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EXHIBIT 10.20
SECOND AMENDMENT TO
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CHANGE IN CONTROL SEVERANCE AGREEMENT
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THIS AGREEMENT ("Second Amendment") is made as of February 9, 2000, by
and among Allegiance Corporation, a Delaware corporation ("Company"), Cardinal
Health, Inc., an Ohio corporation ("Cardinal"), and Xxxxxx X. Xxxxxx
("Employee").
WHEREAS, Company and Employee entered into a change in control
severance agreement under the Allegiance Corporation Change in Control Plan (the
"CIC Plan"), effective as of October 1, 1996 (the "Original Agreement"), which
Original Agreement was amended as of October 8, 1998 by and between Company,
Cardinal and Employee (the "First Amendment") (the Original Agreement as amended
by the First Amendment is hereinafter referred to as the "Change in Control
Agreement"); and
WHEREAS, Company, Cardinal and Employee have determined to further
amend the Change in Control Agreement by this Second Amendment;
NOW, THEREFORE, in consideration of these mutual premises and the
mutual and dependent promises hereinafter set forth, the parties hereto agree as
follows:
1. SUPPLEMENT TO CHANGE IN CONTROL AGREEMENT. This Second Amendment
incorporates by reference the Change in Control Agreement, including all
Exhibits thereto. Any capitalized word used but not defined herein shall have
the meaning ascribed to it in the Change in Control Agreement. All references to
Section numbers of the Change in Control Agreement set forth in this Second
Amendment reference Sections of the Original Agreement. This Second Amendment is
intended to amend and supplement the Change in Control Agreement and is intended
to be interpreted and applied consistent with the terms of the Change in Control
Agreement unless specifically indicated otherwise herein. To the extent there is
any inconsistency between this Second Amendment and the Change in Control
Agreement, however, this Second Amendment shall control.
2. A new Section 21 is hereby added to the Change in Control Agreement
which reads as follows:
21. PART-TIME PERIOD. Employee may, at his option, elect to
change his status to that of a consulting employee, if (i) Employee's
employment is terminated by Company without Cause during the Full-Time
Period (defined below), or (ii) the Full-Time Period expires on
February 9, 2001 according to its terms. The "Full-Time Period" is
defined as that period beginning on February 9, 2000 and ending on
February 9, 2001. In the event that Employee exercises his right to
change his status to that of a consulting employee, then Employee shall
become a consulting employee without experiencing any break in
Employee's status as an employee of Company (the period during which
Employee serves as a consulting employee, if any, the "Part-Time
Period"). During the Part-Time Period, as compensation for Employee's
services as a consulting employee,
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Company shall pay Employee $1,000 per month, payable at such times and
intervals as Company customarily pays the base salaries of its other
executive employees ("Consulting Base Salary"). Employee's ability to
serve as a consulting employee is conditioned upon his continuing
compliance with the obligations set forth in Section 5 of the Change in
Control Agreement. Notwithstanding the foregoing, during such Part-Time
Period, provided Employee is and remains in compliance with Section 5
of the Change in Control Agreement (i) nothing herein shall be deemed
to preclude Employee from engaging in any other business, profession or
occupation so long as such business, profession or occupation is
consistent with the requirements of Section 5 of the Change in Control
Agreement and (ii) Company may not terminate Employee other than for
Cause. The Part-Time Period, if any, shall terminate on February 9,
2003 and in no event shall Employee be entitled to any rights or
benefits from or after such date, except to the extent he remains
entitled to any amounts deferred hereunder. Any stock options held by
Employee will continue to vest in accordance with their terms during
the Part-Time Period.
3. A new Section 22 is hereby added to the Change in Control Agreement
which reads as follows:
22. ADDITIONAL INCENTIVE BONUS AND STAY BONUS. (a) If Employee
remains employed by Company on either a full-time or consulting basis
through February 9, 2001, or if Employee is terminated without Cause by
Company prior to February 9, 2001, Employee shall be paid an amount
(the "Additional Incentive Bonus") equal to the sum of (i) Employee's
base salary as in effect on February 9, 2000 (i.e., $475,000) and (ii)
Employee's target annual bonus for fiscal year 2000 under the bonus
plan for which Employee is eligible on February 9, 2000, calculated on
a full year basis based upon the target bonus percentage in effect on
February 9, 2000 (i.e., $565,250). The Additional Incentive Bonus, if
payable, shall be paid as soon as administratively practicable but in
no case later than April 14, 2001.
(b) In addition to the base salary or Consulting Base Salary,
as applicable, and the Additional Incentive Bonus, if Employee remains
employed by Company on either a full-time or consulting basis through
February 9, 2001, or if Employee is terminated without Cause by Company
prior to February 9, 2001, Employee shall earn a stay bonus (the "Stay
Bonus") in the amount of $570,750.
4. Section 2 of the Change in Control Agreement is hereby deleted in
its entirety and the following provisions are substituted therefor:
2. BENEFITS PAYABLE HEREUNDER.
(a) AGREEMENT BONUS. As soon as administratively practicable
but in no case later than August 15, 2000, Employee shall be paid
$50,000 in consideration for execution of this Second Amendment (the
"Agreement Bonus").
