AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of this 1st day of April, 1997, by and between
Michael R. Walker ("Employee") and Genesis Health Ventures, Inc., a Pennsylvania
corporation ("Employer").
BACKGROUND
Employee has been employed by Employer as its Chief Executive Officer
since the founding of the corporation. Employer and Employee desire to continue
Employee's employment and to amend and restate the existing employment agreement
between Employee and Employer dated April 1, 1994, all upon the conditions and
terms herein set forth.
NOW, THEREFORE, intending to be legally bound hereby, and in
consideration of the mutual covenants set forth herein, Employee and Employer
agree as follows:
1. Employment and Duties. Employer shall continue to employ Employee as
Employer's Chairman and Chief Executive Officer during the term of employment
set forth in Section 2 hereof. Employee shall perform the duties of the Chairman
and Chief Executive Officer of Employer and shall provide to Employer such other
services befitting Employee's position as are requested of him from time to time
by the Board of Directors of Employer. Employee shall have supervision and
control over, and responsibility for, the business and affairs of Employer as
provided in the Bylaws of Employer, subject to the direction of Employer's Board
of Directors. Employee shall report only to the Board of Directors of Employer
and his powers and authority shall be superior to those of
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any officer or employee of Employer. Employee shall devote his full time,
energy, skill and best efforts to the business and affairs of Employer provided,
however, that nothing herein shall preclude Employee from serving as a director,
trustee, officer of, or partner in, any other firm, trust, corporation or
partnership or from pursuing personal investments, as long as such activities do
not interfere with Employee's performance of his duties hereunder. In performing
his duties hereunder, Employee shall not be required to relocate outside a
radius of five (5) miles from the center of Kennett Square, Pennsylvania.
Employee agrees to continue to serve without additional compensation, as a
director of the Employer and any of its subsidiaries and in one or more
executive offices of any of the Employer's subsidiaries.
2. Term. The term of Employee's employment under this Agreement shall
be a three year period commencing on the date hereof and ending on March 31,
2000, unless further extended or sooner terminated in accordance with the other
provisions hereof (the "Term"). On March 31, 2000 and on the last day of each
contract year thereafter, the Term shall be automatically extended for one year.
The last day of the Term, as from time to time extended, is hereinafter referred
to as the "Expiration Date." The Employer or Employee may elect to terminate the
automatic extension of the Term set forth in this section by giving written
notice of such election not less than one (1) year prior to the end of the then
current term.
3. Compensation.
3.1 Base Salary. Employer shall pay to Employee as his base
compensation for all services rendered hereunder an annual base salary of
$600,000 per year ("Base Salary"), payable in accordance with Employer's
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normal payroll practices for employees. Employer shall deduct or cause to be
deducted from the Base Salary all taxes and amounts required by law to be
withheld. Employee's Base Salary shall be reviewed by the Board of Directors no
less frequently than annually, with the first such review to be made within one
year after the date of this Agreement. Employer will cooperate with Employee to
defer up to 12% of Employee's then current Base Salary.
3.2 Benefits. During the Term, subject to the other provisions
of this Agreement, Employee shall be entitled to participate and shall be
included in any savings, 401(K), pension, profit-sharing, group medical or
similar plan adopted by Employer now existing, or established hereafter, to the
extent he is eligible under the general provisions thereof. In addition,
Employee shall be provided with disability insurance providing a disability
benefit consistent with Employer's Disability insurance plan and term life
insurance providing a $6,000,000 death benefit to Employee's designated
beneficiaries.
3.3 Incentive Compensation. In addition to his base
compensation, Employee shall be entitled to receive such non-cash incentive
compensation, including stock options, as may be determined from time to time by
the Board of Directors of Employer or the appropriate committee of the Board of
Directors.
3.4 Fringe Benefits.
3.4.1 Vacation. Employee shall be entitled to
five weeks of vacation during each year.
