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EXHIBIT 10.01
EMPLOYMENT AGREEMENT
This is an agreement between Cardinal Health, Inc., an Ohio corporation
(the "Company" ) and Xxxxxxx X. Xxxxxx (the "Executive"), dated as of the 1st
day of July, 1999, to be performed and executed in Dublin, Ohio.
1. Employment Period. The Company shall employ the Executive, and the
Executive hereby accepts such employment, on the terms and conditions set forth
in this Agreement, for the period commencing on July 1, 1999 (the "Effective
Date") and ending on the third anniversary of the Effective Date (the
"Employment Period").
2. Position and Duties. (a) During the Employment Period, the Executive
shall be employed by the Company, and shall perform such duties and
responsibilities of an executive nature as may be determined from time to time
by the Company's Board of Directors (the "Board") or its lawfully designated
representative.
(b) During the Employment Period, the Executive shall devote his full
time and attention to the business and affairs of the Company, and shall use his
best efforts to promote and establish the business of the Company and to carry
out faithfully and efficiently the responsibilities assigned to him under this
Agreement. It shall not be considered a violation of the foregoing for the
Executive to (i) serve on corporate boards with the approval of Cardinal, (ii)
serve on civic or charitable boards or committees, and (iii) manage personal
investments, so long as such activities do not interfere with the performance of
the Executive's responsibilities under this Agreement.
3. Compensation. (a) Base Salary. During the Employment Period, the
Company shall pay the Executive a base salary (the "Base Salary") at an annual
rate of $336,050, payable in accordance with the Company's payroll practices for
management personnel, as in effect from time to time (but not less frequently
than monthly). During the Employment Period, the Base Salary shall be reviewed
for possible increase annually in accordance with the Company's normal payroll
practices for management personnel. Any increase in the Base Salary shall not
limit, expand or reduce any other obligation of the Company under this
Agreement.
(b) Annual Bonus. In addition to the Base Salary, during the Employment
Period the Executive shall be eligible to receive annual bonuses (each,
regardless of whether for a 12-month period or a different period, an "Annual
Bonus") pursuant to this Section 3(b). The Annual Bonus shall be determined and
paid at the sole discretion of the Company pursuant to the terms and conditions
of the Company's standard Management Incentive Plan as in effect from time to
time, or any successor thereto (the "MIP"), with an MIP potential equal to 85
percent of the Base Salary.
(c) Other Benefits. During the Employment Period, the Executive shall
be entitled to participate in the group health, life, disability insurance,
retirement savings and other employee benefit plans (collectively, "Group
Plans") generally offered to the Company's employees in accordance with the
standard terms and conditions of such plans as in effect from
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time to time. In addition, the Executive shall be eligible to participate in the
Company's Equity Incentive Plan or any successor thereto (the "Cardinal Stock
Plan"), although the actual awards and benefits, if any, to be granted to the
Executive thereunder shall be in the sole discretion of the Compensation and
Personnel Committee of the Company's Board of Directors. The Employee shall at
all times comply with the Company's policies on option exercises and the selling
and buying of Company stock.
(d) Expenses. The Company shall reimburse the Executive for all
reasonable business expenses incurred by the Executive in the performance of his
services hereunder for the Company, which expenses shall be substantiated to the
reasonable satisfaction of the Company, in a manner similar to that applicable
to other management personnel of the Company, and the Executive shall provide
all necessary records to reflect the reasonable business expenses incurred.
(e) Vacation. During the Employment Period, the Executive shall be
entitled to annual paid vacations as provided in the Company's vacation policy
as in effect as of the Effective Date, as it may be revised thereafter from time
to time.
4. Termination of Employment. (a) Death or Disability. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. The Company shall be entitled to terminate the Executive's
employment because of the Executive's Disability during the Employment Period.
"Disability" means the illness or disability of the Executive which prevents or
hampers the performance of his obligations hereunder, and which continues for a
consecutive period of one hundred and twenty (120) days or longer or an
aggregate period of one hundred and eighty (180) days or longer, in either
instance during the Employment Period. A termination of the Executive's
employment by the Company for Disability shall be communicated to the Executive
by written notice, and shall be effective upon receipt of such notice by the
Executive (the "Disability Effective Date").
