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EXHIBIT 10.18
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") is entered into as of this
19th day of January, 1999, by and between Matria Healthcare, Inc., a Delaware
corporation, (the "Company"), Lucor Holdings, LLC, a Georgia limited liability
company ("Lucor"), ▇▇▇▇ ▇. ▇▇▇▇▇▇, a Georgia resident ("MJG"), and J. Michael
Highland, a Georgia resident ("JMH").
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the Company and certain subsidiaries of the Company have acquired
substantially all of the assets of ▇▇▇▇▇▇ Medical Management, L.L.C., a Georgia
limited liability company ("GMM"), including all of the equity interests of
GMM's subsidiaries (the "Subsidiaries") pursuant to the terms of that certain
Purchase and Sale Agreement (the "Purchase Agreement") dated as of December 21,
1998, by and among Company and GMM; and
WHEREAS, MJG and JMH are stockholders, officers and directors of Lucor
and expect to provide services to the Company hereunder through Lucor and are
executing this Agreement solely for the purpose of agreeing to be bound by
Sections 9 and 10 hereof; and
WHEREAS, the execution and delivery of this Agreement is a material
condition for the Company to enter into the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter set forth, Lucor and the Company hereto agree as follows:
1. RETENTION OF MANAGER. Subject to each of the terms, conditions
and provisions of this Agreement, the Company hereby retains Lucor and Lucor
hereby agrees to be retained by the Company and the Subsidiaries to perform
those managerial functions set forth in Section 4 of this Agreement.
2. TERM.
2.1 Subject to the provisions for termination set forth herein,
the term of this Agreement shall be from the date hereof through December 31,
2008.
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2.2 The Company, by written notice to Lucor, authorized by a
majority of the directors other than those who are partners, principals or
employees of Lucor (or an affiliate of Lucor), may terminate this Agreement for
justifiable cause, which shall mean any of the following events: material breach
by Lucor of any of its obligations hereunder (including, without limitation,
failure to make available the services of MJG as provided in paragraph 4 below);
misappropriation by Lucor of funds or property of the Company or the
Subsidiaries, or other willful breach in the course of its duties hereunder; any
attempt by Lucor, MJG or JMH to secure personal profit related to the business
of the Company and not fairly disclosed to and approved by the Board of
Directors of the Company or gross neglect by Lucor in the fulfillment of its
obligations hereunder.
2.3 Either party, by sixty (60) days' prior written notice to the
other party, may terminate this Agreement effective as of the end of each
calendar year during the Term hereof.
3. COMPENSATION.
3.1 As compensation to Lucor for its management services to the
Company and the Subsidiaries under this Agreement in 1999, the Company, on
behalf of itself and the Subsidiaries, agrees to pay Lucor a fee at the annual
rate of Eight Hundred Thousand Dollars ($800,000). Such fee shall be payable
monthly in arrears, on or before the last day of each month, commencing on
January 31, 1999. Payment shall be prorated for any partial month during the
term hereof.
3.2 For years subsequent to 1999, Lucor's compensation under this
Agreement will be established by agreement between Lucor and the Board of
Directors based on the level of compensation paid Lucor in 1999, the number of
employees of Lucor providing management services to the Company, Lucor's
performance in the previous year, inflation and other relevant factors.
3.3 Compensation payable hereunder is intended to cover all
expenses incurred by Lucor in connection with providing management services to
the Company hereunder. Unless approved in advance by the Chief Executive Officer
of the Company, the Company will not reimburse Lucor, MJG or JMH, for
out-of-pocket or other costs and expenses (including travel expenses) incurred
by it or any of its employees or affiliates in connection with (i) providing the
services under this Agreement; or (ii) serving as an officer of the Company.
Unbudgeted approved expenses as set forth in the preceding sentence shall be
reimbursed, if reasonable, upon receipt by the Company of invoices from Lucor
providing information reasonably required by the Company. Provided further, MJG
acknowledges and agrees that as long as this Agreement is in effect, MJG shall
not receive any Board of Directors' fees or participate in the Company's
Director Stock Option Plan.
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4. DUTIES AS MANAGER. Lucor's duties under this Agreement shall
include providing management services to the diabetes disease management and
microsampling businesses operated by the Company, the Subsidiaries and Diabetes
Management Services, Inc., with overall responsibility for the management of
such businesses, subject to the direction and oversight of the Chief Executive
Officer of the Company (the "Services"). Services shall include, without
limitation, identifying and implementing other acquisition opportunities or
joint ventures and business development projects agreed upon by Lucor and the
Company's Chief Executive Officer. Lucor agrees that substantially the full-time
services of its officer, MJG, will be included in the Services provided
hereunder.
5. AUTHORITY OF MANAGER. Except as may be authorized by the Chief
Executive Officer of the Company, Lucor shall have no authority to enter into
any agreement or to make any representation, commitment or warranty binding upon
the Company or any Subsidiary or to obtain or incur any right, obligation or
liability on behalf of the Company.