3.4.2 Reimbursement of Expenses. Employee is
authorized to incur ordinary, necessary and reasonable expenses in the course of
Employer's business. Employer shall reimburse Employee for such expenses upon
presentation by the Employee of an itemized account of such expenditures
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in accordance with Employer's established policy, unless such expenses have been
paid directly by the Employer.
3.5 Entire Compensation. The compensation provided
for in this Section shall be the full consideration for the services to be
rendered by Employee to Employer hereunder.
4. Termination.
4.1 Notice of Termination. Any termination by Employer or by
Employee shall be communicated by written Notice of Termination to the other
party hereto. As used in this Agreement, "Notice of Termination" means a notice
specifying the termination provision in this Agreement relied upon and setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision specified. As
used in this Agreement, "Date of Termination" shall mean the date specified in
the Notice of Termination.
4.2 Grounds for Termination.
4.2.1 Termination upon Death. Employee's employment
with Employer and all of Employee's rights to compensation and benefits
hereunder shall automatically terminate upon his death, except that Employee's
heirs, personal representatives or estate shall be entitled to any unpaid
portion of his Salary and accrued benefits up to the Date of Termination and
shall also be entitled to reimbursement for any expenses incurred by Employee
hereunder. In addition, Employee's heirs, personal representatives or estate
shall be entitled to receive the full amount of Incentive Compensation, if any,
earned by Employee prior to death (determined in accordance with Section 3.3
hereof).
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4.2.2 Termination upon Disability. If Employee
becomes disabled, Employee shall continue to receive all of his compensation and
benefits in accordance with Section 3 for a period of six (6) months following
the Onset of Disability (as defined in this Section 4.2.2). Any amounts due to
Employee under this Section 4.2.2 shall be reduced, dollar-for-dollar, by any
amounts received by Employee under any disability insurance policy or plan
provided to Employee by Employer. "Onset of Disability" means the first day on
which Employee shall be unable to attend to the regular affairs of Employer on a
full time basis by reason of physical or mental incapacity, sickness or
infirmity. If Employee's disability continues for more than twelve (12) months
after the Onset of Disability or for periods aggregating more than twelve (12)
months during any twenty-four (24) month period, then Employer shall have the
right to terminate Employee's employment immediately upon notice, and all of his
rights to compensation and benefits hereunder shall simultaneously terminate,
except that Employee shall be entitled to any unpaid portion of his Salary and
accrued benefits up to the Date of Termination and to any benefits which are to
be continued or paid after the Date of Termination in accordance with the terms
of the corresponding benefit plans.
4.2.3 Termination for Cause. At any time during the
Term, Employer may terminate Employee's employment hereunder for Cause (as
defined herein), effective immediately upon notice to Employee, if at a duly
convened meeting of the Board of Directors of which Employee was given
reasonable advance notice and at which Employee and his counsel had the
opportunity to be heard, a resolution was duly adopted by the affirmative vote
of not less than two-thirds of the entire membership of the Board finding that,
in the good faith judgment of the Board, (1) an event (which is described in the
resolution in reasonable detail) constituting Cause has occurred, and (2) either
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Employee had a reasonable opportunity to take remedial action
but failed or refused to do so, or an opportunity to take remedial action would
not have been meaningful or appropriate under the circumstances. For purposes of
this Agreement, Cause shall mean: (1) Employee willfully breaches or fails to
diligently perform any or all of his duties under this Agreement (other than
such failure resulting from Employee's incapacity due to physical or mental
illness) and Employee continues to do so after demand for substantial
performance is delivered by the Employer that specifically identifies the manner
in which the Employer believes the Employee has not diligently performed his
duties under this Agreement, (2) Employee commits an act of dishonesty or breach
of trust, (3) Employee willfully violates or breaches any of the provisions of
this Agreement, (4) Employee's act or omission to act results in or is intended
to result directly in unjust gain to or personal enrichment of Employee at
Employer's expense, or (5) Employee is indicted for or convicted of a felony or
any crime involving larceny, embezzlement or moral turpitude.
