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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, dated and effective as of the 9th day of February,
2000, is made and entered into by and between Cardinal Health, Inc., an Ohio
corporation (the "Company"), and Xxxxx X. Xxxxxx (the "Executive").
WHEREAS, the Company and the Executive desire to set forth in a
written agreement the terms and conditions under which the Executive will render
services to the Company;
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, agree as follows:
1. EMPLOYMENT PERIOD. The Company shall employ, or shall cause one of
its subsidiaries or affiliates to employ, the Executive, and the Executive shall
serve the Company, on the terms and conditions set forth in this Agreement, for
the Full-Time Period and, if any, the Part-Time Period, each as defined herein
(together, the "Employment Period"). For purposes of this Agreement, any
reference to the "Company" shall mean, where appropriate, the actual Cardinal
subsidiary or affiliate that employs the Executive. The "Full-Time Period" shall
mean the period beginning as of February 9, 2000 and ending on February 9, 2003,
unless before such date (i) the employment of the Executive is terminated in
accordance with Section 4 of this Agreement, or (ii) the Executive properly
exercises his right, as described in the next sentence, to change his status to
that of a consulting employee. If the Executive's employment is terminated by
the Company without Cause (as defined in Section 4 of this Agreement) during the
Full-Time Period, the Executive may, at his option, immediately change his
status to that of a consulting employee. In such event, the Executive shall
become a consulting employee without experiencing any break in Executive's
status as an employee of the Company. The Executive's ability to serve as a
consulting employee is conditioned upon his continued observance of Section 5 of
this Agreement. The Executive's service as a consulting employee shall terminate
on or before February 9, 2003 (the period during which the Executive serves as a
consulting employee, if any, the "Part-Time Period"). The Employment Period may
be extended by mutual written agreement of the parties.
2. POSITION AND DUTIES. (a) From February 18, 2000 and during the
remainder of the Full-Time Period, the Executive shall serve as Executive Vice
President and Group President - Pharmaceutical Distribution and Provider
Services Group, with the duties and responsibilities
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customarily assigned to such position and such other duties and responsibilities
as the Chief Operating Officer shall from time to time assign to the Executive;
PROVIDED that the Company may change the Executive's title, duties and
responsibilities (including reporting responsibilities) at any time without
violating this provision, so long as the Executive remains in an executive
position.
(b) During the Full-Time Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled under the practices and
policies of the Company as in effect from time to time, the Executive shall
devote the Executive's full business attention and time to the business and
affairs of the Company and shall use the Executive's reasonable best efforts to
carry out such responsibilities faithfully and efficiently. It shall not be
considered a violation of the foregoing for the Executive to (A) serve on
corporate boards or committees with the prior consent of the Chief Operating
Officer, (B) serve on civic or charitable boards or committees, (C) deliver
lectures, fulfill speaking engagements or teach at educational institutions and
(D) manage personal investments, so long as such activities do not materially
interfere with the performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement.
(c) The Executive's services shall be performed primarily at the
Company's principal place of business in Dublin, Ohio.
3. COMPENSATION. (a) SALARY. During the Full-Time Period, as
compensation for the Executive's services hereunder, the Company shall pay to
the Executive an annual salary of not less than the amount of the Executive's
salary as in effect on February 9, 2000 (hereinafter the "Commencement Base
Salary"), payable at such times and intervals as the Company customarily pays
the base salaries of its other executive employees; PROVIDED that the
Commencement Base Salary may be reduced as part of a reduction that applies
proportionately to all employees who are otherwise similar to the Executive with
respect to amount of compensation and level of managerial responsibility before
such reduction. During the Part-Time Period, as compensation for the Executive's
services as a consulting employee hereunder, the Company shall pay to the
Executive an annual base salary of $50,000 ("Consulting Base Salary"), payable
at such times and intervals as the Company customarily pays the base salaries of
its other executive employees.
(b) ANNUAL BONUS. In addition to the Commencement Base Salary, during
the Full-Time Period the Executive shall be eligible to receive an annual bonus
(an "Annual Bonus") determined and paid at the sole discretion of the Company
pursuant to the terms and conditions of the Company bonus plan for which the
Executive is then eligible, as such plan is in effect from time to time, or any
successor thereto (the "Bonus Plan"), with a Bonus Plan potential not less than
the target percentage as in effect on February 9, 2000. In addition to the
Consulting Base Salary, during the Part-Time Period the Executive shall be
eligible to receive an Annual
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Bonus determined and paid at the sole discretion of the Company, in such amount,
if any, as the Company may determine, in its sole discretion.
