Exhibit 10.4
FORM OF
EMPLOYEE BENEFITS AGREEMENT
By and between
GENESIS HEALTH VENTURES, INC.
and
GENESIS HEALTHCARE CORPORATION
Dated as of
October __, 2003
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS...................................................................................1
1.1 Accounting Firm..........................................................................................1
1.2 Affiliate................................................................................................1
1.3 Agreement................................................................................................1
1.4 Ancillary Agreements.....................................................................................1
1.5 ASO Contract.............................................................................................1
1.6 Auditing Party...........................................................................................2
1.7 Award....................................................................................................2
1.8 Bonus Plan...............................................................................................2
1.9 Close of the Distribution Date...........................................................................2
1.10 Close of the Transition Date.............................................................................2
1.11 COBRA....................................................................................................2
1.12 COBRA Transition Account.................................................................................2
1.13 Code.....................................................................................................2
1.14 Coverage Account.........................................................................................2
1.15 Deferral Plan............................................................................................2
1.16 Distribution.............................................................................................2
1.17 Distribution Date........................................................................................2
1.18 Distribution Year........................................................................................2
1.19 DOL......................................................................................................2
1.20 ElderCare................................................................................................2
1.21 ElderCare Common Stock...................................................................................2
1.22 ElderCare Employee.......................................................................................2
1.23 ElderCare Entity.........................................................................................3
1.24 ElderCare Individual.....................................................................................3
1.25 Enrolled Total...........................................................................................3
1.26 ERISA....................................................................................................3
1.27 Executive Benefit Plans..................................................................................3
1.28 Flexible Benefits Plan...................................................................................3
1.29 FMLA.....................................................................................................3
1.30 Former ElderCare Individual..............................................................................3
1.31 Group Insurance Policies.................................................................................3
1.32 Group Life Program.......................................................................................4
1.33 Health and Welfare Xxxx..................................................................................4
1.34 Health and Welfare Plans.................................................................................4
1.35 HIPAA....................................................................................................4
1.36 HMO......................................................................................................4
1.37 HMO Agreements...........................................................................................4
1.38 Immediately after the Distribution Date..................................................................4
1.39 Immediately after the Transition Date....................................................................4
1.40 Incentive Plan...........................................................................................4
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1.41 Individual Agreement.....................................................................................4
1.42 Initial Payment..........................................................................................4
1.43 Insured Enrolled Total...................................................................................4
1.44 Insured Parent Plan......................................................................................5
1.45 IRS......................................................................................................5
1.46 Leave of Absence.........................................................................................5
1.47 Match Date...............................................................................................5
1.48 Material Feature.........................................................................................5
1.49 Medical Plan.............................................................................................5
1.50 Non-Employee Director....................................................................................5
1.51 Non-parties..............................................................................................5
1.52 Parent...................................................................................................5
1.53 Parent Common Stock......................................................................................5
1.54 Parent Employee..........................................................................................5
1.55 Parent Entity............................................................................................5
1.56 Parent Incentive Plan....................................................................................5
1.57 Parent Leave of Absence Programs.........................................................................6
1.58 Parent Transferred Employee..............................................................................6
1.59 Parent WCP...............................................................................................6
1.60 Participating Company....................................................................................6
1.61 Plan.....................................................................................................6
1.62 QDRO.....................................................................................................6
1.63 QMCSO....................................................................................................6
1.64 Savings Plan(s)..........................................................................................6
1.65 Self-Insured Parent Plan.................................................................................7
1.66 Separation and Distribution Agreement....................................................................7
1.67 Transition Date..........................................................................................7
1.68 Transition Period........................................................................................7
1.69 True-Up Amount...........................................................................................7
ARTICLE II GENERAL PRINCIPLES............................................................................8
2.1 Assumption of Liabilities................................................................................8
2.2 ElderCare Participation in Parent Plans..................................................................8
2.3 Establishment of ElderCare Plans.........................................................................8
2.4 Terms of Participation by ElderCare Individuals in ElderCare Plans.......................................9
2.5 Best Efforts.............................................................................................9
2.6 Regulatory Compliance....................................................................................9
ARTICLE III DEFINED CONTRIBUTION PLANS....................................................................9
3.1 Defined Contribution Plans...............................................................................9
3.2 Savings Plan Asset Transfer.............................................................................10
3.3 Stock Considerations....................................................................................10
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ARTICLE IV HEALTH AND WELFARE PLANS.....................................................................10
4.1 Assumption of Health and Welfare Plans' Liabilities.....................................................10
4.2 Health and Welfare Plan Transitional Coverage Rules.....................................................11
4.3 Post-Transition Date Coverage...........................................................................12
4.4 Vendor Contracts........................................................................................12
(a) Third-Party ASO Contracts......................................................................12
(b) Group Insurance Policies.......................................................................13
(c) HMO Agreements.................................................................................13
(d) Effect of Change in Rates......................................................................13
4.5 COBRA and HIPAA Compliance..............................................................................14
4.6 Leave of Absence Programs...............................................................................14
4.7 Workers' Compensation Liabilities.......................................................................14
ARTICLE V EXECUTIVE BENEFITS...........................................................................15
5.1 Change of Control.......................................................................................15
5.2 Consents, Notifications and Assignments.................................................................15
5.3 Genesis Health Ventures, Inc. 2001 Deferred Compensation Plan...........................................15
ARTICLE VI OTHER BENEFITS...............................................................................15
6.1 Severance...............................................................................................15
6.2 Parent Bonus Plan.......................................................................................15
ARTICLE VII GENERAL AND ADMINISTRATIVE...................................................................16
7.1 Payment of Administrative Costs and Expenses............................................................16
7.2 Payment of Liabilities, Plan Expenses and Related Matters...............................................16
(a) Actuarial and Accounting Methodologies and Assumptions.........................................16
(b) Contributions to Trusts........................................................................17
7.3 Sharing of Participant Information......................................................................17
7.4 Reporting and Disclosure and Communications to Participants.............................................17
7.5 Non-Termination of Employment; No Third-Party Beneficiaries.............................................17
7.6 Plan Audits.............................................................................................18
(a) Audit Rights With Respect to Information Provided..............................................18
(b) Audits Regarding Vendor Contracts..............................................................18
7.7 Beneficiary Designations................................................................................18
7.8 Requests for IRS Rulings and DOL Opinions...............................................................19
(a) Cooperation....................................................................................19
(b) Life Insurance.................................................................................19
7.9 Fiduciary Matters.......................................................................................19
(a) Fiduciary Status...............................................................................19
(b) Independent Fiduciary..........................................................................19
7.10 Payroll Taxes and Reporting of Compensation.............................................................19
7.11 Collective Bargaining...................................................................................20
7.12 Consent of Third Parties................................................................................20
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ARTICLE VIII MISCELLANEOUS................................................................................20
8.1 Effect if Distribution Does Not Occur...................................................................20
8.2 Relationship of Parties.................................................................................20
8.3 Affiliates..............................................................................................20
8.4 Incorporation of Separation and Distribution Agreement Provisions.......................................20
8.5 Governing Law...........................................................................................20
SCHEDULES TO EMPLOYEE BENEFITS AGREEMENT
Schedule A ElderCare Individuals
Schedule B Parent Executive Benefit Plans
Schedule C Parent Incentive Plans
Schedule D Employee List - Parent Savings Plan
Schedule E Employee List - Parent Bonus Plan
Schedule F Entities Constituting ElderCare Business
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EMPLOYEE BENEFITS AGREEMENT
RECITALS
This EMPLOYEE BENEFITS AGREEMENT (this "Agreement"), dated as of
October __, 2003 is by and between GENESIS HEALTH VENTURES, INC. (which is
expected to be renamed "NeighborCare, Inc." in connection with the spin-off of
its ElderCare business), a Pennsylvania corporation ("Parent"), and GENESIS
HEALTHCARE CORPORATION, a Pennsylvania corporation and a wholly owned subsidiary
of Parent ("ElderCare").
