<PAGE> 1
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SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ROTO-ROOTER, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ROTO-ROOTER, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
___________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
___________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
___________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
___________________________________________________________________
(5) Total fee paid:________________________________
Set forth the amount on which the filing fee is calculated and state how it was
determined.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
___________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
___________________________________________________________________
(3) Filing Party:
___________________________________________________________________
(4) Date Filed:
___________________________________________________________________
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<PAGE> 2
ROTO-ROOTER, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1995
The Annual Meeting of Stockholders of Roto-Rooter, Inc. will be held at The
Phoenix Club, 812 Race Street, Cincinnati, Ohio, on Monday, May 15, 1995 at
11:30 a.m. for the following purposes:
(1) To elect directors;
(2) To approve and adopt the 1995 Stock Incentive Plan;
(3) To ratify the selection by the Board of Directors of independent
accountants; and
(4) To transact such other business as may properly be brought before the
meeting.
Stockholders of record at the close of business on March 20, 1995 are entitled
to notice of, and to vote at, the meeting.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED AT YOUR EARLIEST
CONVENIENCE. NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED STATES.
Naomi C. Dallob
Secretary
April 6, 1995
<PAGE> 3
ROTO-ROOTER, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Roto-Rooter, Inc. (hereinafter called the "Company") of
proxies to be used at the Annual Meeting of Stockholders ("Annual Meeting") of
the Company to be held on May 15, 1995 and any adjournments thereof. The
Company's mailing address is 2500 Chemed Center, 255 East Fifth Street,
Cincinnati, Ohio 45202. The approximate date on which this Proxy Statement and
the enclosed proxy are being sent to stockholders is April 6, 1995. Each valid
proxy received in time will be voted at the meeting and, if a choice is
specified on the proxy, the shares represented thereby will be voted
accordingly. The proxy may be revoked by the stockholder at any time before the
Annual Meeting by providing notice to the Secretary.
Only stockholders of record as of the close of business on March 20, 1995 will
be entitled to vote at the Annual Meeting or any adjournments thereof. On such
date, the Company had outstanding 5,086,328 shares of common stock, par value
$1 per share ("Common Stock"), entitled to one vote per share.
ELECTION OF DIRECTORS
Eighteen directors are to be elected at the Annual Meeting to serve until the
following annual meeting of stockholders and until their successors are duly
elected and qualified. Set forth below are the names of the persons to be
nominated by the Board of Directors, together with a description of each
person's principal occupation during the past five years and other pertinent
information. The Company has a program under which three nominations for
membership on the Board of Directors are rotated each year among senior
officers of the Company, senior executives of its operating divisions and
subsidiaries and senior executives of Chemed Corporation, a Delaware
corporation and the majority (59 percent) owner of the Company's outstanding
Common Stock ("Chemed"). The persons considered to be in the rotating group are
Ms. Naomi C. Dallob and Messrs. Richard L. Arquilla, Brian A. Brumm, Gary C.
Burger, Spencer S. Lee, and Timothy S. O'Toole. Ms. Dallob and Messrs. Brumm
and O'Toole are being nominated from the group this year. It is anticipated
that additional executives of Chemed and the Company will be included in this
rotating group in future years.
Unless authority is withheld or names are stricken, it is intended that the
shares covered by each proxy will be voted for the nominees listed. Votes that
are withheld will be excluded entirely from the vote and will have no effect.
The Company anticipates that all nominees listed in this Proxy Statement will
be candidates when the election is held. However, if for any reason any nominee
is not a candidate at that time, proxies will be voted for any substitute
nominee designated by the Board of Directors (except where a proxy withholds
authority with respect to the election of directors). The affirmative vote of
the holders of a majority of the voting power of the stockholders represented
at the meeting will be necessary to elect each of the nominees for director.
NOMINEES
EDWARD L. HUTTON Mr. Hutton is Chairman of the Company and,
Director since 1984 from 1970 to November 1993, has served as
Age: 75 President, Chief Executive Officer, and a
director of Chemed, Cincinnati, Ohio (a
diversified public corporation with interests
in residential and commercial plumbing and
sewer and drain cleaning services; janitorial
supply products and services; medical and
dental supply distribution for private
practice; and home healthcare services). Since
November 1993, Mr. Hutton has served as
Chairman and Chief Executive Officer of
Chemed. He is Chairman and a director of
Omnicare, Inc., Cincinnati, Ohio (health care
products and services) ("Omnicare"), a public
corporation in which Chemed holds a 5.8
percent ownership interest. He is also
Chairman and a director of National Sanitary
Supply Company, Cincinnati, Ohio (janitorial
supplies) ("National"), a public corporation
in which Chemed
1
<PAGE> 4
holds an 85 percent ownership interest. Mr.
Hutton is also a director of Sonic
Corporation. Mr. Hutton is the father of
Thomas C. Hutton, a director of the Company.
WILLIAM R. GRIFFIN Mr. Griffin is President and Chief Executive
Director since 1984 Officer of the Company and has held these
Age: 51 positions since May 1985. Mr. Griffin is also
an Executive Vice President of Chemed and has
held this position since May 1991. Mr. Griffin
is a director of Barefoot, Inc. and Chemed.
BRIAN A. BRUMM Mr. Brumm is a Vice President, Treasurer and
Director since 1985 the Chief Financial Officer of the Company and
Age: 40 has held these positions since August 1984.
JAMES A. CUNNINGHAM Mr. Cunningham is a Senior Chemical Adviser
Director since 1990 with Wertheim Schroder & Co. Incorporated, New
Age: 50 York, New York (an investment banking, asset
management and securities firm) and has held
this position since March 1992. Previously he
was a Managing Director of Furman Selz
Incorporated, New York, New York (an
institutional investment company) and held
this position from October 1990 to March 1992.
From January 1988 to June 1990, he was a
Director of The First Boston Corporation, New
York, New York (an investment banking firm).
Mr. Cunningham is a director of Chemed and
National.
NAOMI C. DALLOB Ms. Dallob is Secretary and General Counsel of
Director since 1992 the Company and has held these positions since
Age: 41 August 1994. Previously, from September 1984,
she was Assistant Secretary of the Company.
Ms. Dallob is also a Vice President and the
Secretary of Chemed and has held these
positions since February 1987 and August 1994,
respectively. She is a director of National.
CHARLES H. ERHART, JR. Mr. Erhart retired as President of W. R. Grace
Director since 1985 & Co., Boca Raton, Florida (international
Age: 69 specialty chemicals and health care)
("Grace"), in August 1990, having previously
held this position since July 1989.
Previously, he was Chairman of the Executive
Committee of Grace and held that position from
November 1986 to July 1989. He is a director
of Chemed, Grace, National and Omnicare.
