Exhibit 10.8
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is made as of this 25th day
of November, 2003, by and between GENESIS HEALTHCARE CORPORATION, a Pennsylvania
corporation (the "Company"), and XXXXXX XXXXX ("Executive") and shall be
effective as of the date upon which the Distribution (as defined below) is
consummated, provided such date occurs on or prior to March 31, 2004 (the
"Effective Date").
WHEREAS, the Company desires to employ Executive, and Executive desires
to be employed by the Company, in accordance with the terms and conditions
stated below;
WHEREAS, the Executive currently is employed by Genesis Health
Ventures, Inc. ("GHVI") pursuant to an employment agreement dated October 2,
2001 (the "Current Employment Agreement");
WHEREAS, it is the intent of the parties that upon the Effective Date
the Current Employment Agreement shall be superseded by this Agreement;
WHEREAS, the Company and GHVI are negotiating 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 (each as defined in the Separation and
Distribution Agreement) and the relationship of the Company, GHVI, and their
respective subsidiaries following the Distribution;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Employment. The Company agrees to employ Executive, and Executive is willing
to accept such employment, for the period stated in Section 2 hereof and upon
the terms and conditions herein provided.
2. Term.
2.1 Relevant Dates. The period of Executive's employment under this
Agreement shall commence on the Effective Date, and shall, unless sooner
terminated pursuant to Section 6, continue for a two-year period (such period,
as extended from time to time, herein referred to as the "Term"). Subject to
Section 2.2, and if the Term has not been terminated pursuant to Section 6, on
the first anniversary of this Agreement and on each successive anniversary
thereafter (each such anniversary an "Automatic Extension") the Term shall be
extended for an additional period of one year.
2.2 Non-Extension Procedure. The Company (with the affirmative vote of
two-thirds (2/3) of the non-management membership of the Board of Directors of
the Company (the "Board") at a meeting of the Board called and held for such
purpose) or Executive may elect to terminate the automatic extension of this
Agreement described in Section 2.1 by giving written notice of such election.
Any notice given hereunder must be given not less than sixty (60) days prior to
the applicable Automatic Extension date.
3. Position and Responsibilities.
3.1 Position. As of the Effective Date, the Company agrees to employ
Executive in the position of Chief Executive Officer of the Company, and to
cause Executive to be appointed to the Board. The Company agrees to nominate
Executive for a position on the Board as of each relevant period relating to the
election of directors to the Board, and anticipates that, as of such time as may
be determined by the Board, Executive will be appointed to the position of
Chairman of the Board (such date, if any, Executive becomes the Chairman of the
Board, the "Chairman Appointment Date"). Executive agrees to perform such
services and have such duties and responsibilities, not inconsistent with his
position as Chief Executive Officer or Chairman of the Board, as applicable,
customarily associated with and incidental to such positions and as may from
time to time be reasonably assigned to him by the Board. Executive further
agrees to serve as an executive officer or director of any subsidiaries of the
Company without additional compensation.
3.2 Duties. During the period of his employment hereunder Executive
shall devote all of his business time, attention, skill and efforts to the
xxxxxxx and faithful performance of his duties; provided, however, that
Executive may serve as a member of the board of directors of corporations or
similar positions with other organizations which, in the Board's reasonable
judgment, will not present any conflict of interest with the Company or any of
its subsidiaries, or materially interfere with the performance of Executive's
services, duties or responsibilities pursuant to this Agreement. Executive has
disclosed to the Board all current boards of directors on which he is a member
and shall disclose any additional boards of directors that Executive desires to
join. Nothing in this Agreement shall preclude Executive from engaging in
charitable and community affairs, or from managing his personal investments,
provided, that these activities do not interfere with the performance of
Executive's duties and responsibilities hereunder or violate the provisions of
Section 10 of this Agreement.
3.3 Place of Employment. Executive shall perform his duties hereunder
at the Company's executive offices in Kennett Square, Pennsylvania, and shall
travel to the Company's other offices or locations as may be necessary or
appropriate for him to perform his duties hereunder.
4. Compensation and Benefits.
4.1 Salary. For all services rendered by Executive as Chief Executive
Officer of the Company, Chairman of the Board, or as an officer or director of
any subsidiary of the Company during his employment under this Agreement, the
Company shall pay Executive a base salary at the annual rate of $600,000. During
the Term, Executive's base salary shall be reviewed at least annually, with the
first such annual review on the first anniversary of this Agreement. Such review
shall be conducted by a committee comprised of individuals designated by the
Board from its members (the "Compensation Committee"), and the Compensation
Committee may increase said base salary. The annual base salary payable to
Executive in any year is referred to herein as the "Base Salary" for such year.
4.2 Annual Bonus. For each fiscal year of the Company during the Term,
the Company shall afford Executive the opportunity to earn an incentive bonus
("Bonus") equal to one hundred percent (100)% of the Base Salary for such fiscal
year, and shall be payable to the extent the applicable performance goals are
achieved (which goals shall be set by the Compensation Committee within the
first three (3) months of each such year), but only upon certification by the
Compensation Committee that the applicable goals have been achieved.
4.3 Equity Incentive.
(a) Stock Option. The Company shall, pursuant to the terms of
its stock option plan or any similar plan, grant to Executive as of the "Option
Grant Dates" (as defined below), one or more options (the "Stock Options") to
acquire an aggregate of 250,000 shares of common stock of the Company ("Company
Stock"). The Option Grant Dates shall be on the fifth (5th), eleventh (11th),
seventeenth (17th) and twenty-third (23rd) trading days following the Effective
Date. A Stock Option for 62,500 shares of Company Stock shall be granted on each
of the Option Grant Dates. The exercise price per share of the Company Stock
subject to the Stock Options shall be the closing price of the Company Stock on
the Option Grant Date for the applicable Stock Option. The Stock Options shall
vest with respect to the shares subject thereto in equal installments of
twenty-five percent (25%) on the Option Grant Date for the applicable Stock
Option and twenty-five percent (25%) on each of the first three (3)
anniversaries of the Effective Date; provided, that Executive remains employed
with the Company on each such anniversary. Notwithstanding the foregoing, the
Stock Options shall fully and immediately vest on (i) a Change in Control (as
defined in Section 6.5), (ii) any termination of Executive's employment with the
Company by the Company without Cause (as defined in Section 6.3(b)) or because
of Executive's death or Disability (as defined in Section 6.2), (iii) any
termination of Executive's employment by Executive's resignation for Good Reason
(as defined in Section 6.4) or (iv) as a result of the Company's failure to
automatically extend the Term pursuant to Section 2.2 (a "Non-Extension"). The
Stock Options shall have a scheduled ten (10) year term. The Stock Options shall
be "incentive stock options" to the fullest extent permitted by law.
