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EXHIBIT 10.26
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ROTO-ROOTER, INC.
1995 STOCK INCENTIVE PLAN
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ROTO-ROOTER, INC.
1995 STOCK INCENTIVE PLAN
1. PURPOSES: The purposes of this Plan are (a) to secure for the
Corporation the benefits of incentives inherent in ownership of Common Stock by
Key Employees, (b) to encourage Key Employees to increase their interest in the
future growth and prosperity of the Corporation and to stimulate and sustain
constructive and imaginative thinking by Key Employees, (c) to further the
identity of interest of those who hold positions of major responsibility in the
Corporation and its Subsidiaries with the interests of the Corporation's
stockholders, (d) to induce the employment or continued employment of Key
Employees and (e) to enable the Corporation to compete with other organizations
offering similar or other incentives in obtaining and retaining the services of
competent executives.
2. DEFINITIONS: Unless otherwise required by the context, the
following terms when used in this Plan shall have the meanings set forth in
this section 2.
BOARD OF DIRECTORS: The Board of Directors of the Corporation.
COMMON STOCK: The Common Stock of the Corporation, par value
$1.00 per share, or such other class of shares or other securities as may be
applicable pursuant to the provisions of section 8.
CORPORATION: Roto-Rooter, Inc., a Delaware corporation.
FAIR MARKET VALUE: As applied to any date, the last trading
price of a share of Common Stock on the principal stock exchange on which the
Common Stock is listed or, if it is not so listed, as reported by the National
Association of Securities Dealers on such date or, if no sales were made on
such date, on the next preceding date on which there were sales of Common
Stock; provided, however, that, if the Common Stock is not so listed or quoted,
Fair Market Value shall be determined in accordance with the method approved by
the Incentive Committee, and, provided further, if any of the foregoing methods
of determining Fair Market Value shall not be consistent with the regulations
of the Secretary of the Treasury or his delegate at the time applicable to a
Stock Incentive of the type involved, Fair Market Value in the case of such
Stock Incentive shall be determined in accordance with such regulations and
shall mean the value as so determined.
INCENTIVE COMMITTEE: The Incentive Committee designated to
administer this Plan pursuant to the provisions of section 10.
INCENTIVE COMPENSATION: Bonuses, extra and other compensation
payable in addition to a salary or other base
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amount, whether contingent or discretionary or required to be paid pursuant to
an agreement, resolution or arrangement, and whether payable currently or on a
deferred basis, in cash, Common Stock or other property, awarded by the
Corporation or a Subsidiary prior or subsequent to the date of the approval and
adoption of this Plan by the stockholders of the Corporation.
KEY EMPLOYEE: An employee of the Corporation or of a
Subsidiary who in the opinion of the Incentive Committee can contribute
significantly to the growth and successful operations of the Corporation
or a Subsidiary. The grant of a Stock Incentive to an employee by the
Incentive Committee shall be deemed a determination by the Incentive Committee
that such employee is a Key Employee. For the purposes of this Plan, a
director or officer of the Corporation or of a Subsidiary shall be deemed an
employee regardless of whether or not such director or officer is on the
payroll of, or otherwise paid for services by, the Corporation or a Subsidiary.
OPTION: An option to purchase shares of Common Stock.
PERFORMANCE UNIT: A unit representing a share of Common Stock,
subject to a Stock Award, the issuance, transfer or retention of which is
contingent, in whole or in part, upon attainment of a specified performance
objective or objectives, including, without limitation, objectives determined
by reference to or changes in (a) the Fair Market Value, book value or earnings
per share of Common Stock, or (b) sales and revenues, income, profits and
losses, return on capital employed, or net worth of the Corporation (on a
consolidated or unconsolidated basis) or of any one or more of its groups,
divisions, Subsidiaries or departments, or (c) a combination of two or more of
the foregoing factors.
PLAN: The 1995 Stock Incentive Plan herein set forth as the
same may from time to time be amended.
