Exhibit 10.2
TRANSITION AGREEMENT
This TRANSITION AGREEMENT (the "Agreement"), dated as of the 18th day
of June, 2002, is entered into by and between Genesis Health Ventures, Inc., a
Delaware corporation (together with its subsidiaries and affiliates being
collectively referred to herein as the "Company") and Xxxxx X. Xxxx (the
"Executive").
WHEREAS, the Executive and the Company are parties to an Employment
Agreement dated as of October 2, 2001 (the "Employment Agreement");
WHEREAS, the Executive has agreed to resign from his employment with
the Company and relinquish his position as Vice Chairman of the Company as of
the Effective Date (as hereinafter defined) upon the terms and conditions of
this Transition Agreement, but has agreed to continue to provide consulting
services to the Company during the Transition Period (as hereinafter defined);
WHEREAS, the Executive desires to assist the Company in effecting an
orderly and efficient transition in respect of the Company's senior management
following the Effective Date; and
WHEREAS, the Executive and the Company desire to set forth their
understanding of the Executive's role during the Transition Period (as
hereinafter defined) and the parties rights and obligations resulting from the
Executive ceasing to be employed by the Company as of the Effective Date.
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, intending to be legally bound, the parties
hereto hereby agree as follows:
Section 1. Termination of Employment; Termination Payment.
(a) Termination of Employment. The Executive's employment with the
Company shall terminate as of the close of business on June 21, 2002 (the
"Effective Date"). The Executive shall relinquish his position as Vice Chairman
of the Company, including all duties and responsibilities associated with such
position, as of the Effective Date. During the period beginning on the Effective
Date and continuing through the earlier of (i) December 31, 2002 or (ii) such
date, reasonably determined by the Chief Executive Officer, which shall not be
less than five days after notice of such determination is provided to the
Executive (the "Transition Period"), the Executive shall serve as a consultant
to the Company as provided in Section 2 hereof.
(b) Removal of Personal Property. In no event later than August 30,
2002, the Executive shall remove all personal property from his office at the
Company's corporate offices, including but not limited to the paintings, books
and other artifacts located in such office as of the Effective Date. On and
after August 30, 2002, the Executive shall not maintain an office or presence at
the Company's corporate offices.
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(c) Payments and Benefits. In consideration for the Executive's
agreement to be bound by the terms of this Agreement, including but not limited
to Section 5(c) hereof and the Release set forth in Section 3 hereof, the
Executive shall be entitled to receive from the Company the payments and
benefits set forth in subparagraphs (i) through (vi) of this Section 1(c),
provided that the Executive shall not have revoked such Release:
(i) on the eighth day after the Executive's execution of this
Agreement, to the extent there has been no revocation of the Release by the
Executive prior to such date (the "Payment Date"), the Company shall pay the
Executive in a lump sum in cash any accrued and unpaid base salary or deferred
compensation in respect of periods through the Effective Date;
(ii) on the Payment Date, the Company shall pay the Executive
a lump sum in cash in an amount equal to $1,500,000, less applicable
withholding;
(iii) for a period of three years beginning on the Payment
Date, the Company will continue to provide, on the same basis as executive
officers of the Company generally, the health benefits (but excluding disability
benefits) provided to the Executive and his spouse and eligible dependants
immediately prior to the Payment Date (provided that the Executive continues to
make all required employee contributions). In the event that the Executive's
participation in any such plan or program is barred by the terms thereof, the
Company shall pay to the 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 the Executive's participation in any health or medical
insurance plan or program is barred, the Company shall obtain and pay for, on
the Executive's behalf, individual insurance plans, policies or programs that
provide to the Executive and his spouse health and medical insurance coverage
which is equivalent to the insurance coverage to which the Executive and his
spouse were entitled prior to the Payment Date;
(iv) as of the Payment Date, the Company shall provide the
Executive with a life insurance policy in accordance with the Split-Dollar
Insurance Agreement dated October14, 1991, with a death benefit of at least
$3,000,000 to the Executive's designated beneficiaries, and which shall include
the cash surrender value thereof;
(v) the Executive's outstanding deferred stock grant of 75,000
shares of the common stock of the Company shall fully vest as of the Payment
Date and, to the extent permitted by the terms of the Company's Deferred
Compensation Plan, the Executive shall be entitled to defer receipt of such
shares until no later than January 1, 2003; and
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(vi) the Executive's obligations under the promissory note
entered in favor of the Company for funds borrowed by the Executive for
purchases of the Company's common stock shall be forgiven as of the Payment Date
and Executive shall be reimbursed for any federal or state income taxes owed as
a result of such forgiveness on the Payment Date.
