<PAGE>

                              EMPLOYMENT AGREEMENT


         THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of August 12, 1998
by and between Genesis Health Ventures, Inc., a Pennsylvania corporation with
its principal place of business at 101 East State Street, Kennett Square, PA
19348 (the "Company"), and Richard R. Howard (the "Executive").

                                   WITNESSETH

         The Company desires to continue to employ the Executive as an employee
of the Company, and the Executive desires to continue to provide services to the
Company, all upon the terms and conditions hereinafter set forth.

         NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:

         1. Offer and Acceptance of Employment. The Company hereby agrees to
employ the Executive as Vice Chairman of the Company. The Executive accepts such
employment and agrees to perform the customary responsibilities of such position
during the term of this Agreement. The Executive will perform such other duties
as may from time to time be reasonably assigned to him by the Board, provided
such duties are consistent with and do not interfere with the performance of the
duties described herein and are of a type customarily performed by persons of
similar titles with similar corporations. Nothing in this Agreement shall
preclude Executive from serving as a director, trustee, officer of, or partner
in, any other firm, trust, corporation or partnership or from pursuing personal
investments, as long as such activities do not interfere with Executive's
performance of his duties hereunder.

         2. Period of Employment.

            (a) Period of Employment. The period of the Executive's employment
under this Agreement shall commence on the date hereof and shall, unless sooner
terminated pursuant to Section 4, continue for a three year period ending on
August 12, 2001 (such period, as extended from time to time, herein referred to
as the "Term"). Subject to Section 2(b), and if the Term has not been terminated
pursuant to Section 4, on August 12, 1999 and on each August 12 thereafter (each
such August 12, an "Automatic Extension Date") the Term shall be extended for an
additional period of one year.

            (b) Termination of Automatic Extension by Notice. The Company (with
the affirmative vote of two-thirds of the entire membership of the Board of
Directors at a meeting of the Board of Directors called and held for such
purpose) or the Executive may elect to terminate the automatic extension of the
Term set forth in Section 2(a) ("Automatic Extension") by giving written notice
of such election. Any notice given hereunder must be given not less than 180
days prior to the applicable Automatic Extension Date.


<PAGE>

         3. Compensation and Benefits.

            (a) Base Salary. As long as Executive remains an employee of
Company, Executive will be paid a base salary which shall continue at the rate
currently in effect, subject to adjustment as hereinafter provided. The
Compensation Committee of the Board of Directors shall review Executive's base
salary on an annual basis and make recommendations with respect to increases in
base salary to the Board of Directors. Any increase in base salary shall not
reduce or limit any other obligation of the Company hereunder. Executive's
annual base salary payable hereunder, as it may be increased from time to time
and without reduction for any amounts deferred as described below, is referred
to herein as "Base Salary". Executive's Base Salary, as in effect from time to
time, may not be reduced by the Company without Executive's consent, provided
that the Base Salary payable under this paragraph shall be reduced to the extent
Executive elects to defer or reduce such salary under the terms of any deferred
compensation or savings plan or other employee benefit arrangement maintained or
established by the Company. The Company shall pay Executive the portion of his
Base Salary not deferred in accordance with its customary periodic payroll
practices.

            (b) Incentive Compensation. Executive shall be eligible to receive
incentive compensation in the form of stock options in amounts determined from
time to time by the Stock Option Subcommittee of the Compensation Committee of
the Board of Directors, subject to the approval of the Board of Directors.

            (c) Benefits, Perquisites and Expenses.

                (i) Benefits. During the Term, Executive shall be eligible to
participate in (1) each welfare benefit plan sponsored or maintained by the
Company, including, without limitation, each life, hospitalization, medical,
dental, health, accident or disability insurance or similar plan or program of
the Company, and (2) each pension, profit sharing, retirement, deferred
compensation or savings plan sponsored or maintained by the Company, in each
case, whether now existing or established hereafter, to the extent that
Executive is eligible to participate in any such plan under the generally
applicable provisions thereof. Without in any way limiting the foregoing,
Executive shall be provided with term life insurance providing a $3,000,000
death benefit to Executive's designated beneficiaries. With respect to the
pension or retirement benefits payable to Executive, Executive's service
credited for purposes of determining Executive's benefits and vesting shall be
determined in accordance with the terms of the applicable plan or program.
Nothing in this Section 3(c), in and of itself, shall be construed to limit the
ability of the Company to amend or terminate any particular plan, program or
arrangement.

