Exhibit 10(n)
SUPPLEMENTAL AGREEMENT
----------------------
THIS SUPPLEMENTAL AGREEMENT (this "Agreement") by and among Bergen Xxxxxxxx
Corporation, a New Jersey corporation (the "Company"), Milan A. Sawdei (the
"Executive") and, solely for purposes of Section 6 hereof, Cardinal Health,
Inc., an Ohio corporation ("Cardinal"), is dated as of August 23, 1997.
RECITALS
--------
WHEREAS, the Company has entered into an Agreement and Plan of Merger (as
the same may be amended from time to time, the "Merger Agreement") dated as of
August 23, 1997, with Cardinal and Bruin Merger Corp., a New Jersey corporation
and wholly owned subsidiary of Cardinal ("Subcorp"), whereby Subcorp will be
merged as of the Effective Time (as defined in the Merger Agreement) with and
into the Company (the "Merger"), with the Company as the surviving corporation
of the Merger (and references herein to the "Company" refer to the Company both
before and after the Merger); and
WHEREAS, the Company and the Executive desire to amend certain of the terms
and conditions under which the Executive will continue to be employed by the
Company.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, the parties hereto
agree as follows:
1. The Employment Agreement between the Executive and the Company dated
--------------------------------------------------------------------------
as of April 21, 1994 (the "Employment Agreement") is hereby amended as set forth
--------------------------------------------------------------------------------
in this Section 1, effective as of the date of this Agreement.
-------------------------------------------------------------
(a) Section 2 of the Employment Agreement is hereby amended to read in
its entirety as follows:
Effective Date and Term. The effective date of this Agreement
(the "Effective Date") shall be April 21, 1994. Unless the
Executive's employment is sooner terminated as provided in
Section 6, the Company shall employ the Executive until the
third anniversary of the Transaction Date (as defined below)
(such anniversary, the "Expiration Date"). The "Transaction
Date" means the day on which occurs the Effective Time (as
defined in the Merger Agreement dated as of August 23, 1997,
by and among the Company, Cardinal Health, Inc., ("Cardinal")
and Bruin Merger Corp. (as the same may be amended from time
to time, the "Merger Agreement")). All references in Section 5
EXH 10(n) - Page 1
of this Agreement to the Effective Date are hereby deemed to
refer to August 23, 1997.
(b) Section 3(a) of the Employment Agreement is hereby amended to read
in its entirety as follows:
(a) Position. During the term of this Agreement, the Executive
shall be employed by the Company, and shall perform such
duties and responsibilities of an executive nature, consistent
with the Executive's training, education and experience as may
be determined from time to time by the Company's Board of
Directors (the "Board" or the "Board of Directors") or its
lawfully designated representative. In addition, following the
Transaction Date, the Executive shall be a Senior Vice
President and Assistant General Counsel of Cardinal.
(c) The second sentence of Section 5(a) of the Employment Agreement is
hereby amended to read in its entirety as follows:
The Base Salary as of the Transaction Date will be reviewed
annually as of each anniversary of the Transaction Date during
the term of this Agreement, and shall be increased as
necessary to cause the Base Salary to be substantially
comparable to the base salaries of other executives of the
same level of importance, responsibility and performance
within Cardinal (hereinafter, "Peer Company Executives").
(d) The first sentence of Section 5(b) of the Employment Agreement is
hereby amended to read in its entirety as follows:
On each of the first three anniversaries of the Transaction
Date, the Company shall pay to the Executive a bonus in such
amount as may determined by the Company in its discretion, in
accordance with the criteria used by the Company for Peer
Company Executives; provided, however, that in no event shall
such annual bonus for any year be less than fifty percent
(50%) of the average of the two most recent annual bonuses
received by the Executive before the Transaction Date, and the
Executive's target bonus shall in each case be at least equal
to the Executive's target bonus as in effect on the
Transaction Date.
