Exhibit 10.01
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of December, 2006 by and between Xxxxx X.
Xxxxxxxx, 0000 Xxxxxxx Xxxx, Xxxxx, Xxxx 00000 ("Employee"), and Chemed
Corporation, a Delaware corporation (the "Company").
WHEREAS, the Company has employed Employee and desires to continue to
employ Employee as a senior executive and Employee desires to work for the
Company or its subsidiaries in such capacity on the terms and conditions
hereinafter provided;
WHEREAS, Employee is a key senior executive of the Company with major
responsibilities for planning, directing, coordinating and controlling overall
corporate operations;
WHEREAS, in such capacity Employee will develop or have access to all or
substantially all of the business methods and confidential information relating
to the Company, including but not limited to, its financial performance and
results, its product formulae, its manufacturing organization and methods, its
product research and development policies and programs, its service techniques,
its purchasing organization and methods, its sales organization and methods, its
pricing of products, its market development and expansion plans, its personnel
policies and training and development programs, and its customer and supplier
relationships; and franchising programs and franchisee relationships;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
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1. EMPLOYMENT
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ss.1.1 Position and Duties.
(a) The Company agrees to employ Employee and Employee agrees to work for
the Company as a senior financial executive. Employee shall have such duties and
authority as are normally associated with his office. While employed hereunder,
Employee shall devote his full time, effort, skill and attention to the affairs
of the Company. During the term of his employment hereunder, Employee shall not
render any services to any other person that might be in competition with the
Company or any of its subsidiaries or affiliates or in conflict with his
position as a senior executive of the Company or his duty of undivided loyalty
to the Company.
ss.1.2 Term. Unless sooner terminated in accordance with the provisions
hereof, the term of employment shall commence on December 1, 2006 and shall
continue until November 30, 2008. This agreement shall automatically extend
thereafter on each anniversary of the commencement date for additional one-year
periods unless either party delivers written notice thirty days in advance of
such anniversary of the party's intent not to extend this agreement.
2. COMPENSATION
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ss.2.1 Base Salary. While employed hereunder the Company shall pay Employee
a base salary at an annual rate of $313,500.00 or such higher amount or amounts
as the Company may from time to time approve. The base salary shall be due and
payable at the same times and intervals at which salary payments are made to
other senior executives.
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ss.2.2 Incentive Compensation. Employee will be entitled to participate in
all incentive compensation and bonus plans as such have been maintained by the
Company for its senior executives generally. The Employee's annual incentive
compensation will be payable, with respect to each calendar year, on or before
February 28 in the following year.
ss.2.3 Employee Benefits. Employee shall be entitled to participate in
those "fringe" benefit plans which the Company provides for its executives
generally. Employee's participation in such plans will be in accordance with and
subject to the terms and provisions thereof.
ss.2.4 Pension. Employee will continue to participate in Chemed's Excess
Benefit Plan in accordance with and subject to its provisions.
ss.2.5 Miscellaneous.
(a) Company will pay or reimburse Employee for his reasonable business
expenses in accordance with Company policies.
(b) Employee will be entitled to paid vacation in accordance with current
Company policy. Employee will be entitled to payment for unused vacation time in
accordance with Company policy.
(c) Subject to ss.1.1(a) of this Agreement, compliance with applicable laws
relating to interlocking directorships, the Company's policies on conflicts of
interest and improper payments and accounting records contained in the Company's
"Policies on Business Ethics" and "Corporate Governance Principles" and to any
other current applicable Company policy, during the term of Employee's
employment hereunder, Employee will be permitted to accept election, and to
serve as, a director of other entities. Employee will be permitted to retain all
fees and other benefits resulting from his service as a director of any such
entity.
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(d) Each party shall pay their own legal fees incurred in connection with
any enforcement of rights under this Agreement. All disputes arising hereunder
shall be subject to arbitration according to the rules of the American
Arbitration Association. The Company and Employee shall share equally in any
third party costs of such arbitration.
3. TERMINATION.
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ss.3.1 Termination of Employment. The employment of Employee shall
terminate prior to the expiration of the term specified in ss.1.2 upon the
occurrence of any of the following prior to such time:
(a) The death of Employee;
(b) The termination of Employee's employment due to Employee's disability
pursuant to ss.3.2;
(c) The termination by the Company of Employee's employment for Cause
pursuant to ss.3.3;
(d) The retirement of Employee under a retirement plan of the Company; or
(e) The resignation of Employee.
