EXHIBIT 10.33
MATRIA HEALTHCARE, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR XXXXXX X. XXXXXXXX
MATRIA HEALTHCARE, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
FOR XXXXXX X. XXXXXXXX
THIS PLAN is hereby agreed to effective as of the 1st day of January,
2003, between Matria Healthcare, Inc., a Delaware corporation (the "Company")
and Xxxxxx X. Xxxxxxxx (the "Executive").
WHEREAS, the Company recognizes that the Executive, who is a member of
management or an otherwise highly compensated employee, has performed services
for the Company in the past that have been of exceptional merit and have
constituted an invaluable contribution to the general welfare of the Company
bringing it to its present status of operating efficiency, and its present
position in its field of activity;
WHEREAS, the experience of the Executive, her knowledge of the affairs
of the Company and her reputation and contacts in the industry are so valuable
that assurance of the availability of her continued services is essential for
the future growth and profits of the Company and it is in the best interests of
the Company to arrange terms so as to reasonably assure her willingness to
remain in the Company's employment; and
WHEREAS, the Executive is willing to continue in the employ of the
Company provided the Company agrees to pay to her or her beneficiaries certain
benefits in accordance with the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of services performed in the past and
to be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:.
SECTION 1. DEFINITIONS. For purposes of the Plan, the following terms
when capitalized shall have the following meanings unless a different meaning is
plainly required by the context:
1.1 "Account" shall mean the bookkeeping account established to
reflect the value of the Executive's benefit under the Plan pursuant to Section
3.1.
1.2 "Additional Taxable Income" is defined in Section 6.2.
1.3 "Beneficiary" shall mean any person(s), estate, trust or
organization designated by the Executive to receive payment pursuant to Section
6.1 upon the death of the Executive. The Beneficiary may be designated or
changed by the Executive (without the consent of any prior Beneficiary) on a
form provided by the Company and delivered to the Company before her death.
1.4 "Cause" 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 1.4 and
specifying the particulars thereof in detail. For purposes of this Plan 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."
1.5 "Change in Control" shall mean a change in the ownership of a
corporation, change in the effective control of a corporation, change in
ownership of a substantial portion of a corporation's assets or disposition of a
substantial portion of a corporation's assets, all as defined below:
(a) A change in the ownership of a corporation occurs on
the date that any one person, or more than one person acting as a
group, acquires ownership of stock of that corporation 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 such corporation. 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 corporation acquires its own stock in exchange
for property will be treated as an acquisition of stock.
(b) A change in the effective control of a corporation
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
corporation possessing twenty-five percent (25%) or more of the total
voting power of the stock of such corporation; or a majority of members
of the corporation'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 corporation'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
a corporation'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 corporation 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 corporation immediately
prior to such acquisition or acquisitions. The transfer of assets by a
corporation is not treated as a change in the ownership of such assets
if the assets are transferred: to a shareholder of the corporation
(immediately before the asset transfer) in exchange for such
shareholder's capital stock of the corporation 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 fair market
value or voting power of which is owned, directly or indirectly, by the
corporation.
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(d) A disposition of a substantial portion of a
corporation's assets occurs on the date that the corporation 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 corporation'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 corporation as of the date
immediately prior to the first such transfer or transfers. The transfer
of assets by a corporation is not treated as a disposition of a
substantial portion of the corporation'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
corporation.
For purposes of this Plan, (i) references to the Company in this Plan include
the Delaware corporation known as Matria Healthcare, Inc. as of the date of
execution of this Plan, and any corporation which is the legal successor to such
corporation by virtue of merger or share exchange; 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 the
event of any merger, consolidation or share exchange immediately following 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 outstanding voting securities of the Company, resulting in
a change in ownership under Section 1.5(a) above.
1.6 "CIC Agreement" shall mean that certain Change in Control
Severance Compensation and Restrictive Covenant Agreement, dated as of April 27,
2002, between the Company and the Executive.
1.7 "Company" shall mean Matria Healthcare, Inc., a Delaware
corporation.