STOCK AWARD: An issuance or transfer of shares of Common Stock
at the time the Stock Incentive is granted or as soon thereafter as
practicable, or an undertaking to issue or transfer such shares in the future,
including, without limitation, such an issuance, transfer or undertaking with
respect to Performance Units.
STOCK INCENTIVE: A stock incentive granted under this Plan in
one of the forms provided for in section 3.
SUBSIDIARY: A corporation or other form of business
association of which shares (or other ownership interests) having 50% or more
of the voting power are owned or controlled, directly or indirectly,
by the Corporation.
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3. GRANTS OF STOCK INCENTIVES:
(a) Subject to the provisions of this Plan, the Incentive
Committee may at any time, or from time to time, grant Stock Incentives under
this Plan to, and only to, Key Employees.
(b) Stock Incentives may be granted in the following forms:
(i) a Stock Award, or
(ii) an Option, or
(iii) a combination of a Stock Award and an Option.
4. STOCK SUBJECT TO THIS PLAN:
(a) Subject to the provisions of paragraph (c) and (d) of this
section 4 and of section 8, the aggregate number of shares of Common Stock
which may be issued or transferred pursuant to Stock Incentives granted under
this Plan shall not exceed 200,000 shares.
(b) The maximum aggregate number of shares of Common Stock
which may be issued or transferred under the Plan to directors of the
Corporation or of a Subsidiary shall not exceed 100,000 shares.
(c) Authorized but unissued shares of Common Stock and shares
of Common Stock held in the treasury, whether acquired by the Corporation
specifically for use under this Plan or otherwise, may be used, as the
Incentive Committee may from time to time determine, for purposes of this Plan,
provided, however, that any shares acquired or held by the Corporation for the
purposes of this Plan shall, unless and until transferred to a Key Employee in
accordance with the terms and conditions of a Stock Incentive, be and at all
times remain treasury shares of the Corporation, irrespective of whether such
shares are entered in a special account for purposes of this Plan, and shall be
available for any corporate purpose.
(d) If any shares of Common Stock subject to a Stock Incentive
shall not be issued or transferred and shall cease to be issuable or
transferable because of the termination, in whole or in part, of such Stock
Incentive or for any other reason, or if any such shares shall, after issuance
or transfer, be reacquired by the Corporation or a Subsidiary because of an
employee's failure to comply with the terms and conditions of a Stock
Incentive, the shares not so issued or transferred, or the shares so reacquired
by the Corporation or a Subsidiary shall no longer be charged against any of
the limitations provided for in paragraphs (a) or (b) of this section 4 and may
again be made subject to Stock Incentives.
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5. STOCK AWARDS: Stock Incentives in the form of Stock Awards shall
be subject to the following provisions:
(a) A Stock Award shall be granted only in payment of Incentive
Compensation that has been earned or as Incentive Compensation to be earned,
including, without limitation, Incentive Compensation awarded concurrently with
or prior to the grant of the Stock Award.
(b) For the purposes of this Plan, in determining the value of
a Stock Award, all shares of Common Stock subject to such Stock Award shall be
valued at not less than 100% of the Fair Market Value of such shares on the
date such Stock Award is granted, regardless of whether or when such shares are
issued or transferred to the Key Employee and whether or not such shares are
subject to restrictions which affect their value.
(c) Shares of Common Stock subject to a Stock Award may be
issued or transferred to the Key Employee at the time the Stock Award is
granted, or at any time subsequent thereto, or in installments from time to
time, as the Incentive Committee shall determine. In the event that any such
issuance or transfer shall not be made to the Key Employee at the time the
Stock Award is granted, the Incentive Committee may provide for payment to such
Key Employee, either in cash or in shares of Common Stock from time to time or
at the time or times such shares shall be issued or transferred to such Key
Employee, of amounts not exceeding the dividends which would have been payable
to such Key Employee in respect of such shares (as adjusted under section 8) if
they had been issued or transferred to such Key Employee at the time such Stock
Award was granted. Any amount payable in shares of Common Stock under the
terms of a Stock Award may, at the discretion of the Corporation, be paid in
cash, on each date on which delivery of shares would otherwise have been made,
in an amount equal to the Fair Market Value on such date of the shares which
would otherwise have been delivered.