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The termination by the Company of Employee's employment hereunder for any
reason other than those specified in this ss.3.1 shall hereinafter be referred
to as a termination "Without Cause".
ss.3.2 Disability. If, by reason of physical or mental disability, Employee
is unable to carry out his duties pursuant to this Agreement for four (4)
consecutive months, his services hereunder may be terminated by the Company upon
two (2) months' written notice to be given to Employee at any time after the
period of four (4) continuous months of disability and while such disability
continues. If, prior to the expiration of the two (2) months after the giving of
such notice, Employee shall recover from such disability and return to the
active discharge of his duties, then such notice shall be of no further force
and effect and Employee's employment shall continue as if such disability had
not occurred. If Employee shall not so recover from his disability and return to
his duties, then his services shall terminate at the expiration date of such two
(2) months' notice. During the period of Employee's disability and until the
expiration date of such two (2) months' notice, Employee shall continue to
receive all compensation and other benefits provided herein as if he had not
been disabled, at the time, in the amounts and in the manner provided herein. In
the event a dispute arises between Employee and the Company concerning
Employee's physical or mental ability to continue or return to the performance
of his duties as aforesaid, Employee shall submit to examination by a competent
physician mutually agreeable to both parties, and such physician's opinion as to
Employee's ability to so perform will be final and binding.
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ss.3.3 For Cause. The Company may, at any time by written notice to the
Employee, terminate his services hereunder for Cause. Such notice shall specify
the event or events and the actions or failure to act constituting Cause.
"Cause" shall mean, with respect to a Employee's termination of employment: (a)
the willful and repeated failure of the Employee to perform substantially the
Employee's duties with Company (other than any such failure resulting from
incapacity due to physical or mental illness); (b) the Employee's conviction of,
or plea of guilty or nolo contendere to, which through lapse of time or
otherwise is not subject to appeal, a felony which is materially and
demonstrably injurious to Company; or (c) the Employee's engagement in willful
gross misconduct or gross negligence in connection with his or her employment.
If the basis for discharge is pursuant to paragraph (c) above, Employee
shall have thirty (30) days from his receipt of the notice of termination for
Cause to cure, if curable, the actions or failure to act specified in such
notice and, in the event of any such cure within such period, such conduct shall
not constitute Cause hereunder.
ss.3.4 Consequences of Termination.
(a) If Employee's employment hereunder shall terminate pursuant to any of
the provisions of this Article 3, his base salary and incentive compensation
referred to in xx.xx. 2.1 and 2.2 shall cease to accrue forthwith.
(b) If the Company shall terminate Employee's employment hereunder Without
Cause, the Company shall pay Employee a lump sum amount in cash on termination
equal to two and one-half times his then annual base salary plus a lump sum
amount in cash on termination equal to the product of: (i) the average amount of
the Employee's annual incentives under the Company's annual incentive plan paid
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or payable for the last three full fiscal years prior to termination; and (ii) a
fraction, the numerator of which is the number of days in the fiscal year
through the date of termination and the denominator of which is 365. Employee
shall also be eligible to participate in the Company's welfare benefits plans
such as health insurance, life insurance, long-term care insurance and long-term
disability benefits plans for eighteen months following termination, at the then
current employee contribution rates; provided that if the Employee is precluded
from continuing his or her participation in any applicable plan, program, or
arrangement, the Employee shall be provided with the after-tax cost of
continuation of such coverage, including premiums under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, ("COBRA Premiums"), for the
Employee with respect to the benefits provided under such plan, program, or
arrangement, paid as either a lump sum payment or monthly as COBRA Premiums are
due, at the discretion of the Company. If the Employee becomes reemployed with
another employer and is eligible to receive health insurance, life insurance,
long-term care insurance or long-term disability coverage under another
employer-provided plan (regardless of whether the Employee elects such
coverage), the welfare benefits provided pursuant to this agreement shall be
secondary to those provided under such other plan.
(c) In the event that Employee's employment hereunder shall terminate
pursuant to any of the provisions of this Article 3, the rights of Employee
under any incentive compensation plan referred to in ss.2.2, under the executive
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or employee benefit plans or arrangements referred to in ss.2.3 and ss.2.4, or
otherwise shall be determined, subject to this Article 3, in accordance with the
terms and provisions of such plans, arrangements and options applicable to an
employee whose employment has terminated in the manner that occurred, except
that a termination Without Cause shall be treated as a retirement under a
retirement plan of the Company for the purposes of the Company stock incentive
plans.