1.8 "Disability" shall mean shall mean disability under the
Company's long-term disability plan then in effect (or if no plan is then in
effect, the Company's long-term disability plan in effect on the date hereof),
provided however, after the occurrence of a Change in Control, "Disability"
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 her 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 is thereafter given to the
Executive by the Company.
1.9 "Employment Tax Event" shall mean the occurrence of an event
at any time after the adoption of this Plan whereby the Executive is required to
recognize the value of her Account as taxable income for federal or state
employment tax purposes. An Employment Tax Event does not include the occurrence
of an event after the adoption of this Plan whereby the Executive is required to
recognize the value of her Account as taxable income for federal or state income
tax, but not federal or state employment tax, purposes.
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1.10 "Executive" shall mean Xxxxxx X. Xxxxxxxx.
1.11 "Good Reason" shall mean any of the following actions taken by
the Company without the Executive's express written consent:
(a) 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 her employment for
Disability, Retirement or Cause or as a result of the Executive's death
or by the Executive other than for Good Reason;
(b) 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 Plan 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;
(c) 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;
(d) 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 her 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 her 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;
(e) 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 2002
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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 her 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;
(f) 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;
(g) 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;
(h) Any material breach (specifically including, but not
limited to, the failure to make payments specified in Sections 3.2 or
4.2, as applicable) by the Company of any provision of this Plan;
(i) Any failure by the Company to obtain the assumption
of this Plan by any successor or assign of the Company effected in
accordance with the provisions of Section 12 hereof;
(j) Any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination,
and for purposes of this Plan, no such purported termination shall be
effective; or
(k) 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 the CIC Agreement.
1.12 "Income Tax Event" shall mean the occurrence of an event at
any time after the adoption of this Plan whereby the Executive is required to
recognize the value of her Account as taxable income for federal or state income
tax purposes. An Income Tax Event does not include the occurrence of an event
after the adoption of this Plan whereby the Executive is required to recognize
the value of her Account as taxable income for federal or state employment tax,
but not federal or state income tax, purposes.
1.13 "Initial Credit" is defined in Section 3.1.
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1.14 "Notice of Termination" shall mean a written notice which
shall indicate whether such termination is for Disability, Retirement or Cause
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 Plan, 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.
1.15 "Plan" shall mean this Matria Healthcare, Inc. Supplemental
Executive Retirement Plan for Xxxxxx X. Xxxxxxxx.
1.16 "Policy" shall have the meaning given to such term in the
Split-Dollar Agreement.
1.17 "Retirement" shall mean termination of the Executive's
employment based on the Executive's having attained age 65.
1.18 "Split-Dollar Agreement" shall mean that certain Split-Dollar
Life Insurance Agreement, dated as of July 1, 1998, between the Company and the
Executive.
1.19 "Targeted Benefit" shall have the meaning given to such term
in the Split-Dollar Agreement.
1.20 "Trust" shall mean a trust established for purposes of
informally securing the obligations of this Plan.
1.21 "Trustee" shall have the same meaning given to such term in
the Trust.
1.22 "Year of Service" shall mean each twelve (12) month period
during the Executive's employment with the Company in which the Executive
completes at least one thousand (1,000) hours of employment with the Company
plus, in the event of a Change in Control of the Company, three (3) years.
Employment with any entity in which the Company, directly or indirectly, owns in
excess of fifty percent (50%) of the voting interests therein shall, for all
purposes of this Plan, constitute employment with the Company.
SECTION 2. PLAN ADMINISTRATION.
2.1 Plan Administrator. The Company shall appoint or designate a
Plan Administrator (who shall not be the same person or entity as the Trustee).
The initial Plan Administrator shall be a committee, the members of which shall
be the Chief Executive Officer, the Chief Financial Officer and the General
Counsel of the Company.
2.2 Powers and Duties of the Plan Administrator.
(a) The Plan Administrator (either directly or through
its designees) will have power and authority to interpret, construe,
and administer this Plan, provided that the Plan Administrator's
authority to interpret this Plan shall not cause the Plan
Administrator's decisions in this regard to be entitled to a
deferential standard of review
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in the event that the Executive or her Beneficiary seeks review of the
Plan Administrator's decision, as described below.
