EXHIBIT 10.26
EMPLOYMENT AGREEMENT
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THIS AGREEMENT, made effective as of May 20, 1996 by and between
McKESSON CORPORATION (the "Company"), a Delaware corporation with its principal
office at Xxx Xxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx, and
______________("Executive").
R E C I T A L S
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A. The Company, in its business, develops and uses certain trade
secrets, customer lists and other confidential information and data
("Confidential Information"). Such Confidential Information will necessarily be
communicated to or acquired by Executive by virtue of his employment with the
Company, and the Company has spent time, effort and money to develop such
Confidential Information and to promote and increase its goodwill; and
B. The Company desires to retain the services of, and employ,
Executive on its own behalf and on behalf of its affiliated companies for the
period provided in this Agreement and, in so doing, to protect its Confidential
Information and goodwill, and Executive is willing to accept employment by the
Company on a full-time basis for such period, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. Employment. Subject to the terms and conditions of this
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Employment Agreement, the Company agrees to employ Executive, and Executive
agrees to accept employment from, and remain in the employ of, the Company for
the period stated in Paragraph 3 hereof.
2. Position and Responsibilities. During the period of his
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employment hereunder, Executive agrees to serve the Company, and the Company
shall employ Executive, as President and Chief Operating Officer, or in such
other senior corporate executive capacity or capacities as may be specified from
time to time by the Chief Executive Officer of the Company.
3. Term and Duties.
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(a) Term of Employment. The period of Executive's employment under
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this Agreement shall be deemed to have commenced on the date of this Agreement
and shall continue until May 20, 1999.
(b) Duties. During the period of his employment hereunder and
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except for illness, reasonable vacation periods, and reasonable leaves of
absence, Executive shall devote his best efforts and all his business time,
attention, skill and efforts to the business and affairs of the Company and its
affiliated companies, as such business and affairs now exist and as they may be
hereafter changed or added to, under and pursuant to the general direction of
the Board of Directors of the Company; provided, however, that, with the
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approval of the Chief Executive Officer of the Company (or if Executive becomes
Chief Executive Officer, then with approval of the Board of Directors),
Executive may serve, or continue to serve, on the boards of directors of, hold
any other offices or positions in, companies or organizations which, in such
officer's judgment, will not present any conflict of interest with the Company
or any of its subsidiaries or affiliates or divisions, or materially affect the
performance of Executive's duties pursuant to this Agreement. The Company shall
retain full direction and control of the means and methods by which Executive
performs the services for which he is employed hereunder. The services which
are to be employed by Executive hereunder are to be rendered in the State
of California, or in such other place or places in the United States or
elsewhere as may be determined from time to time by the Board of Directors of
the Company, but are to be rendered primarily at the Company's principal place
of business in San Francisco, California. Unless and until otherwise agreed
between the Company and the Executive, the Executive shall be at liberty to
maintain his residence in the San Francisco Bay Area, State of California, and
whenever absent therefrom on account of the performance of services under this
Agreement, shall be reimbursed for all expenses reasonably incurred by him in
the performance of his duties.
4. Compensation and Reimbursement of Expenses;
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Other Benefits;
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(a) Compensation. During the period of employment under this
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Agreement, Executive shall be paid a salary, in biweekly installments, at the
rate of Five Hundred Thousand Dollars ($500,000.00)per year, or such higher
salary as may be from time to time approved by the Board of Directors (or any
duly authorized Committee thereof) of the Company (any such higher salary so
approved to be thereafter the minimum salary payable to Executive during the
remainder of the term hereof), plus such additional incentive compensation, if
any, as may be voted to him yearly by the Board of Directors (or any duly
authorized committee thereof). Executive shall also receive an automobile
allowance from Company of One Thousand Dollars ($1000) per month during the term
of this Agreement.
(b) Reimbursement of Expenses. The Company shall pay or reimburse
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Executive, in accordance with its normal policies and practices, for all
reasonable travel and other expenses incurred by Executive in performing his
obligations under this Agreement. The Company further agrees to furnish
Executive with such assistance and accommodations as shall be suitable to the
character of Executive's position with the Company and adequate for the
performance of his duties hereunder.
(c) Other Benefits. During the period of employment under this
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Agreement, Executive shall be entitled to receive all other benefits of
employment generally available to other members of the Company's management and
those benefits for which key executives are or shall become eligible, when and
as he becomes eligible therefor, including without limitation, group health and
life insurance benefits, short and long-term disability plans and participation
in the Company's Profit-Sharing Investment Plan, Retirement Plan, Executive
Medical Plan, Management Incentive Plan (commencing with the fiscal year
beginning April 1, 1996), Long Term Incentive Plan, Executive Benefit Retirement
Plan, Executive Survivor Benefits Plan, and Restricted Stock and Stock Option
Plan, and the Company agrees that none of such benefits shall be altered in any
manner in such a way as to reduce any then existing entitlement of Executive
thereunder.
