EXHIBIT 7
NONCOMPETITION AGREEMENT
AGREEMENT, dated as of June 16, 1997, among GENESIS HEALTH
VENTURES, INC., a Pennsylvania corporation, ("G"), WALTZ CORP., a Delaware
Corporation ("Parent"), WALTZ ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub") and Stephen R. Baker (the
"Covenantor").
Parent, Merger Sub, G and THE MULTICARE COMPANIES, INC., a
Delaware corporation (the "Company"), have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"), pursuant to which
Merger Sub is merging with and into the Company and the Company will survive as
a wholly-owned subsidiary of Parent (the "Merger"). Capitalized terms used but
not otherwise defined herein shall have the respective meanings ascribed to them
in the Merger Agreement.
The Covenantor is employed as the Chief Operating Officer and
an Executive Vice President by the Company, and has confidential knowledge of
its business and affairs and is considered by Parent to be a key employee of the
Company. Parent wishes to assure itself that the Covenantor agrees to certain
restrictions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. Effectiveness.
This Agreement shall become effective simultaneously
with, and subject to, the consummation of the Merger (the "Closing"). The
parties acknowledge that until this Agreement becomes effective, the Covenantor
may remain an officer and director of the Company and will not be subject to the
restrictions of this Agreement. If the Merger Agreement is terminated, this
Agreement shall be simultaneously terminated.
2. Consideration.
(a) As consideration for the Covenantor's agreement
to the restrictive covenants in Section 4 herein (the "Restrictive Covenants"),
Parent hereby agrees to pay the Covenantor, and the Covenantor agrees to accept
as full consideration for his agreement to the Restrictive Covenants, (i) the
benefits set forth in Section 3 hereof, and (ii) a cash payment in the amount of
$500,000, payable in immediately available funds at the Closing.
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3. Benefits; Office Facilities.
Parent agrees that for a period of six months
following the Effective Time the Covenantor may continue the exclusive use of
his and his secretary's office space and office equipment; provided, that the
foregoing obligation will be excused if and when the Company ceases to maintain
office facilities in Hackensack, New Jersey. Parent agrees that the equipment
and office furnishings located in the Covenantor's office shall be the property
of the Covenantor.
4. Restrictive Covenants.
4.1 Noncompetition Agreement. Covenantor shall not,
for a period of one year after the date hereof, in any capacity (including, but
not limited to, owner, partner, shareholder, consultant, agent, employee,
officer, director or otherwise), directly or indirectly, for his own account or
for the benefit of any person, establish, engage in or be connected with any
Competitive Business. As used herein, the term "Competitive Business" means any
Restricted Business conducted in the Restricted Zone. Restricted Business means
institutional pharmacy, rehabilitation services, long term care services,
skilled nursing facilities or assisted living facilities but does not include
providing any other goods or services to skilled nursing facilities, assisted
living facilities and other health care facilities. The Restricted Zone means
any town in Connecticut or Rhode Island in which the Company operates a long
term care facility and an area of fifteen miles surrounding such facility; any
county in Illinois, New Jersey, Ohio, West Virginia or Wisconsin in which the
Company operates a long term care facility and an area of fifteen miles
surrounding such facility; all portions of Massachusetts east of Worcester; all
portions of Pennsylvania east of Harrisburg and an area of fifteen miles around
any facility located in Virginia or Vermont; but in no event includes any
portion of any state other than Connecticut, Rhode Island, Illinois, New Jersey,
Ohio, West Virginia, Wisconsin, Massachusetts, Pennsylvania, Virginia, or
Wisconsin. In no event shall this Section 4.1 restrict the Covenantor from
owning interests in, or developing, real estate so long as the Covenantor is not
operating any Restricted Business. In addition, Covenantor shall not pursue any
of the development projects listed on Schedule 4.1 hereto.