(b) Restricted Stock Award. The Company anticipates that,
beginning in the first calendar year following the Effective Date, Executive may
be eligible to receive grants of restricted stock as determined by the
Compensation Committee, on similar terms and vesting schedules as provided to
other executive officers of the Company generally.
4.5 Participation in Benefit Plans. (a) Executive shall be entitled to
participate in each employee benefit plan or perquisite applicable generally to
executive officers of the Company (including health insurance, long-term
disability, qualified and non-qualified retirement plans, if any, and deferred
compensation benefits, but excluding any severance benefit or termination pay
plan) in accordance with the provisions thereof. Notwithstanding the foregoing,
Executive shall not be entitled to receive any additional benefits or awards
under discretionary plans or programs of the Company unless the Compensation
Committee exercises the necessary discretion to provide Executive with such
benefits or awards.
(b) During the Term, Executive shall be entitled to $3 million
of "whole life" life insurance coverage.
4.6 Vacation and Holidays. Executive shall be entitled to vacation in
accordance with the Company's vacation policy in effect from time to time for
its executive officers, but not less than five (5) weeks in each full calendar
year. Executive shall also be entitled to all paid holidays given by the Company
to its executive officers. Vacation days that are not used during any calendar
year may not be accrued, nor shall Executive be entitled to compensation for
unused vacation days.
5. Reimbursement of Expenses. The Company shall pay or reimburse Executive for
all reasonable business expenses incurred by Executive in performing his
obligations under this Agreement in accordance with its business expense
policies in effect from time to time.
6. Events of Termination of Employment.
6.1 Expiration of Term. Executive's employment with the Company and its
subsidiaries shall cease automatically on the expiration of the Term.
6.2 Death or Disability. Executive's employment with the Company and
its subsidiaries shall automatically terminate on Executive's death. Executive's
employment shall terminate thirty (30) days after Executive is notified that his
employment is terminated for Disability (provided, that Executive shall not have
returned to the performance of his duties on a full-time basis during such
thirty (30) day period). For purposes of this Agreement, "Disability" means an
incapacity due to a physical or mental condition which causes Executive to be
unable to substantially perform his duties under this Agreement on a full-time
basis for (i) a period of six (6) consecutive months, or (ii) for shorter
periods aggregating more than six (6) months in any twelve (12) month period.
"Disabling Condition" shall mean such an incapacity that does not meet the time
requirements for Disability. The Company may temporarily relieve Executive from
his duties and responsibilities during any period that he has a Disabling
Condition (provided, that the Company shall continue to provide Executive with
full compensation and benefits during such period), provided, that Executive
shall be immediately restored to his duties and responsibilities if Executive is
able to resume his duties on a full-time basis prior to his termination for
Disability. Executive agrees to submit to reasonable medical examination upon
the reasonable request, and at the expense, of the Company during any period
when he (or his representative) claims that he has a Disabling Condition.
6.3 Termination by Company for Cause.
(a) The Company may, following any determination by the Board
that Cause exists in accordance with the procedure set forth in the this
subsection (a), terminate Executive's employment with the Company and its
subsidiaries for Cause by notice to Executive describing the reasons for such
termination. In the event the Board believes Cause may exist for termination of
Executive's employment, the Board shall provide written notice to Executive
describing the basis for such belief. Executive shall be afforded a reasonable
period of time to and shall fully and promptly address, to the extent of
Executive's knowledge, any concerns raised by the Board regarding the existence
of Cause. The Company may temporarily relieve Executive from his duties and
responsibilities pending the outcome of any proceeding of the Board to determine
if Cause exists (provided, that the Company shall continue to provide Executive
with full compensation and benefits during such period); provided, that
Executive shall be immediately restored to his duties and responsibilities if
the Board determines that Cause does not exist or fails to render a prompt
determination following the substantial completion of its investigation. The
final determination that Executive's employment shall be terminated for Cause
shall be made by the affirmative vote of two-thirds (2/3) of the non-management
membership of the Board at a meeting of the Board duly called and held upon at
least fifteen (15) days prior written notice to Executive specifying the
particulars of the action or inaction alleged to constitute "Cause" (and at
which meeting Executive and his counsel are entitled to be present and are given
a reasonable opportunity to be heard).
(b) For purposes of this Section 6.3, "Cause" means any of the
following events with respect to Executive:
(i) Executive has been convicted of, or pleads guilty
or nolo contendere to, any crime or offense constituting a
felony under applicable law or involving embezzlement, theft
or moral turpitude, which crime or offense is substantially
related to Executive's position with the Company or impairs
Executive's ability to perform his duties with the Company, in
either case as may be reasonably determined by the Board;
(ii) Executive's commission of a willful act of fraud
or dishonesty against the Company or any of its subsidiaries,
or Executive's willful engaging in conduct which is injurious
to the Company or any of its subsidiaries, monetarily or
otherwise;
(iii) Executive's abuse of illegal drugs and other
controlled substances or Executive's habitual intoxication,
which conduct continues after written demand for cessation of
such conduct is delivered to Executive by the Board; or
(iv) Any willful, continuous or gross neglect of or
refusal to perform Executive's duties or responsibilities, in
each case which continues after detailed written notice
thereof has been given to Executive.
Action or inaction by Executive shall not be considered
"willful" unless done or omitted by him intentionally and without his
reasonable belief that his action or inaction was in the best interests
of the Company, and shall not include failure to act by reason of total
or partial incapacity due to physical or mental illness.
6.4 Resignation by Executive for Good Reason. Upon the occurrence of
any event described in this Section 6.4 below in the absence of Executive's
express written consent or request, Executive shall have the right to elect to
terminate his employment under this Agreement from all (but not less than all)
positions with the Company and its subsidiaries by resignation, upon not less
than thirty (30) days' prior written notice given within one hundred twenty
(120) days after the event purportedly giving rise to Executive's right to
elect; provided, however, that the Company has not cured or otherwise corrected
such event prior to the expiration of such 30-day period.