Notwithstanding anything to the contrary contained herein, the
term "Cause" shall not include any act or omission to act of the Employee:
(1) if such act or omission has been approved by the Board of
Directors of Employer; or
(2) which is the result of bad judgment or negligence on the
part of the Employee.
On termination of this Agreement pursuant to this Section 4.2.3, all
rights to compensation and benefits of Employee shall cease as of the Date of
Termination, except Employee shall be entitled to any unpaid portion of his
Salary and benefits earned to the Date of Termination. The Employee shall have
the option to have assigned to him at no cost and with no apportionment of
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prepaid premiums any assignable insurance policy owned by the Employer and
relating specifically to the Employee.
4.2.4 Termination without Cause. This Agreement may
be terminated by the Corporation upon thirty (30) days' prior written notice
without Cause being assigned therefor upon affirmative vote of a majority of the
members of the Board of Directors entitled to vote on the matter. On termination
of this Agreement without Cause, Employee shall be entitled to the payments he
would have received had the Agreement been terminated under the provisions of
Section 4.2.3 and shall, in addition, be entitled to severance compensation
equal to two times his then current Base Salary.
4.2.5 Termination for "Good Reason". Employee may,
upon thirty (30) days' prior written notice, terminate this Agreement for Good
Reason if (1) Employer elects to terminate the automatic extension of the Term,
(2) if Employer significantly changes Employee's duties or reduces Employee's
responsibility or authority, (3) Employer's principal office is moved to a
location outside a radius of five (5) miles from the center of Kennett Square,
Pennsylvania, or (4) Employee is removed from Employer's Board of Directors. If
Employee terminates this Agreement for Good Reason, he shall be entitled to the
payments he would have received under Section 4.2.3 and shall, in addition, be
entitled to receive severance compensation equal to two (2) times his then
current Base Salary.
4.3 Mitigation. Employee shall not be required to
mitigate the amount of any payment provided for in Section 4 by seeking
employment or otherwise. Employer shall not be entitled to set off against the
amounts payable to Employee hereunder any amounts earned by Employee in other
employment after termination of his employment with Employee hereunder or any
amounts which might have been earned by Employee in other employment had he
sought
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such other employment. The amounts payable to Employee hereunder shall not be
treated as damages but as severance compensation to which Employee is entitled
by reason of termination of his employment in the circumstances contemplated by
this Agreement.
4.4 Procedure Upon Termination. On termination of employment
regardless of the reason, Employee shall promptly return to Employer all
documents (including copies) and other property of Employer, including without
limitation, customer lists, manuals, letters, materials, reports, and records in
his possession or control no matter from whom or in what manner acquired.
5. Employee's Covenants.
5.1 Discoveries. Employee shall communicate to Employer and
preserve as confidential information of Employer each discovery, idea, design,
invention and improvement relating in any manner to Employer's business, whether
or not patentable and whether or not reduced to practice, which is conceived,
developed or made by Employee, whether alone, or jointly with others, at any
time during the Term hereof (such discoveries, ideas, designs, inventions and
improvements are referred to as "Employee's Discoveries"). All of Employee's
Discoveries shall be Employer's exclusive property, and all of Employee's right,
title and interest therein are hereby irrevocably assigned to Employer. Employee
shall not, except with Employer's express prior written consent, or except in
the proper course of his employment with Employer, use any of Employee's
Discoveries for his own benefit or the benefit of any Person (as defined
herein), or disclose any of Employee's Discoveries to any outside Person through
publication or in any other manner.
For purposes of this Agreement, the term "Person" means a natural
person, corporation, partnership, trust, estate, joint venture, sole
proprietorship,
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government (and any branch or subdivision thereof), governmental agency,
association, cooperative or other entity.
