Exhibit 10.43
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, dated as of March 31, 1999 by and between McKesson HBOC, Inc.
(the "Company"), a Delaware corporation with its principal office at Xxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, and Xxxx X. Xxxxxxx ("Executive").
R E C I T A L S
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A. The Company, in its business, develops and uses certain trade secrets,
pricing and marketing strategies, new products, customer lists, computer
software, and other confidential and proprietary information and data (as
hereinafter defined, "Confidential Information"). Such Confidential
Information will necessarily be communicated to or acquired by Executive by
virtue of his employment with the Company, and the Company has spent time,
effort and money to develop such Confidential Information and to promote
and increase its goodwill; and
B. The Company desires to retain the services of, and employ, Executive on its
own behalf and on behalf of its affiliated companies for the period
provided in this Agreement and, in so doing, to protect its Confidential
Information and goodwill, and Executive is willing to accept employment by
the Company on a full-time basis for such period, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions of this Employment
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Agreement, the Company agrees to employ Executive, and Executive agrees to
accept employment from, and remain in the employ of, the Company for the
period stated in Paragraph 3 hereof.
2. Position and Responsibilities. During the period of his employment
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hereunder, Executive agrees to serve the Company, and the Company shall
employ Executive, as Senior Vice President and President, Customer
Operations or in such other senior corporate executive capacity or
capacities as may be specified from time to time by the Chief Executive
Officer of the Company.
3. Term and Duties.
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(a) Term of Employment. The period of Executive's employment under this
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Agreement shall be deemed to have commenced on the date of this
Agreement and shall continue until March 31, 2003.
(b) Duties. During the period of his employment hereunder and except for
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illness, reasonable vacation periods, and reasonable leaves of
absence, Executive shall devote his best efforts and all his business
time, attention, skill and efforts to the business and affairs of the
Company and its affiliated companies, as such business and affairs now
exist and as they may be hereafter changed or added to, under and
pursuant to the general direction of the Board of Directors of the
Company; provided, however, that,
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with the approval of the Chief Executive Officer of the Company,
Executive may serve, or continue to serve, on the boards of directors
of, hold any other offices or positions in, companies or organizations
which, in such officer's judgment, will not present any conflict of
interest with the Company or any of its subsidiaries or affiliates or
divisions, or materially affect the performance of Executive's duties
pursuant to this Agreement. The Company shall retain full direction
and control of the means and methods by which Executive performs the
services for which he is employed hereunder. The services which are to
be employed by Executive hereunder are to be rendered in the State of
Illinois, or in such other place or places in the United States or
elsewhere as may be determined from time to time by the Board of
Directors of the Company, but are to be rendered primarily at the
Company's principal place of business in the State of Illinois. Unless
and until otherwise agreed between the Company and the Executive, the
Executive shall be at liberty to maintain his residence in or around
the Chicago Area, State of Illinois.
4. Compensation and Reimbursement of Expenses; Other Benefits;
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(a) Compensation. During the period of employment under this Agreement,
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Executive shall be paid a salary, in monthly or semi-monthly
installments, at the rate of Four Hundred Twenty Five Thousand Dollars
($425,000.00) per year, or such higher salary as may be from time to
time approved by the Board of Directors (or any duly authorized
Committee thereof) of the Company (any such higher salary so approved
to be thereafter the minimum salary payable to Executive during the
remainder of the term hereof), plus such additional incentive
compensation, if any, as may be voted to him yearly by the Board of
Directors (or any duly authorized Committee thereof). Executive shall
also receive an automobile allowance from Company of One Thousand
Dollars ($1000) per month during the term of this Agreement.
(b) Reimbursement of Expenses. The Company shall pay or reimburse
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Executive, in accordance with its normal policies and practices, for
all reasonable travel and other expenses incurred by Executive in
performing his obligations under this Agreement. The Company further
agrees to furnish Executive with such assistance and accommodations as
shall be suitable to the character of Executive's position with the
Company and adequate for the performance of his duties hereunder.