(d) A Stock Award shall be subject to such terms and
conditions, including, without limitation, restrictions on sale or other
disposition of the Stock Award or of the shares issued or transferred pursuant
to such Stock Award, as the Incentive Committee shall determine; provided,
however, that upon the issuance or transfer of shares pursuant to a Stock
Award, the recipient shall, with respect to such shares, be and become a
stockholder of the Corporation fully entitled to receive dividends, to vote and
to exercise all other rights of a stockholder except to the extent otherwise
provided in the Stock Award. Each Stock Award shall be evidenced by a written
instrument in such form as the Incentive Committee shall determine, provided
the Stock Award is consistent with this Plan and incorporates it by reference.
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6. OPTIONS: Stock Incentives in the form of Options shall be subject
to the following provisions:
(a) Upon the exercise of an Option, the purchase price shall be
paid in cash or, if so provided in the Option or in a resolution adopted by the
Incentive Committee (and subject to such terms and conditions as are specified
in the Option or by the Incentive Committee), in shares of Common Stock or in a
combination of cash and such shares. Shares of Common Stock thus delivered
shall be valued at their Fair Market Value on the date of exercise. Subject to
the provisions of section 8, the purchase price per share shall be not less
than 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted.
(b) Each Option shall be exercisable in full or in part one
year after the date the Option is granted, or may become exercisable in one or
more installments and at such time or times, as the Incentive Committee shall
determine. Unless otherwise provided in the Option, an Option, to the extent it
is or becomes exercisable, may be exercised at any time in whole or in part
until the expiration or termination of the Option. Subject to the first
sentence of this paragraph, any term or provision in any outstanding Option
specifying when the Option is exercisable or that it be exercisable in
installments may be modified at any time during the life of the Option by the
Incentive Committee, provided, however, no such modification of an outstanding
Option shall, without the consent of the optionee, adversely affect any Option
theretofore granted to him. Subject to the preceding provisions of this
paragraph, an Option will become immediately exercisable in full if at any time
during the term of the Option the Corporation obtains actual knowledge that any
of the following events has occurred, irrespective of the applicability of any
limitation on the number of shares then exercisable under the Option: (1) any
person within the meaning of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the "1934 Act"), other than Chemed Corporation or the
Corporation or any of its subsidiaries, has become the beneficial owner, within
the meaning of Rule 13d-3 under the 1934 Act, of 30 percent or more of the
combined voting power of the Corporation's then outstanding voting securities;
(2) the expiration of a tender offer or exchange offer, other than an offer by
the Corporation or Chemed Corporation, pursuant to which 20 percent or more of
the shares of the Corporation's Common Stock or Chemed Corporation's Capital
Stock have been purchased; (3) the stockholders of the Corporation or Chemed
Corporation have approved (i) an agreement to merge or consolidate with or into
another corporation and the Corporation or Chemed Corporation is not the
surviving corporation or (ii) an agreement to sell or otherwise dispose of all
or substantially all of the assets of Chemed Corporation or the Corporation
(including a plan of liquidation); or (4) during any period of two consecutive
years,
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individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least a majority thereof,
unless the nomination for the election by the Corporation'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.
