[MATRIA LOGO] CORPORATE COPY
March 8, 2006
Jeffrey L. Hinton
It is my pleasure to confirm our revised offer to you for the position of Senior
Vice President & Chief Financial Officer on behalf of Matria Healthcare, Inc.
("Matria" or "Company"), which employment is to commence on or about March 20,
2006. In this position, you will report to Pete Petit, Chairman and Chief
Your initial base salary will be $10,576.92 (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 effective March 1, 2007. In
accordance with Company policy, you will receive an automobile allowance in the
gross amount of $1,300.00 per month.
You will be eligible to participate in the applicable annual Matria Management
Incentive Plan ("MIP") with an annual target bonus amount equal to forty-five
percent (45%) of the base salary paid to you in accordance with the terms of
such program in effect from time-to-time. You will begin participating in the
MIP effective April 1, 2006.
The Company will make a recommendation to the Company's Compensation Committee
that you be granted 12,500 restricted performance shares of Matria Common Stock.
Such stock grant will be subject to the standard terms and conditions of
Matria's applicable stock incentive plan. Such stock grant shall vest one-third
on each subsequent anniversary of the date of grant provided that the
year-over-year growth in the Company's operating earnings, as defined and
approved by the Compensation Committee of the Matria Board of Directors, for the
calendar year preceding the applicable vesting date is 15%.
Immediately upon employment, you will be eligible to begin accrual of vacation
benefits at the accrual rate of 1.66 days per month (20 days per annum).
You and the Company will enter into a Change in Control Severance Compensation
and Restrictive Covenant Agreement ("CIC Agreement'). The CIC Agreement will
include severance compensation equal to two times your annual base compensation
and annual bonus target upon termination of employment in accordance with the
terms and conditions of the CIC Agreement. I enclose a working draft of that
agreement. The form of that agreement currently is under review. The final
agreement may contain some changes, but any such changes will apply equally to
all current executives whose agreements are under review.
You and the Company will enter into a Severance Agreement that will provide that
if your employment is terminated by the Company for reasons other than "For
Cause", or if you terminate your employment with the Company for "Good Reason,"
you will be eligible for twelve (12) months of severance pay equal to one times
your annual base compensation, conditioned on your execution of the Company's
standard general release, to commence on the effective date of such termination
of employment. During the severance period,
Jeffrey L. Hinton
March 8, 2006
Page 2 of 4
you will be entitled to participate in the Company's medical and dental plans at
the employee contribution rate.
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
As used above, "Good Reason" shall mean any of the following actions taken by
the Company without your express written consent: (A) a reduction in your base
salary; (B) any failure of the Company to continue your participation in its
applicable annual MIP or reduce your target bonus amount as expressed as a
percentage of your base salary; (C) failure of the Company to continue your
participation in any benefit programs except those programs or arrangements that
may be discontinued for all other similarly situated executives of the Company;
(D) failure of the Company to enter into the above-referenced severance
agreements on substantially the terms set forth in this letter and in the draft
CIC Agreement delivered to you or failure of the
Company's Compensation Committee to grant, at its next regularly scheduled
meeting, the restricted performance shares described in this letter and (E) a
relocation of the Company's principal executive offices to a location more than
fifty (50) miles outside of Marietta, Georgia or the relocation of your office
to any place other than the Company's principal executive offices.
In connection with your relocation from your current residence located in
Vestavia Hills, Alabama to the Atlanta, Georgia area, you are eligible for the
following relocation benefits:
-- Reimbursement for expenses associated with movement of household
goods, appliance servicing, storage, house hunting trips,
temporary lodging & transportation, sale of former residence and
purchase of new residence will be in accordance with the
benefits described in Matria's Relocation Assistance Policy
#HR-02-08 (copy attached).
-- Lump sum payment of $5,000 to cover miscellaneous costs and
expenses of the relocation not reimbursable by the Company. This
payment will be made upon submission of your final relocation
-- Reimbursement of the first tier tax consequences of the amounts
of the above reimbursed relocation expenses which are taxable to
you in accordance with Section K, Tax Effects of Matria's
Relocation Assistance Policy, provided the total reimbursement
for all relocation expenses, including reimbursement of first
tier tax consequences, does not exceed an amount to be agreed
between you and the Company.
Jeffrey L. Hinton
March 8, 2006
Page 3 of 4
Should you voluntarily elect to leave the employ of the Company, without "Good
Reason" as defined above, within twelve (12) months following the completion of
all relocation expenses, you are bound by the repayment arrangements defined in
Section J, Repayment Agreement of Matria's Relocation Assistance Policy.
You will be eligible to participate in the customary medical, dental, life
insurance and long-term disability benefits offered to other employees in
similar positions the first pay period following thirty (30) days of employment.
Effective April 1, 2006, you will be eligible to begin participation in the
Matria Value Investment Program, the Company's 401 (k) plan, and the Matria
Employee Stock Purchase Plan. More detailed enrollment information will be sent
to you shortly after you begin employment.
If you accept this offer, 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 a favorable background investigation and a
pre-employment drug screen result. Please return the attached background
investigation consent form and we will begin the background process with
Choicepoint. Once we have received the background investigation consent form,
you may contact the Choicepoint National Scheduling Center (NSC) at
1-888-695-3465 (7:00 A.M. - 7:00 P.M. CT) to schedule the drug test prior to
your start date. Please give the NSC the following Requestor Name: Pete Petit
and the Cost Center number: 1010.820. The NSC Scheduler will locate the nearest
facility, schedule and verify an appointment for you while you are on the phone.
A written appointment confirmation will be sent to the collection site for
This offer is contingent upon your signing the Company's Non-Solicitation and
Confidentiality Agreement and Non-Competition Agreement attached hereto. Please
initial the first page of each agreement and sign the second page. 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.
Jeff, we look forward to your joining the Matria team. We are excited about the
potential and expertise you bring to our organization and we look forward to
receiving your acceptance of our offer of employment. Please do not hesitate to
contact me at 770.767.8192 (office), 770.330.4062 (cell) or 770.977.8429 (home)
should you have any questions.
Thornton A. Kuntz
Senior Vice President & Chief Administrative Officer
cc: Pete Petit
Jeffrey L. Hinton
March 8, 2006
Page 4 of 4
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.
Jeffrey L. Hinton Date