(c) Other Benefits. During the period of employment under this Agreement,
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Executive shall be entitled to receive all other benefits of
employment generally available to other members of the Company's
management and those benefits for which key executives are or shall
become eligible, when and as he becomes eligible therefor, including
without limitation, group health and life insurance benefits, short
and long-term disability plans, deferred compensation plans, and
participation in the Company's Profit-Sharing Investment Plan,
Employee Stock Purchase Plan, Executive Medical Plan, 1989 Management
Incentive Plan, Long Term Incentive Plan, 1984 Executive Benefit
Retirement Plan ("EBRP"), 1988 Executive Survivor Benefits Plan
("ESBP"), Stock Purchase Plan and 1994 Restricted Stock and Stock
Option Plan (or any similar plan or arrangement), and the Company
agrees that none of such benefits shall be altered in any manner in
such a way as to reduce any then existing entitlement of Executive
thereunder.
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(d) EBRP and ESBP Designations. Subject to the terms of the respective
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Plans, Executive is hereby designated as a participant in both the
EBRP and the EBSP. Upon satisfaction of the minimum service
requirement with Company for vesting of benefits pursuant to the terms
of the EBRP, Executive shall receive credit for all prior service with
HBO & Company for purposes of said Plan.
5. Initial Incentive Grants. Executive shall receive the
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following initial incentive awards specified in subparagraphs (a) through
(c) below:
(a) Retention Bonus. Company shall pay Executive a special, one-time bonus
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of One Million Five Hundred Thousand Dollars ($1,500,000.00) as soon
as practicable following execution of this Agreement. This bonus is
not to be construed as a salary type payment but rather a retention
payment, to be retained by Executive if and only if he remains
employed by Company one year following execution of this Agreement.
Executive acknowledges and agrees that, in the event he voluntarily
leaves the Company's employment within one (1) year of the date
hereof, he shall promptly (and in no event later than thirty (30) days
following cessation of employment) return one-half of said bonus
(i.e., $750,000.00) to Company.
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(b) Stock Options. Executive has received a grant of One Million
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(1,000,000) non-qualified stock options, which options will vest at
the rate of fifty percent (50%) at the end of two years from the date
hereof, seventy-five percent (75%) at the end of three years and one
hundred percent (100%) at the end of the fourth year from the date
hereof. Such options are otherwise subject to the terms and conditions
of the plan or arrangement pursuant to which they were issued.
(c) LTIP Cash Award. Company shall grant Executive a Long-Term Incentive
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Plan award of Five Million Dollars ($5,000,000.00), payable, if
earned, fifty percent (50%) at the end of three years, and fifty
percent (50%) at the end of five years, in each case, from the date
hereof. Executive acknowledges that payments of the award are
contingent and based upon Company's total shareholder return ("TSR").
Full awards will be paid if, at the end of each measurement period,
the TSR is at or above the 75th percentile of the S&P 500 (excluding
therefrom financial institutions). Partial awards will be paid as
follows: 75% if TSR is between the 60th and 75th percentile; 50% if
TSR is between the 50th and 60th percentile; and 25% if TSR is below
the 50th percentile.
6. Benefits Payable Upon Disability or Death.
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(a) Disability Benefits. If Executive shall be prevented during the term
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of this Agreement from properly performing services hereunder by
reason of illness or other physical or mental incapacity, the Company
shall continue to pay Executive his then current salary hereunder
during the period of his disability; provided, however, that if
Executive is disabled for a continuous period exceeding twelve (12)
calendar months, then the Company's obligations hereunder shall cease
and terminate.
(b) Death Benefits. In the event of the death of Executive during the term
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of this Agreement, Executive's salary payable hereunder shall continue
to be paid to Executive's surviving spouse, or if there is no spouse
surviving, then to Executive's designee or representative (as the case
may be) through the six-month period following
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the end of the calendar month in which death occurs. Thereafter, all
of Company's obligations hereunder shall cease and terminate.
(c) Other Plans. The provisions of this Paragraph 6 shall not affect any
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rights of Executive's heirs, administrators, executors, legatees,
beneficiaries or assigns under the Company's Profit-Sharing Investment
Plan, EBRP, Long Term Incentive Plan, ESBP, Restricted Stock and Stock
Option Plan (or any similar plan or arrangement), any stock purchase
plan or any other employee benefit plan of the Company, and any such
rights shall be governed by the terms of the respective plans.