WHEREAS, the Board of Directors of Parent has determined that it is in
the best interests of Parent and its stockholders to separate Parent's existing
businesses into two independent companies;
WHEREAS, in furtherance of the foregoing, Parent and ElderCare have
entered into a Separation and Distribution Agreement (the "Separation and
Distribution Agreement") and certain other agreements that will govern certain
matters relating to the Separation and the Contribution, the Distribution and
the relationship of Parent, ElderCare, and their respective Subsidiaries
following the Distribution (the "Ancillary Agreements"); and
WHEREAS, pursuant to the Separation and Distribution Agreement, Parent
and ElderCare have agreed to enter into this Agreement allocating assets,
liabilities and responsibilities with respect to certain employee and director
compensation and benefit plans and programs between them.
NOW, THEREFORE, in consideration of the premises, and of the agreements
set forth herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Any capitalized terms that are used in this Agreement but not defined
herein (other than the names of Parent employee benefit plans) shall have the
meanings set forth in the Separation and Distribution Agreement, and, as used
herein, the following terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
1.1 Accounting Firm is defined in Section 4.2.
1.2 Affiliate means with respect to any Person, any entity that
controls, is controlled by or is under common control with such Person.
1.3 Agreement is defined in the Recitals to this Agreement.
1.4 Ancillary Agreements is defined in the Recitals to this Agreement.
1.5 ASO Contract is defined in Section 4.4(a)(i).
1.6 Auditing Party is defined in Section 7.6(a)(i).
1.7 Award means an award under an Incentive Plan.
1.8 Bonus Plan, when immediately preceded by "Parent" means the Parent
annual bonus plan. When immediately preceded by ElderCare, Bonus Plan means the
annual bonus plan to be established by ElderCare pursuant to Section 2.3 to
correspond to the Parent Bonus Plan.
1.9 Close of the Distribution Date means 11:59:59 P.M. City of New York
time on the Distribution Date.
1.10 Close of the Transition Date means 11:59:59 P.M. City of New York
time on the Transition Date.
1.11 COBRA means the continuation coverage requirements for "group
health plans" under Title X of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and as codified in Section 4980B of the Code and
Sections 601 through 608 of ERISA.
1.12 COBRA Transition Account is defined in Section 4.5.
1.13 Code means the Internal Revenue Code of 1986, as amended, or any
successor Federal income tax law. Reference to a specific Code provision also
includes any proposed, temporary or final regulation in force under that
provision.
1.14 Coverage Account is defined in Section 4.2.
1.15 Deferral Plan, when immediately preceded by "Parent," means the
Genesis Health Ventures, Inc. 2001 Deferred Compensation Plan. When immediately
preceded by "ElderCare," Deferral Plan means the plan to be Established by
ElderCare pursuant to Section 2.3 that corresponds to the Parent Deferral Plan.
1.16 Distribution is defined in the Recitals to the Separation and
Distribution Agreement.
1.17 Distribution Date means the date that the Distribution is
effective.
1.18 Distribution Year means the calendar year during which the
Distribution Date occurs.
1.19 DOL means the United States Department of Labor.
1.20 ElderCare is defined in the Recitals to this Agreement.
1.21 ElderCare Common Stock means the SpinCo Common Stock as defined
in the Separation and Distribution Agreement.
1.22 ElderCare Employee means an employee who is employed by ElderCare
or an ElderCare Entity following the Distribution Date.
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1.23 ElderCare Entity means any Person that is, at the relevant time, a
Subsidiary or an Affiliate of ElderCare.
1.24 ElderCare Individual means any individual who, as of the Close of
the Distribution Date is: (a) either actively employed by or on a Leave of
Absence from ElderCare or an ElderCare Entity; (b) neither actively employed by,
nor on a Leave of Absence from, ElderCare or an ElderCare Entity, but who is a
Former ElderCare Individual, or (c) named on Schedule A hereto. ElderCare
Individuals shall also include any other employees or group of employees
designated as ElderCare Individuals (as of a specified date) by mutual agreement
of Parent and ElderCare. An alternate payee under a QDRO, an alternate recipient
under a QMCSO, a beneficiary or a covered dependent, in each case, of an
employee or former employee described above shall also be an ElderCare
Individual with respect to that employee's or former employee's benefit under
the applicable Plans. Such an alternate payee, alternate recipient, beneficiary
or covered dependent shall not otherwise be considered an ElderCare Individual
with respect to his or her own benefits under any applicable Plans unless he or
she is an ElderCare Individual by virtue of either of the first two sentences of
this definition. An individual may be an ElderCare Individual pursuant to this
definition regardless of whether such individual is, as of the Distribution
Date, alive, actively employed, on a temporary Leave of Absence from active
employment, on layoff, terminated from employment, retired or on any other type
of employment or post-employment status relative to a Parent Plan, and
regardless of whether, as of the Close of the Distribution Date, such individual
is then receiving any benefits from a Parent Plan.
1.25 Enrolled Total is defined in Section 4.2.
1.26 ERISA means the Employee Retirement Income Security Act of 1974,
as amended. Reference to a specific provision of ERISA also includes any
proposed, temporary or final regulation in force under that provision.
1.27 Executive Benefit Plans, when immediately preceded by "Parent,"
means the executive plans, programs and arrangements established, maintained,
agreed upon or assumed by Parent or a Parent Entity for the benefit of executive
employees and former executive employees of Parent or a Parent Entity before the
Close of the Distribution Date as set forth on Schedule B. When immediately
preceded by "ElderCare," Executive Benefit Plans means the plans to be
established by ElderCare pursuant to Section 2.3 that correspond to the
respective Parent Executive Benefit Plans.
1.28 Flexible Benefits Plan, when immediately preceded by "Parent,"
means the Genesis Health Ventures, Inc. Pre-Tax Spending Accounts. When
immediately preceded by "ElderCare," Flexible Benefits Plan means the plan or
portion of the plan to be established by ElderCare pursuant to Section 2.3 that
corresponds to the Parent Flexible Benefits Plan.
1.29 FMLA means the Family and Medical Leave Act of 1993, as amended.
1.30 Former ElderCare Individual means an individual who is a former
employee of ElderCare or an ElderCare Entity.
1.31 Group Insurance Policies is defined in Section 4.4(b)(i).
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1.32 Group Life Program, when immediately preceded by "Parent," means
the portion of the Genesis Health Ventures, Inc. Health and Welfare Plan that
provides group basic life insurance coverage for the benefit of employees and
retirees of Parent and certain Parent entities established, maintained, agreed
upon or assumed by Parent or a Parent Entity before the Close of the
Distribution Date. When immediately preceded by "ElderCare," Group Life Program
means the plans or the plan or portion thereof to be established by ElderCare
pursuant to Section 2.3 that correspond to the respective Parent Group Life
Program.
1.33 Health and Welfare Xxxx is defined in Section 4.2.
1.34 Health and Welfare Plans, when immediately preceded by "Parent,"
means the Genesis Health Ventures, Inc. Health and Welfare Plan. When
immediately preceded by "ElderCare," Health and Welfare Plans means the plan or
plans to be established by ElderCare pursuant to Section 2.3 that correspond to
the respective Parent Health and Welfare Plans.
1.35 HIPAA means the health insurance portability and accountability
requirements for "group health plans" under the Health Insurance Portability and
Accountability Act of 1996, as amended.
