CHANGE IN CONTROL SEVERANCE COMPENSATION AND RESTRICTIVE COVENANT AGREEMENT
CHANGE
IN CONTROL
SEVERANCE
COMPENSATION
AND
RESTRICTIVE
COVENANT AGREEMENT
THIS
SEVERANCE COMPENSATION AND RESTRICTIVE COVENANT AGREEMENT
(the
“Agreement”) is dated as of April 26, 2006 between MATRIA
HEALTHCARE, INC.,
a
Delaware corporation (the “Company”), and XXXXXX
X. XXXXX (the
“Executive”).
WHEREAS,
the
Company, has determined that it is appropriate to reinforce and encourage
the
continued attention and dedication of members of the Company’s management,
including the Executive, to their assigned duties without distraction in
potentially disruptive circumstances arising from the possibility of a Change
in
Control (as hereinafter defined) of the Company; and
WHEREAS,
the
severance benefits payable by the Company to the Executive as provided herein
are in part intended to ensure that the Executive receives reasonable
compensation given the specific circumstances of Executive’s employment history
with the Company;
NOW,
THEREFORE,
in
consideration of their respective obligations to one another set forth in
this
Agreement, and other good and valuable consideration, the receipt, sufficiency
and adequacy of which the parties hereby acknowledge, the parties to this
Agreement, intending to be legally bound, hereby agree as follows:
1. Term.
This
Agreement shall terminate, except to the extent that any obligation of the
Company hereunder remains unpaid as of such time, upon the earliest of
(i) the Date of Termination (as hereinafter defined) of the Executive’s
employment with the Company as a result of the Executive’s death, Disability (as
defined in Section 3(b)) or Retirement (as defined in Section 3(c)),
by the Company for Cause (as defined in Section 3(d)) or by the Executive
other than for Good Reason (as defined in Section 3(e)); and
(ii) three years from the date of a Change in Control if the Executive’s
employment with the Company has not terminated as of such time.
2. Change
in Control.
For
purposes of this Agreement, “Change in Control” shall mean changes in the
ownership of the Company, changes in the effective control of the Company,
changes in ownership of a substantial portion of the Company’s assets and a
disposition of a substantial portion of the Company’s assets, all as defined
below:
(a) A
change
in the ownership of the Company occurs on the date that any one person, or
more
than one person acting as a group, acquires ownership of stock of the Company
which, together with stock held by such person or group, represents more
than
fifty percent (50%) of the total fair market value or total voting power
of the
stock of the Company. An increase in the percentage of stock owned by any
one
person, or persons acting as a group, as a result of a transaction in which
the
Company acquires its stock in exchange for property will be
1
treated
as an acquisition of stock.
(b) A
change
in the effective control of the Company occurs on the date that either: any
one
person, or more than one person acting as a group becomes the beneficial
owner
of stock of the Company possessing twenty-five percent (25%) or more of the
total voting power of the stock of the Company; or a majority of members
of the
Company’s board of directors is replaced during any 24-month period by directors
whose appointment or election is not endorsed by at least two-thirds (2/3)
of
the members of the Company’s board of directors who were directors prior to the
date of the appointment or election of the first of such new
directors.
(c) A
change
in the ownership of a substantial portion of the Company’s assets occurs on the
date that any one person, or more than one person acting as a group, acquires
(or has acquired during the 12-month period ending on the date of the most
recent acquisition by such person or persons) assets from the Company that
have
a total fair market value equal to or more than one-half (1/2) of the total
fair
market value of all of the assets of the Company immediately prior to such
acquisition or acquisitions. The transfer of assets by the Company is not
treated as a change in the ownership of such assets if the assets are
transferred: to a shareholder of the Company (immediately before the asset
transfer) in exchange for such shareholder’s capital stock of the Company having
a fair market value approximately equal to the fair market value of such
assets;
or to an entity, fifty percent (50%) or more of the total value or voting
power
of which is owned, directly or indirectly, by the Company.