(b) By the Company. The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause. "Cause"
shall mean (A) fraud, misappropriation, embezzlement or material misconduct on
the part of the Executive, (B) the Executive's (x) failure to substantially
perform his duties for the Company when and to the extent requested by the Board
or its lawfully designated representative to do so and (y) failure to correct
same within five (5) business days after notice from the Board or its lawfully
designated representative requesting the Executive to do so, or (C) the
Executive's breach of any material provision of this Agreement, the Certificate
of Compliance with Company Policies then applicable to management personnel of
the Company, or other agreements between the Executive and the Company and such
breach continues for a period of five (5) business days after notice from the
Board or its lawfully designated representative of such breach. A termination of
the Executive's employment by the Company without Cause shall be effected by
giving the Executive five (5) business days written notice of the termination.
(c) Good Reason. (i) The Executive may terminate employment for Good
Reason or without Good Reason. "Good Reason" means:
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(A) the assignment to the Executive of duties inconsistent in
any material respect with Section 2(a) of this Agreement, other than
any such action that is remedied by the Company within five (5)
business days after receipt of notice thereof from the Executive; or
(B) any failure by the Company to comply with any provision of
Section 3 of this Agreement other than any such failure that is
remedied by the Company within five (5) business days after receipt of
notice thereof from the Executive.
(ii) A termination of employment by the Executive for Good Reason shall
be effectuated by giving the Company written notice ("Notice of Termination for
Good Reason") of the termination, setting forth in reasonable detail the
specific conduct of the Company that constitutes Good Reason and the specific
provision(s) of this Agreement on which the Executive relies. A termination of
employment by the Executive for Good Reason shall be effective on the fifth
business day following the date when the Notice of Termination for Good Reason
is given, unless the notice sets forth a later date (which date shall in no
event be later than 30 days after the notice is given); provided, that such a
termination of employment shall not become effective if the Company shall have
substantially corrected the circumstance giving rise to the Notice of
Termination within such period.
(d) Date of Termination. The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or by the
Executive for Good Reason is effective, the date on which the Company gives the
Executive notice of a termination of employment without Cause, or the date on
which the Executive gives the Company notice of a termination of employment
without Good Reason, as the case may be.
5. Obligations of the Company upon Termination. (a) Death, Disability,
Cause; Without Good Reason. If, during the Employment Period, the Executive's
employment is terminated because of death, Disability, for Cause, or by the
Executive without Good Reason, then the Executive shall not be entitled to any
compensation provided for under this Agreement, other than Base Salary through
the Termination Date, benefits under any long-term disability insurance coverage
in the case of termination because of Disability, and (without limiting the
provisions of Section 6 hereof) vested benefits, if any, required to be paid or
provided by law.
(b) Without Cause; Good Reason. If, during the Employment Period, the
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason (collectively, an "Eligible Termination"), the
Executive shall not be entitled to any compensation provided for under this
Agreement except as set forth in the following three sentences. If the Eligible
Termination occurs prior to the second anniversary of the Effective Date, then
the Company (i) shall continue to pay the Executive his Base Salary, at the rate
then in effect, for and with respect to the period beginning on the date of such
termination of employment and ending on the last day of the Employment Period
(hereinafter, the "Continuation
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Period") in the same manner as specified in Section 3(a) hereof; and (ii) shall
pay the Executive, in lieu of annual bonuses pursuant to Section 3(b), an annual
amount equal to the Executive's most recent previous annual bonus actually paid
at the same time and in the same manner as such annual bonuses would have been
paid during the Continuation Period pursuant to Section 3(b). If the Eligible
Termination occurs on or after the second anniversary of the Effective Date,
then the Company (i) shall continue to pay the Executive his Base Salary, at the
rate then in effect, for and with respect to the period beginning on the date of
such termination of employment and ending on the first anniversary of such date;
and (ii) shall pay the Executive, in lieu of an annual bonus pursuant to Section
3(b), an amount equal to the Executive's most recent previous annual bonus
actually paid at the same time and in the same manner as such annual bonus would
have been paid had the Executive continued to be employed by the Company during
such one year period.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company for which the Executive may
qualify, nor, subject to Section 9(f), shall anything in this Agreement limit or
otherwise affect such rights as the Executive may have under any agreement with
the Company. Vested benefits and other amounts that the Executive is otherwise
entitled to receive under any plan, policy, practice or program of, or any
contract or agreement with, the Company on or after the Date of Termination
shall be payable in accordance with such plan, policy, practice, program,
contract or agreement, as the case may be, except as explicitly modified by this
Agreement.
