Form 10-Q HOLOGIC INC For: Jun 29
DIVISION PRESIDENT SEVERANCE AGREEMENT
THIS AGREEMENT made as of the _20th__ day of July, 2017, by and between Hologic, Inc., a Delaware corporation, and Kevin Thornal (the "Executive").
WHEREAS, the Board of Directors (the "Board") of the Company (as hereinafter defined) recognizes that the possibility of a termination without Cause (as hereinafter defined), can create significant distractions for its key management personnel because of the uncertainties inherent in such situations;
WHEREAS, the Board has determined that it is essential and in the best interest of the Company and its stockholders to retain the services of the Executive, in general, and particularly in the event of a threat or the occurrence of a change in control and to ensure his or her continued and full attention, dedication and efforts in such event without undue concern for his or her personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of the Company, in general, and particularly in the event of a threat or the occurrence of a change in control, the Company desires to enter into this Agreement with the Executive to provide the Executive with severance benefits in the event his or her employment is terminated in certain circumstances in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the respective agreements of the parties contained herein, it is agreed as follows:
l. TERM OF AGREEMENT. This Agreement shall commence as of the date hereof, and shall continue in effect until Executive's employment with Company terminates.
2. DEFINITIONS.
2.1 ACCRUED COMPENSATION. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned or accrued
through the "Termination Date" (as hereinafter defined) but not paid as of the Termination Date, including (i) base salary, (ii) reimbursement for reasonable and necessary business expenses incurred by the Executive on behalf of the Company, pursuant to the Company's expense reimbursement policy in effect at such time, during the period ending on the Termination Date, and (iii) vacation pay.
2.2 BASE SALARY. For purposes of this Agreement, "Base Salary" shall mean the greater of the Executive's annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Termination Date, and shall include all amounts of his or her Base Salary that are deferred at the election of the Executive under the qualified and non-qualified employee benefit plans of the Company or any other agreement or arrangement. For avoidance of doubt, Base Salary shall not include any bonus or portion thereof deferred under the Company's Bonus Deferral Program.
2.3 BONUS AMOUNT. For purposes of this Agreement, "Bonus Amount" shall mean the average of the annual bonuses (excluding any bonuses deferred under the Company's Bonus Deferral Program or under any special bonus program) paid or that has been earned and accrued but unpaid, in each case under the Company’s Short Term Incentive Plan, during the three full fiscal years ended prior to the Date of Termination. Notwithstanding the foregoing sentence, any bonus electively deferred by the Executive pursuant to a qualified or non-qualified plan shall be included in the Bonus Amount. For purposes of this Agreement, Bonus Deferral Program shall be any deferral Plan or Program adopted by the Company's Board of Directors that provides for a non-elective deferral of the Executive's Annual Bonus.
2.4 CAUSE. The Company may terminate the Executive's employment during the Term of this Agreement 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) material violation of the Company's Code of Conduct, and other Company Codes of Conduct or policies and procedures that are applicable to the Executive; 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 or her 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 a vote of not less than 75% of the independent directors (determined in accordance with the corporate li sting standards of the Nasdaq National Market and the applicable rules and regulations of the Commission) determining that his or her actions did, in fact, constitute for Cause.
2.5 COMPANY. For purposes of this Agreement, "Company" shall mean Hologic, Inc. and shall include its "Successors and Assigns" (as hereinafter defined).
2.6 DISABILITY. For purposes of this Agreement, "Disability" shall mean a physical or mental infirmity which impairs the Executive's ability to substantially perform his or her duties with the Company for a period of ninety (90) consecutive days, and the Executive has not returned to his or her full time employment prior to the Termination Date as stated in the "Notice of Termination" (as hereinafter defined).
2.7 GOOD REASON. For purposes of this Agreement, "Good Reason" shall mean:
a. Material diminution in the Executive's offices, titles and reporting requirements, authority, duties or responsibilities as in effect at any time in the ninety (90) days prior to Notice of Termination;
b. Reduction in the Executive's Base Salary or bonus opportunity, unless such reduction is part of a company-wide reduction in salary and bonus opportunities for all similarly situated executives;
c. The Company requiring the Executive to be based at any office or location more than fifty (50) miles from the Company's headquarters as of the date hereof;
d. Any purported termination by the Company of the Executive's employment otherwise than for Cause; or
e. Any failure by the Company to comply with and satisfy Section 6 hereof.
