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EXHIBIT 10.19
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 Xxxxxxx 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. SUPPLEMENT TO EMPLOYMENT AGREEMENT. This Agreement incorporates by
reference the Employment Agreement between the Company and the Executive, dated
as of July 1, 1999 (the "Employment Agreement"). Any capitalized word used but
not defined herein shall have the meaning ascribed to it in the Employment
Agreement. This Agreement is intended to supplement the Employment Agreement and
is intended to be interpreted and applied consistent with the terms of the
Employment Agreement unless specifically indicated otherwise herein.
2. ADDITIONAL INCENTIVE AWARDS. 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 Base
Salary as in effect on February 9, 2000 and (ii) the Executive's target annual
bonus for fiscal year 2000 under the MIP 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").
3. EMPLOYMENT TERMINATION. (a) CONSEQUENCES OF TERMINATION BY THE
COMPANY WITHOUT CAUSE. If, at any time prior to February 9, 2002, the
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason (within the meaning of Section 4 of the Employment
Agreement), the Executive shall
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not be entitled to any further compensation or benefits provided for under this
Agreement except as provided in the Restricted Shares Agreement and except for
any unpaid portion of the Additional Incentive Bonus, PROVIDED that the
Executive has complied with all of the Executive's obligations under Section 7
of the Employment Agreement ("Section 7"). Termination of the Executive's
employment because of Disability shall be treated as described in Section 3(b)
of this Agreement.
(b) OTHER EMPLOYMENT TERMINATIONS. If the Executive's employment is
terminated for any reason other than by the Company without Cause or by the
Executive for Good Reason, the Executive shall not be entitled to any
compensation provided for under this Agreement, other than, in the case of
termination because of Disability or death, the benefits provided for in the
Restricted Shares Agreement, if any.
(c) ACKNOWLEDGMENT AND ENFORCEMENT. (i) The Executive acknowledges and
agrees that: (A) the purpose of Section 7 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 Company and the Affiliated Companies are
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
Company and the Affiliated Companies in the event the Executive breached any of
the covenants of Section 7; and (C) remedies at law (such as monetary damages)
for any breach of the Executive's obligations under Section 7 would be
inadequate. The Executive therefore agrees and consents that if the Executive
commits any breach of a covenant under Section 7 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 Section 7,
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 3 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 3 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.
4. 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 and the Affiliated Companies
for which the Executive may qualify, nor, subject to Section 5 below, shall
anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company and the
Affiliated Companies. 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 and the Affiliated Companies 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 Company or any
Affiliated Company or any entity merged with or into the Company or any
Affiliated Company.
5. ENTIRE AGREEMENT. This Agreement, together with the Employment
Agreement, constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior agreements with respect thereto.
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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/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
XXXXXXXX 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 Xxxxxxx 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 MIP 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 Agreement of the Executive and the Company, dated
as of February 9, 2000 (the "Agreement"), and the Employment Agreement between
the Company and the Executive, dated as of July 1, 1999 (the "Employment
Agreement") and any reference to "this Agreement" herein includes this
Restricted Shares Agreement, the 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 Agreement, and if such terms are not in the Agreement, 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 or by the Executive for Good Reason, the Additional Incentive
Shares shall nevertheless vest on the Vesting Date unless the Executive has
violated any of the provisions of Section 7 of the Employment Agreement. If the
Executive's employment with the Company terminates prior
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to the vesting of the Additional Incentive Shares by reason of the Executive's
death or Disability, 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 7
of the Employment Agreement. Such ratable portion shall be an amount equal to
the number of Additional Incentive Shares multiplied 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 Disability.
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 7 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 7 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 3(c) of the 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
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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 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 7 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 Agreement, (iv) the Employment Agreement, (v)
the Plan, and (vi) 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, the Agreement 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/ Xxxxxxx X. Xxxxxx
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Executive's Signature
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Executive's Social Security Number
03/17/00
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Date
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