7. Confidential Information; Business Interference; Noncompetition;
Inventions. (a) Both during his association with the Company or the Affiliated
Companies (as defined below) and at all times thereafter, Executive shall not
disclose to anyone else, directly or indirectly, any confidential, proprietary
or business-sensitive information or trade secrets concerning or relating to the
business of the Company or the Affiliated Companies (collectively, "Confidential
Information") or use, or permit or assist, by acquiescence or otherwise, anyone
else to use, directly or indirectly, any such Confidential Information.
"Confidential Information" is information not generally known to the public and
which, if released to unauthorized persons, could be detrimental to the
reputation or business interests of the Company or the Affiliated Companies or
parties with which the Company or the Affiliated Companies contract, or which
could permit such unauthorized persons to benefit improperly. Examples of
Confidential Information include, but are not limited to, the following:
strategic business plans; computer materials such as software programs or
documentation; information concerning the Company's and the Affiliated
Companies' customers and potential customers, including their identities,
contact persons, requirements, preferences, pricing or contract terms; marketing
and sales information; research and development plans or data; budgets and
unpublished financial statements; pricing information and cost data; information
concerning the skills and compensation of other employees of the Company or the
Affiliated Companies; and information concerning the suppliers of the Company
and the Affiliated Companies. The foregoing restrictions shall not apply to
disclosure of information by the Executive as may be required in the proper
conduct of his duties on behalf of the Company or the Affiliated Companies or as
may be specifically authorized in writing by the Company's chief executive
officer, president, or chief
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financial officer. Upon termination of employment with the Company for any
reason, Executive shall promptly deliver to the Company all property belonging
to the Company and the Affiliated Companies and shall not retain any copies or
reproductions of correspondence, reports, proposals, lists, computer programs or
files, or other information relating in any way to the affairs of the Company or
the Affiliated Companies.
(b) Both during his association with the Company and at all times
thereafter, Executive shall not take any action which is intended to or would
disparage or diminish the reputation of the Company or the Affiliated Companies.
In addition, while associated with the Company and for a period of two (2) years
after expiration or termination of employment or other association with the
Company, Executive shall not directly or indirectly, employ, contact concerning
employment, or participate in any way in the recruitment for employment (whether
as an employee, officer, director, agent, consultant or independent contractor)
of any person who was or is at any time during the previous 12 months an
employee, representative, officer, or director of the Company or any of the
Affiliated Companies.
(c) During the Noncompetition Period (as defined below), the Executive
shall not, without the prior written consent of the Board, engage in or become
associated with a Competitive Activity. For purposes of this Section 7(c): (i)
the "Noncompetition Period" means (A) the period during which the Executive is
employed by the Company, plus (B) one year; (ii) a "Competitive Activity" means
any business or other endeavor, in the United States or Canada or any other
country, of a kind then being conducted by the Company or any of the Affiliated
Companies in such country; and (v) the Executive shall be considered to have
become "associated with a Competitive Activity" if he becomes directly or
indirectly involved as an owner, principal, employee, officer, director,
independent contractor, representative, stockholder, financial backer, agent,
partner, advisor, lender, or in any other individual or representative capacity
with any individual, partnership, corporation, other organization or entity that
is engaged in a Competitive Activity. Notwithstanding the foregoing, the
Executive may make and retain investments during the Employment Period in not
more than five percent of the equity of any entity engaged in a Competitive
Activity, if such equity is listed on a national securities exchange or
regularly traded in an over-the-counter market. Should this provision be
unenforceable in any jurisdiction because it is deemed too broad, as to time,
area, subject matter, or otherwise, this provision shall be deemed modified to
the extent necessary to be enforceable in such jurisdiction.
(d) As special consideration for the Executive's agreement to be bound
by the provisions of Section 7(c), the receipt and adequacy of which is hereby
confirmed and acknowledged, he is receiving, as of the Effective Date, a special
grant of restricted shares pursuant to the Cardinal Stock Plan.