(b) The powers and duties of the Plan Administrator will
include the following: (i) appointing the Plan's attorney, accountant,
actuary, or any other party needed to administer the Plan; (ii)
directing the Trustee with respect to payments from the Trust; (iii)
communicating with the Executive regarding their participation and
benefits under the Plan, including the administration of all claims
procedures; (iv) filing any returns and reports with the Internal
Revenue Service, Department of Labor, or any other governmental agency;
and (v) reviewing and approving any financial reports, investment
reviews, or other reports prepared by any party under (i) above.
(c) Neither the Plan Administrator, its designee, nor its
advisors shall be liable to any person for any action taken or omitted
in good faith in connection with the interpretation and administration
of this Plan.
2.3 Employment of Agents and Counsel. The Plan Administrator may
appoint such actuaries, accountants, custodians, counsel, agents, consultants,
and other persons deemed necessary or desirable in connection with the
administration and operation of the Plan. The actions of any such third parties
will be subject to the limitations established by the Plan Administrator; and no
such third parties will be given any authority or discretion concerning the
management and operation of the Plan that would cause them to become fiduciaries
of the Plan (as that term is defined in ERISA).
2.4 Compensation and Expenses. The Plan Administrator may receive
such compensation as agreed upon between the Company and the Plan Administrator,
but any person who already receives full-time pay from the Company may not
receive any fees for services to the Plan as Plan Administrator or in any other
capacity. The Company will pay all reasonable expenses incurred by the Plan
Administrator in the performance of its duties.
2.5 Claims Procedures. At such time as the Executive (or her
Beneficiary, as applicable) is entitled to a payment under the terms of Section
6, the Executive or representative of such Executive may apply to the Plan
Administrator requesting payment of benefits due and the manner of payment, in
accordance with the following:
(a) Claims.
(i) A person who believes that she is being
denied a benefit to which she is entitled under this Plan
(hereinafter referred to as a "Claimant") may file a written
request for such benefit with the Plan Administrator, setting
forth her claim. The request must be addressed to the Plan
Administrator, in care of the Company at its then principal
place of business.
(ii) Upon receipt of a claim, the Plan
Administrator shall advise the Claimant that a reply will be
forthcoming within ninety (90) days and shall deliver such
reply within such period.
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(iii) If the claim is denied in whole or in part,
the Plan Administrator shall adopt a written opinion, using
language calculated to be understood by the Claimant, setting
forth: (A) the specific reason or reasons for such denial; (B)
the specific reference to pertinent provisions of this Plan on
which such denial is based; (C) a description of any
additional material or information necessary for the Claimant
to perfect her claim and an explanation why such material or
such information is necessary; (D) appropriate information as
to the steps to be taken if the Claimant wishes to submit the
claim for review; and (E) the time limits for requesting a
review of the claim.
(iv) Within sixty (60) days after the Claimant's
receipt of the written opinion described above, the Claimant
may request in writing a review of the denial. Such request
must be addressed to the Plan Administrator, in care of the
Company at its then principal place of business. The Claimant
or her duly authorized representative may, but need not,
review the pertinent documents and submit issues and comments
in writing for consideration by the Plan Administrator.
(v) Within sixty (60) days after the Plan
Administrator's receipt of a request for review, the Plan
Administrator will review its determination. After considering
all materials presented by the Claimant, the Plan
Administrator will render a written opinion, using language
calculated to be understood by the Claimant, setting forth the
specific reasons for the decision and containing specific
references to the pertinent provisions of this Plan on which
the decision is based.
(b) Arbitration of Denied Claims.