(d) EBRP and ESBP Designations. Subject to the terms of the
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respective Plans, Executive is hereby designated as a participant in the
Executive Benefit Retirement Plan (as amended and restated), with an Income
Objective on Approved Retirement of that percentage of Average Final
Compensation determined under Section D.1 of such Plan (unless and until the
Board of Directors of the Company at any time, or from time to time, designates
a different percentage of Average Final Compensation as an Income Objective),
and Executive is designated as a participant in the Executive Survivor Benefits
Plan.
5. Initial Incentive Grants. Executive shall receive the following
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initial incentive awards specified in subparagraphs (a) through (c) below:
(a) Stock Options. Subject to the terms and conditions of Company's
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1994 Stock Option and Restricted Stock Plan (the "Plan"), Executive shall
receive an initial grant of 200,000 stock options, which options shall vest in
installments of twenty-five percent (25%) per year commencing on the first
anniversary of the date of grant.
(b) Restricted Stock. Subject to the terms and conditions of the
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Plan, Executive shall receive an initial grant of 20,000 shares of Company's
restricted stock. The restrictions with respect to ten thousand (10,000) shares
of said stock shall lapse on the fourth (4th) anniversary of the date of grant;
the restrictions on the balance of the shares shall lapse on the fifth
anniversary of the date of grant.
(c) LTIP Cash Award. Executive is hereby designated as a
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participant in Company's Long Term Incentive Plan. Subject to the terms of the
Plan, Executive's annual target award is thirty percent (30%) of salary.
Executive shall be eligible for a full award for the incentive period ending
March 31, 1997. Executive acknowledges that payment of any and all awards under
the Plan are subject to achievement by the Company of the financial targets
specified pursuant thereto.
6. Housing Assistance.
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Company shall reimburse Executive, in accordance with its existing
policies, for the following reasonable expenses incurred in connection with
purchase of suitable housing in the San Francisco Bay Area: real estate
brokerage fees, pest control inspections, furniture storage fees, title
insurance and escrow fees and moving costs (including temporary living expenses,
if any, while in transit). In addition, Company shall reimburse Executive in an
amount up to one-half month's salary for non-receipted, miscellaneous moving
expenses. Company shall further reimburse Executive for any reasonable amounts
he must repay his previous employer for moving expenses paid to, or on behalf
of, Executive by such employer in connection with Executive's relocation for his
prior position.
7. Benefits Payable Upon Disability or Death.
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(a) If Executive shall be prevented during the term of this
Agreement from properly performing services hereunder by reason of illness or
other physical or mental incapacity, the Company shall continue to pay Executive
his then current salary hereunder during the period of his disability; provided,
however, that if Executive is disabled for a continuous period exceeding twelve
(12) calendar months, then the Company's obligations hereunder shall cease and
terminate.
(b) In the event of the death of Executive during the term of this
Agreement, Executive's salary payable hereunder shall continue to be paid to
Executive's surviving spouse, or if there is no spouse surviving, then to
Executive's designee or representative (as the case may be) through the six-
month period following the end of the calendar month in which death occurs.
Thereafter, all of Company's obligations hereunder shall cease and terminate.
(c) The provisions of this Paragraph 7 shall not affect any rights
of Executive's heirs, administrators, executors, legatees, beneficiaries or
assigns under the Company's Profit-Sharing Investment Plan, Retirement Plan,
Executive Benefit Retirement Plan, Long Term Incentive Plan, Executive Survivor
Benefits Plan, any Stock Purchase, Restricted Stock and Stock Option Plan, or
any other employee benefit plan of the Company, and any such rights shall be
governed by the terms of the respective plans.
8. Obligations of Executive
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During and After Employment.
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(a) Executive agrees that during the term of his employment under
this Agreement, he will engage in no other business activities, directly or
indirectly, which are or may be competitive with or which might place him in a
competing position to that of the Company, or any affiliated company, without
the prior written consent of the Chief Executive Officer of the Company (or if
Executive becomes Chief Executive Officer, then without the prior written
consent of the Board of Directors).