4.2 Confidentiality. For a period of three years
commencing on the Closing Date, the Covenantor shall not, except with the
express prior written consent of Parent, directly or indirectly, disclose,
communicate or divulge to any Person, or use for the benefit of any Person, any
secret, confidential or proprietary knowledge or information with respect to the
conduct or details of the Company or the business engaged in by the Company
including, but not limited to, technical know-how, processes, customers,
prospects, costs, designs, marketing methods and strategies, finances and
suppliers. The provision of this Section 4.1 shall not apply to any information
which at the time of disclosure (i) is generally available to or known to the
public (other than as a result of unauthorized disclosure directly or indirectly
by Covenantor) or (ii) Covenantor discloses, at the direction and authorization
of Parent,
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or, subject to the remainder of this Section 4.1 as required by law. If
Covenantor is required in a judicial, administrative or governmental proceeding
to disclose any information which is the subject of the restrictions contained
in this Section 4.2, then Covenantor will notify Parent as soon as possible so
that Parent may either seek an appropriate protective order or relief, or waive
the provisions of this Section 4.2. If, in the absence of such an order, relief
or waiver, Covenantor is required, in the written opinion of counsel, to
disclose such information to any court, administrative agency or governmental
authority, then Covenantor may disclose such information without liability under
this Agreement.
4.3 Nonsolicitation of Employees. The Covenantor
shall not for a period of two years after the date hereof, except with the
express written consent of Parent (which shall not be unreasonably withheld or
delayed in the case of an employee of the Company or the Surviving Corporation
who has received a notice of termination from the Company or the Surviving
Corporation, as the case may be) or as is otherwise contemplated by the Merger
Agreement, directly or indirectly, whether as an employee, owner, partner,
agent, director, officer, shareholder or in any other capacity, for his own
account or for the benefit of any Person; (i) solicit, divert or induce any of
(1) the Company's employees or (2) the Surviving Corporation's employees to
leave or to work for him or any Person with which he is connected; or (ii) hire
any of the Company's or the Surviving Corporation's employees and other than the
Co-Chief Executive Officers and the Covenantor's personal secretary and other
persons who shall be acceptable to Parent and identified on a schedule to be
agreed upon prior to the purchase of shares in the Offer.
4.4 Remedies. (a) The parties to this Agreement agree
that any breach by Covenantor of the covenants and agreements contained in
Sections 4.1 and 4.2 will result in irreparable injury to Merger Sub for which
money damages could not adequately compensate Merger Sub. Therefore, in the
event of any breach of such Sections, Merger Sub shall be entitled (in addition
to any other rights and remedies which it may have at law or in equity) to have
an injunction issued by any competent court of equity enjoining and restraining
Covenantor and/or any other Person involved therein from continuing such breach.
In any action to enforce the provisions of Sections 4.1 or 4.2, Covenantor
and/or any other Person involved therein shall expressly waive the defense that
any remedy at law is adequate.
(b) In the event Covenantor is found by a
nonappealable judgment of a court of competent jurisdiction to have violated
Section 4.3, in addition to the reasonable fees and expenses of Parent's counsel
incurred to enforce such provision, Covenantor shall pay to Parent, as
liquidated damages, an amount equal to 200% of the applicable employee's annual
compensation (including, without limitation, salary, bonus and benefits) at the
time of the violation (the "Liquidated Damages"); provided, that in the event
Covenantor is found by such court to have not violated Section 4.3, Parent shall
pay to Covenantor the reasonable fees and expenses
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of counsel incurred by Covenantor to defend such action and any actual damages
resulting from Parent's interference with Covenantor's commercial relationships.
4.5 Enforceability. If any portion of the covenants
or agreements contained herein, or the application thereof, is construed to be
invalid or unenforceable, then the other portions of such covenants(s) or
agreement(s) or the application thereof shall not be affected and shall be given
full force and effect without regard to the invalid or unenforceable portions.
If any covenant or agreement herein is held to be unenforceable because of the
area covered, the duration thereof, or the scope thereof, then the court making
such determination shall have, for purposes of enforcement in equity, the power
to reduce the area and/or duration and/or limit the scope thereof, and the
covenant or agreement shall then be enforceable in its reduced form.
