs and expenses, including but not limited to all attorneys' fees and costs incurred by Employer in connection with enforcement of Employer's rights under this section of the Agreement.
12.    MODIFICATION   OF  AGREEMENT.      No waiver or modification of this Agreement or of any covenant, condition or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. No evidence of any waiver or modification shall be offered or received in evidence in any proceeding, arbitration or litigation between the parties hereto arising out of or affecting this Agreement, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid.   The parties agree that the provisions of this Section may not be waived except as herein set forth.

13.      PRIOR  AGREEMENTS.  This Agreement cancels and supersedes any prior employment and/or compensation agreement or agreements, whether oral or written, between Employer and/or its related entities and Employee.
14.    NOTICE.  AlI notices, requests, demands, consents or other communications given  hereunder or in connection herewith shall be in writing,  shall be sent by registered or certified mail,  return receipt requested, postage prepaid, or by hand delivery or expedited delivery service, with delivery charges prepaid and with acknowledged receipt of delivery, shall be deemed given on the date of acceptance or refusal of acceptance shown on such receipt, and shall be addressed to the party to receive such notice at the following applicable address:
If to Employee, to:

If to Employer,   to:

Either party may, by notice given as aforesaid, change its address for all subsequent notices. Each  notice by or on behalf of Employer shall be deemed sufficient if signed by any one of its officers or by its counsel and if otherwise given or made in compliance with this Section.
15.    SEVERABILITY.  If any provision of this Agreement shall be held invalid or unenforceable, the  remainder of this Agreement shall nevertheless remain valid and in full force and effect. If any provision is held invalid or unenforceable with respect to particular circumstances, it shall nevertheless remain in full force and effect in all other circumstances.
16.    BENEFIT.  This Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of and be binding upon the successors and assigns of Employer and upon  the personal representatives of Employee. This Agreement may be assigned by Employer, but not by Employee.
17.    MANDATORY ARBITRATION OF DISPUTES OR CLAIMS. 
Employer and Employee agree that any claims arising out of or in connection with the employment relationship, the terms and conditions of employment, or the termination of Employee's employment will be settled by binding arbitration. This Agreement applies to the following allegations, disputes, and claims for relief, but is not limited to those listed: (1) wrongful discharge under federal and/or state statutory and 

common law;  (2) employment- related claims, discrimination, and harassment claims based on federal, state or local statute, ordinance or governmental regulations, including but not limited to 42 U.S.C. § 1981; Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e, et seq.; the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq.; the Americans with Disabilities Act, 42 U.S.C.  §12,101, et seq.; the  Family  and Medical Leave Act, 29 U.S.C. § 2601 et seq.; and, the Fair Labor Standards Act, 29 U.S.C. § 201, et.seq.; (3) whistleblower claims; (4) retaliatory discharge or other  employment-related actions;  (5) compensation disputes;  (6) tort claims;  (7) bad faith denial of workers' compensation claims; (8) contractual claims; (9) employee benefit claims, including ERISA and COBRA claims; and (10) all other federal and/or state statutory and common law claims, regardless of whether the statute was enacted or whether the common law doctrine was recognized at the time this Agreement was signed. This Agreement applies to all of the aforementioned claims, whether those claims are asserted against the Employer or any managerial or supervisory employee of the Employer, or both. It applies to any claims that may have existed in the past, any present claims, and any future claims. The only exceptions to the scope of this arbitration agreement are as follows: Employer may file a judicial action or resort to arbitration to enforce its rights under paragraphs 9 and/or 11 of this Agreement. Employee may file workers' compensation and unemployment claims with appropriate state  agencies and, thereafter appeal any administrative decisions thereon as provided by state statute  and court rules. Employee may not take any other claims to court. Employee understands that  this Agreement will not limit his or her right to file charges with the Equal Employment Opportunity Commission, unfair labor practice charges with the National Labor Relations Board, complaints with the Occupational Safety and Health Administration or any other filing  with any federal or state agency charged with statutory responsibility to protect the employment-related rights of employees. However, it does preclude his or her resort to the courts to resolve  any disputes or to obtain relief related to his or her employment.
(a)    Either party may commence the arbitration proceeding by written grievance and demand and submission of a $150.00 filing fee,  provided that if the Employee seeks arbitration he or she must first exhaust all internal complaint procedures established by the Employer's handbook, policies and procedures. The time limits for the filing of a grievance shall be the same as provided by the substantive law applicable to the dispute, for example 180 days for discrimination claims. If the Employee exhausts his or her internal 