(c) ADDITIONAL INCENTIVE AWARDS. In addition to the Commencement Base
Salary or Consulting Base Salary, as applicable, if the Executive remains
employed by the Company through February 9, 2002, the Executive shall be paid an
amount (the "Additional Incentive Bonus") equal to the sum of (i) the
Executive's Commencement Base Salary as in effect on February 9, 2000 and (ii)
the Executive's target annual bonus for fiscal year 2000 under the Bonus Plan
calculated on a full year basis based upon the target bonus percentage in effect
on February 9, 2000. The Additional Incentive Bonus, if payable, shall be paid
as soon as administratively practicable but in no case later than March 31,
2002. In addition, the Executive is simultaneously herewith being granted
restricted stock (the "Additional Incentive Shares"), pursuant to the Restricted
Shares Agreement attached to this Agreement as Exhibit A (the "Restricted Shares
Agreement").
(d) EMPLOYEE BENEFITS. During the Employment Period, the Executive
shall be entitled to receive employee benefits (including, without limitation,
medical, life insurance and other welfare benefits and benefits under retirement
and savings plans) and vacation to the same extent as, and on the same terms and
conditions as, other similarly situated executives of the Company from time to
time.
(e) EXPENSES. The Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the Executive during the
Employment Period in carrying out the Executive's duties under this Agreement,
provided that the Executive complies with the policies, practices and procedures
of the Company then applicable to the Executive for submission of expense
reports, receipts, or similar documentation of such expenses.
(f) RETIREMENT. If the Executive's employment with the Company has not
terminated before February 9, 2003, the Executive will be eligible for
"retirement" and may "retire" at such date, in each case within the meaning of
the Company's various stock incentive plans. Nothing in this Agreement shall
limit the ability of the Executive to be eligible for such retirement for other
reasons or at other times, including at an earlier time, upon the then
applicable terms and conditions. In the event that the Executive retires on or
after February 9, 2003 but before the end of the Company's fiscal year in which
such date falls, the Executive's annual bonus earned for such fiscal year, if
any, shall be paid to the Executive in a ratable portion determined based upon
the percentage of the fiscal year during which the Executive was employed by the
Company.
4. EMPLOYMENT TERMINATION. (a) TERMINATION BY THE COMPANY. During the
Employment Period, the Executive's employment may be terminated by the Company
under any of the following circumstances: (i) upon the inability of the
Executive to perform the essential functions of his position with or without
reasonable accommodation, which inability continues for a consecutive period of
120 days or longer or an aggregate period of 180 days or longer, in either
instance during the Full-Time Period ("Incapacity"); (ii) for "Cause," defined
as (w) any willful or grossly negligent conduct by Executive that demonstrably
and materially injures the
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Company; (x) the Executive being convicted of, confessing to, or pleading nolo
contendere to any crime involving dishonesty or moral turpitude; (y) the
Executive violating any provision of Section 5 of this Agreement; or (z) the
Executive's willful and continued failure for a significant period of time to
perform Executive's duties; and (iii) for any other reason (a termination
"without Cause"). The Company shall give the Executive notice of termination
specifying which of the foregoing provisions is applicable and (in the case of
clause (i) or (ii)) the factual basis therefor, and the termination shall be
effective upon the 14th day after such notice is given (hereinafter, the date on
which the Executive ceases to be an employee of the Company for any reason,
including, without limitation, retirement, whether or not during the Employment
Period, is referred to as the "Date of Termination").
(b) CONSEQUENCES OF TERMINATION BY THE COMPANY WITHOUT CAUSE. In the
event the Executive is terminated by the Company without Cause during the
Full-Time Period, the Executive shall be entitled to change his status to that
of a consulting employee as specified in Section 1 hereof. In addition to such
right, and not in lieu thereof, if Executive is terminated without Cause during
the Employment Period, Executive shall also receive
(i) if not already received, the Additional Incentive Shares in
accordance with the Restricted Shares Agreement, including without limitation
the vesting schedule set forth therein, provided that the Executive has complied
with all of the Executive's obligations under Section 5 of this Agreement;
(ii) any unpaid portion of the Additional Incentive Bonus in
accordance with Section 3(c) hereof, including without limitation the timing of
payment thereof after February 9, 2002, provided that the Executive has complied
with all of the Executive's obligations under Section 5 of this Agreement;
(iii) the vested benefits, if any, required to be paid or provided
by law; and
(iv) an amount equal to the sum of the Executive's (A)
Commencement Base Salary as applicable on the last day of the Full-Time Period
and (B) target annual bonus, calculated on a full year basis based upon the
target bonus percentage in effect on the last day of the Full-Time Period.
