EXHIBIT 10.29
SPLIT-DOLLAR TERMINATION AGREEMENT
This Agreement is entered into as of January 1, 2003 by and between
Matria Healthcare, Inc., a Delaware corporation (the "Company"), Xxxxxx X. Xxxxx
(the "Executive") and J. Xxxx Xxxxxxxxx, as trustee under the Xxxxxx X. Xxxxx
1998 Irrevocable Trust Agreement (the "Trustee"), as follows:
W I T N E S S E T H:
WHEREAS, effective January 1, 1997, the Company and the Executive
entered into a Split-Dollar Life Insurance Agreement (the "Split-Dollar
Agreement") and a Collateral Security Assignment Agreement (the "Collateral
Security Agreement") (the Split-Dollar Agreement and the Collateral Security
Agreement are hereinafter referred to collectively as the "Split-Dollar
Program"); and
WHEREAS, pursuant to the Split-Dollar Agreement, the Company caused
Aetna Life Insurance and Annuity Company or any successor thereto (the
"Insurance Company") to issue and deliver to the Executive Policy Number
I0001637 (the "Policy") on the life of the Executive; and
WHEREAS, on February 6, 1998 the Executive transferred ownership of the
Policy, subject to the terms of the Split-Dollar Program, to the Trustee; and
WHEREAS, because of recent legislation, proposed Internal Revenue
Service ("IRS") regulations and other economic factors, the Board of Directors
of the Company has directed that the Split-Dollar Program be terminated; and
WHEREAS, the Executive and the Trustee have agreed to the termination
of the Split-Dollar Program on the terms and conditions set forth below:
NOW, THEREFORE, in consideration of the facts set forth above, the
various promises and covenants set forth below and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties to this
Agreement agree as follows:
1. TERMINATION. The Executive agrees that, pursuant to the terms
and conditions set forth herein, the Split-Dollar Program, and any and all
covenants and agreements of the parties included therein, are hereby terminated
in all respects.
2. TRANSFER OF POLICY TO COMPANY. As soon as is practicable, the
Trustee, as owner of the Policy, agrees to execute such forms and take such
steps as are reasonably requested by the Company to transfer sole ownership of
the Policy into the name of the Company. Following such transfer, the Company
shall effect a partial surrender of the Policy in an amount not to exceed
$948,281 (the "Partial Surrender") and shall be entitled to retain all proceeds
of such Partial Surrender.
3. TRANSFER OF POLICY TO EXECUTIVE. As soon as is practicable
subsequent to the transfer of the Policy to the Company by the Trustee and the
Company's Partial Surrender pursuant to Section 2, the Company, as owner of the
Policy, agrees to execute such forms and take such steps as are reasonably
requested by the Executive to transfer sole ownership of the Policy into the
name of the Executive.
4. RELEASE OF COMPANY'S INTEREST. The Company hereby releases its
rights under the Split-Dollar Agreement and the Collateral Security Agreement,
including without limitation its right to the Repayment Obligation, as defined
in Section 3(a) of the Split-Dollar Agreement, and its security interest in the
Policy as set forth in Section 4 of the Split-Dollar Agreement and as evidenced
by the Collateral Security Agreement. The Company by this Agreement does release
and forever discharge the Trustee and the Executive and his heirs, executors,
administrators, successors and assigns from any obligation or liability of any
kind arising from or relating to all prior transactions, relationships and
dealings relating to or under the terms of the Split-Dollar Program; provided,
however, that the Company does not release any of the Executive's or the
Trustee's obligations under this Agreement.
5. RELEASE OF COMPANY'S OBLIGATIONS. The Executive and the
Trustee by this Agreement do release and forever discharge the Company and its
successors and assigns of and from any obligation or liability of any kind
arising from or relating to all prior transactions, relationships and dealings
relating to or under the terms of the Split-Dollar Program, including, without
limitation, the Company's obligations to pay premiums under the Split-Dollar
Agreement; provided, however, that the Executive and the Trustee do not release
any of the Company's obligations under this Agreement.
6. TAXES. The Company and the Executive agree that, for federal
or state income tax purposes, the Executive shall report as income, and the
Company shall take as a deduction, in connection with this Agreement and the
transactions contemplated herein, an amount equal to the cash surrender value of
the Policy at the time of its transfer to the Executive pursuant to Section 3
(the "Cash Surrender Value"), net of any amounts recognized by the Executive as
income arising in connection with the Split-Dollar Program prior to the date of
this Agreement. If the IRS or any applicable state taxing authority asserts that
the amount to be reported as income by the Executive as a result of
(a) The release of the Company's rights under the
Split-Dollar Agreement and the Collateral Security Agreement under Section 4;
(b) The transfer of the Policy by the Company under
Section 3; and/or
(c) The Executive's termination of the Policy and the
withdrawal of the full Cash Surrender Value on or before the date which is
ninety (90) days after the date of the transfer of the Policy by the Company
pursuant to Section 3, provided that the Executive makes no other changes in the
Policy except as contemplated herein;
exceeds the amount contemplated by the preceding sentence (the amount of such
excess, "Excess Income"), the Executive shall give prompt notice to the Company
of such assertion,
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and the Company shall indemnify, reimburse, defend and hold harmless Executive
from and against any and all additional federal or state income tax, interest or
penalties to the extent arising out of such Excess Income ("Additional Taxes").