(b) NONCOMPETITION PAYMENT. In consideration for Employee's
obligations set
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forth in Section 5 of the Change in Control Agreement, Company shall
pay Employee a "Noncompetition Payment" in an amount equal to
$2,500,000 plus an amount equal to Employee's bonus plan potential for
Company's fiscal year 2001 which shall be calculated at a level not
less than the target percentage in effect on July 1, 2000 (i.e.,
$565,250). The payment of the Noncompetition Payment is conditioned
upon Employee's continuing compliance with the obligations set forth in
Section 5 of the Change in Control Agreement.
(c) PAYMENT OF STAY BONUS AND NONCOMPETITION PAYMENT. The Stay
Bonus provided for in Section 22 and Noncompetition Payment provided
for in Section 2(b), each if earned, shall be paid not later than July
31, 2001. Notwithstanding the fact that Employee's obligations under
Section 5 of the Change in Control Agreement and his liability for
violations thereof extend beyond July 31, 2001, Employee shall be paid
the Noncompetition Payment as set forth in the immediately preceding
sentence if he is in compliance with such covenants on the payment
date.
5. (a) The introductory paragraph to Section 5 and subsections (a) and
(b) of Section 5 of the Change in Control Agreement are each hereby deleted and
replaced in their entirety as follows:
NON-SOLICITATION AND NON-COMPETITION. In consideration for the
benefits called for under Sections 2, 3, and 22 of this Change in
Control Agreement, Employee agrees that Employee shall not:
(a) at any time during the Full-Time Period and an additional
period that ends upon the later of (i) 12 months following (x) the
last day of the Full-Time Period or (y) the date of termination if
Employee is terminated without Cause prior to the expiration of
the Full-Time Period and (ii) 24 months following the end of the
month in which the Cardinal Merger is consummated, without the
prior written consent of Cardinal, alone or association with
others, solicit on behalf of Employee, or any other person, firm,
corporation or entity, any employee of Company or Cardinal or any
of their subsidiaries, partnerships, joint ventures, limited
liability companies, or other affiliates (collectively, the
"Cardinal Group"); and
(b) at any time during the Full-Time Period and an additional
period that ends 24 months after (i) the last day of the Full-Time
Period or (ii) the date of termination if Employee is terminated
without Cause prior to the expiration of the Full-Time Period,
without the prior written consent of Cardinal, 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 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.
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(b) The remainder of Section 5 not modified by the foregoing shall
remain in full force and effect.
6. The last sentence of Section 6 of the Change in Control Agreement is
hereby deleted and replaced in its entirety as follows:
Payment to Employee of the Agreement Bonus, Noncompetition
Payment, Additional Incentive Bonus, and Stay Bonus, each if earned,
and, if any, the Consulting Base Salary and Gross-Up Payment, shall
constitute the entire obligation of Company and Cardinal (other than
for vested benefits and, in accordance with their terms, stock based
incentives) to Employee under the Change in Control Agreement and full
settlement of any claim under law or in equity that Employee might
otherwise assert against Company or Cardinal or any of its employees,
officers or directors on account of Employee's employment or departure
from the Cardinal Group.
7. Section 8 of the Change in Control Agreement is hereby deleted and
replaced 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 the Cardinal
Group, Employee being convicted of or confessing to a crime
involving dishonesty or moral turpitude, Employee's failure to
comply with any of the obligations set forth in Section 5 of
this Change in Control Agreement, 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 during the Part-Time Period without
Employee's express written consent:
(a) the failure by Company to provide Employee with the
compensation and benefits provided for in this Change
in Control Agreement;
(b) any material breach by Company of this Change in
Control Agreement; and
(c) the failure of Company to obtain a satisfactory
agreement from any successor or assign of Company to
assume and agree to perform this Change in Control
Agreement, as required in Section 10 of this Change
in Control Agreement.
If, during the Part-Time Period, Employee elects to terminate
Employee's employment for Good Reason, Employee shall so
notify Cardinal in writing after the occurrence of the event
constituting Good Reason, specifying the basis for such
termination. If Cardinal fails, within ten (10) days after
receiving such written notice, to remedy the facts and
circumstances that provided Good Reason, Employee's
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employment shall be deemed to have terminated for Good Reason
on the tenth day after Cardinal receives such written notice.
If, during the Part-Time Period, Cardinal 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.
8. In the event that Cardinal and Employee agree that Employee shall
continue as a full-time employee of Company after February 9, 2001, Company,
Cardinal and Employee agree to further modify the Change in Control Agreement in
a mutually acceptable manner to take into account such extension of full-time
employment. In the event there is a Change in Control of Company or Cardinal
other than the Cardinal Merger, Employee shall not be entitled to any new or
additional benefits under the CIC Plan, Change in Control Agreement, or this
Second Amendment.
9. All references to Change in Control Agreement in this Second
Amendment shall, to the extent required by the context, be deemed to include the
changes made by this Second Amendment.
IN WITNESS WHEREOF, Company, Cardinal and Employee have signed this Second
Amendment as of the date first written above.
ALLEGIANCE CORPORATION CARDINAL HEALTH, INC.
By: /s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxxx
Executive Vice President - Administration Chairman and Chief
Executive Officer
/s/ Xxxxxx X. Xxxxxx
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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
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