(c) OTHER EMPLOYMENT TERMINATIONS. If, during the Employment Period,
the Executive's employment is terminated for any reason other than by the
Company without Cause, the Executive shall not be entitled to any compensation
provided for under this Agreement, other than (i) the Commencement Base Salary
or Consulting Base Salary, as applicable, through the Date of Termination; (ii)
benefits under any long-term disability insurance coverage in the case of
termination because of Incapacity; (iii) vested benefits, if any, required to be
paid or provided by law; and (iv) in the case of termination because of
Incapacity or death, the benefits provided for in the Restricted Shares
Agreement, if any.
5. COVENANTS. (a) INTRODUCTION. The parties acknowledge that the
provisions and covenants contained in this Section 5 are ancillary and material
to this Agreement and the
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Restricted Shares Agreement and that the limitations contained herein are
reasonable in geographic and temporal scope and do not impose a greater
restriction or restraint than is necessary to protect the goodwill and other
legitimate business interests of the Company. The parties also acknowledge and
agree that the provisions of this Section 5 do not adversely affect the
Executive's ability to earn a living in any capacity that does not violate the
covenants contained herein. The parties further acknowledge and agree that the
provisions of Section 11(a) below are accurate and necessary because (i) this
Agreement is entered into in the State of Ohio, (ii) Ohio has a substantial
relationship to the parties and to this transaction, (iii) Ohio is the
headquarters state of the Company, which has operations nationwide and has a
compelling interest in having its employees treated uniformly within the United
States, (iv) the use of Ohio law provides certainty to the parties in any
covenant litigation in the United States, and (v) enforcement of the provision
of this Section 5 would not violate any fundamental public policy of Ohio or any
other jurisdiction.
(b) CONFIDENTIAL INFORMATION. The Executive shall hold in a fiduciary
capacity for the benefit of the Company and all of its subsidiaries,
partnerships, joint ventures, limited liability companies, and other affiliates
(collectively, the "Cardinal Group"), all secret or confidential information,
knowledge or data relating to the Cardinal Group and its businesses (including,
without limitation, any proprietary and not publicly available information
concerning any processes, methods, trade secrets, research, secret data, costs,
names of users or purchasers of their respective products or services, business
methods, operating procedures or programs or methods of promotion and sale) that
the Executive has obtained or obtains during the Executive's employment by the
Cardinal Group and that is not public knowledge (other than as a result of the
Executive's violation of this Section 5(b)) ("Confidential Information"). For
the purposes of this Section 5(b), information shall not be deemed to be
publicly available merely because it is embraced by general disclosures or
because individual features or combinations thereof are publicly available. The
Executive shall not communicate, divulge or disseminate Confidential Information
at any time during or after the Executive's employment with the Cardinal Group,
except with the prior written consent of the Cardinal Group, as applicable, or
as otherwise required by law or legal process. All records, files, memoranda,
reports, customer lists, drawings, plans, documents and the like that the
Executive uses, prepares or comes into contact with during the course of the
Executive's employment shall remain the sole property of the Company and/or the
Cardinal Group, as applicable, and shall be turned over to the applicable
Cardinal Group company upon termination of the Executive's employment.
(c) NON-RECRUITMENT OF EMPLOYER'S EMPLOYEES, ETC. Executive shall not,
at any time during the Restricted Period (as defined in this Section 5(c)),
without the prior written consent of Cardinal Health, Inc., directly or
indirectly, contact, solicit, recruit, or employ (whether as an employee,
officer, director, agent, consultant or independent contractor) any person who
was or is at any time during the previous twelve months an employee,
representative, officer or director of the Cardinal Group. Further, during the
Restricted Period, Executive shall not take any action that could reasonably be
expected to have the effect of encouraging or inducing any employee,
representative, officer or director of the Cardinal Group to cease their
relationship with the Cardinal Group for any reason. This provision does not
apply to recruitment of employees within or for the Cardinal Group. The
"Restricted Period" means the
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period of Executive's employment with the Cardinal Group (whether Full-Time or
Part-Time) through the end of the twelfth month following the later to occur of
(i) the Date of Termination and (ii) the date on which the last benefit (other
than the vested benefits referenced in Section 4(b)(iii)) is paid under Section
4(b) of this Agreement.