(a) Any reduction by the Company of Executive's Base Salary;
(b) Any relocation of Executive's principal place of
employment or the relocation of the Company's principal office or corporate
headquarters to a location that is not within forty-five (45) miles of the
Borough of Kennett Square, Pennsylvania;
(c) The assignment to Executive by the Company of any duties
inconsistent with Executive's status with the Company or a substantial
alteration in the nature or status of Executive's responsibilities from those
described in Section 3.1, or a reduction in Executive's titles or offices as in
effect as of the Effective Date or the Chairman Appointment Date, as applicable,
or any removal of Executive from, or any failure to nominate or appoint
Executive to any such positions other than as a result of Executive's death,
termination of employment (and other than as a result of Executive's Disabling
Condition or pending a determination that Cause exists), or the failure to
restore Executive to his responsibilities following his recovery from a
Disabling Condition prior to his employment termination or following a
determination that Cause does not exist; provided, that, a failure of the
Company's shareholders to elect Executive to the Board shall not constitute Good
Reason under this Agreement;
(d) Any liquidation or dissolution of the Company, unless the
voting common equity interests of an ongoing entity (other than a liquidating
trust) are beneficially owned, directly or indirectly, by the same persons in
substantially the same proportions as such persons' ownership immediately prior
to such liquidation or dissolution, and such ongoing entity assumes all existing
obligations of the Company to Executive under this Agreement; or
(e) Any material breach of this Agreement by the Company.
Executive agrees and acknowledges that the appointment by the
Company of a non-executive Chairman of the Board (if required by applicable law
or regulation) or a lead director shall not constitute "Good Reason" hereunder.
6.5 Resignation by Executive Following A Change in Control. Executive
may resign from the Company's employ during the ninety (90) day period
commencing on the date that is six (6) months after any Change in Control of the
Company for any reason by providing the Company with a written notice of
termination. Notwithstanding anything to the contrary in Section 6.4, should
Executive notify the Company that Good Reason exists at any time within the
twenty-four (24) months following any Change in Control and should the event
constituting Good Reason continue for more than ten (10) days following
Executive's notice, Executive may, at his option, immediately resign or resign
at any time during such twenty-four month period and any such resignation shall
be treated as a resignation for Good Reason under this Agreement. For purposes
of this Agreement, a Change in Control of the Company means the occurrence of
one of the following events:
(a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty-five percent (25%) or more of either (A) the then-outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock") or (B) the
combined voting power of the then-outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that, for purposes of this
Section 6.5(a), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any of its affiliates, (iv) any
acquisition by any corporation pursuant to a transaction that complies with
Sections 6.5(c)(i), 6.5(c)(ii) and 6.5(c)(iii), (v) any acquisition by any
underwriter temporarily holding securities pursuant to an offering of such
securities, (vi) any acquisition by Xxxxxxx Xxxxx Capital Partners and Highland
Capital, (vii) any acquisition by Executive or any group of persons including
Executive (or any entity controlled by Executive or any group of persons
including Executive) or (viii) a beneficial owner of less than twenty-five
percent (25%) of the Outstanding Company Voting Securities that becomes a
beneficial owner of twenty-five percent (25%) or more of the Outstanding Company
Voting Securities solely by reason of redemption or repurchase of such
securities by the Company so long as such beneficial owner takes immediate
action to reduce its beneficial ownership of Company Voting Securities below
twenty-five percent (25%);
(b) Any time at which individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or nomination
for election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; provided, further, that any individual becoming a director subsequent to
the date hereof who was elected by, or on the recommendation of any person
described in clause (vi) of Section 6.5(a) above pursuant to contractual rights
as of the Effective Date with respect to Outstanding Company Voting Securities
owned by such person;
(c) Consummation of a reorganization, merger, statutory share
exchange or consolidation or similar corporate transaction involving the Company
or any of its subsidiaries, a sale or other disposition of all or substantially
all of the assets of the Company, or the acquisition of assets or stock of
another entity by the Company or any of its subsidiaries (each, a "Business
Combination"), in each case unless, following such Business Combination, (i) all
or substantially all of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than fifty percent (50%) of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, twenty-five percent
(25%) or more of, respectively, the then-outstanding shares of common stock of
the corporation resulting from such Business Combination or the combined voting
power of the then-outstanding voting securities of such corporation, except to
the extent that such ownership existed prior to the Business Combination, and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
6.6 Termination by the Company without Cause. In addition to any
termination of Executive's employment with the Company and its subsidiaries for
reasons described in the foregoing provisions of this Section 6, the Company may
terminate such employment at any time without Cause. Such determination shall be
made by the affirmative vote of two-thirds (2/3) of the non-management
membership of the Board at a meeting of the Board called and held for such
purpose. The Board shall provide Executive with written determination of its
decision no less than thirty (30) days prior to the effective date of such
employment termination.
7. Severance Upon an Event of Termination.
7.1 General Provision. Upon termination of Executive's employment for
any reason, Executive shall be entitled to no further compensation hereunder
other than (i) Executive's accrued and unpaid Base Salary through the date of
termination, (ii) any earned but unpaid Bonus for any fiscal year ending prior
to the date of termination, (iii) any benefits (including reasonable business
expenses) accrued and vested under the terms of the Company's employee benefit
plans and programs through the date of termination, (iv) all deferred
compensation of any kind, including, without limitation, any amounts earned
under any bonus plan, (v) the option to have assigned to him at no cost and with
no apportionment of prepaid premiums any assignable insurance policy owned by
the Company and relating specifically to Executive and (vi) any other payments
or benefits specifically provided in Section 7 of this Agreement.
7.2 Termination Due to Death. Upon Executive's employment termination
due to his death, the Company shall pay to Executive (or to his estate) (i) a
lump sum in cash equal to Executive's Base Salary for the period from the date
of termination through the end of the Term (computed as if Executive had not
died); (ii) benefits as if Executive's employment had terminated on the last day
of the month; and (iii) a pro rata bonus for the portion of the year in which
the date of termination occurs preceding the date of termination based upon an
annual amount equal to 100% of Executive's then-current Base Salary (which
amount will be paid as soon as practicable following the date of termination).