(d) If the Employee's employment hereunder shall terminate pursuant to
ss.3.1(a), (b), or (d), the Company shall pay Employee in lieu of any amounts
that may be due and payable under the Company's annual incentive plan for the
fiscal year of termination a lump sum amount in cash on termination equal to the
product of: (i) the average amount of the Employee's annual incentives under the
Company's annual incentive plan paid or payable for the last three full fiscal
years prior to termination; and (ii) a fraction, the numerator of which is the
number of days in the fiscal year through the date of termination and the
denominator of which is 365.
(e) If the Employee's employment hereunder shall terminate pursuant to
ss.3.1(e) or if the Company shall terminate Employee's employment hereunder with
Cause pursuant to ss.3.1(c), Employee's annual incentive bonus shall then be
forfeited.
(f) Employee shall not be required to offset against amounts due from the
Company under this Article 3 for any salary, bonus or other benefits (other than
welfare benefits described above) received by Employee from a third-party, and
Employee shall be under no duty to mitigate by seeking or accepting another
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position. Any amounts paid or benefits received under this agreement are
conditioned upon execution of a waiver of liability in favor of the Company
executed by Employee, in the form approved by the Company's counsel.
4. OTHER COVENANTS OF EMPLOYEE.
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ss.4.1 Employee shall have no right, title or interest in any reports,
studies, memoranda, correspondence, manuals, records, plans, or other written,
printed or otherwise recorded materials of any kind belonging to or in the
possession of the Company or its subsidiaries, or in any copies, pictures,
duplicates, facsimiles or other reproductions, recordings, abstracts or
summaries thereof and Employee will promptly surrender to the Company any such
materials (other than materials which have been published or otherwise have
lawfully been made available to the public generally) in his possession upon the
termination of his employment or any time prior thereto upon request of the
Company.
ss.4.2 Without the prior written consent of the Company, Employee shall not
at any time (whether during or after his employment with the Company) use for
his own benefit or purposes or for the benefit or purposes of any other person,
firm, partnership, association, corporation or business organization, entity or
enterprise, or disclose (except in the performance of his duties hereunder) in
any manner to any person, firm, partnership, association, corporation or
business organization, entity or enterprise, or disclose (except in the
performance of his duties hereunder) in any manner to any person, firm,
partnership, association, corporation or business organization, entity or
enterprise, any trade secret, or other confidential or proprietary information,
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data, know-how or knowledge (including, but not limited to, that relating to
financial policies, product composition, manufacturing organization and methods,
research and development policies and programs, service techniques, purchasing
organization and methods, sales organization and methods, product pricing,
market development and expansion plans, personnel policies and training and
development programs, customer and supplier relationships) belonging to, or
relating to the affairs of, the Company or its subsidiaries.
ss.4.3 Employee shall promptly disclose to the Company (and to no one else)
all improvements, discoveries and inventions that may be of significance to the
Company or its subsidiaries made or conceived alone or in conjunction with
others (whether or not patentable, whether or not made or conceived at the
request of or upon the suggestion of the Company during or out of his usual
hours of work or in or about the premises of the Company or elsewhere) while in
the employ of the Company, or made or conceived within six months after the
termination of his employment by the Company, if resulting from, suggested by or
relating to such employment. All such improvements, discoveries and inventions
shall, to the extent that they are patentable, be the sole and exclusive
property of the Company and are hereby assigned to the Company. At the request
of the Company and at its cost and without liability to Employee, Employee shall
assist the Company, or any person or persons from time to time designated by it,
in obtaining the grant of patents in the United States and/or in such other
country or countries as may be designated by the Company covering such
improvements, discoveries and inventions and shall be connection therewith
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execute such applications, statements or other documents, furnish such
information and data and take all such other action (including, but not limited
to, the giving of testimony) as the Company may from time to time request.
ss.4.4 For a period of one year following Company's termination of
Employee's employment hereunder Without Cause, in the event Employee has agreed
to accept payment under Section 3.4(b) hereof: (i) Employee shall not directly,
or indirectly, as a stockholder owing beneficially or of record more than 5% of
the outstanding shares of any class of stock of any issuer, or as an officer,
director, employee, consultant, partner, joint venturer, proprietor, or
otherwise, engage in or become interested in any business that directly or
indirectly is in competition with the Company or any of its subsidiaries (or any
of their successors) as conducted at the time of Employee's termination, (ii)
Employee shall not, without the prior written consent of the Company, solicit or
hire or induce the termination of employment of any employee or other personnel
providing services to the Company, or any of its subsidiaries, for any business
activity, and (iii) Employee shall not, without the prior written consent of the
Company, solicit the business of any customer of the Company or any of its
subsidiaries (or any of their successors).
ss.4.5 The obligations of Employee set forth in this Article 4 are in
addition to and not in limitation of any obligations which would otherwise exist
as a matter of law. The provisions of this Article 4 shall survive the
termination of Employee's employment hereunder.