                                      -2-


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                 (ii) Vacation. During the Term, the Executive shall be entitled
to the number of paid vacation days in each calendar year determined by the
Company from time to time for its senior executive officers, but not less than
five weeks in any calendar year. The Executive shall also be entitled to all
paid holidays given by the Company to its senior officers. Vacation days which
are not used during any calendar year may not be accrued, nor shall Executive be
entitled to compensation for unused vacation days.

                (iii) Perquisites. During the Term, Executive shall be entitled
to receive such perquisites (e.g., fringe benefits) as are generally provided to
other senior officers of the Company in accordance with the then current
policies and practices of the Company.

                (iv) Business Expenses. During the Term, the Company shall pay
or reimburse Executive for all reasonable expenses incurred or paid by Executive
in the performance of Executive's duties hereunder, upon presentation of expense
statements or vouchers and such other information as the Company may reasonably
require and in accordance with the generally applicable policies and practices
of the Company.

            4. Employment Termination. The Term of employment under this
Agreement may be earlier terminated only as follows:

                (a) Cause. For purposes hereof, a termination by the Company for
"Cause" shall mean termination by action of at least two-thirds of the members
of the Board of Directors of the Company at a meeting duly called and held upon
at least 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 were entitled to be present and given reasonable
opportunity to be heard) because of (i) Executive's conviction of any felony
(whether or not involving the Company or any of its subsidiaries) involving
moral turpitude which subjects, or if generally known, would subject, the
Company or any of its subsidiaries to public ridicule or embarrassment, (ii)
fraud or other willful misconduct by Executive in respect of his obligations
under this Agreement, or (iii) willful refusal or continuing failure to attempt,
without proper cause and, other than by reason of illness, to follow the lawful
directions of the Board of Directors following thirty days' prior written notice
to Executive of his refusal to perform, or failure to attempt to perform such
duties and which during such thirty day period such refusal or failure to
attempt is not cured by the Executive. "Cause" shall not include a bona fide
disagreement over a corporate policy, so long as Executive does not willfully
violate on a continuing basis specific written directions from the Board of
Directors, which directions are consistent with the provisions of this
Agreement. 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.

                (b) Without Cause. Notwithstanding anything to the contrary
contained in this Agreement, the Company (with the affirmative vote of
two-thirds of the entire membership of the Board at a meeting of the Board
called and held for the purpose) may, at any time after at least 90 days' prior
written notice in accordance with Section 4(e) hereof to the Executive,
terminate the Executive's employment hereunder without Cause.

                                      -3-
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            (c) Death or Disability. If Executive dies, his employment shall
terminate as of the date of death. If Executive develops a disability, the
Company may terminate Executive's employment hereunder. As used in this
Agreement, the term "disability"shall mean incapacity due to physical or mental
illness which has caused the Executive to be unable to substantially perform his
duties with the Company on a full time basis for (i) a period of twelve
consecutive months, or (ii) for shorter periods aggregating more than twelve
months in any twenty-four month period. During any period of Disability, the
Executive agrees to submit to reasonable medical examinations upon the
reasonable request, and at the expense, of the Company.

            (d) Good Reason. The Executive may terminate the Executive's
employment for Good Reason at any time during the term of this Agreement. For
purposes of this Agreement, "Good Reason" shall mean any of the following:

                (i) the assignment to the Executive by the Company of any duties
inconsistent with the Executive's status with the Company or a substantial
alteration in the nature or status of the Executive's responsibilities from
those in effect immediately prior to the date hereof, or a reduction in the
Executive's titles or offices as in effect immediately prior to the date hereof,
or any removal of the Executive from, or any failure to reelect the Executive
to, any of such positions, except in connection with the termination of his
employment for Disability or Cause or as a result of the Executive's death or by
the Executive other than for Good Reason, or the termination by the Company's
Board of Directors of the Automatic Extension;

                (ii) a reduction by the Company in the Executive's Base Salary 
as in effect on the date hereof or as the same may be increased from time to
time during the term of this Agreement;

                (iii) a relocation of the Executive's principal place of
employment or the relocation of the Company's principal office or corporate
headquarters to a location outside the Borough of Kennett Square, Pennsylvania.