7. Obligations of Executive During and After Employment.
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(a) No Competition. Executive agrees that during the term of his
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employment under this Agreement, and for the "Restricted Period" (as
hereinafter defined) thereafter following the termination of
Executive's employment with the Company for any reason, he will not,
within the United States, (i) participate, engage or have any interest
in, directly or indirectly, any person, firm, corporation, or business
(whether as an employee, officer, director, agent, creditor, or
consultant or in any other capacity which calls for the rendering of
personal services, advice, acts of management, operation or control)
which carries on any business or activity competitive with the Company
or any affiliated company about whose business and operations he has
acquired confidential information (including, without limitation, any
products or services sold, investigated, developed or otherwise
pursued by the Company or any affiliated company at any time or from
time to time). For purposes of this Paragraph 7(a), the "Restricted
Period" shall be deemed to be one year.
(b) Unauthorized Use of Confidential Information. Executive acknowledges
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and agrees that (i) during the course of his employment with HBO &
Company ("HBOC") and with the Company, Executive has or will have
produced and/or has had or will have access to Confidential
Information, as hereinafter defined, and (ii) the unauthorized use or
sale of any such Confidential Information at any time would harm the
Company and would constitute unfair competition with Company.
Therefore, during his employment by Company or by an affiliated
company, and for a period of five (5) years after termination of such
employment, Executive agrees to hold in confidence Confidential
Information and not, directly or indirectly, disclose, publish, or
otherwise make available to the public or to any individual, firm or
corporation, or use, copy or make lists of any Confidential
Information, except to the extent expressly authorized by Company in
writing. Executive further agrees that all Confidential Information,
together with all records, files, drawings, documents, equipment, and
the like, or copies thereof, relating to Company's business, or the
business of an affiliated company, which Executive shall prepare, or
use, or come into contact with, shall be and remain the sole property
of Company, or of an affiliated company, and shall not be removed
(except to allow Executive to perform his responsibilities hereunder
while traveling for business purposes or otherwise working away from
his office) from the Company's or the affiliated company's premises
without its prior written consent, and shall be promptly returned to
Company upon termination of employment with Company and its affiliated
companies.
(c) Confidential Information Defined. For purposes of this Agreement,
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"Confidential Information" means all information (whether reduced to
written, electronic, magnetic
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or other tangible form) acquired in any way by Executive during the
course of his employment with the Company concerning the products,
projects, activities, business or affairs of the Company or the
Company's customers, including, without limitation, (i) all
information concerning trade secrets of the Company, including
computer programs, system documentation, special hardware, product
hardware, related software development, manuals, formulae, processes,
methods, machines, compositions, ideas, improvements or inventions of
Company and its affiliated companies, (ii) all sales and financial
information concerning the Company, (iii) all customer and supplier
lists, (iv) all information concerning products or projects under
development or marketing plans for any of those products or projects,
and (v) all information in any way concerning the products, projects,
activities, business or affairs of customers of the Company which was
furnished to him by the Company or any of its agents or customers;
provided, however, that Confidential Information does not include
information which (A) becomes available to the public other than as a
result of a disclosure by Executive, (B) was available to him on a
non-confidential basis outside of his employment with the Company, or
(C) becomes available to him on a non-confidential basis from a source
other than the Company or any of its agents, creditors, suppliers,
lessors, lessees or customers. "Company" as used herein includes all
affiliates of the Company including, without limitation, HBOC.
(d) Nonsolicitation. Executive recognizes and acknowledges that it is
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essential for the proper protection of the business of the Company
that Executive be restrained for a reasonable period following the
termination of Executive's employment with the Company from: (1)
soliciting or inducing any employee of the Company to leave the employ
of the Company; (2) hiring or attempting to hire any employee of the
Company; or (3) soliciting the trade of or trading with the customers
of the Company for any competitive business purpose. Accordingly,
Executive agrees that during the term of his employment under this
Agreement, and for the Restricted Period thereafter following the
termination of Executive's employment with the Company for any reason,
Executive shall not, directly or indirectly, (i) hire, solicit, aid in
or encourage the hiring and/or solicitation of, contract with, aid in
or encourage the contracting with, or induce or encourage to leave the
employment of the Company, any employee of the Company; and (ii)
solicit, aid in or encourage the solicitation of, contract with, aid
in or encourage the contracting with, service, or contact any person
or entity which is, or was, within three years prior to the
termination of Executive's employment with the Company, a customer or
client of the Company or HBOC, for the purpose of offering or selling
a product or service competitive with any of those offered by the
Company. For purposes of this Paragraph 7(d), the "Restricted Period"
shall be deemed to be two (2) years.