(e) The last subsection of Section 5 of the Employment Agreement is
hereby amended to read in its entirety as follows:
During the term of this Agreement, the Executive shall be
entitled to receive all benefits and perquisites made
available to Peer Company Executives from time to time. Such
benefits and perquisites shall include the Company's Executive
A Healthcare program, 401(k) Plan and first class air travel;
provided, that the Company shall not be required to provide
any particular benefit or perquisite so long as the aggregate
value of the Executive's benefits and perquisites is
substantially equivalent to such value as of the Transaction
EXH 10(n) - Page 2
Date, and any changes to such benefits and perquisites shall
be reasonable, taking into account the nature of such benefits
and perquisites as well as their value to the Executive. In
addition, during the term of this Agreement following the
Transaction Date, the Executive shall be eligible to be
considered for grants of options to purchase common stock of
Cardinal pursuant to the Cardinal Equity Incentive Plan on the
standard terms and conditions applicable to option grants
thereunder to similarly situated Cardinal executives.
(f) Section 6(d) of the Employment Agreement is hereby amended by
deleting the first sentence thereof and adding the following additional sentence
at the end thereof:
The Company shall also have the right to terminate the
Executive's employment under this Agreement without Cause upon
thirty calendar days' written notice to the Executive, in
which event the Executive shall be entitled to the severance
payments provided for in Section 13 of this Agreement.
(g) Clause (i) of the first sentence of Section 6(e) of the Employment
Agreement is hereby amended to read in its entirety as follows:
(i) without the express written consent of the Executive, the
assignment to the Executive by the Company of duties
inconsistent with Section 3(a) hereof;
(h) Clause (iii) of the first sentence of Section 6(e) of the
Employment Agreement is hereby amended to read in its entirety as follows:
(iii) the Company's requiring the Executive to be based at any
office or location that is not within 25 miles from the office
at which the Executive is based on the Transaction Date (any
such other office or location, a "Nonqualifying Location"),
other than business trips reasonably required in the
performance of the Executive's responsibilities under this
Agreement; provided, that if the Company notifies the
Executive that it desires to assign the Executive to a
position requiring the Executive to be based at a
Nonqualifying Location, the Executive agrees to consider, in
good faith and in light of the proposed location, title,
responsibilities, supervisory and surbordinate relationships
and other material factors relating to such position and
location, whether to accept such position and such location
change, in the Executive's sole discretion; or
(i) The portion of Section 6(e) of the Employment Agreement that
follows the first sentence thereof is hereby replaced in its entirety with the
following:
If the Executive elects to terminate the Executive's
employment for Good Reason, the Executive shall so notify the
Company in writing after the occurrence of the event
constituting Good Reason, specifying the basis for such
termination. If the Company fails, within ten (10) days after
EXH 10(n) - Page 3
receiving such written notice, to remedy the facts and
circumstances that provided Good Reason, the Executive's
employment shall be deemed to have terminated for Good Reason
on the tenth day after the Company receives such written
notice, and the Executive shall be entitled to the severance
payments provided for in Section 13. If the Company does
remedy such facts and circumstances within such ten (10) days,
the Executive shall be deemed to no longer have Good Reason,
and shall continue in the employ of the Company as if no
notice had been given.
(j) The first sentence of Section 9 of the Employment Agreement is
hereby amended by deleting the phrase "During the Term hereof, the" and
substituting the word "The."