1.36 HMO means a health maintenance organization that provides insured
benefits under the Parent Medical Plans or the ElderCare Medical Plans.
1.37 HMO Agreements is defined in Section 4.4(c)(i).
1.38 Immediately after the Distribution Date means 12:00 A.M. City of
New York time on the day after the Distribution Date.
1.39 Immediately after the Transition Date means 12:00 A.M. City of New
York time on the day after the Transition Date.
1.40 Incentive Plan, when immediately preceded by "Parent," means any
of the cash and stock-based incentive plans, programs and arrangements
established, maintained, agreed upon or assumed by Parent for the benefit of
employees of Parent or a Parent Entity before the Close of the Distribution
Date, as set forth on Schedule C. When immediately preceded by "ElderCare,"
Incentive Plan means the Incentive Plan to be established by ElderCare pursuant
to Section 2.3 that corresponds to the Parent Incentive Plans.
1.41 Individual Agreement means an individual contract or agreement
(whether written or unwritten) entered into between Parent, a Parent Entity,
ElderCare or an ElderCare Entity and an Eldercare Individual that establishes
the right of such individual to special executive compensation benefits,
including, without limitation, base salary, severance, supplemental pension
benefit, deferred compensation, bonus, loan, guaranteed payment, special
allowance, tax equalization or disability benefit.
1.42 Initial Payment is defined in Section 4.2.
1.43 Insured Enrolled Total is defined in Section 4.2.
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1.44 Insured Parent Plan is defined in Section 4.2.
1.45 IRS means the Internal Revenue Service.
1.46 Leave of Absence means any authorized leave of absence, including,
without limitation, leaves of absence for short-term disability, long-term
disability and workers' compensation.
1.47 Match Date is defined in Section 3.2.
1.48 Material Feature means any feature of a Plan that could reasonably
be expected to be of material importance to the sponsoring employer or the
participants and beneficiaries of the Plan, which could include, depending on
the type and purpose of the particular Plan, the class or classes of employees
eligible to participate in such Plan, the nature, type, form, source and level
of benefits provided by the employer under such Plan and the amount or level of
contributions, if any, required to be made by participants (or their dependents
or beneficiaries) to such Plan.
1.49 Medical Plan, when immediately preceded by "Parent," means the
portion of the Genesis Health Ventures, Inc. Health and Welfare Plan that
provides medical benefits to employees and retirees of Parent and certain Parent
Entities established, maintained, agreed upon or assumed by Parent or a Parent
Entity. When immediately preceded by ElderCare, Medical Plan means the portion
of the plan to be established by ElderCare pursuant to Section 2.3 that
corresponds to the Parent Medical Plan.
1.50 Non-Employee Director, means a member of the Board of Directors of
Parent or ElderCare, as applicable, who is not an employee of Parent, a Parent
Entity, ElderCare or an ElderCare Entity.
1.51 Non-parties is defined in Section 7.6(a)(ii).
1.52 Parent is defined in the Recitals to this Agreement.
1.53 Parent Common Stock has the meaning set forth in the Separation
and Distribution Agreement.
1.54 Parent Employee means an employee who is employed by Parent or a
Parent Entity following the Distribution Date.
1.55 Parent Entity means any Person that is, at the relevant time, an
Affiliate of Parent (it being understood that, for periods beginning on and
after the Distribution Date the term "Parent Entity" shall not include ElderCare
or an ElderCare Entity).
1.56 Parent Incentive Plan means the Genesis Health Ventures, Inc.
Incentive Compensation Program.
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1.57 Parent Leave of Absence Programs means the short-term disability
leave, sick leave, military leave, FMLA leave, bereavement leave, jury duty
leave and any other leave programs offered from time to time under the personnel
policies and practices of Parent.
1.58 Parent Transferred Employee means an individual who (a) on the
date hereof, is either actively employed by or on Leave of Absence from
ElderCare or an ElderCare Entity, if such individual is part of a work group or
organization that, at any time before the Close of the Distribution Date, moves
to the employ of Parent or a Parent Entity; (b) on the date hereof, is either
actively employed by or on Leave of Absence from a Parent Entity that becomes an
ElderCare Entity before the Close of the Distribution Date, if such individual,
at any time before the Close of the Distribution Date, moves to the employ of
Parent or a Parent Entity that does not become an ElderCare Entity before the
Close of the Distribution Date; or (c) on the date hereof, is either actively
employed by or on Leave of Absence from ElderCare or an ElderCare Entity in a
common support function, is at any time before the Close of the Distribution
Date designated by Parent for transfer to Parent or a Parent Entity and, at any
time after the date hereof and before the Close of the Distribution Date, moves
to the employ of Parent or a Parent Entity. In addition, Parent and ElderCare
may designate, by mutual agreement, any other individual or group of individuals
as Parent Transferred Employees.
1.59 Parent WCP means the Parent Workers' Compensation Program,
comprised of the certain arrangements established by Parent or a Parent Entity
to comply with the workers' compensation requirements of the states in which
Parent and its Affiliates conduct business.
1.60 Participating Company means, with respect to a Parent Plan, (a)
Parent, and (b) any Affiliate, that is, by the terms of such a Plan,
participating in such Plan or has any employees who are, by the terms of such
Plan, participating in such Plan.
1.61 Plan, when immediately preceded by "Parent" or "ElderCare," means
any plan, policy, program, payroll practice, on-going arrangement, contract,
trust, annuity contract, insurance policy or other agreement or funding vehicle
providing benefits to employees, former employees, dependents of employees or
former employees, or Non-Employee Directors of Parent or ElderCare or Parent and
ElderCare, as applicable, that is sponsored, maintained or contributed to by
Parent, a Parent Entity, ElderCare or an ElderCare Entity, as applicable.
1.62 QDRO means a domestic relations order which qualifies under
Section 414(p) of the Code and Section 206(d) of ERISA and which creates or
recognizes an alternate payee's right to, or assigns to an alternate payee, all
or a portion of the benefits payable to a participant under the Parent Savings
Plan.
1.63 QMCSO means a medical child support order which qualifies under
Section 609(a) of ERISA and which creates or recognizes an alternate recipient's
right to, or assigns to an alternate recipient the right to, receive benefits
for which a participant or beneficiary is eligible under a Parent Medical Plan.
1.64 Savings Plan(s), when immediately preceded by "Parent," means the
Genesis Health Ventures, Inc. Retirement Plan. When immediately preceded by
"ElderCare," Savings Plans means the ElderCare 401(k) Plan for Managed
Employees, the Union Savings Plans and the plan to be established by ElderCare
pursuant to Section 2.3 that corresponds to the Parent Savings Plan.
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1.65 Self-Insured Parent Plan is defined in Section 4.2.
1.66 Separation and Distribution Agreement is defined in the Recitals
to this Agreement.
1.67 Transition Date is defined in Section 4.1(ii).
1.68 Transition Period is defined in Section 4.1(ii).
1.69 True-Up Amount is defined in Section 4.2.
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ARTICLE II
GENERAL PRINCIPLES
2.1 Assumption of Liabilities. ElderCare hereby assumes and agrees to
pay, perform, fulfill and discharge, except as expressly provided in this
Agreement, in accordance with their respective terms, all of the following,
regardless of when or where such liabilities arose or arise or were or are
incurred: (a) all liabilities to or relating to ElderCare Individuals, and their
respective dependents and beneficiaries, in each case relating to, arising out
of or resulting from employment by Parent or a Parent Entity before becoming
ElderCare Individuals, including, without limitation, liabilities under the
ElderCare Plans other than, except as expressly provided in this Agreement,
liabilities under the Parent Plans; (b) all other liabilities to or relating to
ElderCare Individuals and their respective dependents and beneficiaries, in each
case relating to, arising out of or resulting from future, present or former
employment with ElderCare or an ElderCare Entity, including, without limitation,
liabilities under the ElderCare Plans and liabilities under the Parent Plans;
(c) all liabilities relating to, arising out of or resulting from any other
actual or alleged employment relationship with ElderCare or an ElderCare Entity,
including, without limitation, all liabilities relating to, arising out of or
resulting from any collective bargaining agreement covering any ElderCare
Individuals; and (d) all other liabilities relating to, arising out of or
resulting from obligations and responsibilities expressly assumed or retained by
ElderCare, an ElderCare Entity, or an ElderCare Plan pursuant to this Agreement.