complaint procedures but is not satisfied with the resulting decision of the Employer, the Employee may demand arbitration, and the Employee shall submit with the demand for arbitration his or her filing fee check payable to the Employer, which will apply same towards the fees and expenses of the arbitration.
(b)       The arbitration proceedings shall be conducted at a mutually agreed site, with a single arbitrator selected from a panel provided by the Federal Mediation and Conciliation Service. The selection from the panel will be made by the Employee and Employer alternately striking names from the panel provided by FMCS until only one name remains, and that person shall be the arbitrator for the dispute in question. Discovery may be had in accordance with the Federal Ru1es of Civil Procedure, with the arbitrator resolving all discovery disputes in accordance with said rules. Both Employee and Employer may be represented by an attorney throughout the proceedings, but neither party shall be liable for the other party's attorneys' fees and expenses unless such is provided for by the substantive law applicable to the dispute and ordered by the arbitrator.
(c)    The arbitrator shall coordinate and limit as appropriate all pre-arbitral discovery, which shall include document production, information requests and depositions. The arbitrator shall issue a written decision and award, stating the reasons therefore. The decision and award shall be exclusive, final and binding on the parties, their heirs, executors, administrators, successors and assigns. The costs and expenses of the arbitration shall be awarded by the arbitrator in accordance with the substantive law applicable to the dispute. If the arbitrator does not make an award of costs then all fees and expenses of the arbitrator (over and above the $150.00 filing  fee if the arbitration was commenced by the Employee), shall be paid by the Employer. The arbitrator  may also award other costs and fees (for example, deposition  costs, expert costs, attorneys'  fees) in accordance with the substantive law applicable to the particular dispute. If the applicable substantive law does not allow the decision-maker the discretion of awarding costs and fees, or if no such award is made, each party shall be responsible for its own attorneys' fees and costs.
(d)    Employer and Employee understand that, by signing this Agreement, they are agreeing to substitute one legitimate forum (arbitration) for another (litigation), and thereby are waiving their right to have their disputes resolved in court by a jury. This substitution involves no surrender, by either party, of any substantive statutory or common law benefit, protection or defense.

(e)    The parties agree, acknowledge and understand that, unless otherwise provided herein, this Agreement and all related proceedings are subject to the Federal Arbitration  Act, 9 U.S.C. §§ 1-16.
18.    WAIVER.  The waiver by either party of any breach or violation of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach or violation hereunder.
19.    GOVERNING  LAW.  This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the State of Mississippi, regardless of (a) where this Agreement is executed or delivered, (b) where any payment or other performance required by this Agreement is made or required to be made, (c) where any breach of any provision of this Agreement occurs or any cause of action otherwise accrues,  (d) where any action or other proceeding is instituted or pending, (e) the nationality, citizenship, domicile, principal place of business or jurisdiction of organization or domestication of any party,  (f) whether the laws of the forum jurisdiction otherwise would apply the laws of  a jurisdiction other than the State of Mississippi, or (g) any combination of the foregoing.
20.    CHOICE   OF  VENUE.    The parties hereto hereby irrevocably consent (a) to the jurisdiction of the Chancery Courts of the State of Mississippi, County of Attala, and of any Federal    Court located in the Northern District of Mississippi, to enforce the terms of this Agreement, including its Arbitration provisions, and agree that venue in each of such Courts is proper in connection with any such action or proceeding.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and  delivered as of the day and year first above written.

	
					
	[EMPLOYEE]
	 
	 
	[EMPLOYER]
	 

	 
	 
	 
	 
	 

	 
	 
	By:ex10-12.htm

Exhibit 10.12

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT dated as of August 31, 2011 (the “Agreement”), is by and between Healthways, Inc., a Delaware corporation (the “Company”), and Michael R. Farris (the “Executive”).

 

    WHEREAS, the Company and Navvis Healthcare, LLC (“Navvis”) have entered into a Purchase Agreement, dated as of August 24, 2011 (the “Purchase Agreement”), pursuant to which the Company will acquire 100% of the membership interests of Navvis (the “Transaction”);

 

    WHEREAS, the Executive is an employee of Navvis and, as such, possesses confidential and proprietary information regarding Navvis and its subsidiaries;

 

    WHEREAS, the Company desires that the Executive serve as an Employee of Healthways (or a subsidiary thereof) following the consummation of the Transaction, and the Executive desires to hold such position under the terms and conditions of this Agreement;

 

    WHEREAS, the Parties agree that this Agreement replaces and supersedes any agreements between Executive and Navvis in existence on or before the Closing Date (as defined in the Purchase Agreement); and

 

    WHEREAS, the execution of this Agreement, including without limitation the provisions of Section VIII hereof, is a condition of the Company’s entering into the Purchase Agreement and the consummation of the Transaction on the Closing Date (as defined in the Purchase Agreement).

NOW, THEREFORE, intending to be legally bound hereby, the parties agree as follows:

	
I.

	
EMPLOYMENT. The Company hereby employs the Executive and the Executive hereby accepts employment with the Company, upon the terms and subject to the conditions set forth herein.

	
II.