NEAL GILLIATT Mr. Gilliatt is President of Neal
Director since 1985 Gilliatt/Stuart Watson, Inc., New York, New
Age: 77 York (management consulting), and has held
this position since April 1982. On April 1,
1982 he retired as Chairman of the Executive
Committee of the Interpublic Group of
Companies, Inc., New York, New York
(advertising and related communications),
having held that position since February 1980.
Mr. Gilliatt is a director of Consolidated
Products, Inc. and National.
LAWRENCE J. GILLIS Mr. Gillis is a Vice President of the Company
Director from April 1985 and has held this position since May 1992. Mr.
to May 1986 and May 1989 Gillis is also President and Chief Operating
to May 1990 and since May 1991 Officer of Roto-Rooter Services Company and
Age: 60 has held these positions since October 1994.
Previously, he was Senior Vice President -
Operations of Roto-Rooter Services Company,
from February 1991 to October 1994. From
November 1983 to February 1991, he was a
Regional Vice President of Roto-Rooter
Services Company.
2
<PAGE> 5
J. PETER GRACE Mr. Grace is Chairman and a director of Grace
Director since 1985 and served as its Chief Executive Officer from
Age: 81 1945 to 1992. He is Chairman of the Board and
a director of Chemed. He is also a director of
Milliken & Company, National, Omnicare and
Stone & Webster, Inc. He is a trustee emeritus
of Atlantic Mutual Insurance Company, Atlantic
Reinsurance Company and Centennial Insurance
Co., a director emeritus of Ingersoll-Rand
Company, and an Honorary Director of Brascan
Ltd.
DOUGLAS B. HARPER Mr. Harper is the Executive Vice President of
Director since 1984 the Company and has held this position since
Age: 51 May 1992. Previously, from May 1984 to May
1992, he was a Vice President of the Company.
Since October 1980, he has also served as
President of Roto-Rooter Corporation, a
subsidiary of the Company.
WILL J. HOEKMAN Mr. Hoekman is a Senior Vice President of
Director since 1985 Firstar Bank, Des Moines, Iowa, and has held
Age: 49 this position since November 1980. Mr.
Hoekman is a director of National.
THOMAS C. HUTTON Mr. Hutton is a Vice President of Chemed and
Director since 1985 has held this position since February 1988.
Age: 44 Mr. Hutton is a director of Chemed, National
and Omnicare. He is a son of Edward L. Hutton,
Chairman and a director of the Company.
PATRICK L. JOHNSON Mr. Johnson is a Vice President of the Company
Director since 1984 and President and Chief Executive Officer of
Age: 41 Service America Systems, Inc., a subsidiary of
the Company ("Service America"), and has held
these positions since December 1983 and August
1991, respectively. From August 1991 to April
1993, he was Vice Chairman and Chief Executive
Officer of Service America. He also served as
a Senior Vice President of Roto-Rooter
Services Company from September 1986 to
September 1993.
SANDRA E. LANEY Ms. Laney is Senior Vice President and the
Director since 1985 Chief Administrative Officer of Chemed and has
Age: 51 held these positions since November 1993 and
May 1991, respectively. Previously, from May
1984 to November 1993, she was a Vice
President of Chemed. Ms. Laney is a director
of Chemed, National and Omnicare.
KEVIN J. MCNAMARA Mr. McNamara is Vice Chairman of the Company
Director since 1986 and has held this position since August 1994.
Age: 41 Previously, he served as Secretary and General
Counsel of the Company since August 1986. He
is also President of Chemed and has held this
position since August 1994. Previously,
November 1993 to August 1994, he held the
position of Executive Vice President of
Chemed, and, from May 1992 to November 1993,
he held the position of Vice Chairman of
Chemed and, from August 1986 to May 1992, held
the position of Vice President of Chemed. He
also held the positions of General Counsel and
Secretary of Chemed from August 1986 to August
1994. He is a director of Chemed, National and
Omnicare.
TIMOTHY S. O'TOOLE Mr. O'Toole is an Executive Vice President and
Director since 1991 the Treasurer of Chemed and has held these
Age: 39 positions since May 1992. Previously, from
February 1989 to May 1992, he held the
positions of Vice President and Treasurer of
Chemed. He is a director of Chemed, Vitas
Healthcare Corporation (hospice management,
Miami, Florida), National and Omnicare.
3
<PAGE> 6
D. WALTER ROBBINS, JR. Mr. Robbins is a consultant to W. R. Grace &
Director since 1985 Co. and has held this position since January
Age: 75 1987. He is a director of Chemed, Grace,
National and Omnicare.
JEROME E. SCHNEE Mr. Schnee is a Professor of Management at the
Director since August 1993 University of Cincinnati College of Business
Age: 53 Administration ("College") and has held this
position since September 1988. From September
1988 to May 1994, he also served as Dean of
the College. He is a director of National.
COMPENSATION OF DIRECTORS
Throughout 1994 each member of the Board of Directors who was not a regular
employee of the Company or of a wholly owned subsidiary of the Company was
entitled to be paid directors' fees. Accordingly, executives of Chemed who are
directors of the Company (other than Mr. E. L. Hutton who is the Company's
Chairman) are entitled to receive directors' fees for attending Board and
Committee meetings. Each member of the Board of Directors of the Company was
paid $925 for his attendance at each meeting of the Board and $500 for each
meeting of a Committee he attended. The chairman of each Committee was paid
$550. Effective February 1, 1995, the director fees were increased and each
member of the Board of Directors who is not a regular employee of the Company or
of a wholly owned subsidiary of the Company (other than Mr. E. L. Hutton) is now
paid $1,000 for his attendance at each meeting of the Board and $550 for each
meeting of a Committee of the Board he attended. The Chairman of each Committee
is paid $600. The following directors who are members of the Incentive Committee
of either the Company or an affiliated company also receive an additional annual
fee of $4,500: Messrs. Cunningham, Erhart, Gilliatt, Hoekman and Robbins.
Members of the Board of Directors are reimbursed for reasonable travel expenses
incurred in connection with such meetings.
On May 16, 1994, each member of the Board of Directors (other than those
serving on the Incentive Committee of either the Company or an affiliated
company) was granted an unrestricted stock award covering 50 shares of the
Company's Common Stock under the Company's 1984 Stock Incentive Plan. Those
directors who are members of the Incentive Committee of either the Company or
an affiliated company were paid the cash equivalent of the 50 share stock award
or $1,400.
COMMITTEES AND MEETINGS OF THE BOARD
The Company has the following Committees of the Board of Directors: Audit
Committee; Compensation Committee; and Incentive Committee. It does not have a
nominating committee of the Board of Directors.