(d) A
disposition of a substantial portion of the Company’s assets occurs on the date
that the Company transfers assets by sale, lease, exchange, distribution
to
shareholders, assignment to creditors, foreclosure or otherwise, in a
transaction or transactions not in the ordinary course of the Company’s business
(or has made such transfers during the 12-month period ending on the date
of the
most recent transfer of assets) that have a total fair market value equal
to or
more than one-half (1/2) of the total fair market value of all of the assets
of
the Company as of the date immediately prior to the first such transfer or
transfers. The transfer of assets by the Company is not treated as a disposition
of a substantial portion of the Company’s assets if the assets are transferred
to an entity, fifty percent (50%) or more of the total value or voting power
of
which is owned, directly or indirectly, by the Company.
For
purposes of the provision of this Agreement defining “Change in Control,” (i)
references to the Company herein include the Delaware corporation known as
Matria Healthcare, Inc. as of the date of execution of this Agreement, and
any
corporation that is the Successor or Assign (as defined in Section 7(a))
to such
corporation; and (ii) the terms “person,” “acting as a group” and “ownership”
shall have the meanings prescribed in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934, as amended, and Rule 13d-3 promulgated
thereunder; provided, however, that in any merger, consolidation or share
exchange in which less than fifty percent (50%) of the outstanding voting
securities of the Company or its successor corporation are held by the former
shareholders of the Company, the shareholders of the other parties to the
transaction shall be deemed to have acted as a group that acquired ownership
of
more than fifty percent (50%) of the
2
outstanding
voting securities of the Company, resulting in a change in ownership under
Section 2(a) above.
3. Termination
Following Change in Control.
(a) General.
If the
Executive is still an employee of the Company at the time of a Change in
Control, the Executive shall be entitled to the compensation and benefits
provided in Section 4 upon the subsequent termination of the Executive’s
employment with the Company by the Executive or by the Company during the
term
of this Agreement, unless such termination is as a result of (i) the
Executive’s death; (ii) the
Executive’s Disability; (iii) the
Executive’s Retirement; (iv) the
Executive’s termination by the Company for Cause; or (v) the
Executive’s decision to terminate employment other than for Good
Reason.
(b) Disability.
The
term “Disability” as used in this Agreement shall mean termination of the
Executive’s employment by the Company as a result of the Executive’s incapacity
due to physical or mental illness, provided that the Executive shall have
been
absent from his duties with the Company on a full-time basis for six consecutive
months and such absence shall have continued unabated for 30 days after Notice
of Termination as described in Section 3(f) is thereafter given to the Executive
by the Company.
(c) Retirement.
The
term “Retirement” as used in this Agreement shall mean termination of the
Executive’s employment by the Company based on the Executive’s having attained
age 65 or such later retirement age as shall have been established pursuant
to a
written agreement between the Company and the Executive.
(d) Cause.
The
term “Cause” for purposes of this Agreement shall mean the Company’s termination
of the Executive’s employment on the basis of criminal or civil fraud on the
part of the Executive involving a material amount of funds of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have
been
terminated for Cause unless and until there shall have been delivered to
the
Executive a copy of a resolution duly adopted by the affirmative vote of
not
less than three-quarters of the entire membership of the Company’s Board of
Directors at a meeting of the Board called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the Executive,
together with the Executive’s counsel, to be heard before the Board) finding
that in the good faith opinion of the Board the Executive was guilty of conduct
set forth in the first sentence of this Section 3(d) and specifying the
particulars thereof in detail. For purposes of this Agreement only, the
preparation and filing of fictitious, false or misleading claims in connection
with any federal, state or other third party medical reimbursement program,
or
any other violation of any rule or regulation in respect of any federal,
state
or other third party medical reimbursement program by the Company or any
subsidiary of the Company shall not be deemed to constitute “criminal fraud” or
“civil fraud.”
3
(e) Good
Reason.