(c) Each Option shall be exercisable during the life of the
optionee only by him or a transferee or assignee permitted by paragraph (f) of
this section (6) and, after his death, only by his estate or by a person who
acquired the right to exercise the Option pursuant to one of the provisions of
paragraph (f) of this section (6). An Option, to the extent that it shall not
have been exercised, shall terminate when the optionee ceases to be an employee
of the Corporation or a Subsidiary, unless he ceases to be an employee because
of his resignation with the consent of the Incentive Committee (which consent
may be given before or after resignation), or by reason of his death,
incapacity or retirement under a retirement plan of the Corporation or a
Subsidiary. Except as provided in the next sentence, if the optionee ceases to
be an employee by reason of such resignation, the Option shall terminate three
months after he ceases to be an employee. If the optionee ceases to be an
employee by reason of such death, incapacity or retirement, or if he should die
during the three-month period referred to in the preceding sentence, the Option
shall terminate fifteen months after he ceases to be an employee. Where an
Option is exercised more than three months after the optionee ceased to be an
employee, the Option may be exercised only to the extent it could have been
exercised three months after he ceased to be an employee. A leave of absence
for military or governmental service or for other purposes shall not, if
approved by the Incentive Committee, be deemed a termination of employment
within the meaning of this paragraph (c); provided, however, that an Option may
not be exercised during any such leave of absence. Notwithstanding the
foregoing provisions of this paragraph (c) or any other provision of this Plan,
no Option shall be exercisable after expiration of the term for which the
Option was granted, which shall in no event exceed ten years. Where an Option
is granted for a term of less than ten years, the Incentive Committee, may, at
any time prior to the expiration of the Option, extend its term for a period
ending not later than ten years from the date the Option was granted. Such an
extension shall not be deemed the grant of an Option under this Plan.
(d) Options shall be granted for such lawful consideration as the
Incentive Committee shall determine.
(e) Neither the Corporation nor any Subsidiary may directly or
indirectly lend any money to any person for the purpose of assisting him to
purchase or carry shares of Common Stock issued or transferred upon the
exercise of an Option.
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(f) No Option nor any right thereunder may be assigned or transferred
by the optionee except:
(i) by will or the laws of descent and distribution;
(ii) pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or by the
Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder;
(iii) by an optionee who, at the time of the transfer, is not subject
to the provisions of Section 16 of the 1934 Act, provided such
transfer is to or for the benefit of (including but not limited
to trusts for the benefit of) the optionee's spouse or lineal
descendants of the optionee's parents; or
(iv) by an optionee who, at the time of transfer, is subject to the
provisions of Section 16 of the 1934 Act, to the extent, if any,
such transfer would be permitted under Securities and Exchange
Commission Rule 16b-3 or any successor rule thereto, as such
rule or any successor rule thereto may be in effect at the time
of the transfer.
If so provided in the Option or if so authorized by the Incentive Committee and
subject to such terms and conditions as are specified in the Option or by the
Incentive Committee, the Corporation may, upon or without the request of the
holder of the Option and at any time or from time to time, cancel all or a
portion of the Option then subject to exercise and either (i) pay the holder an
amount of money equal to the excess, if any, of the Fair Market Value, at such
time or times, of the shares subject to the portion of the Option so cancelled
over the aggregate purchase price of such shares, or (ii) issue or transfer
shares of Common Stock to the holder with a Fair Market Value, at such time or
times, equal to such excess.
(g) Each Option shall be evidenced by a written instrument, which
shall contain such terms and conditions, and shall be in such form, as the
Incentive Committee may determine, provided the Option is consistent with this
Plan and incorporates it by reference. Notwithstanding the preceding sentence,
an Option, if so granted by the Incentive Committee, may include restrictions
and limitations in addition to those provided for in this Plan.
(h) Any federal, state or local withholding taxes payable by an
optionee or awardee upon the exercise of an Option or upon the removal of
restrictions of a Stock Award shall be paid in cash or
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in such other form as the Incentive Committee may authorize from time to time,
including the surrender of shares of Common Stock or the withholding of shares
of Common Stock to be issued to the optionee or awardee. All such shares so
surrendered or withheld shall be valued at Fair Market Value on the date such
are surrendered to the Corporation or authorized to be withheld.