5.2 Nondisclosure. At all times during and after the Term,
Employee shall keep confidential and shall not, except with Employer's express
prior written consent, or except in the proper course of his employment with
Employer, directly or indirectly, communicate, disclose, divulge, publish, or
otherwise express, to any Person, or use for his own benefit or the benefit of
any Person, any trade secrets, confidential or proprietary knowledge or
information, no matter when or how acquired, concerning the conduct and details
of Employer's business, including without limitation names of customers and
suppliers, marketing methods, trade secrets, policies, prospects and financial
condition. For purposes of this Section 5.2, confidential information shall not
include any information which is now known by or readily available to the
general public or which becomes known by or readily available to the general
public other than as a result of any improper act or omission of Employee.
5.3 Non-competition. During the Term hereof and for a period
of two (2) years thereafter, Employee shall not, except with Employer's express
prior written consent, directly or indirectly, in any capacity, for the benefit
of any Person:
(1) Communicate with or solicit any Person who is or
during such period becomes a customer, supplier, employee, salesman, agent or
representative of Employer, in any manner which interferes or might interfere
with such Person's relationship with Employer, or in an effort to obtain such
Person as a customer, supplier, employee, salesman, agent, or representative of
any business in competition with Employer within 100 miles of any office or
facility owned, leased or operated by Employer.
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(2) Establish, engage, own, manage, operate, join or
control, or participate in the establishment, ownership (other than as the owner
of less than 1% of the stock of a corporation whose shares are publicly traded),
management, operation or control of, or be a director, officer, employee,
salesman, agent or representative of, or be a consultant to, any Person in any
business in competition with Employer, at any location within 100 miles of any
office or facility owned, leased or operated by Employer, or act or conduct
himself in any manner which he would have reason to believe inimical or contrary
to the best interests of Employer.
5.4 Enforcement. Employee acknowledges that any breach by him
of any of the covenants and agreements of this Section 5 ("Covenants") will
result in irreparable injury to Employer for which money damages could not
adequately compensate Employer, and therefore, in the event of any such breach,
Employer shall be entitled, in addition to all other rights and remedies which
Employer may have at law or in equity, to have an injunction issued by any
competent court enjoining and restraining Employee and/or all other Persons
involved therein from continuing such breach. The existence of any claim or
cause of action which Employee or any such other Person may have against
Employer shall not constitute a defense or bar to the enforcement of any of the
Covenants. If Employer is obliged to resort to litigation to enforce any of the
Covenants which has a fixed term, then such term shall be extended for a period
of time equal to the period during which a material breach of such Covenant was
occurring, beginning on the date of a final court order (without further right
of appeal) holding that such a material breach occurred or, if later, the last
day of the original fixed term of such Covenant.
5.5 Consideration. Employee expressly acknowledges that the
Covenants are a material part of the consideration bargained for by Employer
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and, without the agreement of Employee to be bound by the Covenants, Employer
would not have agreed to enter into this Agreement.
5.6 Scope. If any portion of any Covenant or its application
is construed to be invalid, illegal or unenforceable, then the other portions
and their application shall not be affected thereby and shall be enforceable
without regard thereto. If any of the Covenants is determined to be
unenforceable because of its scope, duration, geographical area or similar
factor, then the court making such determination shall have the power to reduce
or limit such scope, duration, area or other factor, and such Covenant shall
then be enforceable in its reduced or limited form.
6. Miscellaneous.
6.1 Notices. All notices, requests, demands, consents or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if and when (1) delivered
personally, (2) mailed by first class certified mail, return receipt requested,
postage prepaid, or (3) sent by a nationally recognized express courier service,
postage or delivery charges prepaid, to the parties at their respective
addresses stated below or to such other addresses of which the parties may give
notice in accordance with this Section.
If to Employer, to:
Genesis Health Ventures, Inc.
148 West State Street, Suite 100
Kennett Square, PA 19348
Attention: Law Department
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With a copy to:
Blank, Rome, Comisky & McCauley
1200 Four Penn Center Plaza
Philadelphia, PA 19103
Attention: Stephen E. Luongo, Esquire
If to Employee, to:
Michael R. Walker
228 North Garfield Street
Kennett Square, PA 19348
6.2 Entire Understanding. This Agreement, sets forth the
entire understanding between the parties with respect to the subject matter
hereof and supersedes all prior and contemporaneous, written, oral, expressed or
implied, communications, agreements and understandings with respect to the
subject matter hereof.