The Audit Committee (a) recommends to the Board of Directors a firm of
independent accountants to audit the Company and its consolidated subsidiaries,
(b) reviews and reports to the Board of Directors on the Company's annual
financial statements and the independent accountants' report on such financial
statements and (c) meets with the Company's senior financial officers, internal
auditors and independent accountants to review audit plans and work and other
matters regarding the Company's accounting, financial reporting and internal
control systems. The Audit Committee consists of Messrs. Gilliatt, Hoekman,
McNamara and Robbins. The Audit Committee met on two occasions in 1994.
The Compensation Committee makes recommendations to the Board of Directors
concerning (a) salary and incentive compensation payable to officers and
certain other key employees of the Company, (b) establishment of incentive
compensation plans and programs generally and (c) adoption and administration
of certain employee benefit plans and programs. The Compensation Committee
consists of Messrs. Erhart, Gilliatt, and T. C. Hutton and Ms. Laney. During
1994, the Compensation Committee met on three occasions.
The Incentive Committee administers the Company's 1984, 1987, 1990 and 1993
Stock Incentive Plans. In addition, the Incentive Committee makes (a) grants of
stock options and stock awards to key employees of the Company and (b)
recommendations to the Board of Directors concerning additional year-end
contributions by the Company under the Company's Retirement and Savings Plan.
The Incentive Committee consists of Messrs. Hoekman, Erhart, and Cunningham.
The Incentive Committee met on three occasions during 1994.
4
<PAGE> 7
During 1994, there were five meetings of the Board of Directors. Each
incumbent director attended at least 75 percent of the aggregate of (a) the
total number of meetings held by the Board of Directors and (b) the total
number of meetings held by all Committees of the Board of Directors on which he
served which were held during the period for which he was a director or member
of any such Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Laney is the Chief Administrative Officer and Senior Vice President of
Chemed and Mr. T. C. Hutton is a Vice President of Chemed. Both are directors
of Chemed, of which, Mr. Griffin is also an Executive Vice President and a
director. See "Certain Arrangements and Transactions-Transactions with Chemed"
on page 15.
EXECUTIVE COMPENSATION
JOINT REPORT OF THE COMPENSATION COMMITTEE AND INCENTIVE COMMITTEE ON EXECUTIVE
COMPENSATION
The Company believes that executive compensation must align executive
officers' interests with those of the Company's stockholders and that such are
best served by having compensation directly and materially linked to financial
and operating performance criteria which when successfully achieved will
enhance stockholder value.
The Company attempts to achieve this objective with an executive compensation
package for its senior executives which combines base salary, annual cash
incentive compensation, long-term incentive compensation in the form of stock
options and restricted stock awards along with various benefit plans, including
pension plans, savings plans and medical benefits generally available to the
employees of the Company.
The executive compensation program is administered through the coordinated
efforts of the Compensation Committee and the Incentive Committee of the Board
of Directors. The membership of both committees is comprised of outside
directors (i.e. non-employees of the Company), although the Compensation
Committee includes two officers of Chemed (see "Compensation Committee
Interlocks and Insider Participation" above). The Compensation Committee is
responsible for the review, approval and recommendation to the Board of
Directors of matters concerning base salary and annual cash incentive
compensation for key executives of the Company. The recommendations of the
Compensation Committee on such matters must be approved by the full Board of
Directors. The Incentive Committee administers the Company's stock incentive
plans under which it reviews and approves grants of stock options and
restricted stock awards. Both the Compensation and Incentive Committees may use
their discretion to set executive compensation where, in their collective
judgement, external, internal or individual circumstances warrant.
Following is a discussion of the components of the executive officer
compensation program.
In determining base salary levels, the Compensation Committee takes into
account the magnitude of responsibility of the position, individual experience
and performance and specific issues particular to the Company. In general, base
salaries are set at levels believed by this Compensation Committee to be
sufficient to attract and retain qualified executives when considered with the
other components of the Company's compensation structure.
The Compensation Committee believes that a significant portion of total cash
compensation should be linked to annual performance criteria. Consequently, the
purpose of annual incentive compensation for senior executives and key managers
is to provide a direct financial incentive in the form of an annual cash bonus
to these executives to achieve their business unit's and the Company's annual
goals. Operational and financial goals are established at the beginning of each
fiscal year and generally take into account such measures of performance as
sales and earnings growth, profitability, cash flow and return on investment.
Other non-financial measures of performance relate to organizational
development, product or service expansion and strategic positioning of the
Company's assets.
5
<PAGE> 8
Individual performance is also taken into account in determining individual
bonuses. It is the Company's belief that bonuses as a percent of a senior
executive's salary should be sufficiently high to provide a major incentive for
achieving annual performance targets. Bonuses for senior executives of the
Company generally range from 25-50 percent of base salary.
The stock option and restricted stock award program forms the basis of the
Company's long-term incentive plans for executive officers and key managers.
The objective of these plans is to align executive and long-term stockholder
interests by creating a strong and direct link between executive pay and
shareholder return.
Stock options and restricted stock awards are granted annually and are
generally regarded as the primary incentive for long-term performance as they
are granted at fair market value and have vesting restrictions which generally
lapse over three or four year periods. The Committee considers each grantee's
current option and award holdings in making grants. Both the amounts of
restricted stock awards and proportion of stock options increase as a function
of higher salary and position of responsibility within the Company.
The Compensation and Incentive Committees have considered, and are continuing
to review, the qualifying compensation regulations issued by the Internal
Revenue Service in December 1993. As compensation for any individual is not
currently expected to exceed the $1 million base, the Company is not presently
affected by these regulations.
The base salary of Mr. Griffin, the President and Chief Executive Officer of
the Company, was increased at an annualized rate of 9.4 percent in 1994 to a
base rate of $291,000. His cash bonus in respect of 1994 services was $134,000,
which represented an increase of $13,000 over 1993 and 46 percent of his base
salary. Restricted stock awards were granted to Mr. Griffin in respect of 1994
services having a value of $100,000 and he was granted 10,000 stock options.
Factors considered in establishing the compensation levels in 1994 for Mr.
Griffin included Company sales growth of 26 percent and net income growth of 10
percent. The Compensation Committee and the Incentive Committee believe that
Mr. Griffin's base salary, the increases in his cash bonus and the restricted
stock awards granted to Mr. Griffin in respect of 1994 services are consistent
with his performance as measured by these factors and the criteria discussed
above.