In addition, all restricted stock, stock options and performance share awards
made to Executive shall automatically become fully vested and immediately
exercisable as of the date of death, and, to the extent requiring exercise,
shall be immediately exercisable for a period of two (2) years following the
termination of Executive's employment, but in no event later than ten (10) years
from the date of grant of an option or award.
7.3 Termination for Cause. Upon Executive's employment termination for
Cause, the Company shall pay to Executive all deferred compensation of any kind.
7.4 Severance. Upon Executive's employment termination by the Company
without Cause, due to Executive's Disability, by Executive for Good Reason, by
Executive in accordance with Section 6.5 following a Change in Control or as a
result of a Non-Extension (each a "Qualifying Termination"), the Company shall,
subject to Executive's compliance with the provisions of Section 9 and 10 below
and, in the discretion of the Company, subject to Executive entering into and
not revoking a release substantially in the form set forth as Exhibit A hereto,
provide the following to Executive (or, in the event of Executive's death after
a Qualifying Termination, his beneficiary or beneficiaries or his estate, as
provided):
(a) Bonus for Year of Termination of Employment. The Company
shall pay to Executive (or to his estate) a pro rata bonus for the portion of
the year in which the date of termination occurs preceding the date of
termination based upon an annual amount equal to 100% of Executive's
then-current Base Salary.
(b) Severance Pay. The Company shall provide to Executive (or
his estate), as severance pay (the "Severance Payments") (x) two (2) times
Executive's Termination Base Salary (as defined below) plus (y) in lieu of
bonus, two (2) times Executive's Termination Base Salary, less any applicable
disability insurance benefits (if Executive's employment terminates because of
Disability) for the two-year period beginning with the date of termination of
employment. "Termination Base Salary" means the highest Base Salary paid to
Executive in the three (3) years preceding the Qualifying Termination. Payment
under this Section 7.4(b) shall be made in a lump sum within ten (10) days
following the date of Executive's termination. In no event shall such payments
be reduced for any reason (other than in the case of Disability as set forth
above), including the fact that Executive is employed by any other entity.
(c) Benefit Continuation. The Company shall continue to
provide, on the same basis as executive officers generally, the health and life
insurance benefits (but excluding disability benefits) provided to Executive and
his spouse and eligible dependants immediately prior to his date of termination
for a period of two (2) years following the date of termination (provided, that
Executive continues to make all required employee contributions) and as modified
for any changes to such benefits made with respect to executive officers of the
Company. In the event that Executive's participation in any such plan or program
is barred by the terms thereof, the Company shall pay to Executive an amount
equal to the annual contribution, payments, credits or allocation made by the
Company to him, to his account or on his behalf under such plans and programs
from which his continued participation is barred except that if Executive's
participation in any health, medical, or life insurance plan or program is
barred, the Company shall obtain and pay for, on Executive's behalf, individual
insurance plans, policies or programs that provide to Executive health, medical
and life insurance coverage which is equivalent to the insurance coverage to
which Executive was entitled prior to the date of termination.
(d) Equity. All restricted stock, stock option and performance
share awards made to Executive shall fully vest and, to the extent requiring
exercise, shall be immediately exercisable for a period of two (2) years
following the termination of Executive's employment, but in no event later than
ten (10) years from the date of grant of an option or award.
8. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company or
its affiliates to or for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required
under this Section 8) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties,
collectively the "Excise Tax"), then Executive shall be entitled to receive an
additional payment (the "Gross-Up Payment") in an amount such that, after
payment by Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 8(c), all determinations
required to be made under this Section 8, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment and the assumptions to
be utilized in arriving at such determination, shall be made by a nationally
recognized certified public accounting firm designated by Executive, subject to
the Company's approval which will not be unreasonably withheld (the "Accounting
Firm"). The Accounting Firm shall provide detailed supporting calculations both
to the Company and Executive within fifteen (15) business days of the receipt of
notice from Executive that there has been a Payment or such earlier time as is
requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control, Executive, subject to the Company's approval which will not be
unreasonably withheld, may appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall then
be referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Section 8, shall be paid by the Company to Executive
within five (5) days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Company and
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments that will not have been made by
the Company should have been made (the "Underpayment"), consistent with the
calculations required to be made hereunder. In the event the Company exhausts
its remedies pursuant to Section 8(c) and Executive thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive.
(c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than ten (10) business days after Executive is
informed in writing of such claim. Executive shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
Executive shall not pay such claim prior to the expiration of the thirty (30)
day period following the date on which Executive gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies Executive in writing
prior to the expiration of such period that the Company desires to contest such
claim, Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Section 8(c),
the Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on behalf of Executive and
direct Executive to xxx for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company shall determine; provided, however, that,
if the Company pays such claim and directs Executive to xxx for a refund, the
Company shall indemnify and hold Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties) imposed with
respect to such payment or with respect to any imputed income in connection with
such payment; and provided, further, that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Executive with
respect to which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which the Gross-Up Payment would be payable
hereunder, and Executive shall be entitled to settle or contest, as the case may
be, any other issue raised by the Internal Revenue Service or any other taxing
authority.
(d) If, after the receipt by Executive of a Gross-Up Payment or payment
by the Company of an amount on Executive's behalf pursuant to Section 8(c),
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, Executive
shall (subject to the Company's complying with the requirements of Section 8(c),
if applicable) promptly pay to the Company the amount of such refund (together
with any interest paid or credited thereon after taxes applicable thereto). If,
after payment by the Company of an amount on Executive's behalf pursuant to
Section 8(c), a determination is made that Executive shall not be entitled to
any refund with respect to such claim and the Company does not notify Executive
in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then the amount of such
payment shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.
(e) Notwithstanding any other provision of this Section 8, the Company
may, in its sole discretion, withhold and pay to the Internal Revenue Service or
any other applicable taxing authority, for the benefit of Executive, all or any
portion of any Gross-Up Payment, and Executive hereby consents to such
withholding.
