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EXHIBIT 2.06
AMENDMENT TO CHANGE
IN CONTROL SEVERANCE AGREEMENT
THIS AGREEMENT is made as of October 8, 1998, by and between
Allegiance Corporation, a Delaware corporation ("Company"), Cardinal Health,
Inc., an Ohio corporation ("Cardinal"), and Xxxxxx X. Xxxxxx ("Employee").
WHEREAS, Company and Employee have entered into a change in control
severance agreement under the Allegiance Corporation Change in Control Plan,
effective as of October 1, 1996 (the "Change in Control Agreement");
WHEREAS, Company has entered into an Agreement and Plan of Merger
Among Cardinal, BOXES Merger Corp. and Company, dated as of October 8, 1998 (the
"Merger Agreement");
WHEREAS, Company wishes to encourage the retention of Employee
following consummation of the merger contemplated by the Merger Agreement; and
WHEREAS, in connection with Company entering into the Merger
Agreement, Company and Employee have determined to amend the Change in Control
Agreement to, among other things, provide that certain modifications to
Employee's employment status following the consummation of the merger
contemplated by the Merger Agreement will not be treated as a basis for a "Good
Reason" termination by Employee under the Change in Control Agreement during the
Minimum Transition Period (as defined below) and to provide certain
modifications to the non-competition and non-solicitation provisions of the
Change in Control Agreement;
NOW, THEREFORE, in consideration of these mutual premises and the
mutual and dependent promises hereinafter set forth, the parties hereto agree as
follows:
1. Section 1 of the Change in Control Agreement is hereby amended by
deleting the second, third and fifth sentences of such Section, and by adding
the following sentences to the end of such Section:
Notwithstanding the foregoing, upon consummation of the merger (the
"Cardinal Merger") contemplated by the Agreement and Plan of Merger
Among Cardinal, BOXES Merger Corp. and Company, dated as of October
8, 1998 (the "Cardinal Merger Agreement"), the term of this
Agreement and Employee's Plan participation shall automatically be
extended for a period of sixty (60) months after the end of the
month in which the Cardinal Merger is consummated. Furthermore,
Employee may terminate this Agreement and his participation in the
Plan at any time by giving Company thirty (30) days' advance written
notice; provided, however, that in no case shall such termination of
this Agreement or participation in the Plan release Employee from
the provisions of Section 5 hereof.
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2. The first sentence of Section 2 of the Change in Control
Agreement is hereby amended by substituting the phrase "sixty (60) months after
the end of month in which the Cardinal Merger is consummated" for the phrase
"twenty-four (24) months following a Change in Control" in the introductory
paragraph to such Section.
3. Paragraph 2(c)(iii) of the Change in Control Agreement will not
apply to Cardinal stock options granted after the consummation of the Cardinal
Merger.
4. Section 5 of the Change in Control Agreement is hereby amended to
read in its entirety as follows:
5. NON-SOLICITATION AND NON-COMPETITION. In consideration for the
severance benefits called for under paragraph 2(c) and Section 3
above, Employee agrees that:
(a) during the greater of the twelve (12) month period following
his Date of Termination and the twenty-four (24) month period
following the end of the month in which the Cardinal Merger is
consummated, Employee will not, without the prior written consent
of Company, alone or in association with others, solicit on
behalf of Employee, or any other person, firm, corporation or
entity, any employee of Company, or any of its operating
divisions, subsidiaries or affiliates; provided, that Employee
shall be permitted to solicit one employee so long as such
solicitation does not interfere with any contractual relationship
of Company, or any of its operating divisions, subsidiaries or
affiliates; and
(b) during the twenty-four (24) month period following his Date
of Termination (the "Noncompete Period"), Employee will not,
without the prior written consent of Company, directly or
indirectly, engage or invest in, counsel or advise or be employed
by any of the entities set forth on Exhibit A attached to this
Agreement (the "Listed Entities"), or by any person, entity, firm
or corporation which is now an affiliate of any of the Listed
Entities, until such time during the Noncompete Period as such
Listed Entity is acquired or consolidated with any entity other
than any of the Listed Entities. Notwithstanding the foregoing,
Employee shall be entitled to passively own not more than four
and nine-tenths percent (4.9%) of any of the Listed Entities.
Should Employee fail to comply with the non-solicitation and/or
non-competition restrictions contained in this Section 5, this
Agreement shall immediately terminate and Employee shall forfeit any
remaining unpaid benefits under this Agreement and Company shall
have the right (in addition to, and not in lieu of, any other right
or remedy that may be available to it) to temporary and permanent
injunctive relief from a court of competent jurisdiction, without
posting any bond or other security and without the necessity of
proof of actual damage. With respect to any provision of this
Section 5 finally determined by a court of
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competent jurisdiction to be unenforceable, Employee and Company
hereby agree that such court shall have jurisdiction to reform this
Agreement or any provision hereof so that it is enforceable to the
maximum extent permitted by law, and the parties agree to abide by
such court's determination. If the non-solicitation or
noncompetition covenant of this Section 5 is determined to be wholly
or partially unenforceable in any jurisdiction, such determination
shall not be a bar to or in any way diminish Company's right to
enforce either such covenant in any other jurisdiction.