<TABLE>
<CAPTION>
Compensation Committee Incentive Committee
---------------------- -------------------
<S> <C>
C. H. Erhart, Jr. J. A. Cunningham
N. Gilliatt C. H. Erhart, Jr.
T. C. Hutton W. J. Hoekman
S. E. Laney
</TABLE>
6
<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table shows the compensation paid to the Chief Executive Officer
and the four most highly compensated executive officers of the Company for the
past three years for all services rendered in all capacities to the Company and
its subsidiaries:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- --------------------------------
SECURITIES
SECURITIES UNDERLYING
NAME ROTO-ROOTER UNDERLYING SERVICE ALL
AND RESTRICTED ROTO-ROOTER AMERICA OTHER
PRINCIPAL STOCK STOCK STOCK COMPEN-
POSITION YEAR SALARY ($) BONUS ($) AWARDS ($) (1) OPTIONS (#) OPTIONS (#) SATION ($)
--------- ---- ---------- --------- -------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
W.R. Griffin 1994 $276,417 $134,000 $100,000 10,000 -0- $68,340 (2)
President 1993 260,000 121,000 120,000 31,500 10,000 81,784
and CEO 1992 214,075 116,000 57,000 -0- -0- 67,842
D.B. Harper 1994 180,514 75,500 53,000 5,000 -0- 39,284 (3)
Executive Vice 1993 174,737 71,000 50,000 15,000 -0- 47,816
President 1992 161,646 66,000 37,000 -0- -0- 47,879
L.J. Gillis 1994 172,217 60,500 69,000 5,000 -0- 37,601 (4)
Vice President 1993 164,000 52,500 60,000 17,000 -0- 45,423
1992 152,173 42,000 25,000 -0- -0- 39,514
P.L. Johnson 1994 163,233 27,800 25,000 4,000 -0- 44,168 (5)
Vice President 1993 149,400 48,000 50,000 15,000 13,000 40,554
1992 135,330 42,000 25,000 -0- -0- 37,392
R.J. Fox (7) 1994 159,448 -0- -0- -0- -0- 3,234 (6)
Vice President 1993 135,000 40,000 -0- -0- 9,000 9,525
1992 126,000 30,000 -0- -0- -0- 10,836
</TABLE>
(1) The number and value of aggregate restricted stock holdings in
Roto-Rooter Common Stock at December 31, 1994 were as follows: W. R.
Griffin -- 5,666 shares, $124,652; D.B. Harper -- 2,791 shares,
$61,402; L.J. Gillis -- 2,696 shares, $59,312; P.L. Johnson -- 2,362
shares, $51,964; and R.J. Fox -- none. Dividends are paid to holders
of restricted stock. Restricted stock awards vest evenly over
three-year periods. Restricted stock awards were granted in December
1992, February 1994 and February 1995, respectively.
(2) Includes a $11,550 contribution to the Company's Retirement and
Savings Plan ("Savings Plan"), a $52,886 contribution to the Company's
Deferred Compensation Plan, a $2,061 premium payment under the
Company's Executive Salary Protection Plan, and a $1,843 premium
payment for term life insurance.
(3) Includes a $9,240 contribution to the Savings Plan, a $28,362
contribution to the Deferred Compensation Plan, and a $1,682 premium
payment for term life insurance.
(4) Includes a $11,550 contribution to the Savings Plan, a $24,922
contribution to the Deferred Compensation Plan, and a $1,129 premium
payment for term life insurance.
(5) Includes a $21,752 contribution to the Service America Retirement and
Savings Plan, a $21,846 contribution to the Service America Deferred
Compensation Plan, and a $570 premium payment for term life insurance.
(6) Mr. Fox participated in the benefit plans of Service America. All
other compensation received by Mr. Fox consisted of a $3,234
contribution to the Service America Retirement and Savings Plan.
(7) Mr. Fox resigned his position on December 31, 1994.
7
<PAGE> 10
STOCK OPTIONS
The table below shows information concerning Roto-Rooter stock options granted
in 1994 to the executive officers named in the Summary Compensation Table.
ROTO-ROOTER STOCK OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------------------------- --------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED (#)(1) YEAR ($/SH) DATE 5% ($) 10% ($)
---- -------------- ---------- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
W.R. Griffin 10,000 12.0% $27.00 5/17/04 $169,802 $430,310
D.B. Harper 5,000 6.0 27.00 5/17/04 84,700 214,900
L.J. Gillis 5,000 6.0 27.00 5/17/04 84,700 214,900
P.L. Johnson 4,000 4.8 27.00 5/17/04 67,760 171,920
R.J. Fox 1,000 1.2 27.00 5/17/04 16,940 42,980
</TABLE>
(1) These options, which were granted on May 17, 1994, provide for the
purchase price of option shares equal to the fair market value of
Roto-Rooter Common Stock on that date and become exercisable in four
equal annual installments beginning on May 17, 1995.
The following table summarizes Roto-Rooter stock option exercises during 1994
and the year-end number and value of unexercised stock options held by the
executive officers named in the Summary Compensation Table.
AGGREGATED ROTO-ROOTER OPTION EXERCISES IN
1994 AND ROTO-ROOTER STOCK OPTION VALUES
AS OF DECEMBER 31, 1994
-----------------------------
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
SHARES NUMBER OF UNEXERCISED OPTIONS
ACQUIRED OPTIONS AT 12/31/94 (#) AT 12/31/94 ($)
ON VALUE ----------------------- --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
W.R. Griffin -0- $ -0- 31,375 35,625 $ 67,979 $9,500
D.B. Harper 2,100 76,850 33,500 17,500 121,952 5,937
L.J. Gillis 1,611 67,260 15,125 19,250 36,785 7,125
P.L. Johnson -0- -0- 20,800 16,000 59,442 3,562
R.J. Fox -0- -0- -0- -0- -0- -0-
</TABLE>
8
<PAGE> 11
The table below shows information concerning the year-end number and value of
unexercised Service America stock options held by the executive officers in the
Summary Compensation Table.
SERVICE AMERICA STOCK OPTION VALUES AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/94 (#) AT 12/31/94 ($)
---------------------------------- ----------------------------------
NAME (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
W. R. Griffin 7,500 17,500 $ -0- $ -0-
D. B. Harper -0- -0- -0- -0-
L. J. Gillis -0- -0- -0- -0-
P. L. Johnson 15,000 28,000 -0- -0-
R. J. Fox -0- -0- -0- -0-
</TABLE>
(1) None of the named executive officers exercised Service America stock
options during 1994.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Griffin,
Harper, Gillis and Johnson. Mr. Griffin's employment agreement provides for his
continued employment as an executive employee of the Company through October
31, 1999, subject to earlier termination under certain circumstances, at a base
salary of $291,000 per annum or such higher amounts as the Board of Directors
may determine as well as participation in incentive compensation plans, stock
incentive plans and other employee benefit plans. In the event of termination
without cause or a material reduction in authority or responsibility, the
agreement provides that Mr. Griffin will receive severance payments equal to
150 percent of his then current base salary plus the amount of incentive
compensation most recently paid or approved in respect of the previous year,
and the fair market value of all stock awards which have vested during the
twelve months prior to termination, for the balance of the term of the
agreement. Messrs. Harper, Gillis and Johnson have employment agreements which
provide for their continued employment as executive employees of the Company
through October 31, 1999, November 6, 1997 and October 31, 1997, respectively,
and are identical in all material respects to that of Mr. Griffin, except their
respective agreements provide for a base salary of $184,500, $177,000 and
$160,500 per annum or such higher amounts as the Board of Directors may
determine.