For
purposes of this Agreement, “Good Reason” shall mean any of the following
actions taken by the Company without the Executive’s express written
consent:
(i)
The
assignment to the Executive by the Company of duties inconsistent with, or
a
material adverse alteration of the powers and functions associated with,
the
Executive’s position, duties, responsibilities and status with the Company prior
to a Change in Control, or an adverse change in the Executive’s titles or
offices as in effect prior to a Change in Control, or any removal of the
Executive from or any failure to re-elect the Executive to any of such
positions, except in connection with the termination of his employment for
Disability, Retirement or Cause or as a result of the Executive’s death or by
the Executive other than for Good Reason;
(ii)
A
reduction in the Executive’s base salary as in effect on the date hereof or as
the same may be increased from time to time during the term of this Agreement
or
the Company’s failure to increase (within 12 months of the Executive’s last
increase in base salary) the Executive’s base salary after a Change in Control
in an amount which at least equals, on a percentage basis, the average annual
percentage increase in base salary for all corporate officers of the Company
effected in the preceding 36 months;
(iii)
Any
failure by the Company to continue in effect any benefit plan, program or
arrangement (including, without limitation, any profit sharing plan, group
annuity contract, group life insurance supplement, or medical, dental, accident
and disability plans) in which the Executive was eligible to participate
at the
time of a Change in Control (hereinafter referred to as “Benefit Plans”), or the
taking of any action by the Company which would adversely affect the Executive’s
participation in or materially reduce the Executive’s benefits under any such
Benefit Plan, unless a comparable substitute Benefit Plan shall be made
available to the Executive, or deprive the Executive of any fringe benefit
enjoyed by the Executive at the time of a Change in Control;
(iv)
Any
failure by the Company to continue in effect any incentive plan or arrangement
(including, without limitation, any bonus or contingent bonus arrangements
and
credits and the right to receive performance awards and similar incentive
compensation benefits) in which the Executive is participating at the time
of a
Change in Control (or any other plans or arrangements providing him with
substantially similar benefits) (hereinafter referred to as “Incentive Plans”)
or the taking of any action by the Company which would adversely affect the
Executive’s participation in any such Incentive Plan or reduce the Executive’s
benefits under any such Incentive Plan, expressed as a percentage of his
base
salary, by more than five percentage points in any fiscal year as compared
to
the immediately preceding fiscal year, or any action to reduce Executive’s
bonuses under any Incentive Plan by more than 20% of the average annual bonus
previously paid to Executive with respect to the preceding three fiscal
years;
(v)
Any
failure by the Company to continue in effect any plan or arrangement to receive
securities of the Company (including, without limitation, the Company’s
4
1997
Stock Incentive Plan, Employee Stock Purchase Plan and any other plan or
arrangement to receive and exercise stock options, stock appreciation rights,
restricted stock or grants thereof) in which the Executive is participating
or
has the right to participate in prior to a Change in Control (or plans or
arrangements providing him with substantially similar benefits) (hereinafter
referred to as “Securities Plans”) or the taking of any action by the Company
which would adversely affect the Executive’s participation in or materially
reduce the Executive’s benefits under any such Securities Plan, unless a
comparable substitute Securities Plan shall be made available to the
Executive;
(vi)
A
relocation of the Company’s principal executive offices to a location more than
ten (10) miles outside of Marietta, Georgia, or the Executive’s relocation to
any place other than the Company’s principal executive offices, except for
required travel by the Executive on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations
immediately prior to a Change in Control;
(vii)
Any
failure by the Company to provide the Executive with the number of paid vacation
days (or compensation therefor at termination of employment) accrued to the
Executive through the Date of Termination;
(viii)
Any
material breach by the Company of any provision of this Agreement;
(ix)
Any
failure by the Company to obtain the assumption of this Agreement by any
successor or assign of the Company effected in accordance with the provisions
of
Section 7(a) hereof;
(x)
Any
purported termination of the Executive’s employment that is not effected
pursuant to a Notice of Termination satisfying the requirements of
Section 3(f), and for purposes of this Agreement, no such purported
termination shall be effective; or
(xi)
Any
proposal or request by the Company after the Effective Date to require that
the
Executive enter into a non-competition agreement with the Company where the
terms of such agreement as to its scope or duration are greater than the
terms
set forth in Section 5 hereof.