2.8 NOTICE OF TERMINATION. For purposes of this Agreement, "Notice of Termination" shall mean (i) a written notice from the Company of termination of the Executive's employment which indicates the specific termination provision in this Agreement relied upon, if any, and which 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; or (ii) a written notice from the Executive of his or her resignation for Good Reason, which indicates the specific provision in Section 2.7 herein.
2.9 PRO RATA BONUS. For purposes of this Agreement, "Pro Rata Bonus" shall mean an amount equal to the Bonus Amount multiplied by a fraction the numerator of which is the number of months worked in the fiscal year through the Termination Date and the denominator of which is 12. Any partial months shall be rounded to the nearest whole number using normal mathematical convention.
2.l0 SUCCESSORS AND ASSIGNS. For purposes of this Agreement, "Successors and Assigns" shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise.
2.11 TERMINATION DATE. For purposes of this Agreement, "Termination Date" shall mean in the case of the Executive's death, his or her date of death, in the case of Good Reason, the last day of his or her employment, and in all other cases, the date specified in the Notice of Termination; provided, however, that if the Executive's employment is terminated by the Company for Cause or due to Disability or by the Executive for Good Reason, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Executive, provided that in the case of Disability the Executive shall not have returned to the full-time performance of his or her duties during such period of at least 30 days.
3. TERMINATION OF EMPLOYMENT. If, during the term of this Agreement, the Executive's employment with the Company is terminated, then the Executive shall be entitled to the following compensation and benefits:
a. If the Executive's employment with the Company shall be terminated (1) by the Company for Cause or Disability, (2) by reason of the Executive's death, or (3) by the Executive other than for Good Reason, the Company shall pay to the Executive the Accrued Compensation only.
b. If the Executive's employment with the Company shall be terminated by Company without Cause or by the Executive for Good Reason (as defined in Section 2.7. then the Executive shall be entitled to each and all of the following:
i. | The Company shall pay the Executive all Accrued Compensation; |
ii. | The Company shall pay the Executive a Pro Rata Bonus; |
iii. | The Company shall continue to pay the Executive his or her Base Salary for the period of fifteen (15) months from the Termination Date in accordance with its normal payroll practices and subject to applicable tax withholding; provided, however, that if the Company determines that such payments would constitute deferred compensation within the meaning of Section 409A of the Code, then the Executive agrees to the modifications with respect to timing of such payments in accordance with Section 10 hereof; and |
c. The Amounts provided for in Sections 3(a) and 3(b)(i) (shall be paid in a single lump sum cash payment within five (5) business days after the Executive's Termination Date (or earlier, if required by applicable law).
3.2 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.
3.3 OTHER SEVERANCE BENEFITS. The severance pay and benefits provided for in this Section 3 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.
3.4 DIVESTITURE OR SALE OF DIVISION. Notwithstanding any other provision of this Agreement to the contrary, the termination of the Executive's employment with the Company in connection with the sale, divestiture or other disposition of a Subsidiary or "Division" (as hereinafter defined) (or part thereof) shall not be deemed to be a termination of employment of the Executive for purposes of this Agreement provided, in the event such sale, divestiture or other disposition of a Subsidiary or Division, the Company obtains an agreement from such purchaser or acquiror as contemplated in Section 6(c). The Executive shall not be entitled to benefits from the Company under this Agreement as a result of such sale, divestiture, or other disposition, except in the event of a subsequent termination of employment entitling Executive to a payment hereunder. "Division” shall mean a business unit or other substantial business operation within the Company that is operated as a separate profit center.
4. NOTICE OF TERMINATION. Any purported termination of the Executive's employment by the Company and/or the Employer shall be communicated by Notice of Termination to the Executive. For purposes of this Agreement, no-such purported termination shall be effective without such Notice of Termination.
