Exhibit 10.03
CHEMED CORPORATION
SENIOR EXECUTIVE SEVERANCE POLICY
Chemed Corporation hereby establishes the Chemed Corporation Senior
Executive Severance Policy ("the Policy").
1. PARTICIPATION. Participants in the Policy shall consist of those
officers designated from time to time on Attachment A to this Policy by the
Compensation/Incentive Committee of the Board of Directors, as may be approved
by the Board of Directors. The Compensation/Incentive Committee and/or the Board
shall have the ability to add or remove Participants at its discretion.
2. TERMINATION OF EMPLOYMENT.
ss.2.1 Termination of Employment. The employment of a Participant shall
terminate upon the occurrence of any of the following:
(a) The death of the Participant;
(b) The termination of the Participant's employment due to the
Participant's disability pursuant to ss.2.2;
(c) The termination by the Company of the Participant's employment for
Cause pursuant to ss.2.3;
(d) The retirement of the Participant under a retirement plan of the
Company; or
(e) The resignation of the Participant.
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The termination by the Company of the Participant's employment for any
reason other than those specified in this ss.2.1 shall hereinafter be referred
to as a termination "Without Cause".
ss.2.2 Disability. If, by reason of physical or mental disability, the
Participant is unable to carry out his or her duties pursuant to this Policy for
four (4) consecutive months, the Participant's may be terminated by the Company
upon two (2) months' written notice to be given to the Participant 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, the Participant shall recover from such disability
and return to the active discharge of his or her duties, then such notice shall
be of no further force and effect and the Participant's employment shall
continue as if such disability had not occurred. If the Participant shall not so
recover from his or her disability and return to his or her duties, then the
Participant's services shall terminate at the expiration date of such two (2)
months' notice. In the event a dispute arises between the Participant and the
Company concerning the Participant's physical or mental ability to continue or
return to the performance of his or her duties as aforesaid, the Participant
shall submit to examination by a competent physician mutually agreeable to both
parties, and such physician's opinion as to the Participant's ability to so
perform will be final and binding.
ss.2.3 For Cause. The Company may, at any time by written notice to the
Participant, terminate his or her services 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 Participant's termination of employment:
(a) the willful and repeated failure of the Participant to perform substantially
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the Participant's duties with Company (other than any such failure resulting
from incapacity due to physical or mental illness); (b) the Participant'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 Participant'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, the
Participant shall have thirty (30) days from 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.2.4 Consequences of Termination.
(a) If the Participant's employment shall terminate pursuant to any of the
provisions of this Article 2, the Participant's base salary and all incentive
compensation shall cease to accrue forthwith.
(b) If the Company shall terminate the Participant's employment Without
Cause, the Company shall pay the Participant a lump sum amount in cash equal to
one and one-half times the Participant's then annual base salary plus a lump sum
amount in cash equal to the product of: (i) the average amount of the
Participant'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
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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. The
Participant 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 twelve months following
termination, at the then current employee contribution rates; provided that if
the Participant is precluded from continuing his or her participation in any
applicable plan, program, or arrangement, the Participant 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 Participant 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 Participant
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
Participant elects such coverage), the welfare benefits provided pursuant to
this Policy shall be secondary to those provided under such other plan.
(c) In the event that the Participant's employment shall terminate pursuant
to any of the provisions of this Article 2, the rights of the Participant under
any incentive compensation plan of the Company, under any executive or employee
benefit plans or arrangements, or otherwise shall be determined, subject to this
Article 2, 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 Participant's employment shall terminate pursuant to ss.2.1(a),
(b), or (d), the Company shall pay the Participant 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 equal to the product of: (i) the
average amount of the Participant'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 Participant's employment shall terminate pursuant to ss.2.1(e)
or if the Company shall terminate Participant's employment with Cause pursuant
to ss.2.1(c), Participant's annual incentive bonus shall then be forfeited.
(f) Participant shall not be required to offset against amounts due from
the Company under this Article 2 for any salary, bonus or other benefits (other
than welfare benefits described above) received by the Participant from a
third-party, and the Participant shall be under no duty to mitigate by seeking
or accepting another position.
(g) Any amounts paid or benefits received under this Policy are conditioned
upon execution of a waiver of liability in favor of the Company executed by the
Participant, in the form approved by the Company's counsel.
(h) Any amounts paid or benefits received under this Policy are also
conditioned, other than a termination under Section 2.1(a), upon execution of
the following in a form approved by the Company's counsel: (i) an agreement
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prohibiting directly or indirectly publishing or disclosing any confidential
information of the Company or any of its affiliates, or using such confidential
information for the Participant's own use or making it available to others; (ii)
a one-year post termination non-compete agreement under which the Participant
will not directly or indirectly engage in or become interested in any business
providing or arranging for any products or services that directly or indirectly
are in competition with the Company or any of its subsidiaries; and (iii) an
agreement prohibiting solicitation during such one-year period of the employment
of any employees or other personnel providing services to the Company or any of
its subsidiaries or soliciting the business of any customer of the Company or
any of its subsidiaries.
3. APPLICATION OF SECTION 409A OF THE INTERNAL REVENUE CODE. In the event
that any payment or benefit to the Participant or for the Participant's benefit
paid or payable or distributed or distributable under this Policy ("Payment"),
would be subject to the excise tax imposed by Section 409A of the Internal
Revenue Code ("Code"), or any interest or penalties are incurred by the
Participant with respect to such excise tax (collectively, "Excise Tax"), the
Participant will be entitled to receive an additional payment ("Gross-Up
Payment") in an amount such that after payment by the Participant 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 Participant's failure to file timely a tax return or pay taxes
shown due on the Participant's return, and including any Excise Tax imposed upon
the Gross-Up Payment), the Participant retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
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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
Participant within five days of the date of termination, if applicable, or such
other time as requested by the Company or by the Participant (provided the
Participant 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 Participant with respect to a Payment or Payments, it will furnish the
Participant an opinion reasonably acceptable to the Participant that no Excise
Tax will be imposed. Within 10 days of the delivery of the Determination, the
Participant 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 Participant within 5 days of the receipt of the
Determination. The existence of the Dispute will not in any way affect the
Participant'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 Participant, 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
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paid ("Underpayment"). An Underpayment will be deemed to have occurred (i) upon
notice to the Participant from any governmental taxing authority that the
Participant's tax liability (whether in respect of the Participant'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 Participant's
satisfaction. If an Underpayment occurs, the Participant 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 Participant 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 Participant's failure to file
timely a tax return or pay taxes shown due on the Participant'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
Participant had previously received a Gross-Up Payment. A "Final Determination"
will be deemed to have occurred when the Participant has received from the
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applicable government taxing authority a refund of taxes or other reduction in
the Participant'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 Participant
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 Participant's applicable tax return has expired.
If an Excess Payment is determined to have been made, the Participant 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 Participant) 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 Participant 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
Participant pursuant to this Policy.
4. LEGAL FEES AND EXPENSES, ARBITRATION. Each party shall pay their own
legal fees incurred in connection with any enforcement of rights under this
Policy. All disputes arising hereunder shall be subject to arbitration according
to the rules of the American Arbitration Association. The Company and the
Participant shall share equally in any third party costs of such arbitration.
5. GOVERNING LAW. This Policy, 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.
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Attachment A
Senior Executives
1. T. C. Hutton
2. N. C. Dallob
3. A. V. Tucker
4. T. J. Reilly
5. L. A. Dittman
6. S. S. Lee
7. R. L. Arquilla
8. G. H. Sander
9. R. P. Goldschmidt
10. D. Lawe
11. P. Pettit
12. D. A. Wester