(b) Executive acknowledges and agrees that (i) during the course of
his employment Executive will have produced and/or have access to Confidential
Information, records, notebooks, data, formulae, specifications, trade secrets,
customer lists and secret inventions and processes of Company and its affiliated
companies, and (ii) the unauthorized use or sale of any of such confidential or
proprietary information at any time would constitute unfair competition with
Company. Executive promises and agrees not to engage in any unfair competition
with Company either during or after the term of this Agreement. Therefore,
during and subsequent to his employment by Company, or by an affiliated company,
Executive agrees to hold in confidence and not, directly or indirectly,
disclose, use, copy or make lists of any such information, except to the extent
expressly authorized by Company in writing. All records, files, drawings,
documents, equipment, and the like, or copies thereof, relating to Company's
business, or the business of an affiliated company, which Executive shall
prepare, or use, or come into contact with, shall be and remain the sole
property of Company, or of an affiliated company, and shall not be removed
(except to allow Executive to perform his responsibilities hereunder while
traveling for business purposes or otherwise working away from his office) from
the Company's or the affiliated company's premises without its prior written
consent, and shall be promptly returned to Company upon termination of
employment with Company and its affiliated companies. This paragraph 8(b) shall
survive the termination or expiration of this Agreement.
9. Termination.
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(a) For Cause. Notwithstanding anything herein to the contrary, the
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Company may, without liability, terminate Executive's employment hereunder for
cause at any time upon written notice from the Board of Directors (or any duly
authorized Committee thereof) specifying such cause, and thereafter the
Company's obligations hereunder shall cease and terminate; provided, however,
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that such written notice shall not be delivered until after the Board of
Directors (or any duly authorized Committee thereof) shall have given Executive
written notice specifying the conduct alleged to have constituted such cause and
Executive has failed to cure such conduct, if curable, within fifteen (15) days
following receipt of such notice. As used herein, the term "cause" shall mean
(i) Executive's misconduct, habitual neglect, dishonesty or other knowing and
material violation of Company's policies and procedures in effect from time to
time, or (ii) actions (or failures to act) by Executive in bad faith and to the
detriment of Company or any affiliated company, or (iii) a material breach by
Executive of one or more terms of this Agreement.
(b) Other than for Cause: Performance, Reorganization.
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Notwithstanding anything herein to the contrary, Company may also terminate
Executive's employment (without regard to any general or specific policies of
Company relating to the employment or termination of its employees) should (i)
Executive fail to perform his duties hereunder in a manner satisfactory to the
Chief Executive Officer of Company (or if Executive becomes Chief Executive
Officer, then satisfactory to the Board of Directors), provided that Executive
shall first be given written notice of such unsatisfactory performance and a
period of ninety (90) days to improve such performance to a level deemed
acceptable to the Chairman and Chief Executive Officer (or to the Board of
Directors if Executive becomes Chief Executive Officer) or, (ii) Executive's
position be eliminated as a result of a reorganization or restructuring of
Company or its affiliated companies.
(c) Obligations of Company on Termination of Employment. If Company
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terminates Executive's employment pursuant to subparagraph 9(a) above, then all
of Company's obligations hereunder shall immediately cease and terminate.
Executive shall thereupon have no further right or entitlement to additional
salary, incentive compensation payments or awards, or any perquisites from
Company whatsoever, and Executive's rights, if any, under Company's employee and
executive benefit plans shall be determined solely in accordance with the
express terms of the respective plans;
(i) If Company terminates Executive's employment pursuant to
subparagraph 9(b) above, then, notwithstanding anything herein (or in any of
Company's benefit,
incentive or severance plans) to the contrary and in complete satisfaction and
discharge of all of its obligations to Executive hereunder, Company shall (i)
continue Executive's then base salary, without increase, for the remainder of
the term of this Agreement, provided, however that Company's obligation to make
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such salary payments shall be reduced by any compensation received by Executive
from a subsequent employer during such term, (ii) consider Executive for a bonus
under the terms of Company's Management Incentive Plan for the fiscal year in
which termination occurs (but not for any subsequent year) provided that any
such bonus, if earned, shall be prorated to reflect the portion of the year for
which Executive was actively employed, (iii) continue Executive's automobile
allowance and Executive Medical Plan benefits until the earlier of the
expiration date of this Agreement or the effective date of Executive's coverage
under a subsequent employer's plan or policy, (iv) continue the accrual and
vesting of Executive's rights, benefits and existing awards for the remainder of
the term of this Agreement for purposes of the Executive Benefit Retirement
Plan, Executive Survivor Benefit Plan, and the Stock Option and Restricted Stock
Plan, provided, however, that (unless the Board of Directors, or any duly
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authorized Committee, in its sole discretion, determines otherwise) Executive
shall in no event receive or be entitled either to additional grants or awards
subsequent to the date of termination, or "Approved Retirement" status, under
the foregoing plans, (v) continue Executive's participation in the Company's
Long Term Incentive Plan for the remainder of the term of this Agreement
(prorating performance periods as of the expiration date of the Agreement),
provided, that Executive shall not participate in any way whatsoever in any
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performance period commencing subsequent to the date of termination, and (vi)
terminate Executive's participation in Company's tax-qualified pension and
profit-sharing plans, pursuant to the terms of the respective plans, as of the
date of Executive's termination of employment.