5. EXCISE TAX PAYMENTS
a. Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, the Executive under any other Company plan or agreement (such payments or benefits are collectively referred to as the "Payments") would be subject to the excise tax (the "Excise Tax") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), the Payments shall be reduced (but not below zero) if and to the extent necessary so that no Payment to be made or benefit to be provided to the Executive shall be subject to the Excise Tax (such reduced amount is hereinafter referred to as the "Limited Payment Amount"). Unless the Executive shall have given prior written notice specifying a different order to the
Company to effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the "Determination" (as hereinafter defined). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation.
b. An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Plan and the amount of such Limited Payment Amount shall be made by an accounting firm at the Company's expense selected by the Company which is designated as one of the six largest accounting firms in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation, to the Company and the Executive within five (5) days of the Termination Date, if applicable, or such other time as requested by the Company or by the Executive (provided the Executive reasonably believes that any of the Payments may be subject to the Excise Tax), and if the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to a Payment or Payments, it shall furnish the Executive with an opinion, at the Company's expense, reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Executive, the Executive shall have the right to dispute the Determination (the "Dispute"). If there is no Dispute, the Determination shall be binding, final and conclusive upon the Company and the Executive subject to the application of Section 5(c) below.
c. As a result of the uncertainty in the application of Sections 4999 and 2800 of the Code, it is possible that the Payments to be made to, or provided for the benefit of, the Executive either have been made or will not be made by the Company which, in either case, will be inconsistent with the limitations provided in Section 5(a) (hereinafter referred to as an "Excess Payment" or "Underpayment", respectively). If it is established pursuant to a final determination of a court, or an Internal Revenue Service (the "IRS") proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to the Executive made on the date the Executive received the Excess Payment and the Executive shall repay the Excess Payment to the Company, on demand (but not less than thirty (30) days after written notice is received by the Executive), together with interest on the Excess Payment at the "Applicable Federal Rate" (as defined in Section 1274(d) of the Code) from the date of the Executive's receipt of such Excess Payment until the date of such repayment. In the event that it is determined by (i) the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to the Executive's satisfaction of the Dispute, that an underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Executive within thirty (30) days of such determination or resolution, together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to the Executive until the date of payment.
d. Notwithstanding anything contained in this Agreement to the contrary, in the event that, according to the Determination, an Excise Tax will be imposed on any Payment or Payments, the Company shall pay to the applicable government taxing authorities, as Excise Tax withholding, the amount of the Excise Tax that the Company has actually withheld from the Payment or Payments.
6. SUCCESSORS: BINDING AGREEMENT.
a. This Agreement shall be binding upon and shall inure to the benefit of the Company, and its Successors and Assigns, and the Company shall require any Successors and Assigns 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 or assignment had taken place.
b. Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, his or her beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's personal representative.
c. In the event that a Subsidiary or Division (or part thereof) is sold, divested, or otherwise disposed of by the Company subsequent to or in connection with a Change in Control and the Executive is offered employment by the purchaser or acquirer thereof, the Company shall require such purchaser or acquiror to assume, and agree to perform, the Company's obligations under this Agreement, in the same manner, and to the same extent, that the Company would be required to perform if no such acquisition or purchase had taken place.
7. ARBITRATION. Any dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity hereof, (collectively, a "Claim") shall be settled by arbitration pursuant to the rules of the American Arbitration Association. Any such arbitration shall be conducted by one arbitrator, with experience in the matters covered by this Agreement, mutually acceptable to the parties. If the parties are unable to agree on the arbitrator within thirty (30) days of one party giving the other party written notice of intent to arbitrate a Claim, the American Arbitration Association shall appoint an arbitrator with such qualifications to conduct such arbitration. The decision of the arbitrator in any such arbitration shall be conclusive and binding on the parties. Any such arbitration shall be conducted in Boston, Massachusetts, unless the Executive consents to a different location.