(i) Because it is agreed that time will be of
the essence in determining whether any payments are due, a
Claimant under this Plan, following receipt of the Plan
Administrator's denial of a claim (in whole or in part)
pursuant to Section 2.5(a) above, may, if she desires, submit
any claim for payment under this Plan or dispute regarding the
interpretation of this Plan to arbitration. This right to
select arbitration shall be solely that of the Claimant, and
the Claimant may decide whether or not to arbitrate in her
discretion. The "right to select arbitration" is not mandatory
on the Claimant, and the Claimant may choose in lieu thereof
to bring an action in an appropriate civil court. Once an
arbitration is commenced, however, it may not be discontinued
without the mutual consent of both parties to the arbitration.
During the lifetime of the Executive, only she can use the
arbitration procedure set forth in this section.
(ii) Any claim for arbitration may be submitted
as follows: If the Claimant disagrees with the Plan
Administrator regarding the interpretation of this Plan and
the claim is finally denied by the Plan Administrator in whole
or in part, such claim may be filed in writing with an
arbitrator of the Claimant's choice, who is selected by the
method described in the next four (4) sentences. The first
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step of the selection shall consist of the Claimant submitting
a list of three (3) potential arbitrators to the Plan
Administrator. Each of the three (3) arbitrators must be
either (A) a member of the National Academy of Arbitrators
located in the State of Georgia, or (B) a retired Georgia
Superior Court, Court of Appeals, or Supreme Court judge.
Within two (2) weeks after receipt of the list, the Plan
Administrator shall select one (1) of the three (3)
arbitrators as the arbitrator for the dispute in question. If
the Plan Administrator fails to select an arbitrator in a
timely manner, the Claimant shall then designate one (1) of
the three (3) arbitrators as the arbitrator for the dispute in
question.
(iii) The arbitration hearing shall be held within
seven (7) days (or as soon thereafter as possible) after the
picking of the arbitrator. No continuance of said hearing
shall be allowed without the mutual consent of the Claimant
and the Plan Administrator. Absence from or non-participation
at the hearing by either party shall not prevent the issuance
of an award. Hearing procedures which will expedite the
hearing may be ordered at the arbitrator's discretion, and the
arbitrator may close the hearing in her sole discretion when
she decides she has heard sufficient evidence to satisfy
issuance of an award.
(iv) The arbitrator's award shall be rendered as
expeditiously as possible and in no event later than one (1)
week after the close of the hearing. In the event the
arbitrator finds that the Company has breached this Plan, she
shall order the Company to immediately take the necessary
steps to remedy the breach. The award of the arbitrator shall
be final and binding upon the parties. The award may be
enforced in any appropriate court as soon as possible after
its rendition. If an action is brought to confirm the award,
both the Company and the Executive (on her own behalf and on
behalf of all other Claimants) agree that no appeal shall be
taken by either party from any decision rendered in such
action.
(v) Solely for purposes of determining the
allocation of the costs described in this subsection, the Plan
Administrator will be considered the prevailing party in a
dispute if the arbitrator determines that (A) the Company has
not breached this Plan, and (B) the claim by the Claimant was
not made in good faith. Otherwise, solely for purposes of
determining the allocation of the costs described in this
subsection, the Claimant will be considered the prevailing
party. In the event that the Company is the prevailing party,
the fee of the arbitrator and all necessary expenses of the
hearing (excluding any attorney's fees incurred by the
Company), including the fees of a stenographic reporter, if
employed, shall be paid by the Claimant. In the event that the
Claimant is the prevailing party, the fee of the arbitrator
and all necessary expenses of the hearing (including any
attorney's fees incurred by the Claimant in pursuing her
claim), including the fees of a stenographic reporter, if
employed, shall be paid by the Company.
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SECTION 3. BENEFITS.
3.1 An Account shall be established for the Executive with an
initial credit of an amount equal to the net present value (calculated at a
discount rate of 7.32%) as of December 31, 2002 of the Targeted Benefit
($726,464.00) (the "Initial Credit").
3.2 Additional Payments.
(a) Subject to Section 4.2(a), following the initial
occurrence of an Income Tax Event, the Company shall promptly pay to
the Executive (or his Beneficiary, if applicable) an amount equal to
42.7% of the Initial Credit.