(e) Remedy for Breach. Executive agrees that in the event of a breach or
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threatened breach of any of the covenants contained in this Paragraph
7, the Company shall have the right and remedy to have such covenants
specifically enforced by any court having jurisdiction, it being
acknowledged and agreed than any material breach of any of the
covenants will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.
(f) Blue-Penciling. Executive acknowledges and agrees that the
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noncompetition and nonsolicitation agreements contained herein are
reasonable and valid in geographic, temporal and subject matter scope
and in all other respects, and do not impose
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limitations greater than that are necessary to protect the goodwill,
Confidential Information, and other business interests of the Company,
Nevertheless, if any court determines that any of said noncompetition
and other restrictive covenants and agreements, or any part thereof,
is unenforceable because of the duration or geographic scope of such
provision, such court shall have the power to reduce the duration or
scope of such provision, as the case may be, and, in its reduced form,
such provision shall then be enforceable to the maximum extent
permitted by applicable law.
(g) Survivability. Paragraphs 7(a), (b) and (d) shall survive the
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termination or expiration of this Agreement.
8. Termination.
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(a) For Cause. Notwithstanding anything herein to the contrary, the
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Company may, without liability, terminate Executive's employment
hereunder for cause at any time upon written notice from the Board of
Directors (or any duly authorized Committee thereof) specifying such
cause, and thereafter the Company's obligations hereunder shall cease
and terminate; provided, however that such written notice
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shall not be delivered until after the Board of Directors (or
any duly authorized Committee thereof) shall have given Executive
written notice specifying the conduct alleged to have constituted such
cause and Executive has failed to cure such conduct, if curable,
within fifteen (15) days following receipt of such notice. As used
herein, the term "cause" shall mean (i) Executive's willful
misconduct, habitual neglect, dishonesty or other intentional actions
(or failures to act) which are materially and demonstrably injurious
to the Company, or (ii) a material breach by Executive of one or more
terms of this Agreement.
(b) Other than for Cause; Performance, Reorganization. Notwithstanding
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anything herein to the contrary, Company may also terminate
Executive's employment (without regard to any general or specific
policies of Company relating to the employment or termination of its
employees) should (i) Executive fail to perform his duties hereunder
in a manner satisfactory to the Chief Executive Officer of Company,
provided that Executive shall first be given written notice of such
unsatisfactory performance and a period of ninety (90) days to improve
such performance to a level deemed acceptable to the Chief Executive
Officer or, (ii) Executive's position be eliminated as a result of a
reorganization or restructuring of Company or its affiliated
companies.
(c) Obligations of Company on Termination of Employment.
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i) If Company terminates Executive's employment pursuant to
subparagraph 8(a) above, then all of Company obligations
hereunder shall immediately cease and terminate. Executive shall
thereupon have no further right or entitlement to additional
salary, incentive compensation payments or awards, or any
perquisites from Company whatsoever, and Executive's rights, if
any, under Company's employee and executive benefit plans shall
be determined solely in accordance with the express terms of the
respective plans;
ii) If Company terminates Executive's employment pursuant to
subparagraph 8(b) above, then, in lieu of any benefits payable
pursuant to Company's Executive Severance Policy (so long as the
compensation and benefits payable hereunder
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are equal to or greater than those payable under said Policy) and
in complete satisfaction and discharge of all of its obligations
to Executive hereunder, Company shall, provided Executive is not
in breach of the provisions of Paragraph 7 hereof, and except as
provided in Section 9(c) below, (a) continue Executive's then
base salary, without increase, for the remainder of the term of
this Agreement, provided, however that Company's obligation to
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make such salary payments shall be reduced by any compensation
received by Executive from a subsequent employer during such
term, (b) consider Executive for a bonus under the terms of
Company's Management Incentive Plan for the fiscal year in which
termination occurs (but not for any subsequent year) provided
that any such bonus, if earned, shall be pro-rated to reflect the
portion of the year for which Executive was actively employed,
(c) continue Executive's automobile allowance and Executive
Medical Plan benefits until the earlier of the expiration date of
this Agreement or the effective date of Executive's medical
coverage under a subsequent employer's plan of policy, (d)
subject to both (x) the express special forfeiture and repayment
provisions of the respective plans (or the terms and conditions
applicable thereto) and (y) the provisions of subparagraph
(c)(iv) below, continue the accrual and vesting of Executive's
rights, benefits and existing awards for the remainder of the
term of this Agreement for purposes of the EBRP, ESBP, and the
Stock Option and Restricted Stock Plan (or any similar plan or
arrangement), provided, however, that (unless the Board of
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Directors, or any duly authorized Committee, in its sole
discretion, determines otherwise) Executive shall in no event
receive or be entitled either to additional grants or awards
subsequent to the date of termination, or "Approved Retirement"
status, under the foregoing plans, (e) continue Executive's
participation in the Company's Long Term Incentive Plan for the
remainder of the term of this Agreement (pro-rating performance
periods as of the date Executive ceased rendering services to
Company), provided, that Executive shall not participate in any
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way whatsoever in any performance period commencing subsequent to
the date of termination, and (f) terminate Executive's
participation in Company's tax-qualified profit-sharing plans and
stock purchase plans, pursuant to the terms of the respective
plans, as of the date of Executive's termination of employment.