                (iv) any "Change of Control" (as defined in Section 6 hereof);

                (v) any material failure by the Company to comply with any of
the provisions of this Agreement;

                (vi) any termination of the Executive's employment for reasons 
other than death, Disability or Cause;

                (vii) the termination by the Board of Directors of the Automatic
Extension pursuant to Section 2(b) of this Agreement;

                                      -4-
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                (viii) the commencement of a proceeding or case, with or without
the application or consent of the Company or any of its subsidiaries, in any 
court or competent jurisdiction, seeking (A) the liquidation, reorganization,
dissolution or winding-up of the Company or its subsidiaries, or the composition
or readjustment of the debts of the Company or its subsidiaries, (B) the
appointment of a trustee, receiver, custodian, liquidator or the like for the
Company or its subsidiaries or of all or any substantial part of their
respective assets, or (C) any similar relief in respect of the Company or its
subsidiaries under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts.

            (e) Notice of Termination. Any termination, except for death,
pursuant to this Section 4 shall be communicated by a Notice of Termination. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.

            (f) Date of Termination. "Date of Termination" shall mean (i) if
this Agreement is terminated by the Company for disability, 30 days after Notice
of Termination is given to the Executive (provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period), (ii) if Executive's employment is terminated due to
Executive's death, on the date of death; (iii) if the Executive's employment is
terminated for Good Reason as a result of a Change of Control, as set forth in
Section 6 hereof or if the Executive's employment is terminated for any other
reason, the date specified in the Notice of Termination (which shall not be less
than 90 nor more than 180 days from the date such Notice of Termination is
given).

         5. Payments upon Termination.

            (a) Termination Due to Death or Disability. Upon the death or
Disability of the Executive (i) the Company shall pay to the Executive or his
estate (1) his full Base Salary and other accrued benefits earned up to the last
day of the month of the Executive's death or Disability, (2) all deferred
compensation of any kind, including, without limitation, any amounts earned
under any bonus plan, and (3) if any bonus, under any bonus plan, shall be
payable in respect of the year in which the Executive's death or Disability
occurs, such bonus(es) prorated up to the last day of the month of the
Executive's death or Disability and (ii) all restricted stock, stock option and
performance share awards made to the Executive shall automatically become fully
vested as of the date of death or Disability.

                                      -5-

<PAGE>

            (b) Termination for Cause. If the Executive's employment shall be
terminated for Cause, the Company shall pay the Executive: (i) his full Base
Salary through the Date of Termination (as defined in Section 4(f)) at the rate
in effect at the time Notice of Termination (as defined in Section 4(e)) is
given, and (ii) all deferred compensation of any kind. In addition, Executive
shall have 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. The Company shall have no
further obligations to the Executive under this Agreement.

            (c) Termination by Executive for Good Reason or by the Company for
Reasons other than for Cause, Death or Disability.

                (i) In the event (1) the Company terminates the Term without
cause, or (2) the Executive terminates the Term for Good Reason, then (I) the
Company shall make a lump-sum payment to the Executive equal to three times the
sum of (x) Executive's Average Base Salary (as defined below) plus (y)
Executive's Average Assumed Cash Incentive Compensation (as defined below); and
(II) all stock options, stock awards and similar equity rights, if any, shall
vest and become exercisable immediately prior to the termination of the Term and
remain exercisable through their original terms with all rights. "Executive's
Average Base Salary" means the (x) Executive's Base Salary for the most recent
three years (including the current year) divided by (y) three. "Executive's
Average Assumed Cash Incentive Compensation" means (x) sum of (i) the value as
of the dates of grant (using a Black-Scholes valuation method) of all stock
options granted to Executive in consideration for services in any of the three
most recent fiscal years plus (ii) the amount of any cash bonus awarded to the
Executive in consideration for services in any of the three most recent fiscal
years divided by (y) three; provided that the Executive's Average Assumed Cash
Incentive Compensation shall not exceed 100% of the Executive's Average Base
Salary.