(ii) Company and Executive agree that if Executive resigns or
otherwise voluntarily leaves his employment with Company prior to the expiration
of this Agreement (other than for Good Reason as defined in the Termination
Agreement between the parties of even date herewith), Company shall be under no
further obligation to make any additional payments or provide any benefits
hereunder. Notwithstanding anything to the contrary contained in the
immediately preceding sentence however, Company agrees that Executive may, in
his sole discretion, elect to resign from Company's employment at any time
between the period commencing January 1, 1998 and ending on the expiration date
of this Agreement (i.e., May 20, 1999). In such event, executive's resignation
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shall, solely for purposes of delineating Company's obligations to Executive
hereunder, be deemed to be a termination pursuant to Paragraph 9(b) above.
Executive shall thereupon be entitled to receive from Company the greater of (i)
those benefits to which he would otherwise be entitled pursuant to the Company's
then existing Severance Policy for Executive Employees (in the absence of this
Employment Agreement and assuming said Policy would then be applicable to
Executive), or (ii) the compensation and benefits provided in Paragraph 9 (c)
(i), for the remaining term of this Agreement; provided, however, that Executive
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shall receive incentive awards (calculated pursuant to the respective terms of
the Company's Management Incentive Plan and Long Term Incentive Plan) for each
of Company's fiscal years ending within the term of this Agreement (i.e., March
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31, 1998 and March 31, 1999), and such incentive awards shall not be pro-rated
in any manner.
10. General Provisions.
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(a) Executive's rights and obligations under this Agreement shall
not be transferable by assignment or otherwise, nor shall Executive's rights be
subject to encumbrance or subject to the claims of Company's creditors. Nothing
in this Agreement shall prevent the consolidation of Company with, or its merger
into, any other corporation, or the sale by Company of all or substantially all
of its properties or assets; and this Agreement shall inure to the benefit of,
be binding upon and be enforceable by, any successor surviving or resulting
corporation, or other entity to which such assets shall be transferred. This
Agreement shall not be terminated by the voluntary or involuntary dissolution of
the Company.
(b) This Agreement (together with the Termination Agreement between
the parties of even date herewith) and the rights of Executive with respect to
the benefits of
employment referred to in Paragraph 4(c) constitute the entire agreement between
the parties hereto in respect of the employment of Executive by Company. This
Agreement supersedes and replaces all prior oral and written agreements,
understandings, commitments, and practices between the parties, including but
not limited to Company's letter to Executive dated March 28, 1996.
(c) Any dispute, controversy or claim arising under or in connection
with this Agreement, or the breach hereof, shall be settled exclusively by
arbitration in accordance with the Rules of the American Arbitration Association
then in effect. Judgment upon the award rendered by the arbitrator may be
entered in any court of competent jurisdiction. Any arbitration held pursuant
to this paragraph in connection with any termination of Executive's employment
shall take place in San Francisco, California at the earliest possible date. If
any proceeding is necessary to enforce or interpret the terms of this Agreement,
or to recover damages for breach thereof, the prevailing party shall be entitled
to reasonable attorneys fees and necessary costs and disbursements, not to
exceed in the aggregate one percent (1%) of the net worth of the other party, in
addition to any other relief to which he or it may be entitled.
(d) The provisions of this Agreement shall be regarded as divisible,
and if any of said provisions or any part thereof are declared invalid or
unenforceable by a court of competent jurisdiction, the validity and
enforceability of the remainder of such provisions or parts thereof and the
applicability thereof shall not be affected thereby.
(e) This Agreement may not be amended or modified except by a
written instrument executed by Company and Executive.
(f) This Agreement and the rights and obligations hereunder shall be
governed by and construed in accordance with the laws of the State of
California.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first above written.
McKESSON CORPORATION
A Delaware Corporation
By_______________________
Vice President
ATTEST:
________________________ _________________________
Secretary Executive
By the Authority of the
Compensation Committee
of the Board of Directors
of McKesson Corporation
on April 24, 1996.