(k) Section 13 of the Employment Agreement is hereby amended to read
in its entirety as follows:
BREACH BY THE COMPANY; DAMAGES; ATTORNEYS' FEES. If the
Executive's employment is terminated by the Executive for Good
Reason or by the Company without Cause (as defined in Section
6(d) of this Employment Agreement), the Company shall provide
the Executive with the following compensation and benefits as
liquidated damages for such termination: the Company (i) shall
continue to pay the Executive the Base Salary, at the rate in
effect as of the date of such termination of employment, for
and with respect to the period beginning on the date of such
termination of employment and ending on the Expiration Date
(hereinafter the "Continuation Period"), at the same times and
in the same manner as specified in Section 5(a) hereof; (ii)
shall pay the Executive, in lieu of annual bonuses pursuant to
Section 5(b) hereof, an annual amount equal to the average of
the Executive's two most recent previous annual bonuses (or,
if the Executive has not been employed by the Company for two
years, the amount of the Executive's most recent previous
annual bonus before the date of such termination) at the same
times and in the same manner as such annual bonuses would have
been paid pursuant to Section 5(b) hereof; (iii) shall
continue to provide the Executive with a car allowance (or use
of a Company car, if applicable) on the terms and conditions
in effect immediately before the termination of employment;
(iv) shall continue to provide the Executive during the
Continuation Period with group health benefits on terms and
conditions substantially similar to those provided to the
Executive immediately before the termination of employment;
provided, that (x) if the Group Health Benefits cannot be
provided to the Executive under the terms of the applicable
plans or applicable law, the Company shall provide the
Executive (and his family, where applicable) with substitute
benefits that are comparable and substantially equivalent in
value to such benefits, and (y) during any period when the
Executive is eligible to receive any such benefits under
another employer-provided plan or a government plan, the Group
Health Benefits or substitute benefits provided by the Company
under this clause (iv) may be made secondary to those provided
under such other plan; provided, that in all events
EXH 10(n) - Page 4
the Executive shall be entitled, after such termination, to
participate in the Company's Retired Officer Medical Plan
subject to the terms and conditions thereof; (v) shall, with
respect to each employee stock option held by the Executive as
of August 23, 1997 that remains outstanding but has not vested
and become exercisable as of the date of such termination,
either (A) cause such option to become fully vested and
exercisable as of the date of termination or (B) arrange for
the Executive to enjoy a status, during the Continuation
Period, such that such option continues to vest and become
exercisable in accordance with its terms in the same manner as
would have occurred if the Executive had remained employed
under this Agreement during the Continuation Period, as the
Company shall elect; provided, that the Company may not elect
to take the action provided for in clause (B) with respect to
options that are "incentive stock options" within the meaning
of Section 422 of the Internal Revenue Code of 1986, as
amended ("ISOs"), if such action would cause such options no
longer to qualify as ISOs; and (v) shall pay all amounts due
pursuant to Section 20 hereof, subject to the terms and
conditions of said Section 20. No mitigation of damages shall
be required of the Executive. The Company shall pay to the
Executive all reasonable attorneys' fees and necessary costs
and disbursements incurred by or on behalf of the Executive in
connection with or as a result of a dispute under this
Agreement or the Supplemental Agreement, if the Executive
ultimately prevails in such dispute. Attorneys' fees that
become payable pursuant to the preceding sentence shall be
paid by the Company within thirty days of presentment by the
Executive to the Company of an invoice received by the
Executive from the Executive's attorneys.
1. The Employment Agreement is hereby amended by adding
the following new Sections at the end thereof, reading in their entirety as
follows:
19. Survival. Notwithstanding any other provision of
this Agreement, Sections 7, 8, 9, 10, 11, 12, 13, 14, 15, 16,
17, 18, 20 and this Section 19 shall survive the termination
of the Executive's employment under this Agreement and the
termination of this Agreement.