4.6 Intent of Parties. Each of the parties hereto
recognize and agree that this Agreement is necessary and essential to enable
Parent to realize and derive substantial benefits, rights and expectations of
the Merger Agreement, that the area and duration of the covenants herein are in
all things, under the circumstances of the Merger Agreement, reasonable; and
that good and valuable consideration exists for Covenantor's agreeing to be
bound by such covenants.
4.7 Definition. As used herein, the term "Person"
means any individual, sole proprietorship, joint venture, partnership,
corporation, association, joint-stock company, unincorporated organization,
cooperative, trust, estate, government (or any branch, subdivision or agency
thereof), governmental, administrative or regulatory authority, or any other
entity of any kind or nature whatsoever.
5. Other Provisions.
5.1 All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person or by telecopier (with a confirmed receipt thereof), and on the next
business day when sent by overnight courier service, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(i) if to Parent or Merger Sub, to:
Waltz Corp.
65 East 55th Street
New York, New York 10022
Attention: James L. Singleton
Telecopier: (212) 705-0199
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with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: William E. Curbow
Telecopier: (212) 455-2502
(ii) if to G, to:
Genesis Health Ventures, Inc.
148 West State Street
Kennett Square, Pennsylvania 19348
Attention: Michael R. Walker
Telecopier: (610) 444-7483
with a copy to:
Blank, Rome, Comiskey & McCauley
1200 Four Penn Center Plaza
Philadelphia, Pennsylvania 19103
Attention: Stephen E. Luongo
Telecopier: (215) 569-5555
(iii) if to the Covenantor, to
Stephen R. Baker
3508 Belmar Boulevard
Neptune, N.J. 07753
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6065
Attention: Carl L. Reisner
Telecopy No. (212) 757-3990
5.2 Entire Agreement. This Noncompetition Agreement
contains the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements, written or oral, with respect
thereto.
5.3 Waivers and Amendments. This Noncompetition
Agreement may be amended, superseded, canceled, renewed or extended, and the
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terms hereof may be waived, only by a written instrument signed by the parties
or, in the case of a waiver, by the party waiving compliance. No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any such right, power or privilege, nor any single or partial exercise of any
such right, power or privilege, preclude any other or further exercise thereof
or the exercise of any other such right, power or privilege.
5.4 Governing Law. This Noncompetition Agreement
shall be governed by and construed in accordance with the laws of the State of
New Jersey without regard to choice of law principles.
5.5 Successors and Assigns; Assignment. This
Noncompetition Agreement is binding upon and shall inure to the benefit of the
parties hereto and their respective successors. This Noncompetition Agreement,
and the Covenantor's rights and obligations hereunder, may not be assigned by
the Covenantor. Parent may assign this Noncompetition Agreement and its rights,
together with its obligations, hereunder in connection with any sale, transfer
or other disposition of all or substantially all of its assets or business,
whether by merger, consolidation or otherwise.
5.6 No Third Party Beneficiaries. This Noncompetition
Agreement is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
5.7 Counterparts. This Noncompetition Agreement may
be executed by the parties hereto in separate counterparts, each of which when
so executed and delivered shall be an original but all such counterparts
together shall constitute one and the same instrument. Each counterpart may
consist of two copies hereof each signed by one of the parties hereto.
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5.8 Headings. The headings in this Noncompetition
Agreement are for reference only and shall not affect the interpretation of this
Noncompetition Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Noncompetition Agreement as of the date first above written.
WALTZ CORP.
By:/s/Karl I. Peterson
____________________
Name: Karl I. Peterson
Title: Vice President,
Secretary and
Assistant Treasurer
WALTZ ACQUISITION CORP.
By:/s/ Karl I. Peterson
_____________________
Name: Karl I. Peterson
Title: Vice President,
Secretary and
Assistant Treasurer
GENESIS HEALTH VENTURES, INC.
By:/s/ Michael R. Walker
_____________________
Name: Michael R. Walker
Title: Chairman and
Chief Executive Officer
/s/ Stephen R. Baker
_____________________
Stephen R. Baker