                (ii) Following termination of the Term for any reason, other 
than for Cause or upon the death of the Executive, the Company shall also
maintain in full force and effect, for the continued benefit of the Executive
for a period equal to the greater of (x) the period of the then current Term
without giving effect to such termination or (y) two (2) years without giving
effect to such termination, all employee benefit plans and programs to which the
Executive was entitled prior to the date of termination (including, without
limitation, the benefit plans and programs provided for herein) if the
Executive's continued participation is possible under the general terms and
provisions of such plans and programs. 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 allocations 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, medical, life insurance or disability plan or program is barred, the
Company shall obtain and pay for, on the Executive's behalf, individual
insurance plans, policies or programs which provide to the Executive health,
medical, life and disability insurance coverage which is equivalent to the
insurance coverage to which the Executive was entitled prior to the date of
termination.

                                      -6-


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            6. Change of Control.

                  (a) Upon a Change of Control (as defined below), the Executive
may terminate the Term upon notice to the Company, effective as set forth in
such notice (i) for any reason or for no reason during the initial ninety (90)
day period following the date of such Change of Control, or (ii) at any time,
within twenty-four (24) months following the date of a Change of Control, if any
other event constituting Good Reason hereunder continues for more than ten (10)
days after the Executive delivers notice thereof to the Company. The failure of
Executive to exercise his rights hereunder following an event constituting a
Change of Control shall not preclude Executive from exercising such rights
following the occurrence of a subsequent Change of Control event, even if
related to a prior Change of Control Event.

            (b) Upon (i) the execution of a definitive agreement (including,
without limitation, any "lock-up" or voting agreement with any of the Company's
principal stockholders) which contemplates a transaction, or (ii) the
commencement of any tender or exchange offer or similar transaction for or
involving the Company's securities, which, in the case of any transaction of the
type described by clause (i) or (ii), if consummated, could result in a Change
of Control, all restricted stock, stock option and performance share awards made
to the Executive shall become automatically fully vested and exercisable in
order to provide the Executive with a reasonable time period to enable the
Executive to obtain the economic benefit of the contemplated transaction with
respect to all restricted stock, stock option and performance share awards then
held by him. Such restricted stock options and performance share awards shall
become automatically exercisable and shall remain exercisable through their
original terms with all rights; provided, however, in the event the transaction
contemplated by the definitive agreement referred to above is not consummated
and such definitive agreement is terminated, all accelerated restricted stock,
stock options and awards shall be deemed restored to the vesting schedules in
effect at the time of execution of such definitive agreement.

            (c) For purposes of this Agreement, the term "Change of Control"
shall mean the happening of any of the following:

                (i) when any "person" as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Section 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d)
of the Exchange Act but excluding the Company and any subsidiary thereof and any
employee benefit plan sponsored or maintained by the Company or any subsidiary
(including any trustee of such plan acting as trustee), directly or indirectly,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
as amended from time to time), of securities of the Company representing 25
percent or more of the combined voting power of the Company's then outstanding
securities;

                                      -7-

<PAGE>


            (ii) when, during any period of 24 consecutive months after the date
of this Agreement, the individuals who, at the beginning of such period,
constitute the Board (the "Incumbent Directors") cease for any reason other than
death to constitute at least a majority thereof; provided that a director who
was not a director at the beginning of such 24-month period shall be deemed to
have satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such 24-month
period) or by prior operation of this Section 6(d)(ii); or

            (iii) the occurrence of a transaction requiring stockholder approval
for the acquisition of the Company by an entity other than the Company or a
subsidiary through purchase of assets, or by merger, or otherwise.

         7. Certain Tax Matters. The Company shall indemnify and hold the
Executive harmless from and against (i) the imposition of excise tax (the"Excise
Tax") under Section 4999 of the Internal Revenue Code of 1986, as amended (or
any successor provision thereto, the "Code"), on any payment made under this
Agreement (including any payment made under this paragraph) and any interest,
penalties and additions to tax imposed in connection therewith, and (ii) any
federal, state or local income tax imposed on any payment made pursuant to this
paragraph. The Executive shall not take the position on any tax return or other
filing that any payment made under this Agreement is subject to the Excise Tax,
unless, in the opinion of independent tax counsel reasonably acceptable to the
Company, there is no reasonable basis for taking the position that any such
payment is not subject to the Excise Tax under U.S. tax law then in effect. If
the Internal Revenue Service makes a claim that any payment or portion thereof
is subject to the Excise Tax, at the Company's election, and the Company's
direction and expense, the Executive shall contest such claim; provided,
however, that the Company shall advance to the Executive the costs and expenses
of such contest, as incurred. For the purpose of determining the amount of any
payment under clause (ii) of the first sentence of this paragraph, the Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation applicable to individuals in the calendar year in which
such indemnity payment is to be made and state and local income taxes at the
highest marginal rates of taxation applicable to individuals as are in effect in
the jurisdiction in which the Executive is resident, net of the reduction in
federal income taxes that is obtained from deduction of such state and local
taxes.