7. COMBINATIONS OF STOCK AWARDS AND OPTIONS: Stock Incentives
authorized by paragraph (b)(iii) of section 3 in the form of combinations of
Stock Awards and Options shall be subject to the following provisions:
(a) A Stock Incentive may be a combination of any form of Stock
Award with any form of Option; provided, however, that the terms and conditions
of such Stock Incentive pertaining to a Stock Award are consistent with section
5 and the terms and conditions of such Stock Incentive pertaining to an Option
are consistent with section 6.
(b) Such combination Stock Incentive shall be subject to such
other terms and conditions as the Incentive Committee may determine, including,
without limitation, a provision terminating in whole or in part a portion
thereof upon the exercise in whole or in part of another portion thereof. Such
combination Stock Incentive shall be evidenced by a written instrument in such
form as the Incentive Committee shall determine, provided it is consistent with
this Plan and incorporates it by reference.
8. ADJUSTMENT PROVISIONS: In the event that any recapitalization, or
reclassification, split-up or consolidation of shares of Common Stock shall be
effected, or the outstanding shares of Common Stock are, in connection with a
merger or consolidation of the Corporation or a sale by the Corporation of all
or a part of its assets exchanged for a different number or class of shares of
stock or other securities of the Corporation or for shares of the stock or
other securities of any other corporation, or a record date for determination
of holders of Common Stock entitled to receive a dividend payable in Common
Stock shall occur (a) the number and class of shares or other securities that
may be issued or transferred pursuant to Stock Incentives, (b) the number and
class of shares or other securities which have not been issued or transferred
under outstanding Stock Incentives, (c) the purchase price to be paid per share
or other security under outstanding Options, and (d) the price to be paid per
share or other security by the Corporation or a Subsidiary for shares or other
securities issued or transferred pursuant to Stock Incentives which are subject
to a right of the Corporation or a Subsidiary to reacquire such shares or other
securities, shall in each case be equitably adjusted.
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9. TERM: This Plan shall be deemed adopted and shall become
effective on the date it is approved and adopted by the stockholders of the
Corporation. No Stock Incentives shall be granted under this Plan after
May 15, 2005.
10. ADMINISTRATION:
(a) The Plan shall be administered by the Incentive Committee,
which shall consist of no fewer than three persons designated by the Board of
Directors. Grants of Stock Incentives may be made by the Incentive Committee
either in or without consultation with employees, but, anything in this Plan to
the contrary notwithstanding, the Incentive Committee shall have full authority
to act in the matter of selection of all Key Employees and in determining the
number of Stock Incentives to be granted to them.
(b) The Incentive Committee may establish such rules and
regulations, not inconsistent with the provisions of this Plan, as it deems
necessary to determine eligibility to participate in this Plan and for the
proper administration of this Plan, and may amend or revoke any rule or
regulation so established. The Incentive Committee may make such
determinations and interpretations under or in connection with this Plan as it
deems necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Corporation, its
Subsidiaries, its stockholders and all employees, and upon their respective
legal representatives, beneficiaries, successors and assigns and upon all other
persons claiming under or through any of them.
(c) Members of the Board of Directors and members of the
Incentive Committee acting under this Plan shall be fully protected in relying
in good faith upon the advice of counsel and shall incur no liability except
for gross negligence or willful misconduct in the performance of their duties.
11. GENERAL PROVISIONS:
(a) Nothing in this Plan nor in any instrument executed
pursuant hereto shall confer upon any employee any right to continue in the
employ of the Corporation or a Subsidiary, or shall affect the right of the
Corporation or of a Subsidiary to terminate the employment of any employee with
or without cause.