(d) NO COMPETITION--SOLICITATION OF BUSINESS. During the Restricted
Period, the Executive shall not (either directly or indirectly or as an officer,
agent, employee, partner or director of any other company, partnership or
entity) solicit, service, or accept on behalf of any competitor of the Cardinal
Group the business of (i) any customer of the Cardinal Group at the time of the
Executive's employment or Date of Termination, or (ii) potential customer of the
Cardinal Group which the Executive knew to be an identified, prospective
purchaser of services or products of the Cardinal Group.
(e) NO COMPETITION--EMPLOYMENT BY COMPETITOR. During the Restricted
Period, the Executive shall not invest in (other than in a publicly traded
company with a maximum investment of no more than 1% of outstanding shares),
counsel, advise, or be otherwise engaged or employed by, any entity or
enterprise that competes with the Cardinal Group, by developing, manufacturing
or selling any product or service of a type, respectively, developed,
manufactured or sold by the Cardinal Group.
(f) NO DISPARAGEMENT. (i) The Executive shall at all times refrain
from taking actions or making statements, written or oral, that (A) denigrate,
disparage or defame the goodwill or reputation of the Cardinal Group or any of
its trustees, officers, security holders, partners, agents or former or current
employees and directors, or (B) are intended to, or may be reasonably expected
to, adversely affect the morale of the employees of the Cardinal Group. The
Executive further agrees not to make any negative statements to third parties
relating to the Executive's employment or any aspect of the businesses of the
Cardinal Group and not to make any statements to third parties about the
circumstances of the termination of the Executive's employment, or about the
Cardinal Group or its trustees, officers, security holders, partners, agents or
former or current employees and directors, except as may be required by a court
or governmental body.
(ii) The Executive further agrees that, following termination of
employment for any reason, the Executive shall assist and cooperate with the
Company with regard to any matter or project in which the Executive was involved
during the Executive's employment with the Company, including but not limited to
any litigation that may be pending or arise after such termination of
employment. Further, the Executive agrees to notify the Company at the earliest
opportunity of any contact that is made by any third parties concerning any such
matter or project. The Company shall not unreasonably request such cooperation
of Executive and shall compensate the Executive for any lost wages or expenses
associated with such cooperation and assistance.
(g) INVENTIONS. All plans, discoveries and improvements, whether
patentable or unpatentable, made or devised by the Executive, whether alone or
jointly with others, from the date of the Executive's initial employment by the
Company and continuing until the end of the
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Employment Period and any subsequent period when the Executive is employed by
the Cardinal Group, relating or pertaining in any way to the Executive's
employment with or the business of the Cardinal Group, shall be promptly
disclosed in writing to the Chief Executive Officer 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 the Executive's 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, trademarks or copyrights, at the expense of the Company, with
respect thereto in the United States and in all foreign countries, that may be
required by the Company. 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.
(h) ACKNOWLEDGMENT AND ENFORCEMENT. (i) The Executive acknowledges and
agrees that: (A) the purpose of the foregoing covenants, including without
limitation the noncompetition covenants of Sections 5(d) and (e), is to protect
the goodwill, trade secrets and other Confidential Information of the Company;
(B) because of the nature of the business in which the Cardinal Group is engaged
and because of the nature of the Confidential Information to which the Executive
has access, the Company would suffer irreparable harm and it would be
impractical and excessively difficult to determine the actual damages of the
Cardinal Group in the event the Executive breached any of the covenants of this
Section 5; and (C) remedies at law (such as monetary damages) for any breach of
the Executive's obligations under this Section 5 would be inadequate. The
Executive therefore agrees and consents that if the Executive commits any breach
of a covenant under this Section 5 or threatens to commit any such breach, the
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.