         8. Executive's Covenants.

                                      -8-

<PAGE>


            (a) Nondisclosure. At all times during and after the Term, Executive
shall keep confidential and shall not, except with Company's express prior
written consent, or except in the proper course of his employment with Company,
directly or indirectly, communicate, disclose, divulge, publish, or otherwise
express, to any Person, or use for his own benefit or the benefit of any Person,
any trade secrets, confidential or proprietary knowledge or information, no
matter when or how acquired concerning the conduct and details of Company's
business, including without limitation, names of customers and suppliers,
marketing methods, trade secrets, policies, prospects and financial condition.
For purposes of this Section 8, confidential information shall not include any
information which 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.

            (b) Non-Competition. During the Term hereof and for a period of two
(2) years thereafter, Executive shall not, except with Company's express prior
written consent, directly or indirectly, in any capacity, for the benefit of any
Person:

                (i) Solicit any Person who is or during such period becomes a
customer, supplier, employee, salesman, agent or representative of Company, in
any manner which interferes or might interfere with such Person's relationship
with Company, or in an effort to obtain such Person as a customer, supplier,
employee, salesman, agent, or representative of any business in competition with
Company which conducts operations within 15 miles of any office or facility
owned, leased or operated by Company or in any county, or similar political
subdivision, in which the Company conducts substantial business.

                (ii) Establish, engage, own, manage, operate, join or control,
or participate in the establishment, ownership (other than as the owner of less
than one percent 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 Company, if such Person has any
office or facility at any location within 15 miles of any office or facility
owned, leased or operated by Company or conducts substantial business in any
county, or similar political subdivision, in which the Company conducts
substantial business, or act or conduct himself in any manner which he would
have reason to believe inimical or contrary to the best interests of Company.

            (c) Enforcement. Executive acknowledges that any breach by him of
any of the covenants and agreements of this Section 8 ("Covenants") will result
in irreparable injury to Company for which money damages could not adequately
compensate Company, and therefore, in the event of any such breach, Company
shall be entitled, in addition to all other rights and remedies which Company
may have at law or in equity, to have an injunction issued by any competent
court enjoining and restraining Executive and/or all other Persons involved
therein from continuing such breach. The existence of any claim or cause of
action which Executive or any such other Person may have against Company shall
not constitute a defense or bar to the enforcement of any of the Covenants. If
Company is obliged to resort to litigation to enforce any of the Covenants which
has a fixed term, then such 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.

            (d) Consideration. Executive expressly acknowledges that the
Covenants are a material part of the consideration bargained for by Company and,
without the agreement of Executive to be bound by the Covenants, Company would
not have agreed to enter into this Agreement.

                                      -9-
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            (e) Scope. If any portion of any Covenant 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 Covenants is determined to be unenforceable
because of its scope, duration, geographical area or similar factor, then 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 form.

            9. No Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.

            (a) The Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination, or otherwise.
The amounts payable to Executive under Section 5 hereof shall not be treated as
damages but as severance compensation to which Executive is entitled by reason
of termination of his employment in the circumstances contemplated by this
Agreement.

            (b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely as
a result of the passage of time, under any benefit plan, employment agreement or
other contract, plan or arrangement.

         10. Miscellaneous.

            (a) Notices. All notices, requests, demands, consents or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if and when (i) delivered
personally, (ii) mailed by first class certified mail, return receipt requested,
postage prepaid, or (iii) sent by a nationally recognized express courier
service, postage or delivery changes prepaid, with receipt, or (iv) delivered by
telecopy (with receipt, and with original delivered in accordance with any of
(i), (ii) or (iii) above) to the parties at their respective addresses stated
below or to such other addresses of which the parties may give notice in
accordance with this Section.