(f) Notice
of Termination.
Any
termination of the Executive’s employment by the Company for a reason specified
in Section 3(b), 3(c) or 3(d) shall be communicated to the Executive by a
Notice of Termination prior to the effective date of the termination. For
purposes of this Agreement, a “Notice of Termination” shall mean a written
notice which shall indicate whether such termination is for the reason set
forth
in Section 3(b), 3(c) or 3(d) 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. For purposes of this
Agreement, no termination of the Executive’s employment by the Company shall
constitute a termination for Disability, Retirement or Cause unless such
termination is preceded by a Notice of Termination.
5
(g) Date
of Termination.
“Date
of Termination” shall mean (a) if
the Executive’s employment is terminated by the Company for Disability, 30 days
after a Notice of Termination is given to the Executive (provided that the
Executive shall not have returned to the performance of the Executive’s duties
on a full-time basis during such 30-day period) or (b) if
the Executive’s employment is terminated by the Company or the Executive for any
other reason, the date on which the Executive’s termination is effective;
provided that, if within 30 days after any Notice of Termination is given
to the
Executive by the Company the Executive notifies the Company that a dispute
exists concerning the termination, the Date of Termination shall be the date
the
dispute is finally determined whether by mutual agreement by the parties
or upon
final judgment, order or decree of a court of competent jurisdiction (the
time
for appeal therefrom having expired and no appeal having been perfected).
For
purposes of this Agreement, the Executive’s employment by the Company shall be
deemed terminated upon the date the Executive incurs a “separation from service”
within the meaning of Section
409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (“Code”), and
the regulations issued thereunder.
4. Compensation
and Benefits upon Termination of Employment.
(a) If
the
Company shall terminate the Executive’s employment after a Change in Control
other than pursuant to Section 3(b), 3(c) or 3(d) and Section 3(f), or if
the Executive shall terminate his employment for Good Reason, then the Company
shall pay to the Executive, as severance compensation and in consideration
of
the Executive’s adherence to the terms of Section 5 hereof, the
following:
(i) On
the
Date of Termination, the Company shall become liable to the Executive for
an
amount equal to three times the Executive’s annual base compensation, targeted
base bonus and annual car allowance on the date of the Change in Control,
which
amount shall be paid to the Executive in cash on or before the fifth day
following the Date of Termination.
(ii) For
a
period of three years following the Date of Termination, the Executive and
anyone entitled to claim under or through the Executive shall be entitled
to all
benefits under the group hospitalization plan, health care plan, dental care
plan, life or other insurance or death benefit plan, or other present or
future
similar group employee benefit plan or program of the Company for which key
executives are eligible at the date of a Change in Control, to the same extent
as if the Executive had continued to be an employee of the Company during
such
period and such benefits shall, to the extent not fully paid under any such
plan
or program, be paid by the Company.
(iii) Notwithstanding
any other provision of this Agreement, it is intended that any payment or
benefit provided pursuant to or in connection with this Agreement that is
considered to be nonqualified deferred compensation subject to Section 409A
of
the Code shall be provided and paid in a manner, and at such time and in
such
form, as complies with the applicable requirements of Section 409A of the
Code.