6. INDEPENDENT CONTRACTOR. Lucor shall act as an independent
contractor and shall have complete charge of its personnel engaged in the
performance of the Services. Neither the Company nor any Subsidiary shall have
any obligation to provide health insurance, life insurance, worker's
compensation, or other benefits, or to pay or withhold employment taxes with
respect to Lucor personnel. To the extent permitted by applicable law and the
Company's insurance carriers, at the request of Lucor, the Company will include
Lucor employees in Company's group health and worker's compensation programs,
provided that Lucor shall pay the Company the Company's cost of providing such
coverage upon the Company's invoice therefor.
7. DISPUTES OVER REQUIRED EXPENDITURES WITH RESPECT TO CALENDAR
YEAR 1999. Notwithstanding the limitations on Lucor's authority and the
requirement that Lucor act under the direction of the Chief Executive Officer of
the Company, as set forth above, any dispute over required expenditures with
respect to calendar year 1999 shall be resolved in accordance with Section 1.5
of the Purchase Agreement.
8. BOOKS AND RECORDS.
(a) Lucor's books and records with respect to the
Services and any reimbursable costs ("Books and Records") shall be kept
at Lucor's office located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇. The Books
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and Records shall be kept in accordance with recognized accounting
principles and practices, consistently applied, and shall be made
available for the Company or the Company's representatives' inspection
and copying at all times during regular office hours. Lucor shall not
be required to maintain the Books and Records for more than three (3)
years after termination of this Agreement.
(b) Lucor shall have access at all reasonable times to
the premises, business properties, assets, financial statements and
other books and records of the Subsidiaries, to the extent necessary
for Lucor to perform its duties hereunder, and the Company agrees to
cause its officers and employees, and the officers and employees of the
Subsidiaries and DMS, to cooperate with Lucor in carrying out its
duties hereunder.
9. CONFIDENTIAL INFORMATION.
9.1 The parties acknowledge that during the course of provision of
the Services, the Company may disclose confidential information to Lucor, MJG
and JMH or its affiliated companies. Lucor, MJG and JMH shall treat such
information as the Company's confidential property and safeguard and keep secret
all such information about the Company, including reports and records, customer
lists, trade lists, trade practices, and prices pertaining to the Company's
business coming to the attention or knowledge of Lucor, MJG or JMH because of
any activities conducted by Lucor, MJG or JMH under or pursuant to this
Agreement.
9.2 Lucor, MJG and JMH shall exercise their best efforts and shall
cause any of their affiliated companies to exercise their best efforts to
prevent any confidential information from being disclosed to third parties,
except as necessarily required in the performance of the Services and except
under terms of confidentiality satisfactory to the Company. This obligation
shall remain in effect until the Company shall release Lucor or its affiliated
companies from their obligations under this paragraph 9, but in no event later
than three (3) years after the completion of the Services. Lucor shall not use
any of the Company's confidential information in any way that is detrimental to
the interests of the Company, directly or indirectly, either during the term of
this Agreement or at any time thereafter.
10. DEFINITIONS.
10.1 For purposes of this Section 10, the following terms shall
have the following respective meanings:
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(a) "Competing Business" shall mean a business that,
wholly or partly, directly or indirectly, is engaged in (i) providing,
selling or marketing lancet or lancing devices, microsampling, sale of
diabetes supplies or diabetic disease management; or (ii) designing,
developing, manufacturing, testing, selling, marketing or distributing
products or equipment relating thereto.
(b) "Competitive Position" shall mean: (i) Lucor's, MJG's
or JMH's direct or indirect equity ownership (excluding ownership of
less than one percent (1%) of the outstanding common stock of any
publicly held corporation) or control of any portion of any Competing
Business; or (ii) Lucor, MJG or JMH serving as a director, officer,
consultant, lender, joint venturer, partner, agent, advisor or
independent contractor of or to any Competing Business.
(c) "Covenant Period" shall mean the period of time
commencing with the date of this Agreement and continuing for a period
of three (3) years after the termination of this Agreement.
(d) "Restricted Territory" shall mean the United States,
the United Kingdom and Germany.
10.2 During the Covenant Period, Lucor, MJG and JMH, and each of
them, agrees that he/it will not, without the prior written consent of the
Company, either directly or indirectly, alone or in conjunction with any other
person or entity, accept, enter into or attempt to enter into a Competitive
Position in the Restricted Territory.
10.3 During the Covenant Period, Seller, MJG and JMH, and each of
them, agrees that it/he will not, without the prior written consent of the
Company, either directly or indirectly, alone or in conjunction with any other
person or entity, solicit any customer of the Subsidiaries (or any actively
sought or prospective customer of the Subsidiaries) for or on behalf of any
Competing Business to purchase any products offered by the Company.
10.4 During the Covenant Period, Lucor, MJG and JMH, and each of
them, agrees that it/he will not, without the prior written consent of the
Company, either directly or indirectly, alone or in conjunction with any other
person or entity, solicit or attempt to solicit any "key or material" employee,
consultant, contractor or other personnel of the Company or the Subsidiaries to
terminate, alter or lessen that party's affiliation with the Company or the
Subsidiaries or to violate the terms of any agreement or understanding between
such employee, consultant, contractor or other person and the Company or the
Subsidiaries. For purposes of this Section
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10.4, "key or material" employees, consultants, contractors or other personnel
shall mean those such persons or entities who have direct access to or have had
substantial exposure to confidential information or trade secrets of the Company
or the Subsidiaries.
