EXHIBIT 10.1
November 7, 2005
Richard M. Hassett, M.D.
3665 Randall Hall
Atlanta, GA 30327
Dear Rick:
It is my pleasure to confirm our
promotional offer to you for the position of
President and Chief Operating Officer of
Matria Healthcare, Inc. ("Matria"),
effective today. In this position, you will
report to me.
Your initial base salary will be $13,846.15
(gross before deductions) per
biweekly pay period. Future salary
adjustments and assignment of job
responsibilities shall be based upon
individual and Company performance. You
will be eligible for your first salary
review in your new position on March 1,
2006. In accordance with Company policy,
you will receive an automobile
allowance in the gross amount of $1,500.00
per month.
You will continue to be eligible to
participate in the applicable annual Matria
Management Incentive Plan ("MIP") as in
effect from time-to-time. Your annual
target bonus amount will increase from
forty percent (40%) to fifty-five percent
(55%) of your base salary (as of each
applicable calendar year end). Your
participation in the 2005 MIP at the new
and former levels will be on a
pro-rated basis.
In connection with your promotion, Matria
Healthcare, Inc.'s Stock Option
Committee has approved a grant to you of a
stock option to purchase 50,000
shares of Matria Common Stock. Such stock
options will vest over a three-year
period and otherwise will be subject to the
standard terms and conditions of the
applicable stock option plan. This grant
will be effective on the date you
assume your new position.
You will continue to accrue vacation
benefits at the accrual rate of 1.66 days
per month (20 days per annum).
If your employment with the Company is
terminated by the Company for reasons
other than "For Cause," you will be
eligible for twelve (12) months of severance
pay to commence on the effective date of
such termination of employment. As used
above, "For Cause" shall mean (A) your
failure, neglect, or refusal, as
determined by the reasonable judgment of
the Company, to perform the duties of
your position, which failure, neglect, or
refusal has not been cured by you
within thirty (30) days of receipt of
written notice from the Company of such
failure, neglect, or refusal and you have
not at any time thereafter repeated
such failure or failed to sustain such
cure; (B) any intentional act by you that
has the effect of injuring the reputation
or business of the Company or any of
its affiliates in any material respect; (C)
your continued or repeated absence
from the Company, unless such absence is
(1) approved or excused by the chief
executive officer of Matria or (2) is the
result of your illness, disability, or
incapacity (in which event (G) below shall
control); (D) your use of illegal
drugs or repeated drunkenness; (E) your
arrest and/or conviction for the
commission of a felony; (F) the commission
by you of an act of fraud, deceit,
material misrepresentation or embezzlement
against the Company, or any of its
affiliates; or (G) your disability, which
shall mean your inability to perform
the essential functions of your position,
with or without reasonable
accommodation by the Company, for an
aggregate of one hundred twenty (120) days
(whether or not consecutive) during any
12-month period during the course of
your employment.
<PAGE>
Richard M. Hassett
November 7, 2005
Page 2 of 2
In lieu of any benefit to which you may
become entitled under the preceding
paragraph, under certain circumstances, you
will be entitled to the alternative
benefits described in the Change In Control
Severance Compensation and
Restrictive Covenant Agreement attached as
Exhibit A.
In your position, you will be allowed to
attend Matria Board of Directors
meetings during the portions of such
meetings where other members of Executive
Management are permitted to attend. At an
appropriate time in the future,
consideration will be given toward your
appointment to the Company's Board of
Directors.
In connection with your relocation from
your former residence located in Boca
Raton, Florida, should you elect to leave
the employ of the Company within
twelve (12) months following the completion
of all relocation expenses
(excluding tax offset), you are bound by
the repayment arrangements defined in
Section J, Repayment Agreement of Matria's
Relocation Assistance Policy.
You will continue to be eligible to
participate in the customary medical,
dental, life insurance and long-term
disability benefits generally offered to
other employees in executive positions.
In the course of your employment, you may
receive copies of Company policies and
procedures in effect from time to time and
agree to abide by same, realizing
that changes can occur at any time and that
such policies and procedures are not
to be construed as a contract of
employment. You will also be reimbursed for
your reasonable business expenses in
accordance with policy.
This offer is contingent upon your signing
the Company's Confidentiality
Agreement and Non-Competition Agreement
attached hereto as Exhibits B and C,
respectively. Please indicate your
acceptance to the terms stated herein by
signing the acceptance below and returning
this letter, along with an executed
original of the attached Agreements to me
in the enclosed self-addressed
envelope. Please retain a copy of the fully
executed Agreements for your
records. This offer supersedes the Letter
Agreement dated October 27, 2004
between you and Diabetes Management
Solutions, Inc.
Sincerely,
Parker H. Petit
Chairman of the Board and Chief Executive
Officer
cc: Thornton
Kuntz
ACCEPTANCE
I have read and understand the foregoing which constitutes the
entire
and exclusive agreement between the Company
and the undersigned and supersedes
all prior or contemporaneous proposals,
promises, understandings,
representations, conditions, oral or
written, relating to the subject matter of
this agreement. I understand and agree that
my employment is at-will and is
subject to the terms and conditions
contained herein.
--------------------------------------------------------------------------------
Richard M. Hassett
Date
<PAGE>
EXHIBIT A
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
----
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 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.
(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.
<PAGE>
(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.
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.
<PAGE>
(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. 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
-----
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."
(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;
<PAGE>
(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 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 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.
<PAGE>
(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).
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:
(1) On the
Date of Termination, the Company shall become
liable to the Executive for an amount equal
to two times the Executive's annual
base compensation 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.
(2) For a
period of two 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.
(3) For
the shorter of a period of one year after the
Date of Termination or expiration of the
lease term, Company shall allow the
Executive to utilize for his business and
personal use any Company leased
automobile furnished to him immediately
prior to the Change in Control and shall
reimburse the Executive for the maintenance
and repair costs of such automobile
and extend full insurance coverage relating
to such automobile in favor of the
Executive, as additional named insured,
during such period. In addition, the
Ex