9
<PAGE> 12
COMPARATIVE STOCK PERFORMANCE
The graph below compares the yearly percentage change in the Company's
cumulative total shareholder return on the Common Stock (as measured by
dividing (i) the sum of (A) the cumulative amount of dividends for the period
December 31, 1989 to December 31, 1994, assuming dividend reinvestment, and (B)
the difference between the Company's share price at December 31, 1989 and
December 31, 1994; by (ii) the share price at December 31, 1989) with (1) the
cumulative total return, assuming reinvestment of dividends, of the NASDAQ
Stock Index and (2) the cumulative total return, assuming reinvestment of
dividends, of the group of companies set forth in the footnote to the graph.
ROTO-ROOTER, INC.
TOTAL CUMULATIVE STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1994
[Graph 1]
Roto-Rooter NASDAQ (US) Peer Group (1)
<TABLE>
<CAPTION>
December 31 1989 1990 1991 1992 1993 1994
----------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Roto-Rooter 100.00 94.46 95.46 133.83 170.72 127.99
NASDAQ (US) 100.00 84.92 136.28 158.58 180.93 176.92
Peer Group 100.00 113.99 130.25 136.09 145.49 159.64
</TABLE>
(1) Since the Company does not believe that it can reasonably identify a
peer group on an industry or line of industry basis, for purposes of
comparison, the Company has selected the following companies which
have similar market capitalizations: Amplicon Inc., Chittenden Corp.,
Ecology and Environment Inc. -- Class A, Groundwater Technology Inc.,
Instron Corp., Knape & Vogt Manufacturing Co., MacDermid Inc., Quaker
Chemical Corp., and Tech-Sym Corp.
10
<PAGE> 13
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the only persons
who are known to be the beneficial owners of more than 5 percent of the Common
Stock of the Company:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF BENEFICIAL OF
TITLE OF CLASS OWNER OWNERSHIP (1) CLASS (4)
-------------- ---------------- ----------------- ---------
<S> <C> <C> <C>
Common Stock Chemed Corporation 2,990,333 shares; 56.3%
Par Value 2600 Chemed Center Direct (2)
$1 Per Share Cincinnati, Ohio
Common Stock State Farm Mutual 463,066 shares; 8.7%
Par Value Automobile Insurance Direct and through
$1 Per Share Company affliliated entities (3)
One State Farm Plaza
Bloomington, Illinois
</TABLE>
FOOTNOTES:
(1) As reported to the Securities and Exchange Commission by the beneficial
owners.
(2) Sole voting power, 2,990,333 shares; sole dispositive power, 2,990,333
shares.
(3) Sole voting power, 463,066 shares; sole dispositive power, 463,066 shares.
(4) For purposes of calculating Percent of Class, all shares subject to stock
options which were exercisable within 60 days from February 1, 1995 were
assumed to have been issued.
11
<PAGE> 14
The following table sets forth information as of February 1, 1995 with respect
to the Capital Stock of Chemed and the Common Stock of the Company beneficially
owned by all nominees and directors of the Company, each of the named executive
officers in the Summary Compensation Table, and the Company's directors and
executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME TITLE OF CLASS OWNERSHIP (1) CLASS (2)
-------------------- -------------------------- ----------------- ---------
<S> <C> <C>
E. L. Hutton Chemed Capital Stock 68,634 Direct
65,500 Option
4,000 Trustee
Roto-Rooter Common Stock 32,763 Direct
15,750 Option
9,372 Trustee
W. R. Griffin Chemed Capital Stock 2,528 Direct
8,000 Option
Roto-Rooter Common Stock 18,168 Direct
34,250 Option
B. A. Brumm Chemed Capital Stock None
Roto-Rooter Common Stock 13,450 Direct
11,086 Option
J. A. Cunningham Chemed Capital Stock 1,000 Direct
500 Trustee
Roto-Rooter Common Stock 1,000 Direct
N. C. Dallob Chemed Capital Stock 5,790 Direct
1,000 Option
Roto-Rooter Common Stock 785 Direct
250 Option
C. H. Erhart, Jr. Chemed Capital Stock 1,500 Direct
Roto-Rooter Common Stock 6,666 Direct
N. Gilliatt Chemed Capital Stock 3,400 Direct
Roto-Rooter Common Stock 6,666 Direct
L. J. Gillis Chemed Capital Stock None
Roto-Rooter Common Stock 9,252 Direct
16,875 Option
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME TITLE OF CLASS OWNERSHIP (1) CLASS (2)
-------------------- -------------------------- ----------------- ---------
<S> <C> <C> <C>
J. P. Grace Chemed Capital Stock 200 Direct
Roto-Rooter Common Stock 200 Direct
2,000 Option
D. B. Harper Chemed Capital Stock 100 Direct
Roto-Rooter Common Stock 23,183 Direct
34,750 Option
W. J. Hoekman Chemed Capital Stock 117,900 Trustee(3) 1.2%
Roto-Rooter Common Stock 75,800 Trustee(3) 1.4%
T. C. Hutton Chemed Capital Stock 14,738 Direct
4,250 Option
4,500 Trustee(4)
Roto-Rooter Common Stock 3,997 Direct
2,500 Option
9,372 Trustee
P. L. Johnson Chemed Capital Stock 375 Option
Roto-Rooter Common Stock 11,070 Direct
22,050 Option
S. E. Laney Chemed Capital Stock 24,788 Direct
23,050 Option
Trustee(4)
Roto-Rooter Common Stock 1,994 Direct
1,750 Option
K. J. McNamara Chemed Capital Stock 11,745 Direct
4,250 Option
Trustee(4)
Roto-Rooter Common Stock 1,205 Direct
2,250 Option
T. S. O'Toole Chemed Capital Stock 11,381 Direct
5,050 Option
Roto-Rooter Common Stock 1,644 Direct
1,250 Option
D. W. Robbins, Jr. Chemed Capital Stock 2,000 Direct
Roto-Rooter Common Stock 1,000 Direct
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
OF BENEFICIAL OF
NAME TITLE OF CLASS OWNERSHIP (1) CLASS (2)
-------------------- -------------------------- ----------------- ---------
<S> <C> <C> <C>
Jerome E. Schnee Chemed Capital Stock None
Roto-Rooter Common Stock 250 Direct
Directors and Chemed Capital Stock 147,804 Direct 1.5%
Executive Officers 178,221 Trustee (5) 1.8%
as a Group 109,475 Option 1.1%
(18 persons) Roto-Rooter Common Stock 133,293 Direct 2.5%
85,172 Trustee (5) 1.6%
144,761 Option 2.7%
</TABLE>
FOOTNOTES TO STOCK OWNERSHIP TABLE
(1) Includes securities beneficially owned (a) by the named persons or group
members, their spouses and their minor children (including shares of
Chemed Capital Stock and Roto-Rooter Common Stock allocated as at
December 31, 1994 to the account of each named person or member of the
group under the Company's Retirement and Savings Plan, Chemed's Savings
and Investment Plan, and Chemed's Employee Stock Ownership Plan, (b) by
trusts and custodianships for their benefit and (c) by trusts and other
entities as to which the named person or group has or shares the power to
direct voting or investment of securities. "Direct" refers to securities
in categories (a) and (b) and "Trustee" to securities in category (c).