9. Duties Upon Termination.
9.1 Return of Materials. Executive agrees that he will, upon
termination of his employment with the Company for any reason whatsoever,
deliver to the Company any and all records, forms, contracts, memoranda, work
papers, lists of names or other customer data and any other articles or papers
which have come into his possession by reason of his employment with the Company
or which he holds for the Company, regardless of whether or not any of said
items were prepared by him, and he shall not retain memoranda or copies of any
of said items. Executive shall assign to the Company all rights to trade secrets
and the products relating to the Company's business developed by him alone or in
conjunction with others at any time alike employed by the Company.
Notwithstanding anything herein to the contrary, Executive may retain this
Agreement, any documents relating to this Agreement and any documents relating
to Executive's compensation, benefits, retirement plans and deferred
compensation plans.
9.2 Resignation from All Positions. Notwithstanding any other provision
of this Agreement, upon the termination of Executive's employment for any
reason, unless otherwise requested by the Board, Executive shall immediately
resign from all positions that he holds or has ever held with the Company and
any of its subsidiaries and affiliates (and with any other entities with respect
to which the Company has requested Executive to perform services). Executive
hereby agrees to execute any and all documentation to effectuate such
resignations upon request by the Company, but he shall be treated for all
purposes as having so resigned upon termination of his employment, regardless of
when or whether he executes any such documentation.
9.3 Cooperation. Following the termination of Executive's employment,
Executive will respond to inquiries from the Company with respect to matters
within Executive's knowledge. Executive need only respond to such inquiries by
telephone or E-mail, and the amount of detail in such response and the
promptness with which it is made will depend on the other demands on Executive's
time.
10. Post-Termination Obligations. All payments and benefits to Executive under
this Agreement shall be subject to Executive's compliance with the following
provisions.
10.1 Confidential Information. At all times during and after the term
of this Agreement, Executive shall not disclose or reveal to any unauthorized
person any trade secret or other confidential information relating to the
Company, its subsidiaries or its affiliates, or to any businesses operated by
them, including, without limitation, any customer lists; and Executive confirms
that such information constitutes the exclusive property of the Company. For
purposes of this Section 10.1, confidential information shall not include any
information that is now known by or readily available to the general public or
which becomes known by or readily available to the general public other than as
a result of any improper act or omission of Executive. Notwithstanding anything
herein to the contrary, during the term of this Agreement, Executive may reveal
information, as necessary, (i) pursuant to his conducting Company business or
(ii) when required to do so by a court of competent jurisdiction, by any
governmental agency having supervisory authority over the business of the
Company, or by any administrative body or legislative body (including a
committee thereof) with jurisdiction to order Executive to divulge, disclose or
make accessible such information.
10.2 Competitive Conduct. While Executive is employed by the Company
and for the two-year period beginning on the date of termination of employment,
Executive shall not, except with the Company's express prior written consent,
directly or indirectly, in any capacity for the benefit of any person:
(a) solicit any person who then is, and who was within six months prior
to the termination of Executive's employment, a customer, supplier, salesman,
agent or representative of the Company, in any manner which interferes with such
person's relationship with the Company, or in an effort to obtain such person as
a customer, supplier, salesman, agent or representative of any business in
competition with the Company in the operation of nursing homes, assisted living
facilities or contract rehabilitation therapy (or with respect to any material
business in which the Company is engaged as of the date of Executive's
termination or is actually contemplating as of the date of Executive's
termination) (the "Subject Business"), which business conducts operations in the
Subject Business within fifteen (15) miles of any office or facility owned,
leased or operated by the Company or in any county, or similar political
subdivision, in which the Company conducts substantial business in the Subject
Business;
(b) solicit the employment of or (solely with respect to employees who
are then or were managing directors or officers of the Company) hire (whether as
an employee, officer, director, agent, consultant or independent contractor),
any person who is, or was at any time during the previous three (3) months, an
employee, consultant, officer or director of the Company or any of its
subsidiaries and affiliates (except for such employment by the Company or any of
its subsidiaries and affiliates);
(c) establish, engage, own, manage, operate, join or control, or
participate in the establishment, ownership (other than as the owner of less
than one percent (1%) of the stock of a corporation whose shares are publicly
traded) management, operation or control of, or be a director, officer,
employee, salesman, agent or representative of, or be a consultant to, any
person in any business in competition with the Company in the Subject Business
if such person has any office or facility, at any location within fifteen (15)
miles of any office or facility owned, leased or operated by the Company or
conducts substantial business in the Subject Business in any county, or similar
political subdivision in which the Company conducts substantial business. For
purposes of Section 10.2, the term "Company" shall include all affiliates and
subsidiaries of the Company except, in the event that the Distribution shall
occur, GHVI and its subsidiaries.
10.3 Failure of Executive to Comply. If Executive shall, without
written consent of the Company, fail to comply with the provisions of this
Section 10, his rights to any future payments or other benefits hereunder shall
terminate (without prejudice to any other rights, including recovery of damages
of the Company), and the Company's obligations to make such payments and provide
such benefits shall cease; provided, however, that, for purposes of Section
10.3, no such failure to comply with any provision of this Section 10 shall be
deemed to have occurred unless and until Executive receives written notice from
the Company specifying the conduct alleged to constitute such failure and,
solely with respect to any failure to comply with any provision of this Section
10, if such failure is an unintentional violation of this Section 10, Executive
has not cured such failure within thirty (30) days after such notice.
10.4 Remedies. Executive agrees that monetary damages would not be
adequate compensation for any loss incurred by the Company by reason of a breach
of the provisions of Sections 9 and 10 of this Agreement and hereby agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate. Accordingly, in addition to any other remedies that the
Company may have at law or in equity, the Company shall have the right to have
all obligations, agreements and other provisions of Sections 10 and 11
specifically performed by Executive, and the Company shall have the right to
obtain preliminary injunctive relief to secure specific performance and to
prevent a breach of Section 9 or 10. If the Company is obliged to resort to
litigation to enforce a covenant in Section 9 or 10 that contains a fixed term,
then such fixed term shall be extended for a period of time equal to the period
during which a material breach of such covenant was occurring, beginning on the
date of a final court order (without further right of appeal) holding that such
a material breach occurred, or, if later, the last day of the original fixed
term of such covenant.