5. Section 8 of the Change in Control Agreement is hereby amended to
read in its entirety as follows:
8. TERMINATION FOR CAUSE AND GOOD REASON. Employee will be
considered to have been terminated for "Cause" if the termination is
by reason of Employee willfully engaging in conduct demonstrably and
materially injurious to Company, Employee being convicted of or
confessing to a crime involving dishonesty or moral turpitude or
Employee's willful and continued failure for a significant period of
time to perform Employee's duties after a demand for substantial
performance has been delivered to Employee by the Board of Directors
of Company which demand specifically identifies the manner in which
the Board believes that Employee has not substantially performed his
duties. Employee's termination shall be considered to have been for
"Good Reason" if Employee's termination is by reason of the
occurrence of any of the following events within twelve (12) months
after the end of the month in which the Cardinal Merger is
consummated (the "Minimum Transition Period") without Employee's
express written consent:
(a) a significant adverse change in the title or duties of
Employee, which change is inconsistent with Employee's position
as Vice-Chairman of Cardinal following the Cardinal Merger, or
the removal of Employee as a director of Cardinal without Cause;
(b) a reduction in or failure to pay any portion of Employee's
Annual Base Salary as in effect on the date of the Change in
Control or as the same may be increased from time to time
thereafter;
(c) the failure by Company to provide Employee with compensation
and benefits (including, without limitation, annual and long-term
incentives, bonus and other compensation plans and any vacation,
medical, hospitalization, life insurance, dental or disability
benefit plan), or cash compensation in lieu thereof, which are,
in the aggregate, no less favorable than those provided by
Company to Employee immediately prior to the occurrence of the
Change in Control;
(d) any material breach by Company of this Agreement; and
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(e) the failure of Company to obtain a satisfactory agreement
from any successor or assign of Company to assume and agree to
perform this Agreement (as amended), as required in Section 10 of
this Agreement.
If, during the Minimum Transition Period, Employee elects to
terminate Employee's employment for Good Reason, Employee shall so
notify Company in writing after the occurrence of the event
constituting Good Reason, specifying the basis for such termination.
If Company fails, within ten (10) days after receiving such written
notice, to remedy the facts and circumstances that provided Good
Reason, Employee's employment shall be deemed to have terminated for
Good Reason on the tenth day after Company receives such written
notice. If, during the Minimum Transition Period, Company does
remedy such facts and circumstances within such ten (10) days,
Employee shall be deemed to no longer have Good Reason, and shall
continue in the employ of Company as if no notice had been given.
Employee's continued employment after the longer of (i) the
expiration of sixty (60) days from any action which would constitute
Good Reason under paragraph 8(a) above and (ii) the expiration of
the Restricted Period (as defined below) shall constitute a waiver
of rights with respect to such action constituting Good Reason under
this Agreement. "Restricted Period" shall mean any period during
which Employee is prohibited from selling Cardinal common shares or
shares of Company common stock pursuant to the restrictions in
connection with the pooling-of-interests method of accounting under
XXX Xx. 00 or any other restrictions under federal or state
securities law; provided, that the Restricted Period shall in no
event extend beyond the expiration of six (6) months after the
consummation of the Cardinal Merger; and provided, further, that
there shall not be taken into account for purposes of determining
the Restricted Period any restrictions under federal or state
securities laws that arise as a result of actions of Employee after
the consummation of the Cardinal Merger.
Following the Minimum Transition Period, any termination of
Employee's employment (other than a termination by Company for
Cause, or a termination by reason of Employee's disability,
retirement or death) during the remainder of the term of this
Agreement, shall be treated as a termination by Employee for Good
Reason.
6. This Agreement shall be effective upon execution of the Cardinal
Merger Agreement, and may not be modified, waived or discharged unless such
modification, waiver or discharge is agreed to in writing and signed by each of
the parties. In the event of the termination of the Cardinal Merger Agreement
prior to the consummation of the Cardinal Merger, this Agreement shall be void
and of no further force or effect, and the Change in Control Agreement will
continue to remain in effect in accordance with its terms without amendment.
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EXHIBIT 2.06
IN WITNESS WHEREOF, Company, Cardinal and Employee have signed this
Agreement as of the date first written above.
ALLEGIANCE CORPORATION
By: ___________________________
Name:
Title:
CARDINAL HEALTH, INC.
By: ___________________________
Name:
Title:
______________________________
Xxxxxx X. Xxxxxx
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EXHIBIT A
AmeriSource
Bergen Xxxxxxxx (including Bergen Medical and any successor
in interest to the Bergen Medical business)
Bindley Western
X.X. Xxxxx
D & K Healthcare
McKesson (including General Medical and any successor
in interest to the General Medical business)
Xxxxxx & Xxxxxxx
Xxxxxx
Xxxxx & Minor
Omnicell
PSS World Medical
Xxxxx Xxxxxx
Medline
Diebold
ServiceMaster
Xxxxxxx Scientific
Maxxim
Safeskin
DeRoyal
VWR