iii) Company and Executive agree that if Executive resigns or
otherwise voluntarily leaves his employment with Company prior to
the expiration of this Agreement (other than for Good Reason as
defined in the Termination Agreement between the parties dated
August 28, 1996 (the "Termination Agreement")), Company shall be
under no further obligation to make any additional payments or
provide any benefits hereunder.
iv) For purposes of subparagraph (c)(ii) above, (a) any stock options
granted to Executive prior to January 1, 1999 shall continue to
vest according to their original vesting schedule during the term
of this Agreement, and (b) any stock options granted to Executive
subsequent to January 1, 1999 which are not vested as of the date
Executive ceases to render services to Company shall be cancelled
and of no further force or effect.
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9. General Provisions.
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(a) Executive's rights and obligations under this Agreement shall not be
transferable by assignment or otherwise. Nothing in this Agreement
shall prevent the consolidation of Company with, or its merger into,
any other corporation, or the sale by Company of all or substantially
all of its properties or assets; and this Agreement shall inure to the
benefit of, be binding upon and be enforceable by, any successor
surviving or resulting corporation, or other entity to which such
assets shall be transferred. This Agreement shall not be terminated by
the voluntary or involuntary dissolution of the Company.
(b) This Agreement (together with the Termination Agreement) and the
rights of Executive with respect to the benefits of employment
referred to in Paragraph 4(c) constitute the entire agreement between
the parties hereto in respect of the employment of Executive by
Company. This Agreement supersedes and replaces all prior oral and
written agreements, understandings, commitments, and practices between
the parties.
(c) In the event Executive's employment with Company shall terminate under
circumstances otherwise providing Executive with a right to benefits
under both Section 5 of the Termination Agreement and Section 8(c)(ii)
of this Agreement, Executive shall be entitled to receive the greater
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of the benefits provided therein, calculated individually, without
duplication.
(d) Any dispute, controversy or claim arising under or in connection with
this Agreement, or the breach hereof, shall be settled exclusively by
arbitration in accordance with the Rules of the American Arbitration
Association then in effect. Judgment upon the award rendered by the
arbitrator may be entered in any court of competent jurisdiction. Any
arbitration held pursuant to this paragraph in connection with any
termination of Executive's employment shall take place in San
Francisco, California at the earliest possible date. If any proceeding
is necessary to enforce or interpret the terms of this Agreement, or
to recover damages for breach thereof, the prevailing party shall be
entitled to reasonable attorneys fees and necessary costs and
disbursements, not to exceed in the aggregate one percent (1%) of the
net worth of the other party, in addition to any other relief to which
he or it may be entitled.
(e) The provisions of this Agreement shall be regarded as divisible, and
if any of said provisions or any part thereof are declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts thereof
and the applicability thereof shall not be affected thereby.
(f) This Agreement may not be amended of modified except by a written
instrument executed by Company and Executive.
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(g) This Agreement and the rights and obligations hereunder shall be
governed by and construed in accordance with the laws of the State of
Illinois.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first above written.
McKESSON HBOC, INC.
A Delaware Corporation
By /s/
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Senior Vice President
ATTEST:
/s/ Xxxx X. Xxxxxxxx /s/ Xxxx X. Xxxxxxx
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Senior Vice President Executive
By the Authority of the
Compensation Committee
of the Board of Directors
of McKesson HBOC, Inc.
on January 27, 1999.
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