                           If to Company, to:

                           Genesis Health Ventures, Inc.
                           101 East State Street
                           Kennett Square, PA 19348

                           Attention: Law Department
                           Attention: Chairman and Chief Executive Officer


                                      -10-
<PAGE>


with a copy to:

                           Blank Rome Comisky & McCauley LLP
                           One Logan Square
                           Philadelphia, PA 19103

                           Attention:  Stephen E Luongo, Esquire


                           If to Executive, to:

                           Richard R. Howard
                           2280 S. Chester Springs Road
                           Chester Springs, PA 19425

            (b) Entire Understanding. This Agreement sets forth the entire
understanding between the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous, written, oral, expressed or implied,
communications, agreements and understandings with respect to the subject matter
hereof.

            (c) Modification. This Agreement shall not be amended, modified,
supplemented or terminated except in writing signed by both parties. No action
taken by Company hereunder, including without limitation any waiver, consent or
approval, shall be effective unless approved by a majority of the Board of
Directors.

            (d) Termination of Prior Employment Agreements. All prior employment
agreements between Executive and Company and/or any of its affiliates (and any
of their predecessors) are hereby terminated as of the date hereof as fully
performed on both sides.

            (e) Assignability and Binding Effect. This Agreement shall inure to
the benefit of and shall be binding upon the Company and its successors and
permitted assigns and upon Executive and his heirs, executors, legal
representatives, 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, and any such attempted assignment, transfer, pledge,
encumbrance, hypothecation or other disposition without such consent shall be
null and voice without effect.

            (f) Severability. If any provision of this Agreement is construed to
be invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.

                                      -11-
<PAGE>


            (g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original
hereof, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one counterpart hereof.

            (h) Section Headings. Section and subsection headings in this
Agreement are inserted for convenience of reference only, and shall neither
constitute a part of this Agreement nor affect its construction, interpretation,
meaning or effect.

            (i) References. All words used in this Agreement shall be
construed to be of such number and gender as the context requires or permits.

            (j) Controlling Law. This Agreement is made under, and shall be
governed by, construed and enforced in accordance with, the substantive laws of
the Commonwealth of Pennsylvania applicable to agreements made and to be
performed entirely therein.

            (k) Settlement of Disputes. The Company and Executive agree that any
claim, dispute or controversy arising under or in connection with this
Agreement, or otherwise in connection with Executive's employment by the Company
(including, without limitation, any such claim, dispute or controversy arising
under any federal, state or local statute, regulation or ordinance or any of the
Company's employee benefit plans, policies or programs) shall be resolved solely
and exclusively by binding arbitration. The arbitration shall be held in Chester
County, Pennsylvania (or at such other location as shall be mutually agreed by
the parties). The arbitration shall be conducted in accordance with the
Expedited Employment Arbitration Rules (the "Rules") of the American Arbitration
Association (the "AAA") in effect at the time of the arbitration, except that
the arbitrator shall be selected by alternatively striking from a list of five
arbitrators supplied by the AAA. All fees and expenses of the arbitration,
including a transcript if either requests, shall be borne equally by the
parties. 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, experts, witnesses, and preparation and
presentation of proofs and post-hearing briefs (unless the party prevails on a
claim for which attorney's fees are recoverable under the Rules). Any action to
enforce or vacate the arbitrator's award shall be governed by the Federal
Arbitration Act, if applicable, and otherwise by applicable state law. If either
the Company or Executive pursues any claim, dispute or controversy against the
other in a proceeding other than the arbitration provided for herein, the
responding party shall be entitled to dismissal or injunctive relief regarding
such action and recovery of all costs, losses and attorney's fees related to
such action.

            (l) Approval and Authorizations. The execution and the
implementation of the terms and conditions of this Agreement have been fully
authorized by the Board of Directors.
                                      -12-

<PAGE>


            (m) Indulgences, Etc. Neither the failure nor delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall the single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or any other right, remedy, power or privilege, nor shall
any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.

            (n) Legal Expenses. In the event that the Executive institutes any
legal action to enforce his rights under, or to recover damages for breach of
this Agreement, the Executive, if he is the prevailing party, shall be entitled
to recover from the Company any actual expenses for attorney's fees and
disbursements incurred by him.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above mentioned, under seal, intending to be legally bound
hereby.

                                    COMPANY:


Attest:


                                              By: 
----------------------------------            ----------------------------------
Secretary                                        President

(Corporate Seal)


                                   EXECUTIVE:


                                               ---------------------------------
                                               Vice Chairman