	
TERM.  Subject to termination as stated in Section V, the term of employment of the Executive pursuant to this Agreement (as the same may be extended hereunder, the “Term”) shall commence immediately upon (and only upon) Closing (as defined in the Purchase Agreement) of the Transaction (the “Effective Date”), and shall expire on December 31, 2014 (the “Initial Term”).  The Company may renew this Agreement for an additional term of one (1) year each (each, a “Renewal Term”), if the Company gives written notice to the Executive not less than sixty (60) days prior to the end of the Initial Term or the then current Renewal Term of its intent to renew this Agreement as of the end of the Initial Term or the then current Renewal Term.  Nothing contained in this Section shall limit or restrict Executive’s ability to provide notice of termination pursuant to Section V(G)(1).

  

  

  

	
III.

	
POSITION AND DUTIES. During the Term, the Executive shall serve as the Chief Executive Officer of Navvis Healthcare, LLC, a wholly owned subsidiary of the Company (“Navvis”), reporting to the Company’s Chief Executive Officer (“Company CEO”) and shall be assigned and perform the duties including, but not limited to those duties described in Exhibit A attached hereto.  During the Term, the Executive shall devote his full time and attention during normal business hours to the business and affairs of the Company; provided, however, that it shall not be a violation of this Agreement for the Executive with the approval of the Company to devote reasonable periods of time to charitable and community activities and industry or professional activities, and/or to manage personal investments, so long as such activities do not interfere with the performance of the Executive’s responsibilities under this Agreement. The Executive is not precluded from having an ownership interest in Navvis Development, LLC but the Executive shall not be actively involved in the management or operation of Navvis Development, LLC.

	
IV.

	
COMPENSATION.

	
A.  

	
Base Salary:  Executive’s annual base salary as of the Effective Date is $700,000, all of which is at-risk in accordance with Section A.3 below (the “Base Salary”) and will be paid in accordance with the following schedule and terms:

	
1.  

	
From the Effective Date through December 31, 2011, Executive will be paid a pro-rata portion of the Base Salary in equal installments in accordance with the Company’s regular payroll practices through December 31, 2011;

 

	
2.  

	
Beginning January 1, 2012 through December 31, 2014, Executive will be paid the full Base Salary in equal installments in accordance with the Company’s regular payroll practices.

 

	
3.  

	
Prior to each of the 2012, 2013 and 2014 fiscal years of the Company, the Company’s CEO will, in his discretion, exercising commercially reasonable judgment, and after discussions with Executive, determine annual requirements and/or targets for Navvis that may include Navvis only revenues, revenues related to joint Company and Navvis initiatives or other matters not related to revenues (the “Annual Targets”) for each corresponding fiscal year.  When establishing the Annual Targets the Company’s CEO will determine and communicate to Executive whether all or some portion of Base Salary will be deemed not earned if the applicable Annual Target is only partially achieved. For each fiscal year in which Navvis fails to achieve the Annual Targets, Executive’s Base Salary, or some portion thereof, if applicable, for the next fiscal year will be reduced accordingly.

 

	
4.  

	
If Navvis fails to achieve the Annual Target for the fiscal year 2014, Executive’s incentive compensation (as set forth in Section IV.B below) shall be reduced accordingly. If the amount of the reduction to the incentive compensation exceeds the Incentive Payment as defined herein, Executive shall pay the difference to the Company on or before January 31, 2015.

 

  

2

  

	
B.  

	
Incentive Compensation: If Executive achieves the Annual Targets, Executive is entitled to receive a one-time $1,500,000 incentive payment (the “Incentive Payment”) payable on or within thirty (30) days after December 31, 2014.  Executive is not entitled to the Incentive Payment if he is not employed by the Company on December 31, 2014. Notwithstanding the foregoing, if this Agreement is terminated without Cause (as set forth in Section V.E below) or with Good Reason (as set forth in Section V.F below) prior to such payment, Executive is eligible to receive a pro-rata portion of the Incentive Payment as determined by the Company.

	
  

	
C.

	
Vacation:  During each calendar year of this Agreement, the Executive shall be entitled to vacation in accordance with Company policy.  The current Company policy allows the Executive to take vacation as needed and is not set at a certain number of vacation days per year.

	
  

	
D.

	
Other Benefits:  During the Term the Executive shall be entitled to participate in all health and welfare benefit plans maintained by the Company for employees generally according to the terms of such plans.

	
V.

	
TERMINATION OF AGREEMENT. The Executive’s employment under this Agreement shall not be terminated except as set forth in this Section. Any reference to the date of delivery of a notice of termination or resignation by either the Company or the Executive in this Section V shall constitute the “Date of Termination,” unless otherwise set forth herein.  For purposes of this Agreement, the Executive will be deemed to have terminated employment when the Executive has a “separation from service” from the Company as determined in accordance with Treasury Regulation 1.409A-1(h).

	
  

	
A.

	
By Mutual Consent. The Executive’s employment pursuant to this Agreement may be terminated at any time by the mutual written agreement of the Company and the Executive upon such terms as are agreed upon between the parties.

	
  

	
B.