(b) Subject to Sections 4.2(b) and 6.2(b), following each
occurrence of an Employment Tax Event, the Company shall promptly pay
to the Executive (or her Beneficiary, if applicable), an amount equal
to the amount the Company is required to withhold from the Executive's
wages for the Executive's share of federal or state employment taxes
with respect to the value of the Executive's Account at such time.
SECTION 4. TRUST.
4.1 Initial Deposit.
(a) The Company shall deposit, on or before January 31,
2003, to the Trust an amount equal to the difference between the
Initial Credit and the net cash surrender value of the Policy as of
December 31, 2002.
(b) The Company shall deposit, on or before February 28,
2003, to the Trust an amount equal to the greater of (i) the net
proceeds received by the Company upon the surrender of the Policy or
(ii) the net cash surrender value of the Policy as of December 31,
2002.
4.2 Deposit Following Change in Control.
(a) Following the initial occurrence of a Change in
Control, in the event no payment has been made to the Executive
pursuant to Section 3.2(a), the Company shall deposit to the Trust an
amount equal to 42.7% of the Initial Credit. Upon deposit of such funds
to the Trust, the Company shall have no further obligation to make
payment to the Executive pursuant to Section 3.2(a).
(b) Following the initial occurrence of a Change in
Control, the Company shall deposit to the Trust an amount equal to the
difference between 1.45% of the Initial Credit and the amount of any
payments made to the Executive pursuant to Section 3.2(b). Upon and
following deposit of such funds to the Trust, the Company shall have no
obligation to make payment to the Executive pursuant to Section 3.2(b)
until such time, if any, as the aggregate amount of payments which the
Executive has received or to which the Executive is entitled under
Section 6.2(b) is equal to the amount deposited pursuant to
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this Section 4.2(b), regardless of whether the Executive actually
elects to receive all or a portion of such payments.
(c) The value of the Executive's Account shall be
increased by an amount equal to the amount of any deposits to the Trust
pursuant to this Section 4.2.
4.3 Funds so deposited in the Trust may be kept in cash or
invested and reinvested in mutual funds, stocks, bonds, securities or any other
assets as may be selected by the Company under the terms of the Trust.
SECTION 5. INVESTMENT OF ACCOUNT.
5.1 The value of the Executive's Account shall be adjusted as
appropriate to reflect (i) contributions to the Trust on the Executive's behalf
in excess of the Initial Credit, (ii) deemed income, gain or loss attributable
to the deemed investment of the Account pursuant to Section 5.2 and (iii)
payments to the Executive from the Account. The Executive agrees on behalf of
himself and her Beneficiary to assume all risk in connection with any decrease
in value of her Account due to the deemed investment provisions of Section 5.2.
The Company or the Plan Administrator may cause the Trustee to maintain and
invest a separate asset account corresponding to the Executive's Account. As of
the last business day of each calendar quarter, the Plan Administrator shall
provide the Executive with a statement of her Account reflecting the deemed
income, gains and losses (realized and unrealized) and distributions of such
Account since the prior statement.
5.2 Deemed Investments.
(a) For purposes of measuring the amounts to be credited
(or debited) to the Executive's Account, the Executive may select, from
the investment options or other investment media provided by the
Trustee and approved by the Company, the investments in which all or
part of her Account shall be deemed to be invested. In no event shall
any Executive be entitled to have any such investments made other than
on a deemed basis. The Accounts maintained pursuant to this Plan are
for bookkeeping purposes only, and neither the Company nor the Trustee
is under any obligation to invest any amounts credited to such
Accounts.
(b) The Executive shall make an investment designation
(in such other manner as specified by the Plan Administrator or the
Company) which shall remain effective until another valid direction has
been made by the Executive. The Executive may amend her investment
designation at such times and in such manner as prescribed by the Plan
Administrator. A timely change to the Executive's investment
designation shall become effective as soon as administratively
practicable in accordance with procedures established by the Plan
Administrator. The investment options or investment media deemed to be
made available to the Executive, and any limitation on the maximum or
minimum percentages of the Executive's Account that may be deemed to be
invested in any particular option or investment, shall be the same as
from time to time communicated to the Executive by the Plan
Administrator.