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5. CERTAIN REMEDIES
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ss.5.1 Breach by the Company. In the event that the Company shall fail, in
any material respect, to observe and perform its obligations hereunder, the
Employee may give written notice to the Company specifying the nature of such
failure. If within thirty (30) days after its receipt of such notice the Company
shall not have remedied such failure, the Employee shall have the right and
option to treat such failure as termination of his employment by the Company
Without Cause, to cease rendering services hereunder and thereafter to receive
the severance benefits and have the other rights and obligations provided for in
Article 3 hereof in the case of a termination by the Company Without Cause. The
remedy provided for in this ss.5.1 shall be in addition to and not in limitation
of any other remedies which would otherwise exist as a matter of law.
ss.5.2 Breach by the Employee. Employee acknowledges and agrees that the
Company's remedy at law for any breach of any of Employee's obligations under
ss.ss.1.1(a), 4.1, 4.2, 4.3 and 4.4 would be inadequate, and agrees and consents
that temporary and permanent injunctive relief may be granted in any proceeding
that may be brought to enforce any provision of any such sections, without the
necessity of proof of actual damage.
6. GENERAL PROVISIONS
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ss.6.1 Representations and Warranties. Employee represents and warrants to
the Company that he is free to enter into this Agreement and that he has no
prior or other obligations or commitments of any kind to anyone that would in
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any way hinder or interfere with his acceptance of, or the full, uninhibited and
faithful performance of, his employment hereunder or the exercise of his best
efforts as an employee of the Company.
ss.6.2 Understandings; Amendments. Except as otherwise provided herein,
this Agreement sets forth the entire agreement and understanding of the parties
concerning the subject matter hereof and supersedes all prior agreements,
arrangements and understandings between Employee and the Company concerning such
subject matter. No representation, promise, inducement or statement of intention
has been made by or on behalf of either party hereto that is not set forth in
this Agreement or the documents referred to herein. This Agreement may not be
amended or modified except by a written instrument specifically referring to
this Agreement executed by the parties hereto.
ss.6.3 Notices.
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and may either be delivered personally to the
addressee or be mailed, registered mail, postage prepaid, as follows:
If to the Company:
Chemed Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: President
with a copy to:
Secretary
Chemed Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
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If to Employee:
0000 Xxxxxxx Xxxx
Xxxxx, Xxxx 00000
(b) Either party may change the address to which any such notices or
communications are to be directed to it by giving written notice to the other
party in the manner provided in the preceding paragraph (a).
ss.6.4 Assignments; Binding Effect.
(a) Employee acknowledges that the services to be rendered by him are
unique and personal. Accordingly, Employee may not assign any of his rights or
delegate any of his duties or obligations under this Agreement. This Agreement
shall be binding upon, and to the extent herein permitted shall inure to the
benefit of, Employee's heirs, legatees and legal representatives.
(b) The Company may not assign this Agreement or its rights hereunder
except to a successor of all or substantially all of the business and assets of
the Company. This Agreement shall be binding upon, and shall inure to the
benefit of, the Company's successors and permitted assigns.
ss.6.5 Severability. If any part of this Agreement shall be unenforceable
under applicable law, it shall not affect the remaining parts of this Agreement.
ss.6.6 Waivers. The failure of either party hereto at any time or from time
to time to require performance of any of the other party's obligations under
this agreement shall in no manner affect the right to enforce any provision of
this Agreement at a subsequent time, and the waiver of any rights arising out of
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any breach shall not be construed as a waiver of any rights arising out of any
subsequent breach.
ss.6.7 Application of Section 409A of the Internal Revenue Code.
