EXHIBIT 10.17
SEVENTEENTH
AMENDMENT TO EMPLOYMENT AGREEMENT
JOEL F. GEMUNDER ("Employee"), and OMNICARE MANAGEMENT COMPANY, a
Delaware corporation with its principal place of business in Covington, Kentucky
(the "Company"), hereby agree as follows:
1. Recitals
(a) The Company is an indirect subsidiary of Omnicare, Inc. (the "Parent
Company") as a result of a corporate restructuring of the Parent Company and its
affiliates.
(b) In connection with such restructuring, certain assets and liabilities
of the Parent Company were transferred to the Company effective December 31,
1988, including an Employment Agreement between the Parent Company and Employee
dated August 4, 1988 (the "Employment Agreement").
(c) The Company, as assignee, and Employee amended the Employment Agreement
by mutual written agreement on December 31, 1988; May 23, 1989; May 22, 1990;
May 21, 1991; May 19, 1992; May 17, 1993; May 16, 1994; May 15, 1995; May 20,
1996; May 19, 1997; May 18, 1998; March 3, 1999; February 25, 2000; March 1,
2000; March 1, 2001 and February 6, 2002 (the "Prior Amendments").
2. Amendments
Article 2 of the Employment Agreement is amended to add a new Section
2.7 at the end thereof to read as follows:
"2.7. Insurance Policies
(a) The Company has purchased the following key man life insurance policies
covering the Employee, as follows:
(i) Phoenix Life Insurance Company life insurance policy # 97300694,
face value $6 million (the "Phoenix Policy")
(ii) Manulife Financial life insurance policy #59072777, face value
$2.5 million (the "Manulife Policy")
(iii) The Travelers Life and Annuity Company life insurance policy
#7404869, face value $2.5 million (the "Travelers Policy").
The Company also maintains three split-dollar life insurance policies and one
term life insurance policy as an employee benefit for Employee (the "Current
Life Policies"). The Company has previously entered into two Split Dollar
Agreements with Employee (dated as amended through February 25, 2000, and June
1, 2000) respect to the split-dollar policies (the "Split Dollar Agreement").
(b) Subject to the condition set forth in Section 2(c) below, Employee
shall have the right and option to elect the following, exercisable during the
term hereof or following any
termination of Employee's employment due to Disability or "Without Cause" under
Article 3 or Section 5.1 hereof:
(i) to convert the Phoenix Policy, without payment by Employee, to a
form of insurance arrangement that is substantially equivalent,
in terms of the relative economic interests of the parties, to an
endorsement method split-dollar life insurance arrangement (or
other split-dollar arrangement that is as favorable to Employee),
pursuant to which Employee will be entitled to designate the
death beneficiary, and with the Company's obligation to make
premium payments to be established on the same basis as provided
in the Sections 4.4 and 4.5 of the Split Dollar Agreement; and
(ii) to purchase from the Company, for a cash payment from Employee
equal to the then-current cash value of the policy, either or
both of the Manulife Policy and the Travelers Policy, as a result
which Employee shall have all rights, interests and obligations
with respect to such policies, and the Company shall have no
further rights, interests or obligations.
(c) The rights of Employee to exercise the conversion and purchase rights
described in Section 2(b) above are conditioned upon the adoption by the
Compensation and Incentive Committee of the Board of Directors of the Parent
Company (the "Compensation Committee") of a resolution stating that it is
satisfied, based on an opinion of outside legal counsel, as to the legality of
such conversion or purchase (as applicable) for purposes of all applicable
securities laws, including the Sarbanes-Oxley Act of 2002. The Compensation
Committee shall make best efforts to obtain such opinion and adopt such
resolution.
(d) The Company and Employee agree that the Company may make adjustments to
its maintenance of the Current Life Policies beginning in 2003, including by
reducing premium and bonus payments on the split-dollar policies and terminating
the term-life insurance policy, to reduce its annual payment obligations with
respect to such policies by approximately $500,000. Any such adjustments shall
not be deemed a violation of the terms of this Employment Agreement nor the
Split Dollar Agreement, provided that the Company shall not take any actions
with respect to the Current Life Policies that shall result in any policy
failing to be exempt from or violating the Sarbanes-Oxley Act of 2002.
(e) The Company and Employee intend that the benefits to be provided to
Employee (and his estate), assuming the conversion and purchase of the life
insurance policies under Section 2(b) hereof and the continued maintenance of
such policies during the Employee's employment with the Company, shall be as
favorable to Employee (and his estate) on an after-tax basis as the benefits
that would have been provided under the Current Life Policies by having the
Company continuing to make premium and bonus payments in respect of the Current
Life Policies and under the Split Dollar Agreement at the rates in effect for
2002. In the event that such after-tax benefit is not as favorable to Employee
(and his estate), as a result of the inability of the Compensation Committee to
adopt the resolution contemplated by Section 2(c) hereof or for any other
reason, then the Company shall make such additional payments or benefits to
Employee (or his estate) as the Compensation Committee deems appropriate to
compensate for the lost benefits."
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3. General
Except as previously changed by the Prior Amendments and as
specifically amended herein, the Employment Agreement will remain in full force
and effect in accordance with its original terms, conditions, and provisions.
IN WITNESS WHEREOF, the parties have duly executed this amendatory
agreement as of September 25, 2002.
OMNICARE MANAGEMENT COMPANY
/s/ Joel F. Gemunder By: /s/ Cheryl D. Hodges
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JOEL F. GEMUNDER CHERYL D. HODGES