Where securities would fall into both "Direct" and "Trustee"
classifications, they are included under "Trustee" only. "Option" refers
to shares which the named person or group has a right to acquire within
60 days from February 1, 1995. For purposes of determining the Percent of
Class, all shares subject to stock options which were exercisable within
60 days from February 1, 1995 were assumed to have been issued.
(2) Percent of Class under 1.0 percent is not shown.
(3) Comprises shares with respect to which Mr. Hoekman shares the power to
direct the voting as a member of a bank trust committee.
(4) Messrs. T. Hutton, McNamara and Ms. Laney are trustees of the Chemed
Foundation which holds 54,821 shares of Chemed's Capital Stock over which
the trustees share both voting and investment power. This number is
included in the total number of "Trustee" shares held by the Directors
and Executive Officers as a group but is not reflected in the respective
holdings of the individual trustees.
(5) Shares over which more than one individual holds beneficial ownership
have only been counted once in calculating the aggregate number of shares
owned by Directors and Executive Officers.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
regulations thereunder, the Company's officers and directors and persons who
own more than ten percent of the Company's Common Stock are required to file
reports with respect to their ownership and changes in ownership of the
Company's Common Stock with the Securities and Exchange Commission ("SEC"). In
addition, such persons are required to forward copies of such reports to the
Company. Based on a review of the copies of such reports furnished to the
Company and on the written representation of those persons who have not
furnished such reports that with respect to 1994 no reports on Form 5 were
required to be filed with the SEC, the Company believes that during the period
January 1, 1994 through December 31, 1994, except for Mr. Gillis, the Company's
officers and directors and greater than 10 percent shareholders have complied
with all Section 16(a) reporting requirements. Mr. Gillis belatedly reported a
stock option grant, a stock option exercise and a sale of stock on Form 5.
14
<PAGE> 17
CERTAIN ARRANGEMENTS AND TRANSACTIONS
TRANSACTIONS WITH CHEMED
CASH MANAGEMENT AND FINANCING. The Company regularly deposits funds in excess
of its working capital requirements with Chemed for short-term investment and
Chemed, on occasion, may make short-term loans to the Company for working
capital needs. These unsecured deposits and loans bear interest at the rate
determined on the basis of United States Treasury Notes. At January 31, 1995,
the Company had $19,398,000 on deposit with Chemed, which was the largest
amount on deposit with Chemed at any time during the period January 1, 1994
through January 31, 1995. Chemed paid the Company $618,000 during 1994 as
interest on amounts deposited by the Company with Chemed.
During 1991, Chemed loaned to the Company $4,200,000 to partially finance the
acquisition of Service America. This loan bears interest at the rate determined
on the basis of United States Treasury Notes. In addition, during 1993, Chemed
loaned to the Company $4,224,000 to partially finance the acquisition of Encore
Services Systems, Inc. This loan bears interest at the fixed rate of 8.15
percent. At January 31, 1995, the Company had $8,424,000 on loan from Chemed,
which was the largest amount on loan from Chemed at any time during the period
January 1, 1994 through January 31, 1995. The Company paid Chemed $603,000
during 1994 as interest on amounts loaned to the Company from Chemed.
SERVICE AND SUPPLY ARRANGEMENTS. As a subsidiary of Chemed and pursuant to an
agreement with Chemed, the Company has used and will continue to use various
financial, insurance, tax, audit, legal and other services provided by Chemed.
The Company pays fees for these services based on Chemed's costs. During 1994,
the Company paid Chemed $227,686 for such services.
In addition, the Company has entered into a sublease agreement with Chemed
pursuant to which the Company leases approximately 23,100 square feet of office
space from Chemed on the 25th and 30th floors of the Chemed Center, Cincinnati,
Ohio, at a rental equal to that paid by Chemed under its lease and for a term
coterminous with Chemed's lease term which expires in 2006. For 1994, the
Company paid Chemed lease payments under the sublease aggregating $413,000.
STATE AND LOCAL INCOME TAXES. Should any state or locality impose, or should
Chemed and the Company elect to pay, an income or franchise tax by combining or
consolidating all or part of the income, losses, properties, payrolls, sales or
other attributes of Chemed and the Company or one or more of their respective
subsidiaries, the Company will reimburse Chemed for the Company's and its
subsidiaries' share of such franchise or income tax. The amount to be
reimbursed is equal to the tax that would have been required to be paid had the
Company or any of its subsidiaries included in such combined or consolidated
return filed a separate return without the inclusion of any income, losses,
properties, payrolls, sales or other attributes of any related parent or
subsidiary corporation.
PROPOSAL TO APPROVE AND ADOPT THE
1995 STOCK INCENTIVE PLAN
In view of the few remaining shares available for the grant of additional
stock awards or stock options under the previously adopted stock incentive
plans, the Board of Directors has approved, subject to stockholder approval,
the adoption of the 1995 Stock Incentive Plan (the "Plan") pursuant to which
200,000 shares of the Company's Common Stock may be issued or transferred to
key employees as stock incentives. The full text of the proposed Plan is set
forth as Exhibit A to this Proxy Statement and the following discussion is
qualified in its entirety by reference to such text.