If and to the extent required by Section 409A of the Code, no payment or
benefit
shall be made or provided to a “specified employee” (as
6
defined
below) prior to the six (6) month anniversary of the Executive’s separation from
service (within
the meaning of Section
409A(a)(2)(A)(i) of the Code). The amounts provided for in this Agreement
that
constitute nonqualified deferred compensation shall be paid as soon as the
six
month deferral period ends. In the event that benefits are required to be
deferred, any such benefit may be provided during such six month deferral
period
at the Executive’s expense, with the Executive having a right to reimbursement
from the Company for the amount of any premiums or expenses paid by the
Executive once the six month deferral period ends. For this purpose, a specified
employee shall mean an individual who is a key employee (as defined in
Section 416(i) of the Code without regard to Section 416(i)(5) of the
Code) of the Company at any time during the 12-month period ending on each
December 31 (the “identification date”). If the Executive is a key employee as
of an identification date, the Executive shall be treated as a specified
employee for the 12-month period beginning on the April 1 following the
identification date. Notwithstanding the foregoing, the Executive shall not
be
treated as a specified employee unless any stock of the Company or a corporation
or business affiliated with it pursuant to Sections 414(b) or (c) of the
Code is
publicly traded on an established securities market or otherwise.
(b) The
parties hereto agree that the payments provided in Section 4(a) hereof are
reasonable compensation in light of the Executive’s services rendered to the
Company and in consideration of the Executive’s adherence to the terms of
Section 5 hereof. Neither party shall contest the payment of such benefits
as
constituting an “excess parachute payment” within the meaning of
Section 280G(b)(1) of the Code. In the event that the Executive becomes
entitled to the compensation and benefits described in Section 4(a) hereof
(the “Compensation Payments”) and the Company has determined, based upon the
advise of tax counsel selected by the Company’s independent auditors and
acceptable to the Executive, that, as a result of such Compensation Payments
and
any other benefits or payments required to be taken into account under Code
Section 280G(b)(2) (“Parachute Payments”), any of such Parachute Payments must
be reported by the Company as “excess parachute payments” and are therefore not
deductible by the Company, the Company shall pay to the Executive at the
time
specified in Section 4(a) above an additional amount (the “Gross-Up
Payment”) such that the net amount retained by the Executive, after deduction of
any of the tax imposed on the Executive by Section 4999 of the Code (the
“Excise
Tax”) and any Federal, state and local income tax and Excise Tax upon the
Gross-Up Payment, shall be equal to the Parachute Payments determined prior
to
the application of this paragraph. The value of any non-cash benefits or
any
deferred payment or benefit shall be determined by the Company’s independent
auditors. For purposes of determining the amount of the Gross-Up Payment,
the
Executive shall be deemed to pay Federal income taxes at the highest marginal
rate of Federal income taxation in the calendar year in which the Gross-Up
Payment is to be made and state and local income taxes at the highest marginal
rates of taxation in the state and locality of the Executive’s residence on the
Date of Termination, net of the maximum reduction in Federal income taxes
which
could be obtained from deduction of such state and local taxes. In the event
that the Excise Tax payable by the Executive is subsequently determined to
be
less than the amount, if any, taken into account hereunder at the time of
termination of the Executive’s employment, the Executive shall repay to the
Company at the time that the amount of such reduction in Excise Tax is
7
finally
determined the portion of the Gross-Up Payment attributable to such reduction
plus interest on the amount of such repayment at the rate provided for in
Section 1274(b)(2)(B) of the Code (“Repayment Amount”). In the event that
the Excise Tax payable by the Executive is determined to exceed the amount,
if
any, taken into account hereunder at the time of the termination of the
Executive’s employment (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-Up Payment),
the
Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest and penalty payable with respect to such excess) immediately
prior to the time that the amount of such excess is required to be paid by
Executive (“Additional Gross-up”), such that the net amount retained by the
Executive, after deduction of any Excise Tax on the Parachute Payments and
any
Federal, state and local income tax and Excise Tax upon the Additional Gross-Up
Payment, shall be equal to the Parachute Payments determined prior to the
application of this paragraph. The obligation to pay any Repayment Amount
or
Additional Gross-up shall remain in effect under this Agreement for the entire
period during which the Executive remains liable for the Excise Tax, including
the period during which any applicable statute of limitation remains
open.