(ii) In addition, in the event of a violation of this Section 5,
the Company shall have no obligation to pay the Additional Incentive Bonus, if
it has not previously been paid, and shall have the right to cause the
Additional Incentive Shares to be forfeited (if they have not previously vested)
as provided in the Restricted Shares Agreement and to require the Executive to
pay to the Company all or any portion of the Clawback Amount (as defined below)
within 30 days following written notice by the Company to the Executive (the
"Company Notice") that it is imposing such requirement. The "Clawback Amount"
means the sum of:
A. the Additional Incentive Bonus, if it has previously been
paid;
B. the amount equal to the gross gain realized or obtained
by the Executive resulting from the vesting of the Additional Incentive Shares,
measured at the date of vesting (i.e., the market value of the Additional
Incentive Shares on the vesting date); and
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C. if (x) the Executive has sold or otherwise disposed of
any of the Additional Incentive Shares, an amount equal to the excess of (I) the
fair market value thereof on the date of the sale or disposition over (II) the
fair market value thereof on the date such shares vested, and if (y) the
Executive has not sold or otherwise disposed of the Additional Incentive Shares,
an amount equal to the excess of (I) the fair market value thereof on the 30th
day following the date of the Company Notice over (II) the fair market value
thereof on the date such shares vested.
(iii) With respect to any provision of this Section 5 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. If any of the covenants of this Section 5 are determined
to be wholly or partially unenforceable in any jurisdiction, such determination
shall not be a bar to or in any way diminish the Company's right to enforce any
such covenant in any other jurisdiction.
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 Cardinal Group for which the
Executive may qualify, nor, subject to Section 9 below, shall anything in this
Agreement limit or otherwise affect such rights as the Executive may have under
any contract or agreement with the Cardinal Group. 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 Cardinal
Group 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. Notwithstanding the foregoing,
the Executive waives all of the Executive's rights to receive severance payments
and benefits under any severance plan, policy or practice of the Cardinal Group
or any entity merged with or into the Cardinal Group (or any part thereof)
except to the extent provided for in this Agreement.
7. NO MITIGATION. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement and such
amounts shall not be reduced, regardless of whether the Executive obtains other
employment.
8. NOTICES. (a) METHODS. Each notice, demand, request, consent,
report, approval or communication (hereinafter, "Notice") which is or may be
required to be given by any party to any other party in connection with this
Agreement, shall be in writing, and given by facsimile, personal delivery,
receipted delivery services, or by certified mail, return receipt requested,
prepaid and properly addressed to the party to be served as shown in Section
8(b) below.
(b) ADDRESSES. Notices shall be effective on the date sent via
facsimile, the date delivered personally or by receipted delivery service, or
three days after the date mailed:
If to the Company: Cardinal Health, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
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Attn.: General Counsel
Facsimile: (000) 000-0000
If to the Executive: At the Executive's residence address
most recently filed with the Company.
(c) CHANGES. Each party may designate by Notice to the other in
writing, given in the foregoing manner, a new address to which any Notice may
thereafter be so given, served or sent.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior agreements with respect thereto, including without limitation, the
Employment Agreement between the Company and the Executive, dated as of May 12,
1998.
10. SUCCESSORS. (a) EXECUTIVE. This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) THE COMPANY. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company may assign this Agreement to any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company that expressly
agrees to assume and perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
assignment had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
11. MISCELLANEOUS. (a) GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of Ohio, without reference to
principles of conflict of laws. In addition, all legal actions or proceedings
relating to this Agreement shall be brought in state or federal courts located
in Franklin County, Ohio, and the parties executing this Agreement hereby
consent to the personal jurisdiction of such courts. 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.
(b) SEVERABILITY. The invalidity or unenforceability of any provision
of this
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Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(c) TAX WITHHOLDING. 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.
(d) NO WAIVER. The Executive's or the Company's failure to insist upon
strict compliance with 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.
(e) WARRANTY. The Executive hereby warrants that the Executive is free
to enter into this Agreement and to perform the services described herein.
(f) HEADINGS. The Section headings contained in this Agreement are for
convenience only and in no manner shall be construed as part of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument
(h) SURVIVAL. The obligations under this Agreement of the Executive
and the Company that by their nature and terms require (or may require)
satisfaction after the end of the Employment Period shall survive such event and
shall remain binding upon such parties.
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization of its Board of Directors, the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day and
year first above written.
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
CARDINAL HEALTH, INC.