	
Death. If Executive dies during the Term of this Agreement, the Company shall pay his Base Salary due through the date of his death to the Executive’s designated beneficiary plus a pro-rata portion of any Bonus Plan or other compensation to which he is otherwise entitled as of the time of his death, which Bonus Plan amount will be determined and paid after the end of the fiscal year for which the Bonus Plan was in place.  The amount of Base Salary due through the date of the Executive’s death shall be paid to his designated beneficiary within thirty (30) days of the Executive’s death, with the date of such payment chosen by the Company in its sole discretion. Any bonus shall be paid at such time designated in the Bonus Plan. Furthermore, all outstanding stock options, restricted stock, restricted stock units and any other unvested equity incentives shall vest and/or remain exercisable for their stated terms solely in accordance with the terms of the award agreements to which the Company and the Executive are parties at the time of his death. In addition, all amounts contributed by the Company to the Capital Accumulation Plan (“CAP”) for the benefit of the Executive shall vest and thereafter be paid out in accordance with the terms of the CAP as in effect at the time of the Executive’s death. The Company shall then have no further obligations to the Executive or any representative of his estate or his heirs except that Executive’s estate or beneficiaries, as the case may be, shall be paid such amounts as may be payable under the Company’s life insurance policies and other plans as they relate to benefits following death then in effect.

  

3

  

	
  

	
C.

	
Disability

	
  

	
1.

	
The Executive’s employment may be terminated by written notice by either party to the other party, when:

	
  

	
a.

	
the Executive suffers a physical or mental disability entitling the Executive to long-term disability benefits under the Company’s long-term disability plan, if any, or

	
  

	
b.

	
in the absence of a Company long-term disability plan, the Executive is unable, as determined by the Board (or any designated Committee of the Board), to perform the essential functions of his regular duties and responsibilities, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months.

	
  

	
2.

	
If the Executive’s employment is terminated under this Section (C), the Executive shall be entitled to receive:

	
  

	
a.

	
all Base Salary and benefits due to the Executive through the Date of Termination (payable within thirty (30) days of the Date of Termination, with the date of such payment determined by the Company in its sole discretion) and a pro-rata portion of any Bonus Plan or other compensation to which he is otherwise entitled as of the Date of Termination, which Bonus Plan amount will be determined after the end of the fiscal year for which the Bonus Plan was in place and paid in accordance with the terms of such Bonus Plan;

	
  

	
b.

	
an amount equal to the Executive’s Base Salary for a total of eighteen (18) months following the Date of Termination; and

	
  

	
c.

	
if permitted under the Company’s group medical insurance, group medical benefits at the same rate as then in effect for the Company’s employees for two (2) years after the Date of Termination; provided, that if the Executive instead elects continuation of group benefits under COBRA, the Company shall pay the full cost of the premiums for two (2) years following the Date of Termination.  The costs of the Company’s portion of any premiums due under this clause (c) shall be included in the Executive’s gross income to the extent the provision of such benefits is deemed to be discriminatory under Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”).

  

4

  

	
  

	
3.

	
The amounts in clause 2(b) above shall be reduced by any disability insurance payments the Executive receives as a result of his disability, and shall be paid to the Executive periodically at the regular payroll dates commencing as of the Date of Termination and for the remaining term of the non-compete covenant in Section VIII hereof. In addition, the Executive will receive an enhanced severance amount consisting of six (6) additional months of the Executive’s Base Salary (payable periodically at regular payroll intervals) upon his or her execution of a full release of claims in favor of the Company.  Furthermore, all outstanding stock options, restricted stock, restricted stock units and any other unvested equity incentives shall vest and/or remain exercisable for their stated terms solely in accordance with the terms of the award agreements to which the Company and the Executive are parties on the Date of Termination. In addition, all amounts contributed by the Company to the CAP for the benefit of the Executive shall vest and thereafter be paid out in accordance with the terms of the CAP as in effect on the Date of Termination.

	
  

	
D.

	
By the Company for Cause

	
  

	
1.

	
The Executive’s employment may be terminated by the Board upon recommendation of the CEO, both acting in good faith, by written notice to the Executive specifying the event(s) relied upon for such termination upon the occurrence of any of the following events (each of which shall constitute “Cause” for termination):

	
  

	
a.

	
the continued failure by the Executive to substantially perform his duties after written notice and failure to cure within sixty (60) days;

	
  

	
b.

	
conviction of a felony or engaging in misconduct which is materially injurious to the Company, monetarily or to its reputation or otherwise, or which would damage Executive’s ability to effectively perform his duties;

	
  

	
c.

	
theft or dishonesty by the Executive;

	
  

	
d.

	
intoxication while on duty; or

	
  

	
e.

	
willful violation of Company policies or procedures after written notice and failure to cure within thirty (30) days.

  

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2.

	
If the Executive’s employment is terminated under this Section (D), the Executive shall be entitled to receive all Base Salary and benefits to be paid or provided to the Executive under this Agreement through the Date of Termination, and no more.