2.2 ElderCare Participation in Parent Plans. Except as provided in
Article IV of this Agreement, effective as of the Close of the Distribution
Date, ElderCare and each ElderCare Entity shall cease to be a Participating
Company in any Parent Plan, and Parent and ElderCare and each ElderCare Entity
shall take all necessary action before the Distribution Date to effectuate such
cessation as a Participating Company.
2.3 Establishment of ElderCare Plans. Effective as of the Close of the
Distribution Date, ElderCare shall adopt, cause to be adopted, or shall assume,
as applicable, the ElderCare Savings Plan, ElderCare Deferral Plan, ElderCare
Bonus Plan, ElderCare Incentive Plan and ElderCare Executive Benefit Plans for
the benefit of ElderCare Individuals and other future and former employees of
ElderCare and the ElderCare Entities. Effective as of the Close of the
Transition Date, ElderCare shall adopt the ElderCare Flexible Benefits Plan and
the ElderCare Health and Welfare Plans for the benefit of ElderCare Individuals
and other future and former employees of ElderCare and the ElderCare Entities.
The foregoing ElderCare Plans as in effect as of the Close of the Distribution
Date or the Close of the Transition Date, as applicable, shall be substantially
identical in all Material Features to the corresponding Parent Plans as in
effect as of the Close of the Distribution Date or the Close of the Transition
Date, as applicable. Notwithstanding the foregoing, the ElderCare Incentive
Plans, the ElderCare Deferral Plan and the ElderCare Bonus Plan shall be adopted
by ElderCare and approved by Parent prior to the Distribution Date as sole
shareholder of ElderCare, to become effective as of the Distribution Date. The
ElderCare Incentive Plans and the ElderCare Bonus Plan shall be substantially
identical in all Material Features to the corresponding Parent Incentive Plans
and Bonus Plan, except that such ElderCare Incentive Plans shall, except as
specifically provided herein, provide for all stock-based awards to be based
upon ElderCare Common Stock rather than Parent Common Stock.
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2.4 Terms of Participation by ElderCare Individuals in ElderCare Plans.
The ElderCare Plans shall be, with respect to ElderCare Individuals, in all
respects the successors in interest to, and shall not provide benefits that
duplicate benefits provided by, the corresponding Parent Plans. Parent and
ElderCare shall agree on methods and procedures, including, without limitation,
amending the respective Plan documents, to prevent ElderCare Individuals from
receiving duplicative benefits from the Parent Plans and the ElderCare Plans.
With respect to ElderCare Individuals, each ElderCare Plan shall provide that
all service, all compensation and all other benefit-affecting determinations
that, as of the Close of the Distribution Date or as of the Transition Date, as
applicable, were recognized under the corresponding Parent Plan shall, as of
Immediately after the Distribution Date or Immediately after the Transition
Date, as applicable, receive full recognition, credit and validity and be taken
into account under such ElderCare Plan to the same extent as if such items
occurred under such ElderCare Plan, except to the extent that duplication of
benefits would result or for benefit accrual to the extent that ElderCare adopts
a final average pay defined benefit pension plan. The provisions of this
Agreement that provide for the transfer of assets from the Parent Plans to the
corresponding ElderCare Plans are based upon the understanding of the parties
that each such ElderCare Plan will assume all liabilities of the corresponding
Parent Plan to or relating to ElderCare Individuals, as provided for herein. If
any such liabilities are not effectively assumed by the appropriate ElderCare
Plan, then the amount of assets transferred to the ElderCare Plan from the
corresponding Parent Plan shall be recomputed, ab initio, as set forth below but
taking into account the retention of such liabilities by such Parent Plan, and
assets shall be transferred by the ElderCare Plan to the Parent Plan so as to
place each such Plan in the position it would have been in had the initial asset
transfer been made in accordance with such recomputed amount of assets.
2.5 Best Efforts. Parent and ElderCare shall use their reasonable best
efforts to (a) enter into any necessary agreements to accomplish the assumptions
and transfers contemplated by this Agreement; and (b) provide for the
maintenance of the necessary participant records, the appointment of the
trustees and the engagement of recordkeepers, investment managers, providers,
insurers, etc.
2.6 Regulatory Compliance. Parent and ElderCare shall, in connection
with the actions taken pursuant to this Agreement, cooperate in making any and
all appropriate filings required under the Code, ERISA and any applicable
securities laws, implementing all appropriate communications with participants,
transferring appropriate records and taking all such other actions as may be
necessary and appropriate to implement the provisions of this Agreement in a
timely manner.
ARTICLE III
DEFINED CONTRIBUTION PLANS
3.1 Defined Contribution Plans. As soon as practicable after the
Distribution Date, Parent shall cause the trustee of the master trust funding
the Parent Savings Plan to transfer to the trustee of the trust funding the
corresponding ElderCare Savings Plan the amounts described in Section 3.2. As of
the time of such transfer, the ElderCare Savings Plans shall assume and be
solely responsible for all liabilities to or relating to ElderCare Individuals
under the Parent Savings Plan. Parent agrees to provide to ElderCare, as soon as
practicable after the Distribution Date, a list of the ElderCare Individuals who
were participants in or are otherwise entitled to benefits under the Parent
Savings Plan, including descriptions of their respective account balances and
the protected benefits (within the meaning of Section 411(d)(6) of the Code)
attached to their accounts.
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3.2 Savings Plan Asset Transfer. For each asset transfer from the
Parent Savings Plan to the ElderCare Savings Plans pursuant to Section 3.1, the
amount transferred pursuant to this Section 3.2 shall equal the value of the
balances of all accounts of the participants in the Parent Savings Plan who are,
as of the date of transfer, Eldercare Individuals. Transfers of Parent Common
Stock and ElderCare Common Stock and outstanding participant loans shall be made
in kind. With respect to all other assets, Parent and ElderCare agree to use
their reasonable best efforts to make transfers in kind to the extent
practicable so as to preserve the investments of the ElderCare Individuals as in
effect on the date of such transfer. In determining whether an ElderCare
Individual is vested in his or her account under the ElderCare Savings Plan, the
ElderCare Savings Plans shall credit each ElderCare Individual with all the
ElderCare Individual's service credited under the Parent Savings Plan. As soon
as possible following the end of the plan year during which the Distribution
Date occurs (the "Match Date"), ElderCare shall contribute to the ElderCare
Savings Plans all matching contributions, if any, due to the ElderCare
Individuals pursuant to the terms and conditions of such ElderCare Savings Plans
(including any amounts due in respect of the portion of the plan year prior to
the Distribution Date). As soon as possible following the Match Date, Parent
shall pay to ElderCare an amount equal to fifty percent (50%) of the amount
contributed by ElderCare for the individuals set forth on Schedule D hereto who
are ElderCare Individuals pursuant to the immediately preceding sentence, and
ElderCare shall pay to Parent an amount equal to fifty percent (50%) of the
amount of the matching contributions contributed by Parent under the Parent
Savings Plans in respect of the plan year during which the Distribution Date
occurs for the individuals set forth on Schedule D hereto who are Parent
Employees.