10.5 Consideration. Executive expressly acknowledges that the covenants
contained in Sections 9 and 10 are a material part of the consideration
bargained for by the Company and, without the agreement of Executive to be bound
by the covenants contained in such sections, the Company would not have agreed
to enter into this Agreement.
10.6 Scope. If any portion of the covenants contained in Section 9 or
10 or its application is construed to be invalid, illegal or unenforceable, then
the other portions and their application shall not be affected thereby and shall
be enforceable without regard thereto. If any of the such covenants is
determined to be unenforceable because of its scope, duration, geographical area
or similar factor, the court making such determination shall have the power to
reduce or limit such scope, duration, area or other factor, and such covenant
shall then be enforceable in its reduced or limited for.
11. Effect of Prior Agreements. This Agreement contains the entire understanding
between the parties hereto and, upon effectiveness of this Agreement pursuant to
Section 2 hereof, supersedes all prior agreements (including but not limited to
the Current Employment Agreement, which shall terminate and have no further
effect) and discussions between the Company and Executive.
12. General Provisions.
12.1 Arbitration. (a) Except with respect to injunctive relief under
Section 10 or otherwise, any controversy or claim arising out of or relating to
this Agreement or its alleged breach, or arising out of or relating to
Executive's employment or termination of employment (including, without
limitation, any dispute arising out of Section 6.3 hereof), shall be resolved
exclusively by final and binding arbitration held in the location of the
Company's principal office where Executive is then employed (or was last
employed if Executive's employment with the Company has been terminated) in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), and judgment on the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof in such state.
(b) An arbitrator shall be selected by mutual agreement of the parties,
if possible. If the parties fail to reach agreement upon appointment of the
arbitrator within thirty (30) days following receipt by one party of the other
party's notice of desire to arbitrate, the arbitrator shall be selected from a
list or lists of persons submitted by the AAA. The selection process shall be
that which is set forth in the AAA Commercial Arbitration Rules then prevailing,
except that, if the parties fail to select the arbitrator from one or more
lists, AAA shall not have the power to make an appointment but shall continue to
submit additional lists until the arbitrator has been selected. If, after three
lists have been submitted by the AAA, the parties have not appointed an
arbitrator, the AAA may limit the number of names that can be stricken by each
party from each subsequent list, until an arbitrator is selected.
(c) Notice of arbitration must be given within one (1) year after the
accrual of the claim on which the notice is based. If the claiming party fails
to give notice of arbitration within that time, the claim shall be deemed to be
waived and shall be barred from either arbitration or litigation.
(d) If Executive prevails as to any material issue presented to the
arbitrator, the entire cost of such proceedings, (including, without limitation,
Executive's reasonable attorneys' fees), shall be borne by the Company. If
Executive does not prevail as to any material issue, each party will pay for the
fees and expenses of its own attorneys, expert witnesses, and preparation and
presentation of proofs and post-hearing briefs. If a party breaches this Section
12.1, however, by commencing litigation of a claim that should be arbitrated
hereunder, then the other party shall have the right to move for a court order
compelling arbitration and, if successful, shall be entitled to recover from the
breaching party the reasonable attorneys' fees and court costs incurred in
obtaining such order.
(e) Except to the extent necessary in connection with a proceeding
relating to the arbitration or an arbitration award contemplated by this Section
12.1, information concerning: (1) the existence of an arbitration, (ii) any
documentary or other evidence given by a party or witness in the arbitration and
(iii) the arbitration award, shall not be disclosed by the Company or its
subsidiaries or affiliates, Executive or their respective counsel and other
representatives, and the Company and Executive agree to use their best efforts
to cause the arbitration tribunal, the administrator, any other party to the
arbitration, such other party's counsel and every other person or entity
connected to, or having knowledge, of the proceeding or related arbitration or
judicial proceeding to keep such information from being disclosed, unless any
such party is required to do so by law or by a competent court or regulatory
body, and then only to the extend of disclosing no more than such party is
legally required to disclose.
(f) The parties hereby waive any rights to appeal or to review of such
decision by any court or tribunal and also waive any objections to such
enforcement. THE PARTIES HEREBY AGREE TO WAIVE ALL RIGHTS TO TRIAL BY JURY WITH
RESPECT TO ANY CONTROVERSY, DISPUTE OR CLAIM SUBMITTED TO ARBITRATION UNDER THIS
AGREEMENT.
12.2 Legal Expenses. Except as otherwise provided in Section 12.1, in
the event Executive prevails as to any material issue in any legal proceeding to
enforce the terms of this Agreement, the Company shall reimburse Executive for
reasonable attorneys' fees, costs and expenses incurred in connection therewith.
The Company shall pay directly all attorneys' fees and expenses reasonably
incurred by Executive in connection with the negotiation and preparation of this
Agreement and any negotiations with Executive's prior employer in connection
with Executive's capacity to enter into this Agreement, subject to a maximum of
$25,000.
12.3 Mitigation. Executive shall not be obligated to seek other
employment or take any other action to mitigate any severance benefits
hereunder.
12.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the Company and
Executive and his heirs, executors, legal representatives, successors and
permitted assigns. Unless clearly inapplicable, reference herein to the Company
shall be deemed to include its successors and permitted assigns. However,
neither party may assign, transfer, pledge, encumber, hypothecate or otherwise
dispose of this Agreement or any of its or his rights hereunder without prior
written consent of the other party, any such attempted assignment, transfer,
pledge, encumbrance, hypothecation or other disposition without such consent
shall be null and void, without effect; provided, that the Company may assign
this Agreement to any successor to all or substantially all of its assets.
12.5 Severability. In the event any provision of this Agreement or any
part hereof is held invalid, such invalidity shall not affect any remaining part
of such provision or any other provision, and to this end, the provisions of
this Agreement are intended to be and shall be deemed severable. If any court
construes any provision of this Agreement to be illegal, void or unenforceable
because of the duration or the area or matter covered thereby, such court shall
reduce the duration, area or matter of such provision, and, in its reduced form,
such provision shall then be enforceable and shall be enforced.
12.6 Withholding. The Company may withhold from any amounts payable
under this Agreement such taxes and governmentally required withholdings as may
be required to be withheld pursuant to any applicable law or regulation.