15
<PAGE> 18
THE PLAN
The Plan will become effective as of the date it is adopted by the
stockholders of the Company, i.e., May 15, 1995. If it is not adopted by the
stockholders, the Plan will be of no force and effect. If it is adopted, no
stock options may be granted under the Plan after May 15, 2005. The Board of
Directors may terminate the Plan at any earlier time, but outstanding options
will continue to be exercisable until they expire in accordance with their
terms. The market value of the Common Stock as of March 20, 1995 was $26.50
per share.
The Plan authorizes the issuance or transfer of a maximum of 200,000 shares of
Common Stock pursuant to stock incentives granted to key employees of the
Company and its subsidiaries under the Plan. For purposes of the Plan, a
"subsidiary" is a corporation or other form of business association of which
shares (or other ownership interests) having 50 percent or more of the voting
power are owned or controlled, directly or indirectly, by the Company and "key
employees" are employees of the Company or a subsidiary, including officers and
directors thereof, who in the opinion of the Incentive Committee (as defined
below) are deemed to have the capacity to contribute significantly to the
growth and successful operations of the Company or a subsidiary.
Stock incentives granted under the Plan may be in the form of options to
purchase Common Stock ("stock options") or in the form of awards of Common
Stock in payment of incentive compensation ("stock awards"), or a combination
of stock awards and stock options.
The Plan shall be administered by a Committee (the "Incentive Committee")
consisting of no fewer than three persons designated by, and serving at the
pleasure of, the Board of Directors of the Company.
The Incentive Committee designates the key employees of the Company and its
subsidiaries who might participate in the Plan and as to the form and terms of
the number of shares covered by each stock incentive granted thereunder. In
making such designation the Committee may consider an employee's present or
potential contribution to the success of the Company or any subsidiary and
other factors which it may deem relevant.
Under the Plan, a stock incentive in the form of a stock award will consist of
shares of Common Stock issued as incentive compensation earned or to be earned
by the employee. Shares subject to a stock award may be issued when the award
is granted or at a later date, with or without dividend equivalent rights. A
stock award shall be subject to such terms, conditions and restrictions
(including restrictions on the transfer of the shares issued pursuant to the
award) as the Incentive Committee shall designate.
Under the 1995 Plan, a stock incentive in the form of a stock option will
provide for the purchase of shares of Common Stock in the future at an option
price per share which will not be less than l00 percent of the fair market
value of the shares covered thereby on the date the stock option is granted.
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 or upon various
circumstances which may result in a change of control; provided, however, that
in no event shall an option be exercisable until one year after the date the
option is granted. 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. Any term or
provision in any outstanding option specifying when the option may be
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.
Upon the exercise of an option, the purchase price shall be paid in cash or,
if so provided in the option, in shares of Common Stock or in a combination of
cash and such shares. The Company may cancel all or a portion of an option
subject to exercise, and pay the holder cash or shares equal in value to the
excess of the fair market value of the shares subject to the portion of the
option so canceled over the option price of such shares. Options shall be
granted for such lawful consideration as the Incentive Committee shall
determine.
16
<PAGE> 19
All stock options granted under the Plan will expire within ten years from the
date of grant. A stock option is not transferable or assignable by an optionee
otherwise than by will, by the laws of descent and distribution, pursuant to a
qualified domestic relations order or to certain family members, if permitted
under SEC Rule 16b-3 or any successor rule thereto, and each option is
exercisable, during his lifetime, only by him or a permitted transferee or
assignee. Unexercised options terminate upon termination of employment, except
that if termination arises from a resignation with the consent of the Incentive
Committee, the options terminate three months after such termination of
employment, and except further that if an optionee ceases to be an employee by
reason of his death while employed, retirement or disability, or if he should
die within three months following his resignation with the consent of the
Incentive Committee, the options terminate fifteen months after an optionee's
termination of employment but may be exercised only to the extent that they
could have been exercised by the optionee, had he lived, three months after he
ceased to be an employee. A leave of absence for military or governmental
service or for other purposes, if approved by the Incentive Committee, does not
constitute a termination of employment, but no options are exercisable during
any such leave of absence.
Exercise of a stock option will be conditioned on an optionee's payment in
full of the purchase price for the shares, in cash or by the transfer to the
Company of shares of the Company's Common Stock at fair market value on the
date of transfer. An optionee shall not be considered a holder of the shares
subject to a stock option until actual delivery of a certificate representing
such shares is made by the Company.
None of the stock options granted under the Plan will be "restricted",
"qualified" or "incentive" stock options or options granted pursuant to an
"employee stock purchase plan" as the quoted terms are defined in Sections 422
through 424 of the Internal Revenue Code.
With respect to stock awards in Common Stock that are either transferable or
not subject to a substantial risk of forfeiture, the employee must recognize
ordinary income equal to the cash or the fair market value of the Common Stock
and the Company will be entitled to a deduction for the same amount. With
respect to stock awards that are settled in Common Stock that is restricted as
to transferability and subject to substantial risk of forfeiture, the employee
must recognize ordinary income equal to the fair market value of the Common
Stock at the first time the Common Stock becomes transferable or not subject to
a substantial risk of forfeiture, whatever occurs earlier, and the Company will
be entitled to a deduction for the same amount.
An optionee realizes no taxable income by reason of the grant of a
nonstatutory option. Subject to insider trading restrictions, upon exercise of
the option, an optionee realizes compensation taxable as ordinary income in the
amount of the excess of the fair market value of the stock over the option
price on the date of exercise. Upon the sale of stock acquired pursuant to the
exercise of an option, an optionee realizes either a capital gain or a capital
loss based upon the difference between his selling price and the fair market
value of the stock on the date of exercise. Such capital gain or loss, as the
case may be, will be either short term or long term depending on the period
elapsed between the date of exercise and the date of sale. In those instances
where the employee receives compensation taxable as ordinary income, the
Company or a subsidiary (except for certain foreign subsidiaries) will
generally be entitled to a Federal income tax deduction in the amount of such
compensation. An employee will not recognize gain on previously owned shares
of the Company's Common Stock if he exercises an option and transfers such
shares to the Company in payment of the option price. Taxes payable by an
optionee or awardee on exercise of an option or removal of restrictions on an
award may be paid in cash, surrender of shares, or withholding of shares of
Common Stock as the Incentive Committee shall determine.
The Board of Directors, upon the recommendation of the Incentive Committee,
may amend the Plan subject, in the case of specified amendments, to stockholder
approval. The Plan may be discontinued at any time by the Board of Directors.
No amendment or discontinuance of the Plan shall, without the consent of the
employee, adversely affect any stock incentive held by him under the Plan.