(c) The
payments provided in Section 4(a) above shall be in lieu of any other
severance compensation otherwise payable to Executive under any other agreement
between Executive and the Company or the Company’s established severance
compensation policies; provided, however, that nothing in this Agreement
shall
affect or impair Executive’s vested rights under any other employee benefit plan
or policy of the Company. For the avoidance of doubt, if more than one Change
in
Control occurs during the term hereof, the term of this Agreement shall be
measured from the latest such Change in Control to occur and the amount of
compensation payable under Section 4(a)(1) shall be based upon the highest
annual base salary, targeted base bonus and car allowance payable to Executive
on the date of any such Change in Control, but Executive shall not be entitled
to receive severance compensation under Section 4(a) more than
once.
(d) Unless
the Company determines that any Parachute Payments made hereunder must be
reported as “excess parachute payments” in accordance with the third sentence of
Section 4(b) above, neither party shall file any return taking the position
that the payment of such benefits constitutes an “excess parachute payment”
within the meaning of Section 280G(b)(1) of the Code. If the Internal
Revenue Service proposes an assessment of Excise Tax against the Executive
in
excess of the amount, if any, taken into account at the time specified in
Section 4(a), then, if the Company notifies Executive in writing that the
Company elects to contest such assessment at its expense, unless the Executive
waives the right to an Additional Gross-Up Payment, the Executive (i) shall
in good faith cooperate with the Company in contesting such proposed assessment;
and (ii) such Executive shall not settle such contest without the written
consent of the Company. Any such contest shall be controlled by the Company,
provided,
however,
that the
Executive may participate in such contest.
8
5. Protective
Covenants.
(a) Definitions.
This
Subsection sets forth the definition of certain capitalized terms used in
Subsections (a) through (f) of this Section 5.
(i)
“Competing
Business”
shall
mean a business (other than the Company) that, directly or through a controlled
subsidiary or through an affiliate, (a) provides disease management programs
for
diabetes, congestive heart failure, coronary artery disease, chronic obstructive
pulmonary disease, cancer, pregnancy, depression, chronic pain or hepatitis
C;
and/or (b) provides obstetrical home care; and/or (c) provides on-line programs
targeting weight loss, nutrition and diet, fitness, smoking cessation or
stress
management; and/or (d) provides informatics services (collectively, “Competing
Services”). Notwithstanding the foregoing, no business shall be deemed a
“Competing Business” unless, within at least one of the business’s three most
recently concluded fiscal years, that business, or a division of that business,
derived more than twenty percent (20%) of its gross revenues or more than
$2,000,000 in gross revenues from the provision of Competing
Services.
(ii)
“Competitive
Position”
shall
mean: (A) the Executive’s direct or indirect equity ownership (excluding
ownership of less than one percent (1%) of the outstanding common stock of
any
publicly held corporation) or control of any portion of any Competing Business;
or (B) any employment, consulting, partnership, advisory, directorship, agency,
promotional or independent contractor arrangement between the Executive and
any
Competing Business where the Executive performs services for the Competing
Business substantially similar to those the Executive performed for the Company,
provided, however, that the Executive shall not be deemed to have a Competitive
Position solely because of the Executive’s services for a Competing Business
that are not directly related to the provision of Competing Services, unless
more than thirty-five percent (35%) of the gross revenues of the Competing
Business are derived from the provision of Competing Services.
(iii)
“Covenant
Period”
shall
mean the period of time from the date of this Agreement to the date that
is
three years after the Date of Termination.
(iv)
“Customers”
shall
mean actual customers, clients or referral sources to or on behalf of which
the
Company provides Competing Services (A) during the three years prior to the
date
of this Agreement and (B) during the Covenant Period.
(v)
“Restricted
Territory”
shall
mean the 00 xxxxxxxxxx xxxxxx xx xxx xxxxxxxxxxx Xxxxxx Xxxxxx.
(b) Limitation
on Competition.