12.7 Indemnification. (a) The Company shall indemnify Executive and his
beneficiaries and successors (the "Legal Representatives") to the fullest extent
permitted by applicable law against all costs, charges, damages, amounts paid in
settlement or expenses (including reasonable attorneys' fees) whatsoever
incurred or sustained by him or his Legal Representatives in connection with any
threatened, pending or completed action, suit or proceeding to which he or his
Legal Representatives may be made a party as a result of the entering into of
this Agreement or the performance of services hereunder. This indemnification
provision is in addition to, and is not in substitution for, any other
indemnification rights that Executive might have under any insurance policy, the
Company's By-Laws, or any other plan, policy or agreement which provides
indemnification rights for Executive; provided, however, that any indemnity
payments made pursuant to this Section 12.7 shall not be duplicative of payments
made pursuant to any insurance policy, the Company's By-Laws, or any other plan,
policy or agreement which provides indemnification rights for Executive.
(b) Notice of Claim. Executive shall give to the Company
notice of any claim made against him for which indemnification will or could be
sought under this Section 12.7. In addition, Executive shall give the Company
such information and cooperation as it may reasonably require and as shall be
within Executive's power, at such times and places as are convenient for
Executive.
(c) Defense of Claim. With respect to any claim under this
Section 12.7 as to which Executive notifies the Company of the commencement
thereof:
(i) The Company will be entitled to participate
therein at its own expense; and
(ii) To the extent that it may wish, the Company will
be entitled to assume the defense thereof, with counsel reasonably satisfactory
to Executive, which in the Company's sole discretion may be regular counsel to
the Company and may be counsel to other officers and directors of the Company or
any subsidiary.
(iii) The Company shall not be liable to indemnify
Executive under this Section 12.7 for any amounts paid in settlement of any
action or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither the Company
nor Executive will unreasonably withhold or delay their consent to any proposed
settlement.
(d) Timing of Payment. The Company shall pay all costs and
expenses (including reasonable attorneys' fees) incurred by Executive or his
Legal Representatives in connection with the investigation, defense, settlement
or appeal of any action, suit or proceeding within thirty days of presentation
to the Company of an itemized statement of such costs and expenses. The Company
shall pay any damages or settlement amounts to the claiming party when such
amounts are due and owing under any court order or settlement document. If the
Company does not pay any amounts on a timely basis, Executive or his Legal
Representatives may bring a claim for payment against the Company and the
Company shall pay Executive's or his Legal Representative's costs and expenses
(including reasonable attorneys' fees) in connection with such claim.
(e) Survival. Notwithstanding anything contained herein to the
contrary, the provisions of this Section 12.7 shall survive the termination of
this Agreement.
13. Modification and Waiver.
13.1 Amendment of Agreement. Except for increases in compensation made
as provided in Section 4.1, this Agreement may not be changed or modified except
by an instrument in writing signed by both of the parties hereto.
13.2 Waiver. No term or condition of this Agreement shall be deemed to
have been waived, nor shall there be any estoppel against the enforcement of any
provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each such waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver of such term or condition for the future or as to any act
other than that specifically waived.
14. Notices. Any notice to be given hereunder shall be in writing and shall be
deemed given when delivered personally, sent by courier or telecopy or
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently give notice of hereunder in writing:
To Executive at:
with a copy:
To the Company at:
Genesis HealthCare Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, XX 00000
Attention: Law Department
And with a copy to:
The Chairman of the Compensation Committee
15. Governing Law. The parties hereto intend that this Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania, without regard to its
conflict of laws provisions. Each party hereto hereby irrevocably waives, to the
fullest extent permitted by law, (i) any objection that it may now or hereafter
have to laying venue of any suit, action or proceeding brought in such courts,
and (ii) any claim that any suit, action or proceeding brought in such courts
has been brought in an inconvenient forum.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed by its duly authorized officer, and Executive has signed this
Agreement, all as of the day and year first above written.
GENESIS HEALTHCARE CORPORATION
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
Title: Director
/s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
XXXXXX X. XXXXX
Acknowledged on Behalf of the Board:
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Corporate Secretary
EXHIBIT A
FORM OF RELEASE AGREEMENT
This Release Agreement ("Release") is entered into as of this ____ day
of _____________, hereinafter "Execution Date", by and between Xxxxxx X. Xxxxx,
Xx. (hereinafter "Employee"), and Genesis HealthCare Corporation and its
successors and assigns (hereinafter, the Company"). The Employee and the Company
are sometimes collectively referred to as the "Parties".
1. The Employee's employment with the Company is terminated effective [Month,
Day, Year] (hereinafter "Termination Date"). The Parties have agreed to
avoid and resolve any alleged existing or potential disagreements between
them arising out of or connected with the Employee's employment with the
Company including the termination thereof. The Company expressly disclaims
any wrongdoing or any liability to the Employee.
2. The Company agrees to provide the Employee the severance benefits provided
for in his/her Employment Agreement with the Company, dated as of November
25, 2003, after he/she executes this Release and the Release becomes
effective pursuant to its terms [FOR 40+ and does not revoke it as
permitted in Section 8 below, the expiration of such revocation period
being the "Effective Date")].
3. Employee represents that he has not filed, and will not file, any
complaints, lawsuits, administrative complaints or charges relating to his
employment with, or resignation from, the Company[; provided, however, that
nothing contained in this Section 3 shall prohibit Employee from bringing a
claim to challenge the validity of the ADEA Release in Section 8 herein].