10.5 During the Covenant Period, Lucor, MJG and JMH, and each of
them, shall not make any statement or other communication that impugns or
attacks the reputation or character of the Company or the Subsidiaries, or
materially damages the goodwill of the Company or the Subsidiaries, take any
action that would interfere with any contractual, customer or referral source
relationships of the Company or the Subsidiaries in a way, including, without
limitation, any action that would result in a diminution of business, or
otherwise take any action that is detrimental to the best interests of the
Company or the Subsidiaries.
11. INDEMNIFICATION. The Company agrees to indemnify and hold
Lucor and its partners, officers, directors and agents harmless from damages,
losses or expenses (including, without limitation, reasonable attorneys' fees
and expenses) incurred or paid directly or indirectly, by Lucor as a result or
arising out of any actions taken by Lucor in connection with the performance of
the Services under this Agreement except to the extent that such actions
resulted solely from the gross negligence or willful misconduct of Lucor. The
Company hereby further agrees to reimburse Lucor for all reasonable fees and
expenses (including attorneys' fees) incurred in connection with defending any
such claim to which Lucor is a party, as such fees and expenses are incurred by
Lucor.
12. NOTICES AND COMMUNICATIONS.
12.1 All communications relating to the day-to-day activities
necessary to render the Services shall be exchanged between the respective
representatives of the Company and Lucor, who will be designated by the parties
promptly upon commencement of the Services.
12.2 All other notices, demands and communications required or
permitted hereunder shall be in writing and shall be delivered personally to
the respective representatives of the Company and Lucor set forth below or shall
be mailed by registered mail, postage prepaid, return receipt requested.
Notices, demands and communications hereunder shall be effective: (i) if
delivered personally, on delivery; or (ii) if mailed, 48 hours after deposit
thereof in the United States mail addressed to the party to whom such notice,
demand, or communication is given. Until changed by written notice, all such
notices, demands and communications shall be addressed as follows:
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If to the Company:
Matria Healthcare, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
NationsBank Plaza
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lucor:
Lucor Management Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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If to MJG:
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Scarborough, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to JMH:
J. Michael Highland
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Scarborough, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
13. ASSIGNMENTS. Lucor shall not assign this Agreement in whole or
in part without the prior written consent of the Company, and the Company shall
not assign this Agreement in whole or in part without the prior written consent
of Lucor; provided, however, that such consent shall not be unreasonably
withheld with respect to assignments to affiliates or wholly-owned subsidiaries;
and provided further, that any such assignment shall not relieve the assignor of
any of its obligations under this Agreement.
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Subject to the foregoing, all the terms and conditions contained herein
shall inure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, personal representatives, successors and assigns.
14. APPLICABLE LAW AND SEVERABILITY. This document shall, in all
respects, be governed by the laws of the State of Georgia applicable to
agreements executed and to be wholly performed within the State of Georgia.
Nothing contained herein shall be construed so as to require the commission of
any act contrary to law, and wherever there is any conflict between any
provisions contained herein and any contrary present or future statute, law,
ordinance or regulation, the latter shall prevail, but the provision of this
document which is affected shall be curtailed and limited only to the extent
necessary to bring it within the requirements of the law.
15. FURTHER ASSURANCES. Each of the parties hereto shall execute
and deliver any and all additional papers, documents and other assurances, and
shall do any and all acts and things reasonably necessary in connection with the
performance of their obligations hereunder and to carry out the intent of the
parties hereto.
16. ATTORNEYS' FEES. In the event any action is instituted by a
party to enforce any of the terms and provisions contained herein, the
prevailing party in such action shall be entitled to such reasonable attorneys'
fees, costs and expenses as may be fixed by the court.
17. CAPTIONS. The captions appearing at the commencement of the
paragraphs herein are descriptive only and for convenience and reference. Should
there be any conflicts between any such caption and the paragraph at the head of
which it appears, the paragraph and not such caption shall control and govern in
the construction of this document.
18. MODIFICATIONS OR AMENDMENTS. No amendment, change or
modification of this document shall be valid unless it is in writing and signed
by all the parties hereto and expressly states that an amendment, change or
modification of this Agreement is intended.
19. SEPARATE COUNTERPARTS. This document may be executed in one or
more separate counterparts, each of which, when so executed, shall be deemed to
be an original. Such counterparts shall, together, constitute and be one and the
same instrument.
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20. ENTIRE AGREEMENT. This Agreement shall constitute the entire
understanding and agreement between the parties hereto and shall supersede any
and all letters of intent, whether written or oral, pertaining to the subject
matter of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
MATRIA HEALTHCARE, INC.
By:
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Name:
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Title:
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LUCOR HOLDINGS, LLC
By:
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Name:
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Title:
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▇▇▇▇ ▇. ▇▇▇▇▇▇
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J. MICHAEL HIGHLAND
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