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chief Executive Officer
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Exhibit A
RESTRICTED SHARES AGREEMENT
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Cardinal Health, Inc., an Ohio corporation (the "Company"), hereby
grants, pursuant to the Cardinal Health, Inc. Amended and Restated Equity
Incentive Plan, as amended (the "Plan"), to Xxxxx X. Xxxxxx (the "Executive")
that number of common shares in the Company (the "Additional Incentive Shares")
equal to the quotient of (a) the sum of (i) the Executive's Base Salary as in
effect on February 9, 2000 and (ii) the Executive's target annual bonus for
fiscal year 2000 under the Bonus Plan calculated on a full year basis based upon
the target bonus percentage in effect on February 9, 2000, divided by (b) the
closing NYSE sales price per common share on the Grant Date (rounded down to the
nearest whole share). The Additional Incentive Shares are subject to all
provisions of the Plan, which are hereby incorporated herein by reference, and
shall be subject to the provisions of this Agreement. This Agreement also hereby
incorporates by reference the Employment Agreement of the Executive and the
Company, dated as of February 9, 2000 (the "Employment Agreement"), and any
reference to "this Agreement" herein includes this Restricted Shares Agreement
and the Employment Agreement. Any capitalized terms used in this Restricted
Shares Agreement that are not specifically defined herein shall have the
meanings ascribed to such terms in the Employment Agreement.
VESTING. Except as otherwise provided in this Agreement, 100% of the
Additional Incentive Shares shall vest on February 9, 2002 (which date shall be
the "Vesting Date").
PURCHASE PRICE. The purchase price of Additional Incentive Shares
shall be $0.00.
TRANSFERABILITY. Prior to the Vesting Date, the Executive shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber the Additional
Incentive Shares. The Additional Incentive Shares will be held by the Company;
provided, however, that the Company will deliver certificates representing those
Additional Incentive Shares that have fully vested within a reasonable time
after being requested in writing to do so.
TERMINATION OF SERVICE. If the Executive's employment with the
Cardinal Group terminates prior to the Vesting Date, all of the Restricted
Shares shall be forfeited. Notwithstanding the foregoing, if the Executive's
employment with the Company is terminated before the end of the Employment
Period by the Company without Cause, the Additional Incentive Shares shall
nevertheless vest on the Vesting Date unless the Executive has violated any of
the provisions of Section 5 of the Employment Agreement. If the Executive's
employment with the Company terminates prior to the vesting of the Additional
Incentive Shares by reason of the Executive's death or Incapacity, then the
restrictions with respect to a ratable portion of the Additional Incentive
Shares shall lapse and such shares shall not be forfeited, unless the Executive
has violated any of the provisions of Section 5 of the Employment Agreement.
Such ratable portion shall be an amount equal to the number of Additional
Incentive Shares multiplied
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by the portion of the period between February 9, 2000 and the second anniversary
thereof that has expired at the date of the Executive's death or Incapacity.
SPECIAL FORFEITURE/CLAWBACK RULES. Notwithstanding the foregoing, if
at any time prior to the Vesting Date, the Executive violates any of the
provisions of Section 5 of the Employment Agreement, the Additional Incentive
Shares shall be forfeited by the Executive. In addition, if at any time the
Executive violates any of the provisions of Section 5 of the Employment
Agreement, the Executive is subject to being required to pay the Clawback Amount
to the Company, as more fully set forth in Section 5(h) of the Employment
Agreement. No provision of this Agreement shall diminish, negate, or otherwise
affect any separate noncompete agreement to which the Executive may be a party.
The Executive acknowledges and agrees that the provisions contained in this item
5 are being made for the benefit of the Cardinal Group in consideration of the
Executive's receipt of the Additional Incentive Shares, in consideration of
employment, in consideration of exposing the Executive to the Cardinal Group's
business operations and confidential information, and for other good and
valuable consideration, the adequacy of which consideration is hereby expressly
confirmed. The Executive further acknowledges that the receipt of the Additional
Incentive Shares and execution of this Agreement are voluntary actions on the
part of the Executive, and that the Company is unwilling to provide the
Additional Incentive Shares to the Executive without their being subject to this
item 5.
RIGHT OF SET-OFF. By accepting these Additional Incentive Shares, the
Executive consents to a deduction from and set-off against any amounts owed to
the Executive by the Cardinal Group from time to time (including but not limited
to amounts owed to the Executive as wages, severance payments, or other fringe
benefits) to the extent of the amounts so owed.
SHAREHOLDER RIGHTS AND RESTRICTIONS. Except with regard to the
disposition of Additional Incentive Shares, the Executive shall generally have
all rights of a shareholder with respect to the Additional Incentive Shares from
the date of grant, including, without limitation, the right to receive dividends
with respect to the Additional Incentive Shares and the right to vote the
Additional Incentive Shares, but subject, however, to those restrictions in this
Agreement or in the Plan.