In consideration of the benefits described in Section 2, for himself and
his heirs, administrators, representatives, executors, successors and
assigns (collectively, "Releasers"), Employee agrees to release the
Company, its subsidiaries, affiliates, and their respective parents, direct
or indirect subsidiaries, divisions, affiliates and related companies or
entities, regardless of its or their form of business organization, any
predecessors, successors, joint ventures, and parents of any such entity,
and any and all of their respective past or present shareholders, partners,
directors, officers, employees, consultants, independent contractors,
trustees, administrators, insurers, agents, attorneys, representatives and
fiduciaries, including without limitation all persons acting by, through,
under or in concert with any of them (collectively, the "Released
Parties"), from any and all claims, charges, complaints, causes of action
or demands of whatever kind or nature that Employee and his Releasers now
have or have ever had against the Released Parties, whether known or
unknown, including but not limited to: wrongful or tortious termination;
constructive discharge; implied or express employment contracts and/or
Page 1
estoppel; discrimination and/or retaliation under any federal, state or
local statute or regulation, specifically including any claims Employee may
have under the Fair Labor Standards Act, the Americans with Disabilities
Act, Title VII of the Civil Rights Act of 1964 as amended, and the Family
and Medical Leave Act; the discrimination or other employment laws of the
State of Pennsylvania; any claims brought under any federal or state
statute or regulation for non-payment of wages or other compensation,
including grants of stock options or any other equity compensation; and
libel, slander, or breach of contract other than the breach of this
Release. This Release specifically excludes claims, charges, complaints,
causes of action or demand that (a) post-date the Termination Date, (b)
relate to any unemployment compensation claim Employee may have, (c)
involve rights to receive vested benefits to which Employee is entitled as
of the Termination Date under any qualified or nonqualified employee
benefit plans and arrangements of the Company, (d) relate to claims for
indemnification as provided under applicable law, any applicable insurance
policies, e.g., directors and officers insurance, the Articles of
Incorporation or By-Laws of the Company or any affiliate of the Company, or
any applicable policy statements or indemnification agreements by or with
the Company or any affiliate of the Company, or (e) involve obligations
owed to Employee by the Company under the Employment Agreements dated
October 2, 2001 and November 25, 2003 between the Company and the Employee.
4. The Company, on its own behalf and on behalf of the Released Parties,
hereby releases Employee from all claims, causes of actions, demands or
liabilities which arose against the Employee on or before the time it signs
this Agreement. This release covers any claims, whether the facts or
circumstances giving rise to them are currently known or unknown. This
Paragraph, however, does not apply to or adversely affect any claims
against Employee which allege or involve the following: (i) a failure to
deal fairly with the Company or its shareholders in connection with a
matter in which Employee has a conflict of interest; (ii) a violation of
criminal law, unless Employee has reasonable cause to believe that his
conduct was lawful; (iii) willful misconduct or gross negligence by
Employee; or (iv) obligations owed by him to the Company under the
Employment Agreement dated November 25, 2003 between the Company and the
Employee. The Company will indemnify Employee for reasonable attorneys'
fees, costs and damages which may arise in connection with any proceeding
by the Company or any Released Party which is inconsistent with this
Release by the Company and the Released Parties.
5. Employee agrees to keep the fact that this Release exists and the terms of
this Release in strict confidence except to his/her immediate family and
his/her financial and legal advisors on a need-to-know basis, except as
required by law.
Page 2
6. Employee warrants that no promise or inducement has been offered for this
Release other than as set forth herein and that this Release is executed
without reliance upon any other promises or representations, oral or
written. Any modification of this Release must be made in writing and be
signed by Employee and the Company.
7. If any provision of this Release or compliance by Employee or the Company
with any provision of the Release constitutes a violation of any law, or is
or becomes unenforceable or void, then such provision, to the extent only
that it is in violation of law, unenforceable or void, will be deemed
modified to the extent necessary so that it is no longer in violation of
law, unenforceable or void, and such provision will be enforced to the
fullest extent permitted by law. If such modification is not possible, such
provision, to the extent that it is in violation of law, unenforceable or
void, will be deemed severable from the remaining provisions of this
Release, which provisions will remain binding on both Employee and the
Company. This Release is governed by, and construed and interpreted in
accordance with the laws of the State of Pennsylvania, without regard to
principles of conflicts of law. Employee consents to venue and personal
jurisdiction in the State of Pennsylvania for disputes arising under this
Release. This Release represents the entire understanding with the Parties
with respect to subject matter herein, no oral representations have been
made or relied upon by the Parties.
8. In further recognition of the above, Employee hereby releases and
discharges the Released Parties from any and all claims, actions and causes
of action that he/she may have against the Released Parties, as of the date
of the execution of this Release, arising under the Age Discrimination in
Employment Act of 1967, as amended ("ADEA"), and the applicable rules and
regulations promulgated thereunder. The Employee acknowledges and
understands that ADEA is a federal statute that prohibits discrimination on
the basis of age in employment, benefits and benefit plans. Employee
specifically agrees and acknowledges that: (A) the release in this Section
8 was granted in exchange for the receipt of consideration that exceeds the
amount to which he/she would otherwise be entitled to receive upon
termination of his/her employment; (B) his/her waiver of rights under this
Release is knowing and voluntary as required under the Older Workers
Benefit Protection Act; (B) that he/she has read and understands the terms
of this Release; (C) he/she has hereby been advised in writing by the
Company to consult with an attorney prior to executing this Release; (D)
the Company has given him/her a period of up to twenty-one (21) days within
which to consider this Release, which period shall be waived by the
Employee's voluntary execution prior to the expiration of the twenty-one
day period; and (E) following his/her execution of this Release he/she has
seven (7) days in which to revoke his/her release as set forth in this
Section 8 only and that, if he/she chooses not to so revoke, the Release in
this Section 8 shall then become effective and enforceable and the payment
listed above shall then be made to his/her in accordance with the terms of
this Release. To cancel this Release, Employee understands that he/she must
give a written revocation to the General Counsel of the Company, either by
hand delivery or certified mail within the seven-day period. If he/she
rescinds the Release, it will not become effective or enforceable and
he/she will not be entitled to any benefits from the Company.
Page 3
9. EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE/SHE HAS CAREFULLY READ AND
VOLUNTARILY SIGNED THIS RELEASE, THAT HE/SHE HAS HAD AN OPPORTUNITY TO
CONSULT WITH AN ATTORNEY OF HIS/HER CHOICE, AND THAT HE/SHE SIGNS THIS
RELEASE WITH THE INTENT OF RELEASING THE RELEASED PARTIES TO THE EXTENT SET
FORTH HEREIN.
10. In the event that any provision of this Release should be held to be
invalid or unenforceable, each and all of the other provisions of this
Release shall remain in full force and effect. If any provision of this
Release is found to be invalid or unenforceable, such provision shall be
modified as necessary to permit this Release to be upheld and enforced to
the maximum extent permitted by law.
ACCEPTED AND AGREED TO:
_________________________________ __________________________________
[Employer Full Name] [Employee Full Name]
Dated:______________________ Dated:_____________________
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