8. NOTICE. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be (i) delivered by hand, ii) transmitted by facsimile or electronic mail with receipt confirmed, (iii) delivered by overnight courier service with confirmed receipt or (iv) mailed by first class U.S. mail postage pre-paid and registered or certified, return receipt requested and addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the Board with a copy to the General Counsel of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.
9. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company (except for any severance or termination policies, plans, programs or practices) and for which the Executive may qualify, nor shall anything herein limit or reduce such rights as the Executive may have under any other agreements with the Company (except for any severance or termination agreement). Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan or program of the Company shall be payable in accordance with such plan or program, except as explicitly modified by this Agreement.
10. 409A COMPLIANCE. Notwithstanding any other provision herein to the contrary, the Company shall make the payments required hereunder in compliance with the requirements of Section 409A of the Code and any interpretative guidance issued thereunder. The Company may, in its sole and absolute discretion, delay payments hereunder or make such other modifications with respect to the timing of payments as it deems necessary to comply with Section 409A of the Code.
11. RELEASE. The Executive agrees that, with the exception of the Accrued
Compensation due to him in accordance with the terms hereunder, that the payment of any severance under Sections 3(b)(ii) and (iii) is subject to and conditioned upon the execution and delivery by the Executive to the Company of a Settlement and Release Agreement (the "Release Agreement") in favor of the Company, its affiliates and their respective officers, directors, employees and agents in respect to the Executive's employment with the Company and the termination thereof in a form suitable to the Company and the expiration of any revocation period provided for under the Release Agreement.
12. NO EMPLOYMENT RIGHT. This Agreement does not constitute, and shall not be construed to provide, any assurance of continuing employment. Executive's employment with the Company and of its Successors or Assigns is "at will" and, subject to the terms and conditions of this Agreement, may be terminated by Executive or the Company at any time.
13. OTHER CHANGE IN CONTROL AGREEMENT. Notwithstanding anything herein to the contrary, if the Executive is a party to a Change of Control Agreement with the Company and such Agreement results in the payment of benefits to the Executive as the result of a change in control then the Executive shall receive no compensation hereunder.
14. MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, specifying such modification, waiver or discharge, and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other 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 similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.
15. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Massachusetts without giving effect to the conflict of laws principles thereof. Any action brought by any party to this Agreement to enforce any decision of an arbitrator made as contemplated in Section 8 above shall be brought and maintained in a court of competent jurisdiction in the Commonwealth of Massachusetts.
16. SEVERABILITY. The provisions of this Agreement shall be deemed severable, and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior severance agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof, provided, however, that any Change of Control Agreement, option agreement, Assignment of Intellectual Property and Non-Competition Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized executive and the Executive has executed this Agreement as of the day and year first above written.
Hologic, Inc.
By: ___/s/ Allison Bebo__________________
Date:__ July 20, 2017____________________
Executive
/s/ Kevin R. Thornal
____________________________________
Date:__July 20, 2017___________________
CHANGE OF CONTROL AGREEMENT
CHANGE OF CONTROL AGREEMENT by and between Hologic, Inc., a Delaware corporation (the “Company”), and Kevin Thornal (the “Executive”), dated as of July 20, 2017 (the “Agreement”).
WHEREAS, the Executive serves as a Division President of the Company; and
WHEREAS, the Company 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, in connection therewith, to provide the Executive with compensation and benefits arrangements upon a Change of Control as set forth herein; and
WHEREAS, the Company and Executive desire to enter into this Change of Control Agreement; and
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. As used herein, the following terms shall have the meanings set forth below:
“Accrued Obligations” means the sum of (i) any portion of the Executive’s base salary earned but not yet paid through the Date of Termination, (ii) the product of (x) the Average Annual Bonus and (y) 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 (iii) any accrued and unpaid compensation, expense reimbursements and any accrued and vested pension, welfare and fringe benefits subject to and in accordance with the terms of the applicable plan or policy including, any unpaid accrued vacation pay, in each case, to the extent earned, but not yet paid by the Company through the Date of Termination. Notwithstanding anything to the contrary in the foregoing, the term “Accrued Obligations” shall not include any severance benefits not otherwise expressly set forth herein, it being understood that this Agreement, as it relates to the termination during the Change of Control Period, shall supersede any severance benefits to which the Executive would otherwise have been entitled to pursuant to any other severance agreement or severance plan that would otherwise have been applicable to the Executive.