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(c) The Trustee shall invest assets of the Trust in
accordance with the terms and provisions of the trust agreement that
establishes and governs the Trust.
SECTION 6. PAYMENT OF BENEFITS. The benefits to be paid under the terms
of this Plan and to the Executive (unless they are forfeited by the occurrence
of any of the events of forfeiture specified in Section 7, below) are as
follows:
6.1 If the Executive's employment hereunder is continued until the
earlier of (i) such time as Executive's attainment of age 65 or (ii) the date of
the Executive's death, the Company shall pay to her or her Beneficiary (as the
case may be) in one lump sum the value of her Account, as adjusted pursuant to
Section 5.1, as of such date. If no such Beneficiary shall have been designated,
or if no designated Beneficiary shall survive the Executive, amounts payable to
the Executive under the terms of this Plan at her death shall be paid in one
lump sum to the Executive's estate.
6.2 Payment for Taxes.
(a) Following the initial occurrence of an Income Tax
Event at any time prior to the payment of the Executive's Account
pursuant to Section 6.1, the Executive shall be entitled to an
immediate payment from her Account of an amount equal to the excess of
(i) any federal or state income tax owed by the Executive in respect of
the Executive's interest in her Account over (ii) the amount payable to
Executive pursuant to Section 3.2(a). In the event that, subsequent to
any payment made pursuant to Section 3.2(a) and, if required, any
payment made pursuant to the first sentence of this Section 6.2(a), but
prior to the payment of the Executive's Account pursuant to Section
6.1, the Executive is required to recognize taxable income for federal
or state income tax purposes in respect of the value of her Account
(specifically including earnings, if any, on the Initial Credit), other
than any such taxable income recognized by the Executive upon the
initial occurrence of an Income Tax Event, ("Additional Taxable
Income") the Executive shall be entitled to an immediate payment from
her Account of an amount equal to the excess, if any, of (i) any
federal or state income tax owed or previously owed in respect of the
value of her Account (specifically including any federal or state
income tax owed in respect of such Additional Taxable Income), over
(ii) any payments previously made under Section 3.2(a) or from the
Account pursuant to this Section 6.2(a).
(b) Following the occurrence of an Employment Tax Event
at any time prior to the payment of the Executive's Account pursuant to
Section 6.1, but subsequent to a contribution to the Trust pursuant to
Section 4.2(b), the Executive shall be entitled to an immediate payment
from her Account of an amount equal to the lesser of:
(i) the amount contributed to the Trust pursuant
to Section 4.2(b) (less the amount of any prior payments
pursuant to the terms of this Section 6.2(b)); or
(ii) the amount the Company is required to
withhold from the Executive's wages for the Executive's share
of federal or state employment taxes with respect to the value
of the Executive's Account at such time.
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(c) Notwithstanding the foregoing, no payment pursuant to
this Section 6.2 shall exceed the value of the Executive's Account as
of the applicable date of payment.
6.3 Notwithstanding Section 6.1, the Executive shall be entitled
to payment of the value of her Account in accordance with the following:
(a) Provided the Executive shall elect on a form provided
by and delivered to the Company, all (and not less than all) of the
Executive's vested Account balance shall be payable on or after the
earlier to occur of (a) the Executive's attainment of age 55 or (b) a
Change in Control. A payment under this Section 6.3(a) shall be payable
during any calendar year (which date shall be specified in the
Executive's election) which is at least one calendar year after the
calendar year during which the Executive makes the election for
payment.
(b) Following the occurrence of an Income Tax Event, and
provided the Executive shall elect on a form provided by and delivered
to the Company, all or a portion of the Executive's vested Account
balance shall be payable on or after the earlier to occur of (a) the
Executive's attainment of age 55 or (b) a Change in Control. A payment
under this Section 6.3(b) shall be payable as soon as practicable after
the Company's receipt of the Executive's election.
(c) Following the occurrence of a Change in Control, in
the event the Executive's employment is terminated (i) involuntarily by
the Company without Cause or (ii) voluntarily by the Executive for Good
Reason, all of the Executive's vested Account balance shall be payable
as soon as practicable after such termination.
