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SEVERANCE COMPENSATION
AND
RESTRICTIVE COVENANT AGREEMENT
THIS SEVERANCE COMPENSATION AND RESTRICTIVE COVENANT
AGREEMENT (the "Agreement") is dated as of
November 6, 2006, between MATRIA HEALTHCARE,
INC. , a Delaware corporation (the
"Company"), and YVONNE V. SCOGGINS
(the "Executive").
WHEREAS , the Board of Directors
of the Company has determined that it is appropriate to reward the
Executive for her years of service to the Company and predecessor
companies and encourage the Executive to remain in the
Company’s employ;
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
.
(a) The term of this
Agreement shall begin on November 6, 2006 and shall continue in
effect until the termination of the Executive’s employment
with the Company as a result of (i) the Executive’s
death; (ii) the Executive’s Disability; (iii) the
Executive’s termination by the Company for Cause; or
(iv) the Executive’s decision to terminate employment
other than for Good Reason.
2. Termination of
Employment during the Term .
(a) The Executive
shall be entitled to the compensation and benefits provided in
Section 3 upon the termination of the Executive’s
employment with the Company during the term of this Agreement by
the Executive or by the Company, unless such termination is as a
result of (i) the Executive’s death; (ii) the
Executive’s Disability; (iii) the Executive’s
termination by the Company for Cause; or (iv) 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 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 as described in Section 2(e) is thereafter given to the
Executive by the Company.
(c) Cause
. The term "Cause" for purposes of this Agreement shall mean the
Company’s termination of the Executive’s employment by
the Company on the basis of criminal or
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civil fraud on the part of the Executive
involving a material amount of funds of the Company. 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."
(d) 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) Failure to re-elect the Executive as an
officer of the Company, or removal of the Executive as an officer
of the Company, except in connection with the termination of her
employment for Disability or Cause or as a result of the
Executive’s death or by the Executive;
(ii) A reduction in the Executive’s base
salary as in effect on the date hereof;
(iii) 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 on
the date of this Agreement (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;
(iv) 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 1981 Incentive
Stock Option Plan, 1983 Incentive Stock Option Plan, 1984
Nonqualified Stock Option Plan, 1985 Nonqualified Stock Option
Plan, 1991 Stock Option Plan and 1993 Stock Option Plan, 1996 Stock
Incentive Plan, 1997 Stock Incentive Plan, Employee Stock Purchase
Plan and any other plan or arrangement to receive and exercise
stock options, stock appreciation rights, restricted stock or
grants thereof) in which the Executive is participating or has the
right to participate on the date of this Agreement (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, provided that a diminution
in the number of option shares granted under any such Securities
Plan shall not constitute Good Reason so long as the diminution in
total grants to all key executives is apportioned ratably among all
such key executives;
(v) Any failure by the Company to allow the
Executive to participate in 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, but excluding
Incentive Plans and Securities Plans) to the same extent as other
key executives of the Company;
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(vi) 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 (as defined in Section 2(f) below;
or
(vii) Any purported termination of the
Executive’s employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of
Section 2(e), and for purposes of this Agreement, no such
purported termination shall be effective.
(e) Notice of
Termination . Any termination of the Executive’s
employment by the Company for a reason specified in
Section 2(b) or 2(c) 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
2(b) or 2(c) 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 or Cause unless such termination is preceded by a Notice
of Termination.
(f) 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.
3. Compensation
and Benefits upon Termination of Employment .
(a) If the Company
shall terminate the Executive’s employment other than
pursuant to Section 2(b) or 2(c) and Section 2(e), or if the
Executive shall terminate her 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 4 hereof, the following:
(i) 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 and targeted base bonus on the Date of Termination,
which amount sha
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