EXHIBIT 10.2
CHANGE IN CONTROL
SEVERANCE COMPENSATION
AND
RESTRICTIVE COVENANT AGREEMENT
THIS SEVERANCE COMPENSATION AND RESTRICTIVE COVENANT AGREEMENT
(the
"Agreement") is dated as of November 7,
2005 between MATRIA HEALTHCARE, INC., a
Delaware corporation (the "Company"), and
RICHARD M. HASSETT, M.D. (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 disturbing
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 Executive
as
provided herein are in part intended to
ensure that 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
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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
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Control" shall mean changes in the
ownership of a corporation, changes in the
effective control of a corporation, changes
in ownership of a substantial
portion of a corporations assets and a
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 stock in exchange for property will be
treated as an acquisition of stock.
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(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 value or voting power of
which is owned, directly or
indirectly, by the corporation.
(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 the provision of this
Agreement defining "Change in Control,"
(i) references to the Company in this
Agreement include the Delaware corporation
known as Matria Healthcare, Inc. as of the
date of execution of this Agreement,
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 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
outstanding voting securities of the
Company, resulting in a change in ownership
under Section 2(a) above.
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3.
Termination Following Change in Control.
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(a)
General. If the Executive is still an employee of the
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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
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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
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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. Termination of
Executive's employment at a time when
Executive is eligible to receive benefits
under the Company's Retirement Benefit
Award or the Company's Protective Umbrella
for Lifelong Security of Employees
Program shall not constitute Retirement
unless Executive shall have attained
such age.
(d)
Cause. The term "Cause" for purposes of this Agreement
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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."
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(e)
Good Reason. For purposes of this Agreement, "Good
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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;
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(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 stock incentive and long-term
incentive plans, 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 which 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
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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 th