3.3 Stock Considerations. As a result of Section 3.2 and to the extent
that, immediately prior to asset transfers under Section 3.2, the Parent Savings
Plan holds both Parent Common Stock and ElderCare Common Stock and shares of
such securities are transferred to the ElderCare Savings Plans pursuant to
Section 3.2, Parent and ElderCare shall assume sole responsibility for ensuring
that their respective Savings Plans are maintained in compliance with applicable
laws with respect to holding shares of common stock of the other entity.
ARTICLE IV
HEALTH AND WELFARE PLANS
4.1 Assumption of Health and Welfare Plans' Liabilities.
Except as specifically provided below, Parent shall retain:
(i) sponsorship of all Parent Health and Welfare
Plans
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(ii) if the Distribution occurs prior to December 31,
2003, ElderCare Individuals and their eligible covered dependents who are
participants in the Parent Health and Welfare Plans as of the Distribution Date
shall be eligible to continue to participate (or become participants in the case
of individuals hired by ElderCare during the time period from the Close of the
Distribution Date through the Transition Date (the "Transition Period")) in the
Parent Health and Welfare Plans through December 31, 2003 (the "Transition
Date") to the extent they continue to meet the requirements for such
participation (treating employment with ElderCare or an ElderCare Entity as if
it were employment with Parent).
(iii) Parent shall not assume or retain any liability
relating to health and welfare claims incurred by or on behalf of ElderCare
Individuals or their covered dependents that would result in payments to be made
by Parent after the Distribution Date, and such claims shall be satisfied
pursuant to Section 4.2.
(iv) If the Distribution occurs prior to December 31,
2003, ElderCare Individuals and their eligible covered dependents who are
participants in the Parent Flexible Benefits Plan as of the Distribution Date
shall be eligible to continue to participate (or become participants in the case
of individuals hired by ElderCare during the Transition Period) in the Parent
Flexible Benefits Plan through the Transition Date.
4.2 Health and Welfare Plan Transitional Coverage Rules. As of
Immediately after the Distribution Date, and for all periods thereafter, as soon
as practicable following the receipt by ElderCare from Parent of each xxxx
received by Parent on or following the Distribution Date in respect of the
Parent Health and Welfare Plans as in effect prior to the Distribution Date or
during the Transition Period (each, a "Health and Welfare Xxxx"), (i) with
respect to each Parent Health and Welfare Plan that is a self-insured plan
(each, a "Self-Insured Parent Plan"), ElderCare shall pay to Parent in each case
an amount equal to the product of (x) the total amount of the Health and Welfare
Xxxx that is attributable to the applicable Self-Insured Parent Plan minus any
stop-loss or any other reimbursements due to participating employees under such
Self-Insured Plan and (y) a fraction, the denominator of which is the total
number of individuals (including covered dependents) enrolled in such Parent
Health and Welfare Plan, in respect of which the applicable Health and Welfare
Xxxx is received, for the monthly enrollment period in which the date that is
two months prior to the receipt of such Health and Welfare Xxxx occurs (the
"Enrolled Total") and the numerator of which is the number of the individuals
constituting the Enrolled Total that is the sum of the ElderCare Individuals and
their covered dependents, and (ii) with respect to each Parent Health and
Welfare Plan that is not a Self-Insured Parent Plan (each, an "Insured Parent
Plan"), ElderCare shall pay to Parent in each case an amount equal to the
product of (x) the total amount of the Health and Welfare Xxxx that is
attributable to the applicable Insured Parent Plan and (y) a fraction, the
denominator of which is the total number of individuals (including covered
dependents) enrolled in such Parent Health and Welfare Plan, in respect of which
the applicable Health and Welfare Xxxx is received, for the monthly enrollment
period with respect to which such Health and Welfare Xxxx is received (the
"Insured Enrolled Total") and the numerator of which is the number of the
individuals constituting the Insured Enrolled Total that is the sum of ElderCare
Individuals and their covered dependents (each of the payments contemplated by
clauses (i) and (ii) above, an "Initial Payment"). Parent shall, to the extent
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practicable, keep a separate account of the actual cost of the participation of
ElderCare Individuals in the Parent Health and Welfare Plans for the bills
reflected above (the "Coverage Account"). As soon as practicable after January
1, 2005, KPMG Peat Marwick, or such other nationally recognized accounting firm
as may be agreed upon by Parent and ElderCare (the "Accounting Firm"), shall, as
nearly as reasonably possible, determine the excess, if any, of (y) the amount
represented by the Coverage Account over (z) the total amount of all Initial
Payments (the "True-Up Amount"). If the True-Up Amount is a positive number,
ElderCare shall pay to Parent an amount equal to the True-Up Amount, and if the
True-Up Amount is a negative number, Parent shall pay to ElderCare an amount
equal to the difference between the Initial Payment and the amount represented
by the Coverage Account. Such payment shall be made as soon as practicable
following the determination by the Accounting Firm. The expenses of the
Accounting Firm shall be shared equally by Parent and ElderCare.
4.3 Post-Transition Date Coverage. (a) Immediately after the Transition
Date, ElderCare Individuals and their eligible covered dependents shall cease to
participate in the Parent Health and Welfare Plans and shall be eligible to
participate in the corresponding ElderCare Health and Welfare Plans, but without
regard for any requirements of proof of insurability and without regard to any
restrictions or limitations with respect to any pre-existing condition, provided
that such pre-existing condition is otherwise a covered condition under the
terms of such plan. Subject to the agreement of any applicable insurer, all
compensation, periods of service, benefit elections, deductible payments,
payments toward the applicable out-of-pocket maximums and other
benefit-affecting determinations affecting ElderCare Individuals that, as of the
Close of the Transition Date, were recognized under the Parent Health and
Welfare Plans shall receive full recognition, credit and validity and be taken
into account under the ElderCare Health and Welfare Plans Immediately after the
Transition Date in a manner consistent with the manner in which such
benefit-affecting determinations were treated under the terms of the Parent
Health and Welfare Plans immediately prior to the Close of the Transition Date.
Immediately after the Transition Date, ElderCare Individuals and their eligible
covered dependents shall cease to participate in the Parent Flexible Benefits
Plan and shall be eligible to participate in the corresponding ElderCare
Flexible Benefits Plan.
4.4 Vendor Contracts.
(a) Third-Party ASO Contracts.
(i) Parent and ElderCare shall use their reasonable
best efforts to amend each administrative-services-only contract with a
third-party administrator that relates to any of the Parent Health and Welfare
Plans (an "ASO Contract") in existence as of the date of this Agreement that is
applicable to ElderCare Individuals to permit ElderCare to participate in the
terms and conditions of such ASO Contract from Immediately after the
Distribution Date through the Transition Date. Parent and ElderCare shall use
their reasonable best efforts to cause all ASO Contracts entered into after the
date of this Agreement but before the Close of the Distribution Date to allow
ElderCare to participate in the terms and conditions thereof effective
Immediately after the Distribution Date on the same or similar basis as Parent.
(ii) The permissible ways in which ElderCare's
participation may be effectuated include automatically making ElderCare a party
to the ASO Contracts or obligating the third party to enter into a separate ASO
Contract with ElderCare providing for the same terms and conditions as are
contained in the ASO Contracts to which Parent is a party. Such terms and
conditions shall include the financial and termination provisions, performance
standards, methodology, auditing policies, quality measures and reporting
requirements.
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(b) Group Insurance Policies.