(b) No shares of Common Stock shall be issued or transferred
pursuant to a Stock Incentive unless and until all legal requirements
applicable to the issuance or transfer of such shares, in the opinion of
counsel to the Corporation, have been complied with. In connection with any
such issuance or transfer, the person acquiring the shares shall, if requested
by the Corporation, give assurances, satisfactory to counsel to the
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Corporation, that the shares are being acquired for investment and not with a
view to resale or distribution thereof and assurances in respect of such other
matters as the Corporation or a Subsidiary may deem desirable to assure
compliance with all applicable legal requirements.
(c) No employee (individually or as a member of a group), and
no beneficiary or other person claiming under or through him, shall have any
right, title or interest in or to any shares of Common Stock allocated or
reserved for the purposes of this Plan or subject to any Stock Incentive except
as to such shares of Common Stock, if any, as shall have been issued or
transferred to him.
(d) The Corporation or a Subsidiary may, with the approval of
the Incentive Committee, enter into an agreement or other commitment to grant a
Stock Incentive in the future to a person who is or will be a Key Employee at
the time of grant, and, notwithstanding any other provision of this Plan, any
such agreement or commitment shall not be deemed the grant of a Stock Incentive
until the date on which the Company takes action to implement such agreement or
commitment.
(e) In the case of a grant of a Stock Incentive to an employee
of a Subsidiary, such grant may, if the Incentive Committee so directs, be
implemented by the Corporation issuing or transferring the shares, if any,
covered by the Stock Incentive to the Subsidiary, for such lawful consideration
as the Incentive Committee may specify, upon the condition or understanding
that the Subsidiary will transfer the shares to the employee in accordance with
the terms of the Stock Incentive specified by the Incentive Committee pursuant
to the provisions of this Plan. Notwithstanding any other provision hereof,
such Stock Incentive may be issued by and in the name of the Subsidiary and
shall be deemed granted on the date it is approved by the Incentive Committee,
on the date it is delivered by the Subsidiary or on such other date between
said two dates, as the Incentive Committee shall specify.
(f) The Corporation or a Subsidiary may make such provisions as
it may deem appropriate for the withholding of any taxes which the Corporation
or a Subsidiary determines it is required to withhold in connection with any
Stock Incentive.
(g) Nothing in this Plan is intended to be a substitute for, or
shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or fringe benefits to
employees generally, or to any class or group of employees, which the
Corporation or any Subsidiary or other affiliate now has or may hereafter
lawfully
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put into effect, including, without limitation, any retirement, pension, group
insurance, stock purchase, stock bonus or stock option plan.
12. AMENDMENTS AND DISCONTINUANCE:
(a) This Plan may be amended by the Board of Directors upon the
recommendation of the Incentive Committee, provided that, without the approval
of the stockholders of the Corporation, no amendment shall be made which (i)
increases the aggregate number of shares of Common Stock that may be issued or
transferred pursuant to Stock Incentives as provided in paragraph (a) of
section 4, (ii) increases the maximum aggregate number of shares of Common
Stock that may be issued or transferred under the Plan to directors of the
Corporation or of a Subsidiary as provided in paragraph (b) of section 4, (iii)
withdraws the administration of this Plan from the Incentive Committee, (iv)
permits any person who is not at the time a Key Employee of the Corporation or
of a Subsidiary to be granted a Stock Incentive, (v) permits any Option to be
exercised more than ten years after the date it is granted, (vi) amends section
9 to extend the date set forth therein or (vii) amends this section 12.
(b) Notwithstanding paragraph (a) of this section 12, the Board
of Directors may amend the Plan to take into account changes in applicable
securities laws, federal income tax laws and other applicable laws. Should the
provisions of Rule 16b-3, or any successor rule, under the Securities Exchange
Act of 1934 be amended, the Board of Directors may amend the Plan in accordance
therewith.
(c) The Board of Directors may by resolution adopted by a
majority of the entire Board of Directors discontinue this Plan.
(d) No amendment or discontinuance of this Plan by the Board of
Directors or the stockholders of the Corporation shall, without the consent of
the employee, adversely affect any Stock Incentive theretofore granted to him.
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