(d) In the event of the Executive's death after
termination of her employment but prior to payment of the value of her
Account pursuant to Section 6.1 or otherwise under this Section 6.3,
the Company shall pay to her Beneficiary in one lump sum the value of
her vested Account balance, as adjusted pursuant to Section 5.1, as of
the date of the Executive's death. If no such Beneficiary shall have
been designated, or if no designated Beneficiary shall survive the
Executive, amounts payable to the Executive under the terms of this
Plan at her death shall be paid in one lump sum to the Executive's
estate.
6.4 All payments to the Executive, her Beneficiary or estate
pursuant to the terms of the Plan shall be in cash. Such payments shall commence
as soon as is practicable following the event that triggers the Executive's
right to such payment. To the extent funds have been deposited in the Trust, the
Company's obligations for payment to the Executive under the terms of this Plan
shall be payable from the Trust (other than the payment specified in Section
3.2, unless the provisions of Section 4.2 are applicable). Satisfaction of a
payment obligation under this Plan to the Executive from the Trust shall
extinguish any obligation on the part of the Company for such payment. The
Company may deduct from any payment to the Executive, her Beneficiary or estate
pursuant to the terms of the Plan any federal, state or local taxes required by
law to be withheld by the Company.
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SECTION 7. FORFEITURE OF BENEFITS.
7.1 The vested percentage of an Executive's Account shall be
determined based on the factors in the table below. Notwithstanding the
foregoing, in the event of the Executive's Retirement or death while employed by
the Company, or, following a Change in Control, in the event the Executive's
employment is terminated (i) involuntarily by the Company without Cause or (ii)
voluntarily by the Executive for Good Reason, the Executive's Account shall be
100% vested.
TERMINATION OF EMPLOYMENT PRIOR
TO A CHANGE IN CONTROL FOR REASONS
OTHER THAN DISABILITY
------------------------------------------- TERMINATION OF EMPLOYMENT
Age at Termination Age at Termination DUE TO DISABILITY OR AFTER A
YEARS OF SERVICE less than 55 55 or more CHANGE IN CONTROL
-----------------------------------------------------------------------------------------------------------
Less than 5 - 0 - - 0 - - 0 -
---------------------------------------------------------------------------------------------------------------
5 - 0 - - 0 - 33%
---------------------------------------------------------------------------------------------------------------
6 - 0 - - 0 - 40%
---------------------------------------------------------------------------------------------------------------
7 - 0 - - 0 - 47%
---------------------------------------------------------------------------------------------------------------
8 - 0 - - 0 - 53%
---------------------------------------------------------------------------------------------------------------
9 - 0 - - 0 - 60%
---------------------------------------------------------------------------------------------------------------
10 30% 50% 67%
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11 36% 60% 73%
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12 42% 70% 80%
---------------------------------------------------------------------------------------------------------------
13 48% 80% 87%
---------------------------------------------------------------------------------------------------------------
14 54% 90% 93%
---------------------------------------------------------------------------------------------------------------
15 or more 60%* 100% 100%
---------------------------------------------------------------------------------------------------------------
* 100% in the event the Executive's employment is terminated by
the Company without Cause after attaining 15 Years of Service and 52 years of
age.
7.2 If the Executive's employment hereunder is terminated for any
reason prior to the Executive being 100% vested in her Account, the Executive
shall forfeit all rights to any payments from the Plan or Trust for the
nonvested portion of her Account.
SECTION 8. BENEFITS NOT ASSIGNABLE. The right of the Executive or any
other person to payment or other benefits under the terms of the Plan shall not
be assigned, transferred, pledged or encumbered except by will or by the laws of
descent and distribution.
SECTION 9. NO ADDITIONAL RIGHTS GRANTED.
9.1 Nothing contained herein shall be construed as conferring upon
the Executive the right to continue in the employ of the Company as an executive
or in any other capacity.