6.3 Modification. This Agreement shall not be amended,
modified, supplemented or terminated except in writing signed by both parties.
No action taken by Employer hereunder, including without limitation any waiver,
consent or approval, shall be effective unless approved by a majority of the
Board.
6.4 Prior Agreements. Employee represents to Employer (1) that
there are no restrictions, agreements or understandings whatsoever to which
Employee is a party which would prevent or make unlawful his execution of this
Agreement or his employment hereunder, (2) that his execution of this Agreement
and his employment hereunder shall not constitute a breach of any contract,
agreement or understanding, oral or written to which he is a party or by which
he is bound and (3) that he is free and able to execute this Agreement and to
enter into employment by Employer.
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6.5 Termination of Prior Employment Agreements. All prior
employment agreements between Employee and Employer (and/or any of its
affiliates) are hereby terminated as of the date hereof as fully performed on
both sides.
6.6 Parties in Interest. This Agreement and all rights of
Employee hereunder shall inure to the benefit of, bind and be enforceable by
Employee and his heirs, personal representatives, estate and beneficiaries, and
Employer and its successors and assigns. This Agreement is a personal employment
contract of Employer, being for the personal services of Employee, and shall not
be assignable by Employee.
6.7 Severability. If any provision of this Agreement is
construed to be invalid, illegal or unenforceable, then the remaining provisions
hereof shall not be affected thereby and shall be enforceable without regard
thereto.
6.8 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original hereof, and it shall not be necessary in making proof of this Agreement
to produce or account for more than one counterpart hereof.
6.9 Section Headings. Section and subsection headings in this
Agreement are inserted for convenience of reference only, and shall neither
constitute a part of this Agreement nor affect its construction, interpretation,
meaning or effect.
6.10 References. All words used in this Agreement shall be
construed to be of such number and gender as the context requires or permits.
6.11 Controlling Law. This Agreement is made under, and shall
be governed by, construed and enforced in accordance with, the substantive laws
of Pennsylvania applicable to agreements made and to be performed entirely
therein.
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6.12 Settlement of Disputes. Any claims, controversies,
demands, disputes or differences between or among the parties hereto or any
persons bound hereby arising out of, or by virtue of, or in connection with, or
relating to this Agreement shall be submitted to and settled by arbitration in
Philadelphia Pennsylvania, before and in accordance with the rules then
obtaining of JUDICATE. In the event JUDICATE does not exist for settlement of
disputes at the time either or both of the parties desire to submit a claim,
controversy, demand, dispute or difference to arbitration, then such claim,
controversy, demand, dispute or difference shall be submitted to and settled by
arbitration in Philadelphia, Pennsylvania before a single arbitrator who shall
be knowledgeable in the field of business law and employment relations and such
arbitration shall be in accordance with the rules then obtaining of the American
Arbitration Association. The parties agree to bear joint and equal
responsibility for all fees of the arbitrator, abide by any decision rendered as
final and binding, and waive the right to submit the dispute to a public
tribunal for a jury or non-jury trial.
6.13 Approval and Authorizations. The execution and the
implementation of the terms and conditions of this Agreement have been fully
authorized by the Board.
6.14 Indulgences, Etc. Neither the failure nor delay on the
part of either party to exercise any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof, nor shall the single or
partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
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6.15 Legal Expenses. In the event that the Employee institutes
any legal action to enforce his rights under, or to recover damages for breach
of this Agreement, the Employee, if he is the prevailing party, shall be
entitled to recover from the Employer any actual expenses for attorney's fees
and disbursements incurred by him.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above mentioned, under Seal, intending to be legally bound
hereby.
EMPLOYER:
Genesis Health Ventures, Inc.
Attest:
_____________________ By: _________________________
Secretary President
(Corporate Seal)
EMPLOYEE:
______________________________
Michael R. Walker