	
  

	
3.

	
In addition, the Executive will receive an enhanced severance amount consisting of six (6) additional months of the Executive’s Base Salary (payable periodically at regular payroll intervals) upon his or her execution of a full release of claims in favor of the Company. Furthermore, all outstanding stock options, restricted stock, restricted stock units and any other vested equity incentives shall remain exercisable solely in accordance with the terms of the award agreements to which the Company and the Executive are parties on the Date of Termination. All unvested equity incentives shall terminate on the Date of Termination. In addition, all amounts contributed by the Company to the CAP for the benefit of the Executive that have vested shall be paid out in accordance with the terms of the CAP as in effect on the Date of Termination. The Executive shall not be entitled to receive any unvested Company contributions to the CAP.

	
  

	
E.

	
By the Company Without Cause

	
  

	
1.

	
The Executive’s employment may be terminated by the Board upon recommendation of the CEO at any time without Cause by delivery of a written notice of termination to the Executive. If the Executive’s employment is terminated under this Section (E), the Executive shall be entitled to receive:

	
  

	
a.

	
all Base Salary and benefits due to the Executive through the Date of Termination (payable within thirty (30) days of the Date of Termination, with the date of such payment determined by the Company in its sole discretion) and a pro-rata portion of any Bonus Plan or other compensation to which he is otherwise entitled as of the Date of Termination, which Bonus Plan amount will be determined after the end of the fiscal year for which the Bonus Plan was in place and paid in accordance with the terms of such Bonus Plan;

	
  

	
b.

	
an amount equal to the Executive’s Base Salary for a total of eighteen (18) months following the Date of Termination; and

  

6

  

	
  

	
c.

	
group medical benefits for eighteen (18) months after the Date of Termination. The costs of the Company’s portion of any premiums due under this clause (c) shall be included in the Executive’s gross income to the extent the provision of such benefits is deemed to be discriminatory under Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”).

	
  

	
2.

	
The amount in clause 1(b) above shall be paid to the Executive periodically at the regular payroll dates commencing as of the Date of Termination and for the remaining term of the non-compete covenant in Section VIII hereof.  In addition, the Executive will receive an enhanced severance amount consisting of six (6) additional months of the Executive’s Base Salary (payable periodically at regular payroll intervals) upon his or her execution of a full release of claims in favor of the Company. Furthermore, all outstanding stock options, restricted stock, restricted stock units and any other unvested equity incentives shall vest and/or remain exercisable for their stated terms solely in accordance with the terms of the award agreements to which the Company and the Executive are parties on the Date of Termination. In addition, all amounts contributed by the Company to the CAP for the benefit of the Executive shall vest and thereafter be paid out in accordance with the terms of the CAP as in effect on the Date of Termination.

	
  

	
F.

	
By the Executive for Good Reason

	
  

	
1.

	
The Executive’s employment may be terminated by the Executive by written notice of his resignation delivered within sixty (60) days after the occurrence of any of the following events, each of which shall constitute “Good Reason” for resignation:

	
  

	
a.

	
a material reduction in the Executive’s Base Salary not pursuant to Section IV(A)(3) (unless such reduction is part of an across the board reduction affecting all Company executives with a comparable title);

	
  

	
b.

	
a requirement by the Company to relocate the Executive to a location that is greater than twenty-five (25) miles from the location of the office in which the Executive performs his duties hereunder at the time of such relocation;

	
  

	
c.

	
in connection with a Change in Control, a failure by the successor person or entity, or the Board, either to honor this Agreement or to present the Executive with an employment agreement containing provisions substantially similar to this Agreement or otherwise satisfactory to the Executive and which is executed by the Executive; or

  

7

  

	
  

	
d.

	
a material reduction in the Executive’s title, or a material and adverse change in Executive’s status and responsibilities, or the assignment to Executive of duties or responsibilities which are materially inconsistent with Executive’s status and responsibilities.

	
  

	
2.

	
The Executive shall give the Company written notice of his intention to resign for Good Reason (stating the reason therefor) within sixty (60) days after the occurrence of one of the events stated in subparagraphs (a), (b), (c) or (d) above (the “Good Reason Events”) and the Company shall have sixty (60) days (the “Cure Period”) thereafter to rescind the Good Reason Event(s), in which event the Executive no longer shall have the right to resign for Good Reason. If the Company fails to rescind the Good Reason Event(s) before the expiration of the Cure Period, then the Executive may resign for Good Reason and receive the benefits described below so long as the resignation for Good Reason occurs within thirty (30) days following the expiration of the Cure Period, otherwise the right to resign on the basis of that Good Reason Event(s) shall be deemed to have been waived.   If the Executive resigns for Good Reason as defined in this Section (F), the Executive shall be entitled to receive:

	
  

	
a.