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9.2 Except as otherwise provided by law, neither the establishment
of this Plan, nor any modification hereto, nor the creation of any fund or
account, nor the payment of any benefits, will be construed as giving any
Executive or other person any legal or equitable rights against the Company, any
officer or employee thereof, or the Trustee, except as herein provided; and the
terms of employment of any Executive will not be modified or affected by this
Plan.
SECTION 10. AMENDMENT. Except as provided in a written instrument signed
by the Company and the Executive, this Agreement may not be canceled, amended,
altered or modified.
SECTION 11. MERGER OR CONSOLIDATION. This Plan may be merged or
consolidated with, or its assets and/or liabilities may be transferred to any
other Plan only if the benefits which would be received by the Executive, in the
event of a termination of the Plan immediately after such transfer, merger or
consolidation, are at least equal to the benefits the Executive would have
received if the Plan had terminated immediately before the transfer, merger or
consolidation. Notwithstanding the foregoing, any such merger or consolidation
shall be allowed, regardless of the effect on benefits of the Executive, if the
Employer and Executive shall agree in writing thereto.
SECTION 12. SUCCESSOR TO THE COMPANY. 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, by agreement in form and substance satisfactory to the
Executive, expressly, absolutely and unconditionally to assume and agree to
perform this Plan 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 Plan and shall entitle the Executive to terminate the Executive's
employment for Good Reason. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor or assign to its business
and/or assets as aforesaid.
SECTION 13. TITLE TO ASSETS. No Executive or designated beneficiary will
have any right to, or any interest in, any assets of the Trust upon separation
from service with the Company except as otherwise provided by the terms of the
Plan.
SECTION 14. SEVERABILITY OF PROVISIONS. If any Plan provision is held
invalid or unenforceable, such invalidity or unenforceability will not affect
any other provision of this Plan, and this Plan will be construed and enforced
as if such provision had not been included.
SECTION 15. LEGAL ACTION. In any claim, suit or proceeding concerning the
Plan and/or Trust which is brought against the Trustee or the Plan
Administrator, this Plan and Trust will be construed and enforced according to
the laws of the State of Georgia, to the extent that is not preempted by the
provisions of ERISA; and unless otherwise prohibited by law, the Company will
reimburse the Trustee and/or the Plan Administrator for all costs, attorneys
fees and other expenses associated with any such claim, suit or proceeding.
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SECTION 16. CONSTRUCTION. The Company shall have full power and authority
to interpret, construe, and administer the Plan and the Company's
interpretations and construction thereof, and actions thereunder, including any
valuation of the Trust, or the amount or recipient of the payment to be made
therefrom, shall be binding and conclusive on all persons for all purposes. No
officer, director or shareholder of the Company shall be liable to any person
for any action taken or omitted in connection with the interpretation and
administration of the Plan unless attributable to her own willful misconduct or
lack of good faith.
SECTION 17. BINDING EFFECT. The Plan shall be binding upon and inure to
the benefit of the Company, its successors and assigns, and the Executive and
her heirs, executors, administrators, and legal representatives.
SECTION 18. GOVERNING LAW. The Plan shall be construed in accordance with
and governed by the law of the State of Georgia.
SECTION 19. HEADINGS. Section and other headings contained in the Plan are
for reference purposes only and are not intended to describe, interpret, define,
or limit the scope, extent, or intent of the Plan or any provision hereof.
SECTION 20. GENDER AND NUMBER. All pronouns and any variations thereof
shall be deemed to refer to masculine, feminine, or neuter, singular or plural,
as the identity of the person or persons may require.
SECTION 21. FURTHER ASSURANCES. The parties to this Plan agree to execute
and deliver in a timely fashion any and all additional documents to effectuate
the purposes of this Agreement.
SECTION 22. COUNTERPARTS. The Plan is executed in multiple counterparts,
each of which shall be considered an original, and such counterparts shall,
together, constitute and be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
_______________________________
Xxxxxx X. Xxxxxxxx
EXECUTIVE
MATRIA HEALTHCARE, INC.
By: ___________________________
Title:_________________________
COMPANY
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