“Annual Base Salary” means the greater of the Executive’s annual base salary as of (i) the date of the consummation of a Change of Control or (ii) Date of Termination. Notwithstanding anything herein to the contrary, any portion of Annual Base Salary electively deferred by the Executive pursuant to a qualified or a non-qualified plan shall be included in determining Annual Base Salary.
“Annual Bonus” means the amount paid to Executive in accordance with the Company’s annual bonus plan, provided, that any portion of an annual bonus electively deferred by the Executive pursuant to a qualified or a non-qualified plan shall be included in determining Annual Bonus. For the avoidance of doubt the Executive’s Annual Bonus amount shall exclude any retention bonus paid pursuant to a separate retention agreement between Company and Executive and any amount contributed or to be contributed by the Company on behalf of the Executive pursuant to any qualified or non-qualified plan maintained by the Company.
“Average Annual Bonus” means an amount equal to the average (annualized for any completed fiscal year with respect to which the Executive has been employed by the Company for less than twelve (12) full months) of the Annual Bonus (payable to the Executive by the Company and, if applicable, its predecessors, in respect of each of the three (3) fiscal years immediately preceding the fiscal year in which a Change of Control occurs.
“Cause” means a determination by the Company that any of the following has occurred: (i) disloyalty, gross negligence, willful misconduct or breach of fiduciary duty to the Company which results in substantial direct or indirect loss, damage or injury to the Company; (ii) Executive’s material violation of the Company’s Code of Conduct, and other Company Codes of Conduct or other policies and procedures that are applicable to the Executive; (iii) the commission, indictment, plea of nolo contendere or conviction of Executive of a felony; (iv) the breach of the Executive’s confidentiality, non-competition, non-solicitation covenants set forth in a separate written agreement between the Company and the Executive; or (v) a violation of federal or state securities law or regulations.
“Change of Control” means:
(i) | The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% 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 of 50% 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 then outstanding shares of common 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 |
(ii) | 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; or |
(iii) | The consummation of (i) a Merger with respect to which 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 then outstanding shares of common 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 and without regard to any of the individual’s and entities’ shareholdings in the corporation resulting from the Merger 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. |
Notwithstanding the foregoing, no Change of Control shall be deemed to occur if as a result of any transaction referred to in paragraph (iii) above, the Company is deemed to be the accounting acquirer under U.S. generally accepted accounting principles pursuant to paragraph 17 of Statement of Financial Accounting Standard (SFAS) 141, as it may be amended from time to time or any successor rule, standard, pronouncement, law or regulation.
“Change of Control Period” means the period commencing upon a Change of Control and ending two (2) years after a Change of Control.
“Code” means the Internal Revenue Code of 1986, as amended and any successor act thereto.
“Company Payments” has the meaning ascribed to in Section 6.
“Company’s Accountants” means 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 the such certified public accountants.
“Date of Termination” means the date of receipt of the notice of termination by either party provided that if the Executive’s employment is terminated by the Executive as a result of Good Reason, the Date of Termination shall be the date that the Company’s 30 day cure period expires.
“Disability” means Executive’s inability to satisfactorily perform the essential functions and duties of Executive’s position with the Company, with or without reasonable accommodation, for either 60 consecutive days or 90 days in any 6 month period, as a result of any physical or mental impairment, as determined by the Board upon certification thereof by a qualified physician selected by the Board after such physician examines Executive. Executive agrees, upon request by the Board, to submit to such examination and to provide the Board such medical evidence, records and examination data as is reasonably necessary for the Board to evaluate any potential Disability. The Board agrees to treat such medical information confidentially as required by law.
“Effective Date” means the date of the occurrence of a Change of Control.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor act thereto.
“Excise Tax” has the meaning ascribed to it in Section 6.
