UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (date of earliest event reported):
May 3,
2008
CHEMED
CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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1-8351
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31-0791746
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(State
or other
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(Commission
File Number)
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(I.R.S.
Employer
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jurisdiction
of
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Identification
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incorporation)
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Number)
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2600
Chemed Center, 255 East 5th Street, Cincinnati, OH 45202
(Address
of principal executive
offices) (Zip
Code)
Registrant's
telephone number, including area code:
(513)
762-6900
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2 below):
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[_]
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Written
communications pursuant to Rule 425 under the Securities
Act
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(17
CFR 230.425)
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[_]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act
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(17
CFR 230.425)
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[_]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under Exchange
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Act
(17 CFR 230.425)
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[_]
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Pre-commencement
communications pursuant to Rule 13e-4 (c) under
Exchange
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Act
(17 CFR 230.425)
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Page 1 of
2
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Item
5.02(e)
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Compensatory
Arrangements of Certain Officers
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Employment
Agreements
On May 3,
2008 Chemed Corporation and Kevin J. McNamara, its Chief Executive Officer and
President, entered into an Employment Agreement which provides for an annual
base salary of $700,000. If the Corporation terminates Mr. McNamara’s
employment without cause, as defined in the agreement, he shall receive five
times his annual base salary plus a pro-rated portion of his annual incentive
bonus, and shall continue to participate in the Corporation’s welfare benefit
plans for eighteen months, in exchange for two-year post termination noncompete
and nonsolicitation covenants.
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Item
9.01
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Financial
Statements and Exhibits
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c)
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Exhibits
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10.01
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Employment
Agreement dated as of May 3, 2008 between Chemed Corporation and Kevin J.
McNamara.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
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CHEMED
CORPORATION
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Dated: May
6, 2008
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By:
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/s/ Arthur V. Tucker, Jr. | |
| Arthur V. Tucker, Jr. | |||
| Vice President and Controller | |||
Page 2
of
2
EMPLOYMENT
AGREEMENT
AGREEMENT made as of the 3rd day of
May, 2008 by and between Kevin J. McNamara, 949 Edwards Road, Cincinnati, OH
45208 ("Employee"), and Chemed Corporation, a Delaware corporation (the
"Company").
WHEREAS, the Company has employed
Employee and desires to continue to employ Employee as Chief Executive Officer
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;
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
§1.1 Position and
Duties.
(a) The Company agrees to employ
Employee and Employee agrees to work for the Company as a senior executive
officer. 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 officer of the Company or his duty of
undivided loyalty to the Company.
§1.2 Term. Unless
sooner terminated in accordance with the provisions hereof, the term of
employment shall commence on May 3, 2008 and shall continue until May 2,
2010. 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
§2.1 Base
Salary. While employed hereunder the Company shall pay
Employee a base salary at an annual rate of $700,000.00 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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§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.
§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.
§2.4 Pension. Employee
will continue to participate in Chemed's Excess Benefit Plan in accordance with
and subject to its provisions.
§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 §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.
§3.1 Termination of
Employment. The employment of Employee shall terminate prior
to the expiration of the term specified in §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
§3.2;
(c) The termination by the
Company of Employee's employment for Cause pursuant to §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 §3.1 shall hereinafter be referred to as a termination "Without
Cause".
§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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§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.
§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 §§ 2.1 and 2.2 shall cease to
accrue forthwith.
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(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 five 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 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 §2.2, under the executive or employee benefit plans or arrangements
referred to in §2.3 and §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.
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(d) If the Employee’s employment
hereunder shall terminate pursuant to §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 §3.1(e) or if the Company shall terminate
Employee’s employment hereunder with Cause pursuant to §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 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.
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4. OTHER COVENANTS OF
EMPLOYEE.
§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.
§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, any trade secret, or other confidential or proprietary information,
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.
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§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
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.
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§4.4 For a period of two
years 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).
§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
§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 §5.1 shall be in
addition to and not in limitation of any other remedies which would otherwise
exist as a matter of law.
§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 §§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
§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 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.
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§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.
§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
2600 Chemed Center
Cincinnati,
OH 45202
Attn: President
with a copy to:
Secretary
Chemed Corporation
2600 Chemed Center
Cincinnati,
OH 45202
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If to Employee:
949 Edwards Road
Cincinnati, OH 45208
(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).
§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.
§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.
§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 any breach shall
not be construed as a waiver of any rights arising out of any subsequent
breach.
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§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
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.
15
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 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.
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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 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.
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§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/ Naomi C.
Dallob
Naomi C.
Dallob
Vice President and
Secretary
EMPLOYEE
/s/ Kevin J.
McNamara
Kevin J. McNamara
18