WITHHOLDING TAX. The Company shall have the right to require the
Executive to pay to the Company the amount of any taxes which the Company
determines that it is required to withhold with respect to the Additional
Incentive Shares (including the amount of any taxes which the Company is
required to withhold with respect to dividends on the Additional Incentive
Shares) or, in lieu thereof, to retain, or sell without notice, a sufficient
number of Additional Incentive Shares to cover the amount required to be
withheld. The Company shall also have the right to facilitate withholding by any
other method permitted by the Plan.
GOVERNING LAW/VENUE. This Agreement shall be governed by the laws of
the State of Ohio, without regard to principles of conflicts of law, except to
the extent superseded by the laws of the United States of America. In addition,
all legal actions or proceedings relating to this Restricted Shares Agreement
shall be brought in state or federal courts located in Franklin
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County, Ohio, and the parties executing this Agreement hereby consent to the
personal jurisdiction of such courts. The Executive acknowledges that the
covenants contained in item 5 of this Restricted Shares Agreement and in Section
5 of the Employment Agreement are reasonable in nature, are fundamental for the
protection of the Cardinal Group's legitimate business and proprietary
interests, and do not adversely affect the Executive's ability to earn a living
in any capacity that does not violate such covenants. The parties further agree
that, in the event of any violation by the Executive of any such covenants, the
Cardinal Group will suffer immediate and irreparable injury for which there is
no adequate remedy at law. In the event of any violation or attempted violations
of such covenants, the Cardinal Group shall be entitled to specific performance
and injunctive relief or other equitable relief without any showing of
irreparable harm or damage, and the Executive hereby waives any requirement for
the securing or posting of any bond in connection with such remedy, without
prejudice to the rights and remedies afforded the Cardinal Group hereunder or by
law. In the event that it becomes necessary for the Cardinal Group to institute
legal proceedings under this Agreement, the Executive shall be responsible to
the Cardinal Group for all costs and reasonable legal fees incurred by the
Cardinal Group with regard to such proceedings. Any provision of this Agreement
that is determined by a court of competent jurisdiction to be invalid or
unenforceable should be construed or limited in a manner that is valid and
enforceable and that comes closest to the business objectives intended by such
provision, without invalidating or rendering unenforceable the remaining
provisions of this Agreement.
PROMPT ACCEPTANCE OF AGREEMENT. The Additional Incentive Shares grant
evidenced by this Agreement shall, at the discretion of the Committee, be
forfeited if this Agreement is not executed by the Executive and returned to the
Company within sixty days of the grant date set forth below.
CARDINAL HEALTH, INC.
DATE OF GRANT: FEBRUARY 9, 2000 By: /s/ Xxxxxx Xxxx Xxxxxxx
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Xxxxxx Xxxx Xxxxxxx
Executive Vice President
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ACCEPTANCE OF AGREEMENT
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The Executive hereby: (a) acknowledges that the Executive has received
a copy of (i) the attached Restricted Shares Agreement, (ii) the Company's most
recent Annual Report and other communications routinely distributed to the
Company's shareholders, (iii) the Executive's Employment Agreement, (iv) the
Plan, and (v) the most recent summary description of the Plan issued by the
Company; and (b) accepts this Agreement and the Additional Incentive Shares
granted to the Executive under this Agreement subject to all provisions of the
Restricted Shares Agreement, the Plan and the Employment Agreement; (c)
represents and warrants to the Company that the Executive is purchasing the
Additional Incentive Shares for the Executive's own account, for investment, and
not with a view to or any present intention of selling or distributing the
Additional Incentive Shares either now or at any specific or determinable future
time or period or upon the occurrence or nonoccurrence of any predetermined or
reasonably foreseeable event; and (d) agrees that no transfer of the Additional
Incentive Shares shall be made unless the Additional Incentive Shares have been
duly registered under all applicable federal, state, local and foreign
securities laws pursuant to a then-effective registration that contemplates the
proposed transfer or unless the Company has received a written opinion of, or
satisfactory to, its legal counsel that the proposed transfer is exempt from
such registration.
/s/ Xxxxx X. Xxxxxx
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Executive's Signature
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Executive's Social Security Number
04/03/2000
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Date
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