	
all Base Salary and benefits due to the Executive under this Agreement through the Date of Termination (payable within thirty (30) days of the Date of Termination, with the date of such payment determined by the Company in its sole discretion) and a pro-rata portion of any Bonus Plan or other compensation to which he is otherwise entitled as of the Date of Termination, which Bonus Plan amount will be determined after the end of the fiscal year for which the Bonus Plan was in place and paid in accordance with the terms of such Bonus Plan;

	
  

	
b.

	
an amount equal to Executive’s Base Salary for a total of eighteen (18) months following the Date of Termination; and

	
  

	
c.

	
group medical benefits for eighteen (18) months after the Date of Termination.  The costs of the Company’s portion of any premiums due under this clause (c) shall be included in the Executive’s gross income to the extent the provision of such benefits is deemed to be discriminatory under Section 105(h) of the Internal Revenue Code of 1986, as amended (the “Code”).

  

8

  

	
  

	
3.

	
The amount in clause 2(b) above shall be paid to the Executive periodically at the regular payroll dates commencing as of the Date of Termination and for the remaining term of the non-compete covenant in Section VIII hereof. In addition, the Executive will receive an enhanced severance amount consisting of six (6) additional months of the Executive’s Base Salary (payable periodically at regular payroll intervals) upon his or her execution of a full release of claims in favor of the Company.  Furthermore, all outstanding stock options, restricted stock, restricted stock units and any other unvested equity incentives shall vest and/or remain exercisable for their stated terms solely in accordance with the terms of the award agreements to which the Company and the Executive are parties on the Date of Termination. In addition, all amounts contributed by the Company to the CAP for the benefit of the Executive shall vest and thereafter be paid out in accordance with the terms of the CAP as in effect on the Date of Termination.

	
  

	
G.

	
By the Executive Without Good Reason

	
  

	
1.

	
The Executive may terminate his employment at any time by delivery of a written notice of resignation to the Company no less than sixty (60) days and no more than ninety (90) days prior to the effective date of the Executive’s resignation. The Executive shall receive all Base Salary and benefits due under this Agreement through the next payroll date following the Date of Termination, and no more.

	
  

	
2.

	
Although the Executive is not entitled to any severance amount in the event of termination pursuant to this Section (G), the Executive may reduce the term of the non-compete and non-solicitation covenants in Section VIII hereof, from twenty-four (24) months to eighteen (18) months, upon execution of a full release of claims in favor of the Company. Furthermore, all outstanding stock options, restricted stock, restricted stock units and any other vested equity incentives shall remain exercisable solely in accordance with the terms of the award agreements to which the Company and the Executive are parties on the Date of Termination. All unvested equity incentives shall terminate on the Date of Termination. In addition, all amounts contributed by the Company to the CAP for the benefit of the Executive that have vested shall be paid out in accordance with the terms of the CAP as in effect on the Date of Termination. The Executive shall not be entitled to receive any unvested Company contributions to the CAP.

	
  

	
H.

	
Following a Change in Control

	
  

	
1.

	
If the Executive’s termination of employment without Cause (pursuant to Section V (E)) or for Good Reason (pursuant to Section V(F)) occurs within twelve (12) months following a Change in Control, then the amounts payable pursuant to Section V(E) or Section V(F) above, as the case may be, shall be referred to as the “Change in Control Severance Amount,” and shall be paid to Executive in a lump sum no later than sixty (60) days following the Date of Termination, with the date of such payment determined by the Company in its sole discretion.  In addition, the Executive will receive an enhanced severance amount consisting of six (6) additional months of the Executive’s Base Salary (payable periodically at regular payroll dates) upon his or her execution of a full release of claims in favor of the Company. Payments pursuant to this Section V(H) shall be made in lieu of, but not in addition to, any payment under any other paragraph of this Section V. Furthermore, all outstanding stock options, restricted stock, restricted stock units and any other unvested equity incentives shall vest and/or remain exercisable for their stated terms solely in accordance with the terms of the award agreements to which the Company and the Executive are parties on the Date of Termination. In addition, all amounts contributed by the Company to the CAP for the benefit of the Executive shall vest and thereafter be paid out in accordance with the terms of the CAP as in effect on the Date of Termination.

  

9

  

	
  

	
2.

	
For the purposes of this Agreement, a “Change in Control” shall mean any of the following events:

	
  

	
a.

	
any person or entity, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or a wholly-owned subsidiary thereof or any employee benefit plan of the Company or any of its subsidiaries, becomes the beneficial owner of the Company’s securities having 35% or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business);

	
  

	
b.

	
as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sales of assets or contested election, or any combination of the foregoing transactions, less than a majority of the combined voting power of the then outstanding securities of the Company or any successor corporation or entity entitled to vote generally in the election of the directors of the Company or such other corporation or entity after such transaction are held in the aggregate by the holders of the Company’s securities entitled to vote generally in the election of directors of the Company immediately prior to such transaction; or

	
  

	
c.

	
during any period of two (2) consecutive years, individuals who at the beginning of any such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election, or the nomination for election by the Company’s stockholders, of each director of the Company first elected during such period was approved by a vote of at least two-thirds of the directors of the Company then still in office who were directors of the Company at the beginning of any such period.

