EXHIBIT 10.20
FORM OF
AMENDMENT TO EMPLOYMENT AGREEMENT
[EXECUTIVE] of ____________ ("Employee"), and OMNICARE MANAGEMENT
COMPANY, a Delaware corporation with its principal place of business in
Covington, Kentucky (the "Company"), hereby agree as follows:
1. Recitals
(a) The Company is an indirect subsidiary of Omnicare, Inc. (the
"Parent Company") as a result of a corporate restructuring of the Parent Company
and its affiliates.
(b) In connection with such restructuring, certain assets and
liabilities of the Parent Company were transferred to the Company effective
December 31, 1988, including an Employment Agreement between the Parent Company
and Employee dated _______ (the "Employment Agreement").
(c) The Company, as assignee, and Employee amended the Employment
Agreement by mutual written agreement on ____________________________ (the
"Prior Amendments").
2. Amendments
(a) Article 3 of the Employment Agreement is hereby amended by
renumbering Section 3.3 as Section 3.2 and renumbering Section 3.4 as Section
3.3 (to reflect the deletion of the prior Section 3.2 by the Prior Amendments),
and by adding a new Section 3.4 to read in its entirely as follows:
"Section 3.4 Parachute Tax Indemnity.
(a) If it shall be determined that any amount, right or
benefit paid, distributed or treated as paid or
distributed by the Company, the Parent Company or any of
its affiliates to or for the Employee's benefit (whether
paid or payable or distributed or distributable hereunder
or otherwise, including, without limitation, in
connection with a Change of Control (as defined in
Section 5.1 hereof), but determined without regard to any
additional payments required under this Section 3.4) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of the Code, or any interest or penalties
are incurred by the Employee with respect to such excise
tax (such excise tax, together with any such interest and
penalties, collectively, the "Excise Tax"), then the
Employee shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that
after payment by the Employee of all federal, state and
local taxes
(including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with
respect thereto) and 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.
(b) All determinations required to be made under this Section
3.4, including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized
accounting firm as shall be designated jointly by the
Employee and the Company (the "Accounting Firm"), which
shall be permitted to designate an independent counsel to
advise it for this purpose. The Accounting Firm shall
provide detailed supporting calculations both to the
Company and the Employee within 15 business days of the
receipt of notice from the Employee or the Company that
there has been a Payment, or such earlier time as is
requested by the Company. All fees and expenses of the
Accounting Firm and its legal counsel shall be paid by
the Company. Any Gross-Up Payment, as determined pursuant
to this Section 3.4, shall be paid by the Company to the
Employee (or to the Internal Revenue Service on the
Employee's behalf) within five days of the receipt of the
Accounting Firm's determination. All determinations made
by the Accounting Firm shall be binding upon the Company
and the Employee. As a result of the uncertainty
regarding the application of Section 4999 of the Code
hereunder, it is possible that the Internal Revenue
Service may assert that an Excise Tax is due that was not
included in the Accounting Firm's calculation of the
Gross-Up Payments (an "Underpayment"). In the event that
the Company exhausts its remedies pursuant to this
Section 3.4 and the Employee thereafter is required to
make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has
occurred and any additional Gross-Up Payments that are
due as a result thereof shall be promptly paid by the
Company to the Employee (or to the Internal Revenue
Service on Employee's behalf).
(c) The Employee shall notify the Company in writing of any
claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days
after the Employee receives written notification of such
claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be
paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on
which it gives such notice to the Company (or such
shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company
notifies the Employee in writing prior to the expiration
of such period that it desires to contest such claim, the
Employee shall: (i) give the Company
all information reasonably requested by the Company
relating to such claim; (ii) take such action in
connection with contesting such claim as the Company
shall reasonably request in writing from time to time,
including, without limitation, accepting legal
representation with respect to such claim by an attorney
selected by the Company and reasonably acceptable to the
Employee and ceasing all efforts to contest such claim;
(iii) cooperate with the Company in good faith in order
to effectively contest such claim; and (iv) permit the
Company to participate in any proceeding relating to such
claim; provided, however, that the Company shall bear and
pay directly all reasonable costs and expenses (including
additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the
Employee harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest and penalties with
respect thereto) imposed as a result of such
representation and payment of costs and expense. Without
limiting the foregoing provisions of this Section 3.4,
the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct the Employee to pay the tax claimed
and xxx for a refund or contest the claim in any
permissible manner, and the Employee agrees to prosecute
such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company shall determine
and direct; provided, however, that if the Company
directs the Employee to pay such claim and xxx for a
refund, the Company shall advance the amount of such
payment to the Employee, on an interest-free basis, and
shall indemnify and hold the Employee harmless, on an
after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and
further provided that any extension of the statute of
limitations relating to payment of taxes for the
Employee's taxable year with respect to which such
contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable
hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing
authority.