It is understood and agreed that this indemnity agreement shall not extend to
any additional taxes arising from actions taken by the Executive with respect to
the Policy after the date of this Agreement, other than the termination of the
Policy and the withdrawal of the full Cash Surrender Value as described in (iii)
above. With respect to any IRS or state claim for Additional Taxes, the Company
shall undertake the defense thereof by representatives of its own choosing
reasonably satisfactory to the Executive. The Executive shall cooperate in the
defense of any IRS or state claim for Additional Taxes, to the extent reasonably
requested by and at the expense of the Company. The Executive shall have the
right to participate at his own expense in any such defense of an IRS or state
claim for Additional Taxes with advisory counsel of his own choosing. The
Executive shall execute any settlement agreement requested by the Company with
respect to Additional Taxes, and the Executive shall not settle or compromise,
or voluntarily enter into any binding agreement to settle or compromise, or
consent to entry of any judgment arising from, any IRS or state claim for
Additional Taxes without the prior written consent of the Company, which shall
not be unreasonably withheld.
7. AUTHORIZATION. The Company represents and warrants that this
Agreement has been duly authorized by all necessary corporate action and
constitutes a valid and legally binding obligation of the Company in accordance
with its terms.
8. ASSIGNMENT AND OWNERSHIP. The Executive represents and
warrants that he has not assigned to any person the Split-Dollar Agreement or
any interest in the Split-Dollar Program (other than the transfer of the Policy
to the Trustee) and that he has full power and authority to enter into this
Agreement. The Trustee represents and warrants that he has not assigned to any
person any interest in the Policy and that he is the owner of the Policy.
10. INSURANCE BROKER. The Company agrees to request Xxxxx
Financial Services to cooperate fully with the Executive in connection with the
exercise of Executive's rights under the Policy and designates the following
person at Xxxxx Financial Services as the contact person for such purposes:
Xxxxx Xxxx
Senior Vice President
Xxxxx Financial Services
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
(000) 000-0000
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11. MISCELLANEOUS.
(a) Notices. All notices and other communications under
this Agreement shall be in writing and shall be given by facsimile followed by
first-class mail, or by certified or registered mail with return receipt
requested, and shall be deemed to have been duly given three (3) days after
certified or registered mailing or twelve (12) hours after transmission of a
facsimile to the respective persons named below:
If to the Company: Chief Executive Officer
Matria Healthcare, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax No.: (000) 000-0000
With a copy to: General Counsel
Matria Healthcare, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax No.: (000) 000-0000
If to the Executive: Xxxxxx X. Xxxxx
0000 Xxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
If to the Trustee: J. Xxxx Xxxxxxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Any party may change such party's address for notices by notice duly given
pursuant to this Section 11.
(b) Headings. The Section headings herein are intended
for reference and shall not by themselves determine the construction or
interpretation of this Agreement.
(c) Tax Withholding. The transfer of the Policy to the
Executive pursuant to Section 3 may be subject to withholding of applicable
federal, state or local taxes, and the Company may condition the delivery of the
Policy on satisfaction of such applicable withholding obligations.
(d) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Georgia.
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(e) No Admissions. This Agreement is not and shall not be
construed as evidence of or an admission by the parties hereto of any liability
on either of their parts, nor shall it be deemed as an admission of, or
construed as evidence of the truth of any of the allegations made by either of
the parties hereto.
(f) Successors and Assigns. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and assigns; provided,
however, that this Agreement may not be assigned by any party hereto without the
prior written consent of the other party or parties.
(g) Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the matters
contained herein, and this Agreement contains the sole and entire agreement
among the parties hereto with respect to the subject matter hereof and the
transactions contemplated herein.
(h) Further Assurances. The parties to this Agreement
agree to execute and deliver in a timely fashion any and all additional
documents to effectuate the purposes of this Agreement.
(i) Counterparts. This Agreement may be executed in one
(1) or more counterparts which, taken together, shall constitute one and the
same Agreement.
(j) Fax Signature. This Agreement may be executed via
facsimile, and facsimile signature pages shall be deemed to be binding and as
effective as delivery of original signature pages.
[Signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
_____________________________________
Xxxxxx X. Xxxxx
MATRIA HEALTHCARE, INC.
By: _________________________________
Title:_______________________________
_____________________________________
J. Xxxx Xxxxxxxxx, as Trustee
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