  

10

  

	
  

	
3.

	
Excise Tax Payment. If, in connection with a Change in Control, the Internal Revenue Service asserts, or if the Executive or the Company is advised in writing by an established accounting firm, that any payment in the nature of compensation to, or for the benefit of, the Executive from the Company (or any successor in interest) constitutes an “excess parachute payment” under Section 280G of the Code, whether paid pursuant to this Agreement or any other agreement, and including property transfers pursuant to securities and other employee benefits that vest upon a Change in Control (collectively, the “Excess Parachute Payments”) the Company shall pay to the Executive, on demand, a cash sum equal to the amount of excise tax due under Section 4999 of the Code on the entire amount of the Excess Parachute Payments (excluding any payment pursuant to this Section V (H)(3)) (the “Gross-up Amount”).  The payment of the "Gross-up Amount" due to the Executive under this Section V(H)(3) shall be paid as soon as reasonably possible following demand of payment by the Executive, but in no event later than December 31 of the year following the year (A) any tax is paid to the Internal Revenue Service regarding this Section V(H)(3) or (B) any tax audit or litigation brought by the Internal Revenue Service or other relevant taxing authority related to this Section V(H)(3) is completed or resolved.

 

	
  

	
I.

	
Delay of Payments Pursuant to Section 409A.  It is intended that (1) each installment of the payments provided under this Agreement is a separate “payment” for purposes of Section 409A of the Code and (2) that the payments satisfy, to the greatest extent possible, the exemptions from the application of Section 409A of the Code provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(9)(iii), and 1.409A-1(b)(9)(v).  Notwithstanding anything to the contrary in this Agreement, if the Company determines (i) that on the date the Executive’s employment with the Company terminates or at such other time that the Company determines to be relevant, the Executive is a “specified employee” (as such term is defined under Treasury Regulation 1.409A-1(i)) of the Company and (ii) that any payments to be provided to the Executive pursuant to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section 409A of the Code if provided at the time otherwise required under this Agreement then such payments shall be delayed until the date that is six months after the date of the Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)) with the Company, or, if earlier, the date of the Executive’s death.  Any payments delayed pursuant to this Section V (I) shall be made in a lump sum on the first day of the seventh month following the Executive’s “separation from service” (as such term is defined under Treasury Regulation 1.409A-1(h)), or, if earlier, the date of the Executive’s death. In addition, to the extent that any reimbursement, fringe benefit or other, similar plan or arrangement in which the Executive participates during the term of Executive’s employment under this Agreement or thereafter provides for a "deferral of compensation" within the meaning of Section 409A of the Code, (i) the amount eligible for reimbursement or payment under such plan or arrangement in one calendar year may not affect the amount eligible for reimbursement or payment in any other calendar year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid), and (ii) subject to any shorter time periods provided herein or the applicable plans or arrangements, any reimbursement or payment of an expense under such plan or arrangement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.

  

11

  

	
VI.

	
REPRESENTATIONS. The Executive represents and warrants that he is not a party to any agreement or instrument which would prevent him from entering into or performing his duties in any way under this Agreement.

	
VII.

	
ASSIGNMENT, BINDING AGREEMENT. This Agreement is a personal contract and the rights and interests of the Executive hereunder may not be sold, transferred, assigned, pledged, encumbered, or hypothecated by him, except as otherwise expressly permitted by the provisions of this Agreement. This Agreement shall inure to the benefit of and be enforceable by the Executive and his personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his devisee, legatee or other designee or, if there is no such designee, to his estate.

VIII.           CONFIDENTIALITY, NON-COMPETITION, NON-SOLICITATION

	
  

	
A.

	
The Executive acknowledges that:

	
  

	
1.

	
the business of providing care support services and health support services in which the Company is engaged (the “Business”) is intensely competitive and that the Executive’s employment by the Company will require that the Executive have access to and knowledge of confidential information of the Company relating to its business plans, financial data, marketing programs, client information, contracts and other trade secrets, in each case other than as and to the extent such information is generally known or publicly available through no violation of this Agreement by the Executive;

	
  

	
2.

	
the use or disclosure of such information other than in furtherance of the Business may place the Company at a competitive disadvantage and may do damage, monetary or otherwise, to the Business; and

	
  

	
3.

	
the engaging by the Executive in any of the activities prohibited by this Section shall constitute improper appropriation and/or use of such information. The Executive expressly acknowledges the trade secret status of the Company’s confidential information and that the confidential information constitutes a protectable business interest of the Company. Other than as may be required in the performance of his duties, Executive expressly agrees not to divulge such confidential information to anyone outside the Company without prior permission.