(i) This Section 4.4(b) applies to group insurance
policies not subject to allocation or transfer pursuant to the foregoing
provisions of this Article IV ("Group Insurance Policies").
(ii) Parent and ElderCare shall use their reasonable
best efforts to amend each Group Insurance Policy in existence as of the date of
this Agreement that is applicable to ElderCare Individuals for the provision or
administration of benefits under the Parent Health and Welfare Plans to permit
ElderCare to participate in the terms and conditions of such policy from
Immediately after the Distribution Date through the Transition Date. Parent and
ElderCare shall use their reasonable best efforts to cause all Group Insurance
Policies that are applicable to ElderCare Individuals entered into or renewed
after the date of this Agreement but before the Close of the Distribution Date
to allow ElderCare to participate in the terms and conditions thereof effective
Immediately after the Distribution Date on the same basis as Parent.
(iii) ElderCare's participation in the terms and
conditions of each such Group Insurance Policy shall be effectuated by
obligating the insurance company that issued such insurance policy to Parent to
issue one or more separate policies to ElderCare. Such terms and conditions
shall include, without limitation, the financial and termination provisions,
performance standards and target claims.
(c) HMO Agreements.
(i) Parent and ElderCare shall use their reasonable
best efforts to amend all agreements with HMOs that provide medical services
under the Parent Medical Plan ("HMO Agreements") in existence as of the date of
this Agreement that are applicable to ElderCare Individuals to permit ElderCare
to participate in the terms and conditions of such HMO Agreements, in each case,
from Immediately after the Distribution Date through the Transition Date. Parent
and ElderCare shall use their reasonable best efforts to cause all HMO
Agreements entered into after the date of this Agreement but before the Close of
the Distribution Date to allow ElderCare to participate in the terms and
conditions of such HMO Agreements from Immediately after the Distribution Date
through the Transition Date on the same basis as Parent.
(ii) The permissible ways in which ElderCare's
participation may be effectuated include, without limitation, automatically
making ElderCare a party to the HMO Agreements or obligating the HMOs to enter
into agreements with ElderCare that are identical to the HMO Agreements. Such
terms and conditions shall include, without limitation, the financial and
termination provisions of the HMO Agreements.
(d) Effect of Change in Rates. Parent and ElderCare shall use
their reasonable best efforts to cause each of the insurance companies, HMOs and
third-party administrators providing services and benefits under the Parent
Health and Welfare Plans and the ElderCare Health and Welfare Plans to maintain
the premium and/or administrative rates based on the aggregate number of
participants in both the Parent Health and Welfare Plans and the ElderCare
Health and Welfare Plans through the Transition Date. To the extent they are not
successful in such efforts, Parent and ElderCare shall each bear the revised
premium or administrative rates attributable to the individuals covered by their
respective Health and Welfare Plans.
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4.5 COBRA and HIPAA Compliance. Parent shall be responsible for
administering compliance with the health care continuation requirements of
COBRA, the certificate of creditable coverage requirements of HIPAA, and the
corresponding provisions of the Parent Health and Welfare Plans with respect to
ElderCare Individuals and their covered dependents who incur a COBRA qualifying
event or loss of coverage under the Parent Health and Welfare Plans at any time
on or before the Close of the Transition Date. Parent shall keep a separate
account of the costs of such COBRA compliance administration that are incurred
and paid for by Parent with respect to any ElderCare Individuals and their
covered dependents at any time during the period from the Close of the
Distribution Date through the Close of the Transition Date (the "COBRA
Transition Account"). As soon as practicable following the Transition Date,
ElderCare shall pay to Parent an amount equal to the amount set forth in the
COBRA Transition Account. Effective Immediately after the Transition Date,
ElderCare shall be responsible for administering compliance with the health care
continuation requirements of COBRA, the certificate of creditable coverage
requirements of HIPAA, and the corresponding provisions of the ElderCare Health
and Welfare Plans with respect to ElderCare Individuals and their covered
dependents who incur a COBRA qualifying event or loss of coverage under the
ElderCare Health and Welfare Plans at any time after the Close of the
Distribution Date.
4.6 Leave of Absence Programs. Effective Immediately after the
Distribution Date: (i) ElderCare shall adopt, and shall cause each ElderCare
Entity to adopt, leave of absence programs that are substantially identical in
all Material Features to the Parent Leave of Absence Programs as in effect on
the Distribution Date; (ii) ElderCare shall honor, and shall cause each
ElderCare Entity to honor, all terms and conditions of leaves of absence which
have been granted to any ElderCare Individual under a Parent Leave of Absence
Program before the Close of the Distribution Date by Parent, ElderCare, or an
ElderCare Entity, including, without limitation, such leaves that are to
commence after the Distribution Date; (iii) each party shall be solely
responsible for administering leaves of absence and compliance with FMLA with
respect to their employees; and (iv) ElderCare and each ElderCare Entity shall
recognize all periods of service of ElderCare Individuals with Parent or a
Parent Entity, as applicable, to the extent such service is recognized by Parent
for the purpose of eligibility for leave entitlement under the Parent Leave of
Absence Programs; provided, that no duplication of benefits shall be required by
the foregoing.
4.7 Workers' Compensation Liabilities. All workers' compensation
liabilities that are outstanding as of the Close of the Distribution Date or
that become outstanding following the Close of the Distribution Date and that
relate to, arise out of, or result from any claim by an ElderCare Individual,
which claim results from an accident occurring, or from an occupational disease
which becomes manifest, before, on or following the Distribution Date and while
such ElderCare Individual was employed by ElderCare or another ElderCare Entity
shall be assumed or retained by ElderCare. Parent, ElderCare, the Parent
Entities and the other ElderCare Entities shall cooperate with respect to any
notification to appropriate governmental agencies of the Distribution and the
issuance of new, or the transfer of existing, workers' compensation insurance
policies and claims handling contracts.
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ARTICLE V
EXECUTIVE BENEFITS
5.1 Change of Control. Except as provided in this Agreement, effective
Immediately after the Distribution Date, ElderCare shall assume and be solely
responsible for all liabilities to or relating to ElderCare Individuals under
all Parent Executive Benefit Plans. None of the transactions contemplated by the
Separation and Distribution Agreement or any of the Ancillary Agreements,
including, without limitation, this Agreement constitute a change in control for
purposes of any Executive Benefit Plan.
5.2 Consents, Notifications and Assignments. Parent and ElderCare shall
use their reasonable best efforts to obtain, or cause to be obtained, to the
extent necessary, the written consent of each ElderCare Individual who is a
party to an Individual Agreement to the treatment of such Individual Agreement
in accordance with this Article V, including, without limitation, the assumption
by ElderCare of sole responsibility for, and the release of Parent from, all
liabilities thereunder; provided, that no failure to seek or to obtain any such
consent shall have any effect upon the obligations of ElderCare with respect to
such liabilities.
5.3 Genesis Health Ventures, Inc. 2001 Deferred Compensation Plan. As
soon as practicable after the Distribution Date, Parent shall cause the trustee
of the trust funding the Parent Deferral Plan to transfer to the trustee of the
trust funding the corresponding ElderCare Deferral Plan an amount equal to the
value of the balances of all accounts of the participants in the Parent Deferral
Plan who are, as of the date of transfer, ElderCare Individuals and who have so
elected to have their account balances transferred.
ARTICLE VI
OTHER BENEFITS
6.1 Severance. As of Immediately after the Distribution Date, ElderCare
shall assume all liabilities to Former ElderCare Individuals under the Parent
severance plan or policy as in effect on the Distribution Date.