Section 2. Consulting Services During the Transition Period. During the
Transition Period, the Executive shall serve as a consultant to the Company on a
limited time basis, and without further compensation, and shall perform such
consulting services as the Chief Executive Officer of the Company shall
reasonably request to assist the Company in transactional and marketing
activities. Effective as of the end of the Transition Period, the Executive
shall cease to be a consultant of the Company.
Section 3. Release by the Executive.
(a) The Executive knowingly and voluntarily releases and forever
discharges the Company and the Company's parents, subsidiaries and affiliates,
together with all of their respective past and present directors, managers,
officers, partners, employees and attorneys, and each of their predecessors,
successors and assigns, and any of the foregoing in their capacity as a
shareholder or agent of the Company (collectively, "Releasees") from any and all
claims, charges, complaints, promises, agreements, controversies, liens,
demands, causes of action, obligations, damages and liabilities of any nature
whatsoever, known or unknown, suspected or unsuspected, which against them the
Executive or his executors, administrators, successors or assigns ever had, now
have, or may hereafter claim to have against any of the Releasees by reason of
any matter, cause or thing whatsoever arising on or before the Effective Date
and whether or not previously asserted before any state or federal court or
before any state or federal agency or governmental entity (the "Release"). The
Release includes, without limitation, any rights or claims relating in any way
to the Executive's employment relationship with the Company or any of the
Releasees, or the termination thereof, or arising under any statute or
regulation, including the Age Discrimination in Employment Act of 1967, Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans
with Disabilities Act of 1990, the Employee Retirement Income Security Act of
1974, and the Family Medical Leave Act of 1993, each as amended, or any other
federal, state or local law, regulation, ordinance or common law, or under any
policy, agreement, understanding or promise, whether written or oral, formal or
informal, between any of the Releasees and the Executive.
(b) Nothing herein shall be deemed to release (i) any of the
Executive's rights under this Agreement, (ii) any of the Executive's rights that
have accrued prior to the date hereof under the Company's employee benefit
plans; or (iii) any of the Executive's rights to indemnification under any
indemnification agreement, applicable law and the certificates of incorporation
and bylaws of the Company and/or any subsidiary or parent of the Company.
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(c) The Executive represents that the Company has advised him to
consult with an attorney of his choosing prior to signing this Agreement. The
Executive further represents that he understands and agrees that he has the
right and has in fact reviewed this Agreement and, specifically, the Release,
with an attorney of the Executive's choice. The Executive further represents
that he understands and agrees that the Company is under no obligation to offer
him this Agreement, and that the Executive is under no obligation to consent to
the Release, and that he has entered into this Agreement freely and voluntarily.
(d) The Executive shall have twenty-one (21) days to consider this
Agreement and once he has signed this Agreement, the Executive shall have seven
additional days from the date of execution to revoke his consent to the Release
set forth above. Any such revocation shall be made by delivering written
notification to the Chief Executive Officer.
Section 4. Notices. For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid as follows:
If to the Executive:
00 Xxxx Xxxxx Xxxxx
Xxxxxx Xxxx, Xx. 00000
If to the Company:
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Interim Chief Executive Officer
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
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Section 5. Miscellaneous.
(a) Enforcement; Governing Law; Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of law principles. The Company
shall have the right, without prejudice to any other rights or remedies it might
have under the law which are reserved, to obtain injunctive relief to restrain
any breach or threatened breach by the Executive of this Agreement or otherwise
to specifically enforce any provision of this Agreement; provided, however, that
such right to injunctive relief does not preclude the Company from seeking
monetary damages for a breach by the Executive of this Agreement.
(b) Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes any and all prior agreements, and understandings, both
written and oral, between the parties hereto with respect to the subject matter
hereof, including but not limited to the Employment Agreement and any separation
benefits payable thereunder, except as otherwise provided in Section 5(c) below.
(c) Survival of Certain Employment Agreement Provisions. The
Company and the Executive agree that Sections 9,10, 11, 13.1 and 13.2 of the
Employment Agreement shall continue in full force and effect following the
Effective Date and that the non-compete term of Section 11.2 shall commence on
the Effective Date.
(d) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect.
(e) Successors. This Agreement shall be binding upon and shall
inure to the benefit of each of the parties hereto, and their respective heirs,
legatees, executors, administrators, legal representatives, successors and
assigns.
(f) Withholding. All payments made by the Company to the Executive
pursuant to this Agreement shall be reduced by all federal, state, city or other
taxes that are required to be withheld pursuant to any law or governmental
regulation.
(g) Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
GENESIS HEALTH VENTURES, INC.
By:
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Name:
Title:
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Xxxxx X. Xxxx
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