In
consideration of the Company’s entering into this Agreement, the Executive
agrees that during the Covenant Period, the Executive will not,
9
without
the prior written consent of the Company, anywhere within the Restricted
Territory, either directly or indirectly, alone or in conjunction with any
other
party, accept, enter into or take any action in conjunction with or in
furtherance of a Competitive Position (other than action to reject an
unsolicited offer of a Competitive Position).
(c) Limitation
on Soliciting Customers.
In
consideration of the Company’s entering into this Agreement, the Executive
agrees that during the Covenant Period, the Executive will not, without the
prior written consent of the Company, alone or in conjunction with any other
party, solicit, divert or appropriate or attempt to solicit, divert or
appropriate on behalf of a Competing Business with which Executive has a
Competitive Position any Customer located in the Restricted Territory (or
any
other Customer with which the Executive had any direct contact on behalf
of the
Company) for the purpose of providing the Customer or having the Customer
provided with a Competing Service.
(d) Limitation
on Soliciting Personnel or Other Parties.
In
consideration of the Company’s entering into this Agreement, the Executive
hereby agrees that he will not, without the prior written consent of the
Company, alone or in conjunction with any other party, solicit or attempt
to
solicit any employee, consultant, contractor, independent broker or other
personnel of the Company or any subsidiary of the Company to terminate, alter
or
lessen that party’s affiliation with the Company or to violate the terms of any
agreement or understanding between such employee, consultant, contractor
or
other person and the Company or any subsidiary of the Company.
(e) Acknowledgement.
The
parties acknowledge and agree that the Protective Covenants are reasonable
as to
time, scope and territory given the Company’s need to protect its trade secrets
and confidential business information and given the substantial payments
and
benefits to which the Executive may be entitled pursuant to this
Agreement.
(f) Remedies.
The
parties acknowledge that any breach or threatened breach of a Protective
Covenant by the Executive is reasonably likely to result in irreparable injury
to the Company, and therefore, in addition to all remedies provided at law
or in
equity, the Executive agrees that the Company shall be entitled to a temporary
restraining order and a permanent injunction to prevent a breach or contemplated
breach of the Protective Covenant. If the Company seeks an injunction, the
Executive waives any requirement that the Company post a bond or any other
security.
6. No
Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.
(a) All
compensation and benefits provided to the Executive under this Agreement
are in
consideration of the Executive’s services rendered to the Company and of the
Executive’s adhering to the terms set forth in Section 5 hereof and the
Executive shall not be required to mitigate damages or the amount of any
payment
provided for under this Agreement by seeking other employment or otherwise,
nor
shall the amount of any payment provided for under
10
this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or
otherwise.
(b) The
provisions of this Agreement, and any payment provided for hereunder, shall
not
reduce any amounts otherwise payable, or in any way diminish the Executive’s
existing rights, or rights which would accrue solely as a result of the passage
of time, under any Benefit Plan, Incentive Plan or Securities Plan, employment
agreement or other contract, plan or arrangement.
7. Successor
to the Company.
(a) The
Company will require any successor or assign (whether direct or indirect,
by
purchase, merger, consolidation or otherwise) to all or substantially all
of the
business and/or assets of the Company (“Successor or Assign”), by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to 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. Any failure of the Company
to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle
the
Executive to terminate the Executive’s employment for Good Reason. As used in
this Agreement (except for purposes of defining “Change in Control” in Section
2), “Company” shall mean the Company as hereinbefore defined and any Successor
or Assign to the Company. If at any time during the term of this Agreement
the
Executive is employed by any corporation a majority of the voting securities
of
which is then owned by the Company, “Company” as used in Sections 3, 4, 12
and 14 hereof shall in addition include such employer. In such event, the
Company agrees that it shall pay or shall cause such employer to pay any
amounts
owed to the Executive pursuant to Section 4 hereof.
(b) This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Executive should die while
any amounts are still payable to him hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this
Agreement to the Executive’s devisee, legatee, or the designee or, if there be
no such designee, to the Executive’s estate.