  

12

  

	
  

	
B.

	
The “Company” (which shall be construed to include the Company, its subsidiaries and their respective affiliates) and the Executive agree that for a period of eighteen (18) months after the Date of Termination if the Executive’s employment is terminated under Sections V(C), (D), (E), (F) or (H), and for a period of twenty-four (24) months after the Date of Termination if the Executive’s employment is terminated under Section V(G), the Executive shall not:

	
  

	
1.

	
engage in Competition, as defined below, with the Company or its subsidiaries within any market where the Company is conducting the Business at the time of termination of the Executive’s employment hereunder. For purposes of this Agreement, “Competition” by the Executive shall mean the Executive’s being employed by or acting as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of, or permitting his name to be used in connection with the activities of any entity engaged in the Business, provided that, it shall not be a violation of this sub-paragraph for the Executive to become the registered or beneficial owner of less than five percent (5%) of any class of the capital stock of any one or more competing corporations registered under the 1934 Act, provided that, the Executive does not participate in the business of such corporation until such time as this covenant expires; and

	
  

	
2.

	
The Executive further agrees that he will not, directly or indirectly, for his benefit or for the benefit of any other person or entity, do any of the following:

	
  

	
a.

	
solicit from any customer, doing business with the Company as of the Executive’s termination, business of the same or of a similar nature to the Business of the Company with such customer;

	
  

	
b.

	
solicit from any known potential customer of the Company business of the same or of a similar nature to that which, to the knowledge of the Executive, has been the subject of a written or oral bid, offer or proposal by the Company, or of substantial preparation with a view to making such a bid, proposal or offer, within eighteen (18) months prior to the Executive’s termination; or

	
  

	
c.

	
recruit or solicit the employment or services of any person who was employed by the Company upon termination of the Executive’s employment and is employed by the Company at the time of such recruitment or solicitation.

  

13

  

	
  

	
3.

	
The Executive acknowledges that the services to be rendered by him to the Company are of a special and unique character, which causes this Agreement to be of significant value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and that a breach or threatened breach by him of any of the provisions contained in this Section will cause the Company irreparable injury. The Executive therefore agrees that the Company will be entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining the Executive from any such violation or threatened violations. The Executive acknowledges that the terms of this Section VIII and its obligations are reasonable and will not prohibit him from being employed or employable in the health care industry.

	
  

	
C.

	
If any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the fullest extent permitted by law.

	
IX.

	
ENTIRE AGREEMENT. This Agreement, together with Exhibit A attached hereto, contains all the understandings between the parties pertaining to the matters referred to herein, and supersedes any other undertakings and agreements, whether oral or written, previously entered into by them with respect thereto. The Executive represents that, in executing this Agreement, he does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter or effect of this Agreement or otherwise and that Executive has had the opportunity to be represented by counsel of his choosing.

	
X.

	
AMENDMENT OR MODIFICATION; WAIVER. No provision of this Agreement may be amended or waived, unless such amendment or waiver is agreed to in writing, signed by the Executive and by a duly authorized officer of the Company. No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

	
XI.

	
NOTICES. Any notice to be given hereunder shall be in writing and shall be deemed given when delivered personally, sent by courier, facsimile or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice in writing:

  

14

  

           To the Executive at:                                                                           To the Company at:

Michael R. Farris                                                                             Chief Executive Officer

15945 Clayton Road, Suite 360                                                      Healthways, Inc.

Ballwin, Missouri 63011                                                                 701 Cool Springs Boulevard

                            Franklin, TN 37067

	 	
Any notice delivered personally or by courier shall be deemed given on the date delivered. Any notice sent by facsimile, registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date transmitted by facsimile or mailed.

	
XII.

	
SEVERABILITY. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law.

	
XIII.

	
SURVIVORSHIP. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

	
XIV.

	
GOVERNING LAW; VENUE. This Agreement will be governed by and construed in accordance with the laws of the State of Tennessee, without regard to the principles of conflicts of law thereof, and venue shall be the United States District Court for the Middle District of Tennessee.

	
XV.

	
HEADINGS. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.

	
XVI.

	
COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement effective as of date set forth above.

[SIGNATURE PAGE FOLLOWS]

  

15

  

                                                                                                HEALTHWAYS, INC.

By:  /s/ Ben R. Leedle, Jr.

Name:  Ben R. Leedle, Jr.

Title:   President & CEO

EXECUTIVE

                                 /s/ Michael R. Farris

                            Michael R. Farris

  

16

  

EXHIBIT A

Exceptions

Notwithstanding anything in the Agreement to the contrary, the following terms are also part of the Agreement and supersede any contradictory term contained therein:

Nothing contained herein shall preclude Executive from participating on the Board of Directors of another company so long as the applicable company is not engaged in any activity that is the same as or substantially similar to the Business and such activities do not interfere with Executive’s ability to discharge his duties set forth in this Agreement.

  

17

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