In the event that any payment or benefit to the Employee or for the
Employee's benefit paid or payable or distributed or distributable under this
Agreement ("Payment"), would be subject to the excise tax imposed by Section
409A of the Code, or any interest or penalties are incurred by the Employee with
respect to such excise tax (collectively, "Excise Tax"), the Employee will be
entitled to receive an additional payment ("Gross-Up Payment") in an amount such
that after payment by the Employee of all taxes (including any income or payroll
tax, interest or penalties imposed with respect to such taxes and the Excise
Tax, other than interest and penalties imposed by reason of the Employee's
failure to file timely a tax return or pay taxes shown due on the Employee's
return, and including any Excise Tax imposed upon the Gross-Up Payment), the
Employee retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
An initial determination as to whether and in what amount a Gross-Up
Payment is required will be made at the Company's expense by an accounting firm
of recognized national standing selected by the Company ("Accounting Firm"). The
Accounting Firm will provide its determination ("Determination"), together with
detailed supporting calculations and documentation, to the Company and the
Employee within five days of the Date of Termination, if applicable, or such
other time as requested by the Company or by the Employee (provided the Employee
reasonably believes that any of the Payments may be subject to the Excise Tax).
If the Accounting Firm determines that no Excise Tax is payable by the Employee
with respect to a Payment or Payments, it will furnish the Employee an opinion
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reasonably acceptable to the Employee that no Excise Tax will be imposed. Within
10 days of the delivery of the Determination, the Employee will have the right
to dispute the Determination (the "Dispute"). The Gross-Up Payment, if any, as
determined pursuant to this Section will be paid by the Company to the Employee
within 5 days of the receipt of the Determination. The existence of the Dispute
will not in any way affect the Employee's right to receive the Gross-Up Payment
in accordance with the Determination. If there is no Dispute, the Determination
will be binding upon the Company and the Employee, subject to the following
paragraph.
As a result of uncertainty in the application of Section 409A of the Code,
it is possible that a Gross-Up Payment will be paid which should not be paid
("Excess Payment") or that a Gross-Up Payment which should be paid will not be
paid ("Underpayment"). An Underpayment will be deemed to have occurred (i) upon
notice to the Employee from any governmental taxing authority that the
Employee's tax liability (whether in respect of the Employee's current taxable
year or in respect of any prior taxable year) may be increased by reason of the
imposition of the Excise Tax on a Payment or Payments with respect to which the
Company has failed to make a sufficient Gross-Up Payment, (ii) upon a
determination by a court, (iii) by reason of a determination by the Company
(which will include the position taken by the Company on its federal income tax
return) or (iv) upon the resolution of the Dispute to the Employee's
satisfaction. If an Underpayment occurs, the Employee will promptly notify the
Company and the Company will promptly, but in any event at least 5 days prior to
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the date on which the applicable government taxing authority has requested
payment, pay to the Employee an additional Gross-Up Payment equal to the amount
of the Underpayment plus any interest and penalties (other than interest and
penalties imposed by reason of the Employee's failure to file timely a tax
return or pay taxes shown due on the Employee's return) imposed on the
Underpayment.
An Excess Payment will be deemed to have occurred upon a Final
Determination (as hereinafter defined) that the Excise Tax will not be imposed
upon a Payment or Payments (or portion thereof) with respect to which the
Employee had previously received a Gross-Up Payment. A "Final Determination"
will be deemed to have occurred when the Employee has received from the
applicable government taxing authority a refund of taxes or other reduction in
the Employee's tax liability by reason of the Excise Payment and upon either (x)
the date a determination is made by, or an agreement is entered into with, the
applicable governmental taxing authority which finally binds the Employee and
such taxing authority, or if a claim is brought before a court, the date a final
determination has been made by such court and either all appeals have been
finally resolved or the time for all appeals has expired or (y) the statute of
limitations with respect to the Employee's applicable tax return has expired. If
an Excess Payment is determined to have been made, the Employee will pay to the
Company (but not less than 10 days after the determination of such Excess
Payment and written notice has been delivered to the Employee) the amount of the
Excess Payment plus interest at an annual rate equal to the Applicable Federal
Rate provided for in Section 1274(d) of the Code from the date the Gross-Up
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Payment was paid until the date of repayment. The Employee will use reasonable
cooperative efforts at the request of the Company to assist in the determination
of the amount of any Excess Payment or Underpayment made to the Employee
pursuant to this Plan.
ss.6.8 Governing Law. This Agreement, the rights and obligations hereunder,
and any related claims shall be governed by and construed in accordance with the
laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written hereinabove.
CHEMED CORPORATION
By: /s/ Xxxxx X. XxXxxxxx
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Xxxxx X. XxXxxxxx, President
and Chief Executive Officer
EMPLOYEE
/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
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