8. Notice.
For
purposes of this Agreement, notices and all other communications provided
for in
this Agreement shall be in writing and shall be deemed to have been duly
given
when delivered by overnight courier service (e.g., Federal Express) or mailed
by
United States certified mail, return receipt required, postage prepaid, as
follows:
11
If
to
Company:
Matria
Healthcare, Inc.
0000
Xxxxxxx Xxxxx, 00xx Xxxxx
Xxxxxxxx,
XX 00000
Attention:
General Counsel
If
to
Executive:
Xxxxxx
X.
Xxxxx
0000
Xxx
Xxxx
Xxxxxxx,
XX 00000
or
such
other address as either party may have furnished to the other in writing
in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
9. Miscellaneous.
No
provisions of this Agreement may be modified, waived or discharged unless
such
waiver, modification or discharge is agreed to in writing 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. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made
by
either party which are not set forth expressly in this Agreement. This Agreement
shall be governed by and construed in accordance with the laws of the State
of
Delaware. This Agreement supersedes that certain Change in Control Severance
Compensation and Restrictive Covenant Agreement between the parties dated
February 19, 2002.
10. Validity.
The
invalidity or unenforceability of any provisions of this Agreement shall
not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect.
11. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original but all of which together shall constitute one and
the
same instrument.
12. Legal
Fees and Expenses.
The
Company shall pay all legal fees, expenses and damages which the Executive
may
incur as a result of the Executive’s instituting legal action to enforce his
rights hereunder, or in the event the Company contests the validity,
enforceability or the Executive’s interpretation of, or determinations under,
this Agreement. If the Executive is the prevailing party or recovers any
damages
in such legal action, the Executive shall be entitled to receive in addition
thereto pre-judgment and post-judgment interest on the amount of such
damages.
12
13. Section
409A Indemnification.
Notwithstanding any other provision of this Agreement, it is intended that
any
payment or benefit which is provided pursuant to or in connection with this
Agreement which is considered to be nonqualified deferred compensation subject
to Section 409A of the Code shall be provided and paid in a manner, and at
such
time and in such form, as complies with the applicable requirements of Section
409A of the Code. The Company and the Executive shall cooperate to modify
this
Agreement as necessary to comply with the requirements of Section 409A of
the
Code. In the event the Company does not so cooperate, it shall indemnify
and
hold harmless the Executive on an after-tax basis from any tax or interest
penalty imposed under Section 409A of the Code with respect to any payment
or
benefit provided pursuant to this Agreement or any other plan or arrangement
sponsored or maintained by the Company to the extent such tax or interest
penalty is imposed as a result of any failure of the Company to comply with
Section 409A of the Code with respect to such payment or benefit.
14. Severability;
Modification.
All
provisions of this Agreement are severable from one another, and the
unenforceability or invalidity of any provision of this Agreement shall not
affect the validity or enforceability of the remaining provisions of this
Agreement, but such remaining provisions shall be interpreted and construed
in
such a manner as to carry out fully the intention of the parties. Should
any
judicial body interpreting this Agreement deem any provision of this Agreement
to be unreasonably broad in time, territory, scope or otherwise, it is the
intent and desire of the parties that such judicial body, to the greatest
extent
possible, reduce the breadth of such provision to the maximum legally allowable
parameters rather than deeming such provision totally unenforceable or
invalid.
15. Confidentiality.
The
Executive acknowledges that he has previously entered into, and continues
to be
bound by the terms of, a Confidentiality and Non-Solicitation Agreement with
the
Company.
16. Agreement
Not an Employment Contract.
This
Agreement shall not be deemed to constitute or be deemed ancillary to an
employment contract between the Company and the Executive, and nothing herein
shall be deemed to give the Executive the right to continue in the employ
of the
Company or to eliminate the right of the Company to discharge the Executive
at
any time.
13
IN
WITNESS WHEREOF,
the
parties have executed this Agreement to be effective as of the date first
above
written.
MATRIA
HEALTHCARE, INC.
By:
Its
Chief
Executive Officer
Executive
14