(d) If, after the Employee's receipt of an amount advanced by
the Company pursuant to this Section 3.4, the Employee
becomes entitled to receive any refund with respect to
such claim, the Employee shall promptly pay to the
Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable
thereto). If, after the Employee's receipt of an amount
advanced by the Company pursuant to this Section
3.4, a determination is made that the Employee shall not
be entitled to any refund with respect to such claim and
the Company does not notify the Employee in writing of
its intent to contest such denial of refund prior to the
expiration of 30 days after the Company's receipt of
notice of such determination, then such advance shall be
forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be
paid.
(e) The provisions of this Section 3.4 shall survive the
expiration of the Employee's term of employment
hereunder.
(b) Section 5.1 of the Employment Agreement is hereby amended to read
in its entirety as follows:
"Section 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 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 parties agree that a material
breach by the Company for purposes of this Section 5.1 shall include, but not be
limited to, a material reduction in Employee's title, authority or
responsibilities from those he was exercising on the date of execution of this
Agreement. Without limitation of the foregoing prior to a Change of Control, the
parties further agree that, following a Change of Control, a material breach by
the Company shall mean:
(a) the assignment to the Employee of any duties inconsistent
with the Employee's position, title, authority or
responsibilities as contemplated by Section 1.1 hereof,
or any action by the Company that results in a diminution
in such position, title, authority or responsibilities
(excluding for these purposes an isolated and
insubstantial action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Employee);
(b) any requirement that the Employee report to any person or
entity other than the Chairman of the Parent Company or
the Board of Directors of the Parent Company;
(c) any failure to nominate the Employee for election as
director of the ultimate parent corporation of the
Company;
(d) any failure by the Company or the Parent Company, as
applicable, to comply with the compensation and benefits
provisions of Section 2 hereof; and
(e) the relocation of the Parent Company's principal
executive offices to a location more than 30 miles from
its current location in Covington, Kentucky.
In addition, the Employee may terminate his employment
voluntarily for any reason within the 120-day period following the occurrence of
the Change of Control and shall have the right and option to treat such
voluntary termination as termination by the Company without Cause in accordance
herewith.
For purposes of this Agreement, a "Change of Control" shall
mean the occurrence of one of the following events: (i) any Person becomes a
beneficial owner, directly or indirectly, of securities of the Parent Company
representing 20% or more of the combined voting power of the Parent Company's
then outstanding securities; (ii) the merger or consolidation of the Parent
Company with or into another entity (or other similar reorganization), whether
or not the Parent Company is the surviving corporation, in which the
stockholders of the Parent Company immediately prior to the effective date of
such transaction own less than 50% of the voting power in the surviving entity;
(iii) the sale or other disposition of all or substantially all of the assets of
the Parent Company, or a complete liquidation or dissolution of the Parent
Company; or (iv) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Parent
Company cease for any reason to constitute at least a majority of such Board of
Directors, unless the nomination for the election by the Parent Company's
stockholders of each new director was approved by a vote of at least one-half of
the persons who were directors at the beginning of the two-year period.
For purposes of this definition, a "Person" shall mean any
individual, firm, company, partnership, other entity or group, but excluding the
Parent Company, its affiliates, any employee benefit plan maintained by the
Parent Company, or an underwriter temporarily holding securities pursuant to an
offering of such securities.
For purposes of this definition, a Person shall be deemed the
"beneficial owner" of any securities (i) which such Person or any of its
Affiliates or Associates beneficially owns, directly or indirectly; or (ii)
which such Person or any of its Affiliates or Associates, has directly or
indirectly, (1) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (2) the right to vote pursuant to
any agreement, arrangement or understanding; or (iii) which are beneficially
owned, directly or indirectly, by any other Person with which such Person or any
of its Affiliates or Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any securities.
For purposes of this definition, the terms "Affiliate" or
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934.
The remedy provided for in this Section 5.1 shall be in
addition to and not in limitation of any other remedies which would otherwise
exist as a matter of law."
(c) Article 6 is hereby amended by adding a new Section 6.7 reading as
follows:
"Section 6.7 No Mitigation or Offset. The Employee shall not be
required to seek other employment or to reduce any severance benefit payable to
him under Section 3.3 hereof, and no such severance benefit shall be reduced on
account of any compensation received by the Employee from the Company or any
other employment. The Company's obligations to the Employee hereunder,
including, without limitation, any obligation to provide severance benefits,
shall not be subject to set-off or counterclaim in respect of any debts or
liabilities of the Employee to the Company.
3. General
Except as previously changed by the Prior Amendments and as
specifically amended herein, the Employment Agreement will remain in full force
and effect in accordance with its original terms, conditions, and provisions.
IN WITNESS WHEREOF, the parties have duly executed this amendatory
agreement as of February 25, 2000.
OMNICARE MANAGEMENT COMPANY
____________________________________ By:____________________________
