Exhibit 10.17
VIA E-MAIL AND REGULAR MAIL
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Xx. Xxxxxx X. Xxxxx
00000 Xxxxxx Xxx Xxxxx
Xxxxxxxxxxxx, XX 00000
As of July 15, 2003
Re: Employment Agreement
Dear Xxxx:
Reference is made to that certain letter agreement, dated July 15, 2003,
relating to your employment with Genesis Health Ventures, Inc. and proposed
employment with Genesis HealthCare Corporation (the "Original Letter
Agreement"), which such Original Letter Agreement is hereby amended and restated
in its entirety to the effect set forth below:
As you know, Genesis Health Ventures, Inc. ("GHV") is contemplating a spin-off
of its eldercare business ("Spin-Off") through the creation of a new public
company, Genesis HealthCare Corporation ("New Company"). This transaction may
trigger your right to receive a lump-sum severance payment, under Section 5 of
your current employment agreement with GHV dated November 11, 1998 and amended
on October 2, 2000 and further amended on October 2, 2001 ("Current Employment
Agreement"), equal to two times the sum of your Average Base Salary (as defined
in your Current Employment Agreement) plus your Average Assumed Cash Incentive
Compensation (as defined in your Current Employment Agreement).
If you voluntarily elect to waive your potential lump-sum severance payment and
other benefits under your Current Employment Agreement and you remain employed
until the Spin-Off, the New Company is willing, upon the successful completion
of the Spin-Off, to:
Make a lump-sum payment to you in the amount of $377,116 (equal to one
times the sum of your Average Base Salary plus your Average Assumed
Cash Incentive Compensation), due and payable upon the successful
completion of the Spin-Off; and
Continue your employment with the New Company pursuant to the terms and
conditions of an employment agreement (the "New Company Employment
Agreement"), such New Company Employment Agreement to take effect upon
the successful completion of the Spin-Off. The material differences
between the New Company Employment Agreement and your Current
Employment Agreement include the following:
Xxxxxx X. Xxxxx
July 15, 2003
Page 2
The New Company Employment Agreement shall be with Genesis HealthCare
Corp., and not GHV;
The New Company Employment Agreement becomes effective only upon the
successful completion of the Spin-Off;
The term of your employment is extended to October 1, 2005 (with
possible extensions);
Moving the Company's principal offices is not included in the list of
events that would allow you to terminate your employment for Good
Reason (to be defined in the New Company Employment Agreement);
Moving your primary place of business as of the Spin-Off more than 45
miles is included in the list of events that would allow you to
terminate your employment for Good Reason;
Payments upon termination by the Company without Cause (to be defined
in the New Company Employment Agreement) or by you for Good Reason will
be equal to one times the sum of your Average Base Salary plus your
Average Assumed Cash Incentive Compensation (your Current Employment
Agreement provides for two times such sum);
The New Company Employment Agreement provides for a payment upon
termination by you for Good Reason or by the Company without Cause
within two years of a Change of Control (to be defined in the New
Company Employment Agreement) of one and one-half times the sum of your
Average Base Salary plus your Assumed Cash Incentive Compensation;
Under the New Company Employment Agreement, termination payments are
subject to, and conditional upon, you executing a general release of
claims;
The New Company Employment Agreement provides that the Company may
assign or transfer its rights under the employment agreement to a
buyer, successor, permitted assign, or affiliate; and
The New Company Employment Agreement modifies and updates the
arbitration provisions.
In addition to the consideration set forth above, subject to approval by the
Compensation Committee of the Board of Directors of the New Company, you will
receive 62,500 stock options in the New Company as of the latter of November 12,
2003 or five business days following the completion of the Spin-Off, you will
receive an additional 62,500 stock options six months thereafter and you will
receive a target bonus in the amount of $128,000 at the time of the Spin-Off.
Notwithstanding anything to the contrary herein or in the New Company Employment
Agreement, if you terminate your employment for Good Reason as set forth in the
New Company Employment Agreement as a result of the failure to receive the stock
options or bonus as contemplated in the immediately preceding sentence, you
shall be bound by the restrictive covenants set forth in Section 7 of your
Current Employment Agreement and not by the covenants in the New Company
Employment Agreement.
Xxxxxx X. Xxxxx
July 15, 2003
Page 3
This first amended and restated letter agreement replaces and supersedes the
Original Letter Agreement in its entirety and such Original Letter Agreement
shall be of no further force and effect.
If you have any questions please do not hesitate to contact me.
Very truly yours,
/s/ Xxxxxx X. Xxxxx, Xx.
Xxxxxx X. Xxxxx, Xx., Chief Financial Officer
On behalf of Genesis Health Ventures, Inc. and Genesis HealthCare Corporation
I hereby acknowledge that I understand the alternatives before
me and, subject to the Spin-Off becoming effective, I voluntarily elect to waive
any potential to receive a lump sum severance payment as specified above and
other rights under my Current Employment Agreement, effective as of the
completion of the Spin-Off.
Accepted and Acknowledged:
/s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