“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; |
(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; |
(iv) | A material change in the geographic location in which Executive’s principal office was located immediately prior to the Change of Control; |
(v) | A material diminution in the budget over which the Executive had authority immediately prior to the of the Change of Control; |
(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 within such thirty (30) day cure period.
“Merger” means a reorganization, merger or consolidation.
“Non-Competition Agreements” means any agreement other than this Agreement between the Executive and the Company containing restrictive covenants pertaining to confidentiality, non-competition and non-solicitation.
“Voting Stock” means the then outstanding shares of voting stock of the Company.
“Welfare Benefit Continuation” means the continuation of health and dental insurance benefits to the Executive and/or the Executive's family at least equal to and on the same basis to those which would have been provided in accordance to the terms of the plans to other similarly situated employees of the Company.
2. Effect of Change of Control and Obligations of the Company upon Termination Following a Change of Control.
(a) Termination Following a Change of Control as a Result of Death, Disability or Cause. If the Company consummates a Change of Control and during the Change of Control Period the Executive’s employment is terminated for Cause or as a result of the Executive’s death or disability, then this Agreement shall terminate without further obligations to the Executive or the Executive’s legal representatives under this Agreement, other than for payment of any Accrued Obligations and any other benefits or compensation payable under any employee benefit plan in accordance with the applicable plans’ terms.
(b) Termination Following a Change of Control Other Than for Death, Disability or Cause or as a Result of Good Reason. If the Company consummates a Change of Control and during the Change of Control Period the Company terminates the Executive’s employment other than for death or Disability or Cause, or if the Executive terminates employment for Good Reason then the Company shall pay to the Executive in a lump sum in cash within thirty (30) days after the Date of Termination the aggregate of the following amounts: (i) all Accrued Obligations; (ii) a lump sum amount equal to the product of (X) one (1) multiplied by (Y) the sum of (A) the Annual Base Salary and (B) the Average Annual Bonus; (iii) any other benefits or compensation payable under any employee benefit plan in accordance with the applicable plans’ terms; (iv) all unvested options, restricted stock or stock appreciation rights which Executive then holds to acquire securities from the Company, shall be immediately and automatically exercisable as of the Date of Termination notwithstanding any other provisions to the contrary contained herein or in any option agreement, restricted stock agreement 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; and (v) the Company shall timely pay and provide Welfare Benefit Continuation for the twelve (12) months following the Date of Termination; provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or dental benefits under another employer provided plan, the medical or dental benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility.
3. Non-exclusivity of Rights. Except as provided in this Section 3, 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; provided, however, that in the event the Executive is entitled to benefits under Section 2(b), then the Executive shall have no right to severance under any separate agreement with the Company or any plan or policy of the Company.
4. No Duty to Mitigate. 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, such amounts shall not be reduced whether or not the Executive obtains other employment.
5. Full Settlement/Release. The Executive shall only be entitled to receive payments and accelerated vesting under Sections 2(b)(ii) and 2(b)(iv), respectively, if Executive: (a) executes a general release of the Company, in a form and of a scope determined by the Company in its sole discretion including, without limitation, non-disparagement provisions (the “Release”) and executes and returns the Release to the Company, without revoking such Release, within fifty-two (52) days of the date of termination of Executive’s employment (the “Consideration Period”) and provided that if the termination date 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 payment of the benefits under Sections 2(b)(ii) and 2(b)(iv) will be paid by the Company to the Executive in the second calendar year; (b) continues to comply with the provisions of any Non-Competition Agreements; and (c) prior to expiration of the Consideration Period (i) presents satisfactory evidence to the Company that she/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 and/or director of the Company or any of its affiliates, if applicable. In the event that the Company determines in good faith that Executive has breached, or has threatened to breach, any material provision of the aforementioned restrictive covenants set forth in a separate written agreement, the Company shall immediately terminate all payments and benefits and Executive shall no longer be entitled to such benefits. Such termination of benefits shall be in addition to any and all legal and equitable remedies available to the Company, including injunctive relief. The Company shall pay all legal fees and expenses which the Executive may reasonably incur in seeking to obtain or enforce, by bringing an action against the Company, any right or benefit provided in this Agreement, if the Executive prevails in such action. Notwithstanding anything to the contrary in the Agreement, payment shall be made by the earlier of the end of the calendar year in which the Consideration Period ends or the first business day following expiration of the Consideration Period.