6.2 Parent Bonus Plan. (a) ElderCare shall advise and direct Parent in
determining all awards that would otherwise be payable under the Parent Bonus
Plan to ElderCare Individuals for the fiscal year ending September 30, 2003, and
shall advise and direct Parent in determining for ElderCare Individuals (i) the
extent to which established performance criteria have been met, and (ii) the
payment level for each ElderCare Individual. Parent shall use all reasonable
efforts to award the amounts under the Parent Bonus Plan as determined by
ElderCare as provided under this Section 6.2. ElderCare shall assume and
directly pay when due all liabilities with respect to any such awards payable to
ElderCare Individuals for the fiscal year ending September 30, 2003. As soon as
possible following the payment of awards to ElderCare Individuals for the fiscal
year ending September 30, 2003, Parent shall pay to ElderCare an amount equal to
fifty percent (50%) of the amount awarded by ElderCare to the individuals set
forth on Schedule E hereto who are ElderCare Individuals, and ElderCare shall
pay to Parent an amount equal to fifty percent (50%) of the amount of the awards
paid by Parent under the Parent Bonus Plan in respect of the plan year during
which the Distribution Date occurs for the individuals set forth on Schedule E
hereto who are Parent Employees.
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(b) ElderCare shall be responsible for determining and paying
for all awards that may be payable under the ElderCare Bonus Plan to ElderCare
Individuals for the 2004 fiscal year and thereafter.
ARTICLE VII
GENERAL AND ADMINISTRATIVE
7.1 Payment of Administrative Costs and Expenses. Parent and ElderCare
shall each be responsible for their allocable share of such budgeted costs and
any increases in such budgeted costs through December 31, 2003 (or, if later,
the Distribution Date) incurred in the administration of the Parent Plans;
including, without limitation, (i) all external administrative costs for
management of assets, recordkeeping, communications, benefit delivery, insurance
fees and commissions, consultant, accounting, actuarial and legal expenses,
printing, photocopying, mailing and other expenses; and (ii) all COBRA
administrative expenses. To the extent such administrative expenses are not
chargeable to the trusts established to fund the Plans pursuant to the
guidelines in effect at the time, effective for periods on or after December 31,
2003, ElderCare shall pay to Parent its allocable share of the total costs which
shall be determined through the cycle billing process based on the corporate
divisions constituting part of the ElderCare Business, as set forth on Schedule
F, consistent with past practice. With respect to any corporate staff costs or
additional unanticipated expenses that are not billed through the cycle billing
process, ElderCare shall pay to Parent its allocable share of the total costs
which shall be based on a head count of ElderCare Individual, or, in the event
such costs are fixed costs that cannot be allocated on such basis, ElderCare's
allocable share shall be equal to one half (1/2) of such costs.
7.2 Payment of Liabilities, Plan Expenses and Related Matters.
(a) Actuarial and Accounting Methodologies and Assumptions. For
purposes of this Agreement, unless specifically indicated otherwise: the value
of plan assets shall be the value established for purposes of audited financial
statements of the relevant plan or trust for the period ending on the date as of
which the valuation is to be made. ElderCare liabilities relating to, arising
out of or resulting from the status of ElderCare and the ElderCare Entities as
Participating Companies in Parent Plans, as provided for in Section 2.2 and all
accruals relating thereto shall be determined by Parent using actuarial
assumptions and methodologies, including, without limitation, assumptions with
respect to demographics, medical trends and other relevant factors, determined
by Parent in a manner consistent with Parent's practice as in effect immediately
before the Distribution Date and in conformance with the generally accepted
actuarial principles promulgated by the American Academy of Actuaries, the Code,
ERISA, and/or generally accepted accounting principles, as applicable, in each
case as interpreted by Parent consistent with Parent's past practice. Except as
otherwise contemplated by this Agreement or as required by law, all
determinations as to the amount or valuation of any assets of or relating to any
Parent Plan, whether or not such assets are being transferred to an ElderCare
Plan, shall be made pursuant to procedures to be established by the parties
before the Distribution Date.
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(b) Contributions to Trusts. To the extent consistent with past
practice, ElderCare shall pay its share of any contributions made to any trust
maintained in connection with a Parent Plan with respect to any period while
ElderCare or an ElderCare Entity is a Participating Company in that Parent Plan.
7.3 Sharing of Participant Information. Parent and ElderCare shall
share, Parent shall cause each applicable Parent Entity to share, and ElderCare
shall cause each applicable ElderCare Entity to share, with each other and their
respective agents and vendors, without obtaining releases, all participant
information necessary for the efficient and accurate administration of each of
the Parent Plans and the ElderCare Plans in accordance with the terms of this
Agreement. For periods beginning on the Distribution Date, Parent and ElderCare
shall coordinate access to information through their respective departments of
human resources. Parent and ElderCare and their respective authorized agents
shall, subject to applicable laws on confidentiality, be given reasonable and
timely access to, and may make copies of, all information relating to the
subjects of this Agreement in the custody of the other party, to the extent
necessary for such administration. Until December 31, 2004, all participant
information shall be provided in the manner and medium in effect as of the Close
of the Distribution Date, unless otherwise agreed to by Parent and ElderCare.
7.4 Reporting and Disclosure and Communications to Participants. Parent
and ElderCare shall assist each other in complying with all reporting and
disclosure requirements of ERISA, including, without limitation, the preparation
of Form 5500 annual reports for the Parent Plans and the ElderCare Plans, where
applicable.
7.5 Non-Termination of Employment; No Third-Party Beneficiaries. No
provision of this Agreement or the Separation and Distribution Agreement shall
be construed to create any right, or accelerate entitlement, to employment or to
any compensation or benefit whatsoever on the part of any ElderCare Individual,
Parent Employee or other future, present or former employee of Parent, a
Parent Entity, ElderCare, or an ElderCare Entity under any Parent Plan or
ElderCare Plan or otherwise. Without limiting the generality of the foregoing:
(a) neither the Distribution nor the termination of the Participating Company
status of ElderCare or an ElderCare Entity shall cause any employee to be deemed
to have incurred a termination of employment which entitles such individual to
the commencement of benefits under any of the Parent Plans, any of the ElderCare
Plans, or any of the Individual Agreements; and (b) except as expressly provided
in this Agreement, nothing in this Agreement shall preclude ElderCare, at any
time after the Close of the Distribution Date, from amending, merging,
modifying, terminating, eliminating, reducing, or otherwise altering in any
respect any ElderCare Plan, any benefit under any Plan or any trust, insurance
policy or funding vehicle related to any ElderCare Plan.
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7.6 Plan Audits.
(a) Audit Rights With Respect to Information Provided.
(i) Each of Parent and ElderCare, and their duly
authorized representatives, shall have the right to conduct audits with respect
to all information provided to it by the other party. The party conducting the
audit (the "Auditing Party") shall have the sole discretion to determine the
procedures and guidelines for conducting audits and the selection of audit
representatives under this Section 7.6(a). The Auditing Party shall have the
right to make copies of any records at its expense, subject to the
confidentiality provisions set forth in the Separation and Distribution
Agreement, which are incorporated by reference herein. The party being audited
shall provide the Auditing Party's representatives with reasonable access during
normal business hours to its operations, computer systems and paper and
electronic files, and provide workspace to its representatives. After any audit
is completed, the party being audited shall have the right to review a draft of
the audit findings and to comment on those findings in writing within five
business days after receiving such draft.