(e) All plans, discoveries and improvements, whether patentable or
unpatentable, made or devised by the Executive, whether by himself or jointly
with others, from the date of the Executive's initial employment by the Company
and continuing until the end of the Employment Period and any subsequent period
when the Executive is employed by the Company or any of the Affiliated
Companies, relating or pertaining in any way to his employment with or the
business of the Company or any of the Affiliated Companies, shall be promptly
disclosed in writing to the
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Board and are hereby transferred to and shall redound to the benefit of the
Company, and shall become and remain its sole and exclusive property. The
Executive agrees to execute any assignments to the Company or its nominee, of
his entire right, title and interest in and to any such discoveries and
improvements and to execute any other instruments and documents requisite or
desirable in applying for and obtaining patents or copyrights, at the expense of
the Company, with respect thereto in the United States and in all foreign
countries. The Executive further agrees, during and after the Employment Period,
to cooperate to the extent and in the manner required by the Company, in the
prosecution or defense of any patent or copyright claims or any litigation, or
other proceeding involving any trade secrets, processes, discoveries or
improvements covered by this Agreement, but all necessary expenses thereof shall
be paid by the Company.
(f) The Executive acknowledges and agrees that the Company's remedy at
law for any breach of the Executive's obligations under this Section 7 would be
inadequate and agrees and consents that temporary and permanent injunctive
relief may be granted in any proceeding which may be brought to enforce any
provision of such Section without the necessity of proof of actual damage. With
respect to any provision of this Section 7 finally determined by a court of
competent jurisdiction to be unenforceable, the Executive and the 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.
8. Successors. (a) This Agreement is personal to the Executive, and he
may not assign any interest herein in any manner whatsoever. Any purported
assignment by the Executive shall be void.
(b) In addition to assignments by operation of law, the Company shall
have the right to assign this Agreement to any person, firm or corporation,
controlling, controlled by or under common control with the Company (including
without limitation any of the Affiliated Companies), or acquiring substantially
all of its assets, but such assignment shall not release the Company from its
obligations under this Agreement.
9. Miscellaneous. (a) The provisions of Sections 5, 6, 7, 8, and 9 of
this Agreement shall survive any expiration or termination of this Agreement.
(b) This Agreement shall be governed by and construed in accordance
with, the laws of the State of Ohio, without reference to principles of conflict
of laws. THE PARTIES HERETO HEREBY AGREE THAT ANY DISPUTE CONCERNING FORMATION,
MEANING, APPLICABILITY OR INTERPRETATION OF THIS AGREEMENT SHALL BE RESOLVED BY
ARBITRATION IN FRANKLIN COUNTY, OHIO, IN ACCORDANCE WITH THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION AND JUDGMENT ON THE AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified except by a written agreement executed by the parties hereto
or their respective successors and legal representatives.
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(c) All notices, requests, consents and other communications required
or provided under this Agreement shall be in writing and shall be deemed
sufficient if delivered by facsimile, overnight courier, or certified or
registered mail, return receipt requested, postage prepaid, and shall be
effective upon delivery as follows:
If to the Executive:
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Xxxxxxx X. Xxxxxx
0000 Xxxxxx Xxxx Xxxxx
Xxx Xxxxx, XX 00000
Facsimile: ___________________
If to the Company:
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Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
Either party may change the address and/or facsimile number to which notices are
to be sent to that party by giving written notice of such change of address to
the other party in the same manner above provided for giving notice.
(d) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective, but only to the extent of such prohibition or unenforceability,
without invalidating the other provisions hereof or without affecting the
validity or enforceability of such provision in any other jurisdiction.
(e) Notwithstanding any other provision of this Agreement, the Company
may withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
(f) As of the Effective Date, this Agreement shall constitute the
entire agreement between the parties relative to the subject matter contained
herein, superseding, canceling and replacing all prior agreements. No promises,
covenants or representations of any character or nature other than those
expressly stated herein have been made to induce either party to enter into this
Agreement. This Agreement shall not be modified, waived or discharged except in
writing duly signed by each of the parties or their authorized assignees.
(g) The Executive's or the Company's failure to insist upon strict
compliance with
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any provision of, or to assert any right under, this Agreement shall not be
deemed to be a waiver of such provision or right or of any other provision of or
right under this Agreement except to the extent any other party hereto is
materially prejudiced by such failure.
(h) The term "Affiliated Companies" means all companies controlled by,
controlling or under common control with the Company.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and the Company has caused this Agreement to be executed in its name on its
behalf, in Dublin, Ohio, all as of the day and year first above written.
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
XXXXXXXX HEALTH, INC.
By: Xxxx X. Xxxx
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Title: President, COO
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