17
<PAGE> 20
No determination has been made with respect to any prospective grant of a
stock incentive under the Plan. It is, therefore, not possible at the present
time to indicate specifically the names and positions of key employees to whom
stock incentives may be granted or to whom stock incentives would have been
granted had this Plan been in effect during 1994 or the number of shares to be
subject to stock incentives or any other information concerning the operation
of the Plan as it may affect specific individuals. The proceeds of sale of
Common Stock under the Plan will be used by the Company for general corporate
purposes.
In order to effect the approval and adoption of the Plan, the following
resolution will be presented to the Annual Meeting:
"RESOLVED THAT THE 1995 STOCK INCENTIVE PLAN SET FORTH AS EXHIBIT A TO THE
PROXY STATEMENT ACCOMPANYING THE NOTICE OF THE ANNUAL MEETING OF THE
STOCKHOLDERS OF ROTO-ROOTER, INC. TO BE HELD MAY 15, 1995 BE AND THE SAME
HEREBY IS APPROVED AND ADOPTED."
The affirmative vote of the holders of a majority of the voting power of the
stockholders represented at the meeting will be necessary for the adoption of
the foregoing resolution The approval and adoption of the Plan is not a matter
which is required to be submitted to a vote of the stockholders of the Company.
The reason for submitting such proposal to a vote of the stockholders is to
meet a condition of Rule l6b-3 of the Securities and Exchange Commission which
provides for an exemption from the operation of Section l6(b) of the Securities
Exchange Act of l934, as amended. Section l6(b) provides generally that profits
realized by directors and officers from any purchase and sale (or sale and
purchase) of the Company's Common Stock within a period of less than six months
are recoverable by the Company. Rule 16b-3 exempts from the application of
Section 16(b): (i) the acquisition, expiration, cancellation or surrender to
the Company of a stock option; (ii) the surrender or delivery to the Company of
shares of Common Stock as payment for the exercise of a stock option for shares
of Common Stock; and (iii) the acquisition upon the exercise of a stock option
of shares of Common Stock equal to the number of shares of Common Stock
surrendered or delivered to the Company as payment for the exercise of the
option. Management has not determined what course of action it intends to take
in the event of a negative vote on the proposal by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF THE
PLAN.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants for the Company and its consolidated subsidiaries for
the year 1995. This firm has acted as independent accountants for Chemed since
1970 and for the Company and its consolidated subsidiaries since 1980. Although
the submission of this matter to the stockholders is not required by law or by
the By-Laws of the Company, the selection of Price Waterhouse LLP will be
submitted for ratification at the Annual Meeting. The affirmative vote of a
majority of the voting power of the stockholders represented at the Annual
Meeting will be necessary to ratify the selection of Price Waterhouse LLP as
independent accountants for the Company and its consolidated subsidiaries for
the year 1995. If the selection is not ratified at the meeting, the Board of
Directors will reconsider its selection of independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
It is expected that a representative of Price Waterhouse LLP will be present
at the Company's Annual Meeting. Such representative shall have the
opportunity to make a statement if he desires to do so and shall be available
to respond to appropriate questions raised at the meeting.
STOCKHOLDER PROPOSALS
Any proposals by stockholders intended to be included in the proxy materials
for presentation at the 1996 Annual Meeting of Stockholders must be in writing
and received by the Secretary of the Company no later than December 6, 1995.
18
<PAGE> 21
OTHER MATTERS
As of the date of this Proxy Statement, the management knows of no other
matters which will be presented for consideration at the Annual Meeting.
However, if any other business should come before the meeting, the persons
named in the enclosed proxy (or their substitutes) will have discretionary
authority to take such action as shall be in accordance with their best
judgment.
EXPENSES OF SOLICITATION
The expense of soliciting proxies in the accompanying form will be borne by
the Company. In addition to solicitation by mail, the Company will request
banks, brokers and other persons holding shares beneficially owned by others to
send proxy materials to the beneficial owners and to secure their voting
instructions, if any. The Company will reimburse such persons for their
expenses in so doing. Officers and regular employees of the Company may,
without extra remuneration, solicit proxies personally, by telephone or by
telegram from some stockholders if such proxies are not promptly received. This
Proxy Statement and the accompanying Notice of Meeting are sent by order of the
Board of Directors.
Naomi C. Dallob
Secretary
April 6, 1995
19
<PAGE> 22
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20
<PAGE> 23
EXHIBIT A
================================================================================
ROTO-ROOTER, INC.
1995 STOCK INCENTIVE PLAN
================================================================================
A-1
<PAGE> 24
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 $l.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 l0.
INCENTIVE COMPENSATION: Bonuses, extra and other compensation payable in
addition to a salary or other base 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.
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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.
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 l00% 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.
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 l00% 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
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<PAGE> 27
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, 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.
(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.
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<PAGE> 28
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 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.
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.
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<PAGE> 29
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 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.
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<PAGE> 30
(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 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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<PAGE> 31
ROTO-ROOTER, INC.
2500 CHEMED CENTER
255 EAST FIFTH STREET PLEASE MARK, SIGN, DATE AND RETURN PROXY
CINCINNATI, OHIO 45202 CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
_____________________________________________________________________________
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS, MAY 15, 1995.
The undersigned hereby appoints E. L. Hutton, W. R. Griffin, and K. J. McNamara
as Proxies, each with the power to appoint a substitute, and hereby authorizes
them to represent and to vote, as designated on the reverse side, all the
shares of stock of Roto-Rooter, Inc. held of record by the undersigned on March
20, 1995, at the Annual Meeting of Stockholders to be held on May 15, 1995, or
at any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
(1) Election of Directors (mark only ONE box): __
/ / FOR all nominees / / FOR nominees listed / / WITHHOLD ALL AUTHORITY
listed. EXCEPT THOSE WHOSE to vote in the selection
NAMES I HAVE STRICKEN. of directors.
Edward L. Hutton Neal Gilliatt Patrick L. Johnson
William R. Griffin Lawrence J. Gillis Sandra E. Laney
Brian A. Brumm J. Peter Grace Kevin J. McNamara
James A. Cunningham Douglas B. Harper Timothy S. O'Toole
Naomi C. Dallob Will J. Hoekman D. Walter Robbins, Jr.
Charles H. Erhart, Jr. Thomas C. Hutton Jerome E. Schnee
(2) Approve and adopt the 1995 Stock Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
(3) Ratifying the selection of independent accountants.
/ / FOR / / AGAINST / / ABSTAIN
(4) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS (1), (2) AND
(3).
DATED: _______________________________________, 1995
(Be sure to date Proxy)
SIGNED:_____________________________________________
_____________________________________________
(Please sign exactly as names appear at left)
When signed on behalf of a corporation,
partnership, estate, trust, or other
stockholder, state your title or capacity or
otherwise indicate that you are authorized to
sign.