(ii) The Auditing Party's audit rights under this
Section 7.6(a) shall include the right to audit, or participate in an audit
facilitated by the party being audited, of any Subsidiaries and Affiliates of
the party being audited and of any benefit providers and third parties with whom
the party being audited has a relationship, or agents of such party, to the
extent any such persons are affected by or addressed in this Agreement
(collectively, the "Non-parties"). The party being audited shall, upon written
request from the Auditing Party, provide an individual (at the Auditing Party's
expense) to supervise any audit of a Non-party. The Auditing Party shall be
responsible for supplying, at the Auditing Party's expense, additional personnel
sufficient to complete the audit in a reasonably timely manner. The
responsibility of the party being audited shall be limited to providing, at the
Auditing Party's expense, a single individual at each audited site for purposes
of facilitating the audit.
(b) Audits Regarding Vendor Contracts. To the extent permitted
under HIPAA, from Immediately after the Distribution Date through September 30,
2004, Parent and ElderCare and their duly authorized representatives shall have
the right to conduct joint audits with respect to any vendor contracts that
relate to both the Parent Health and Welfare Plans and the ElderCare Health and
Welfare Plans. The scope of such audits shall encompass the review of all
correspondence, account records, claim forms, canceled drafts (unless retained
by the bank), provider bills, medical records submitted with claims, billing
corrections, vendor's internal corrections of previous errors and any other
documents or instruments relating to the services performed by the vendor under
the applicable vendor contracts. Parent and ElderCare shall agree on the
performance standards, audit methodology, auditing policy and quality measures
and reporting requirements relating to the audits described in this Section 7.6
and the manner in which costs incurred in connection with such audits will be
shared.
7.7 Beneficiary Designations. All beneficiary designations made by
ElderCare Individuals for Parent Plans shall be transferred to and be in full
force and effect under the corresponding ElderCare Plans until such beneficiary
designations are replaced or revoked by the ElderCare Individual who made the
beneficiary designations.
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7.8 Requests for IRS Rulings and DOL Opinions.
(a) Cooperation. ElderCare shall cooperate fully with Parent on
any issue relating to the transactions contemplated by this Agreement for which
Parent elects to seek a determination letter or private letter ruling from the
IRS or an advisory opinion from the DOL. Parent shall cooperate fully with
ElderCare with respect to any request for a determination letter or private
letter ruling from the IRS or advisory opinion from the DOL with respect to any
of the ElderCare Plans relating to the transactions contemplated by this
Agreement.
(b) Life Insurance. To the extent the transfer or allocation of
all or a portion of any life insurance policies results in any adverse tax or
legal consequences, including, without limitation, (i) any finding that such
transfer results in the creation of a modified endowment contract within the
meaning of Section 7702A of the Code, a transfer for valuable consideration
within the meaning of Section 101(a) of the Code, or a lack of insurable
interest for either Parent or ElderCare (or their respective trusts, if any), or
(ii) multiple claims for insurance proceeds, Parent and ElderCare shall take
such steps as may be necessary to contest any such finding and, to the extent of
any final determination that such adverse tax or legal consequences will result,
Parent and ElderCare shall make such further adjustments so as to place both
parties in the proportionate financial position that they each would have been
in relative to the other but for such adverse tax or legal consequences.
7.9 Fiduciary Matters.
(a) Fiduciary Status. Parent and ElderCare each acknowledges
that certain actions required to be taken pursuant to this Agreement may be
subject to fiduciary duties or standards of conduct under ERISA or other
applicable law, and no party shall be deemed to be in violation of this
Agreement if it fails to comply with any provisions hereof based upon its good
faith determination that to do so would violate such a fiduciary duty or
standard.
(b) Independent Fiduciary. ElderCare shall retain the right to
retain a fiduciary, auditor or accounting firm independent of Parent to review
and approve the types and value of the assets to be transferred to the ElderCare
Plans from the Parent Plans as described in Article III and Article IV of this
Agreement to the extent that such Plans are subject to Part 4 of Title I of
ERISA. The foregoing shall not prevent ElderCare from engaging any fiduciaries
for any other purposes.
7.10 Payroll Taxes and Reporting of Compensation. Pursuant to the
alternative procedure prescribed by Section 5 of Revenue Procedure 84-17, (a)
Parent and ElderCare shall report on a "predecessor-successor" basis with
respect to each ElderCare Individual; (b) ElderCare shall assume Parent's entire
obligation to prepare, file and furnish Forms W-2 for the calendar year in which
the Distribution occurs, and process garnishments and wage assignments with
respect to each ElderCare Individual; (c) Parent shall be relieved of any
obligation to provide Forms W-2 and process garnishments and wage assignments to
each ElderCare Individual for the calendar year in which the Distribution
occurs; and (d) Parent and ElderCare will work in good faith to adopt similar
procedures under applicable state or local laws and will cooperate with each
other in preparing filings and forms relating to such procedures.
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7.11 Collective Bargaining. To the extent any provision of this
Agreement is contrary to the provisions of any collective bargaining agreement
to which Parent or any Affiliate of Parent is a party, the terms of such
collective bargaining agreement shall prevail. Should any provisions of this
Agreement be deemed to relate to a topic determined by an appropriate authority
to be a mandatory subject of collective bargaining, Parent or ElderCare may be
obligated to bargain with the union representing affected employees concerning
those subjects.
7.12 Consent of Third Parties. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor or a union) and
such consent is withheld, Parent and ElderCare shall use their reasonable best
efforts to implement the applicable provisions of this Agreement to the full
extent practicable. If any provision of this Agreement cannot be implemented due
to the failure of such third party to consent, Parent and ElderCare shall
negotiate in good faith to implement the provision in a mutually satisfactory
manner. The phrase "reasonable best efforts" as used herein shall not be
construed to require the incurrence of any non-routine or unreasonable expense
or liability or the waiver of any right.
ARTICLE VIII
MISCELLANEOUS
8.1 Effect if Distribution Does Not Occur. If the Distribution does not
occur, then all actions and events that are, under this Agreement, to be taken
or occur effective as of the Close of the Distribution Date, Immediately after
the Distribution Date, or otherwise in connection with the Distribution or the
Transition Date or the Transfer Date, shall not be taken or occur except to the
extent specifically agreed by ElderCare and Parent.
8.2 Relationship of Parties. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating the relationship of
principal and agent, partnership or joint venture between the parties, it being
understood and agreed that no provision contained herein, and no act of the
parties, shall be deemed to create any relationship between the parties other
than the relationship set forth herein.
8.3 Affiliates. Each of Parent and ElderCare shall cause to be
performed, and hereby guarantees the performance of, all actions, agreements and
obligations set forth in this Agreement to be performed by a Parent Entity or an
ElderCare Entity, respectively.
8.4 Incorporation of Separation and Distribution Agreement Provisions.
The following provisions of the Separation and Distribution Agreement are hereby
incorporated herein by reference, and unless otherwise expressly specified
herein, such provisions shall apply as if fully set forth herein (references in
this Section 8.4 to an "Article" or "Section" shall mean Articles or Sections of
the Separation and Distribution Agreement, and, except as expressly set forth
below, references in the material incorporated herein by reference shall be
references to the Separation and Distribution Agreement): Article V
Indemnification; Article VI Exchange of Information, Confidentiality; Article
VII Further Assurances and Additional Covenants; Article VIII Termination; and
Article X Miscellaneous, other than Section 10.3 Governing Law.
8.5 Governing Law. To the extent not preempted by applicable Federal
law, this Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware (other than the laws regarding choice of laws and
conflicts of laws that would apply the substantive laws of any other
jurisdiction) as to all matters, including, without limitation, matters of
validity, construction, effect, performance and remedies.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
GENESIS HEALTH VENTURES INC.
By:__________________________________
Name: Xxxxxx X. Xxxx
Title: Chairman of the Board and CEO
GENESIS HEALTHCARE CORPORATION
By:__________________________________
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
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