6. 280G.
(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 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 greatest 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): (1) the Company Payments or (2) 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 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 make the final determination with regard to the issues. In the event of any conference with any taxing authority as 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.
7. Term. The initial term of this Agreement shall be for a period commencing on July 24, 2017 and ending on December 31, 2020; provided, that, commencing on January 1, 2020 and each January 1st thereafter, the term of this Agreement shall automatically be extended for an additional year unless, not later than thirty (30) days prior to such January 1, the Company shall have given notice that it does not wish to extend this Agreement; and provided, further, that notwithstanding any such notice by the Company not to extend, this Agreement shall continue in effect for a period of twenty-four (24) months beyond the term provided herein if a Change in Control shall have occurred during such term.
8. Acknowledgment and Confirmation of Non-Competition Agreements. The Executive hereby acknowledges and confirms the obligations of the Executive to the Company under any Non-Competition Agreements and that such acknowledgment and confirmation is given by the Executive as further consideration for the covenants and agreements of the Company hereunder.
9. Miscellaneous.
(a) Governing Law. 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) Notice. All notices and other communications hereunder shall be in writing and shall be given by electronic mail, hand delivery to the other party or by registered or certified mail, overnight courier, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Kevin Thornal (at the address on record with the company)
If to the Company:
Hologic, Inc.
250 Campus Drive
Marlborough, MA 07130
Attn: General Counsel
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) Severability. 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) Tax Withholding. 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) Waiver. 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) Entire Agreement/Amendment. 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 Change of Control Period; provided, however, that the Employee Intellectual Property Rights and Non-Competition Agreement, option agreement or other employment agreement by and between the Company and Executive shall remain in full force and 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.
(g) Successors. 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. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 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 or successor 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 hereinbefore 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.
(h) At Will Employment. The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, 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. Moreover, 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. Notwithstanding anything contained herein, if, during the Change of Control Period, the Executive shall terminate employment with the Company other than for Good Reason, the Executive shall have no liability to the Company.
(i) Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.
(j) Construction. As used herein, unless the context otherwise dictates, the term “Company” shall be read to include the Company and each of its parents and subsidiaries, and any of their respective subsidiaries.
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/ Ali Bebo
Name: Ali Bebo
Title: | SVP, Human Resources |
EXECUTIVE
_/s/ Kevin Thornal____________________
Kevin Thornal
-1-
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Stephen P. MacMillan, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Hologic, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 31, 2019
/s/ Stephen P. MacMillan | |
Stephen P. MacMillan | |
Chairman, President and Chief Executive Officer | |
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Karleen M. Oberton, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of Hologic, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 31, 2019
/s/ Karleen M. Oberton | |
Karleen M. Oberton | |
Chief Financial Officer | |
Exhibit 32.1
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
I, Stephen P. MacMillan, Chief Executive Officer of Hologic, Inc., a Delaware corporation (the “Company”), do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), that:
(1) | The Quarterly Report on Form 10-Q for the quarter ended June 29, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: July 31, 2019 | /s/ Stephen P. MacMillan |
Stephen P. MacMillan | |
Chairman, President and Chief Executive Officer | |
A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 HAS BEEN PROVIDED TO HOLOGIC, INC. AND WILL BE RETAINED BY HOLOGIC, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.
Exhibit 32.2
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
I, Karleen M. Oberton, Chief Financial Officer of Hologic, Inc., a Delaware corporation (the “Company”), do hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), that:
(1) | The Quarterly Report on Form 10-Q for the quarter ended June 29, 2019 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: July 31, 2019 | /s/ Karleen M. Oberton |
Karleen M. Oberton | |
Chief Financial Officer | |
A SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 HAS BEEN PROVIDED TO HOLOGIC, INC. AND WILL BE RETAINED BY HOLOGIC, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.