20. (a) Effective as of ninety days before the
Transaction Date (the "Conversion Date"), all of the
Executive's benefits, rights and entitlements under the Bergen
Xxxxxxxx Amended and Restated Supplemental Executive
Retirement Plan (the "SERP") and the Bergen Xxxxxxxx Capital
Accumulation Plan (the "CAP"), shall be replaced by the
benefits provided by this Section 20. The Company shall
maintain three bookkeeping accounts for the benefit of the
Executive, one of which ("Account A"), which shall initially
be credited with $226,012, shall represent the Executive's
entire accrued benefit under the CAP (which is currently fully
vested), one of which ("Account B"), which shall initially be
credited with $128,534, shall represent the portion of the
Executive's accrued benefit under the SERP that was fully
vested as of the Conversion Date, without giving effect to the
provisions of Section 5.1(b) of the SERP, as in effect before
the amendment dated as of Xxxxxx 00, 0000,
XXX 10(n) - Page 5
and one of which ("Account C"), which shall initially be
credited with $801,095, shall represent the additional vested
benefit that would have been credited to the Executive as of
the Conversion Date pursuant to said Section 5.1(b) before
such amendment. (Account A, Account B and Account C are
referred to collectively as the "Accounts.") The amounts
credited to the Accounts pursuant to the foregoing shall be
nonforfeitable from and after the Conversion Date. Except as
specifically provided in Section 20(c) below, each of the
Accounts shall be credited with interest on the balance
therein ("Interest") at the rate of 6.25% per annum,
compounded quarterly, from the Conversion Date until the
balance therein has been reduced to zero by distributions
pursuant to Section 20(c).
(b) The balance (with Interest) of Account A
and Account B and, if Section 20(c) is not applicable, the
balance (with Interest) of Account C shall be paid or begin to
be paid to the Executive as soon as practicable after the date
of the Executive's termination of employment with the Company
(whether or not such termination occurs during the term of
this Agreement) (such date, the "Starting Date"). The
Executive shall be entitled to elect by written notice to the
Company whether to receive payment in a single lump sum or in
annual installments over a specified period of years (the
"Installment Period"). Any such election may be revoked,
amended or superseded by a subsequent election; provided, that
no such election shall be effective if it is made less than
one year before the Starting Date. If, as of the Starting
Date, the Executive has not made an effective election to
receive installment payments, the Executive will be paid in a
single lump sum. If the Executive elects to receive
installment payments, then as soon as practicable after the
Starting Date, and on each anniversary thereof until the
expiration of the Installment Period, the Executive shall
receive a payment equal to (i) the balance in Account A and
Account B and, if it is being paid pursuant to this Section
20(b), the balance in Account C, divided by (ii) the number of
anniversaries of the Starting Date remaining in the
Installment Period, plus one. Notwithstanding the foregoing,
in the event of the Executive's death before the Starting Date
or before completion of any such installment payments, any
balances in the Accounts that remain payable hereunder shall
be paid to the Executive's designated beneficiary (or, if the
Executive had not designated a beneficiary, to the Executive's
estate) in a single lump sum as soon as practicable after such
death.
(c) If the Executive's employment with the
Company is terminated before the Expiration Date by the
Company for Cause or by the Executive without Good Reason,
then the balance in Account C shall not be paid pursuant to
Section 20(b) above, but shall instead be paid without
Interest (i) to the Executive on the Executive's 65th birthday
or (ii) if the Executive dies before the Executive's 65th
birthday, to the Executive's designated beneficiary (or, if
the Executive had not designated a beneficiary, to the
Executive's estate) on the 65th anniversary of the Executive's
birth.
EXH 10(n) - Page 6
2. The promissory note evidencing each loan to the
-------------------------------------------------------
Executive that is outstanding as of the date of this Agreement under the
--------------------------------------------------------------------------------
Company's Executive Loan Program is hereby amended, effective as of the date of
--------------------------------------------------------------------------------
this Agreement, by adding to it the following:
---------------------------------------------
Notwithstanding any other provision of this Note: (i) the
consummation of the transactions contemplated by the Agreement
and Plan of Merger dated as of August 23, 1997, by and among
the Company, Cardinal Health, Inc., and Bruin Merger Corp. (as
the same may be amended from time to time, the "Merger
Agreement"), shall not be deemed to constitute a "Change in
Control" for purposes of this Agreement, and from and after
the Effective Time (as defined in the Merger Agreement), the
provisions of this Note providing for forgiveness and
cancellation of this Note upon a Change in Control shall be
null and void and of no further force or effect; and (ii) if
either (A) the Maker remains in continuous employment with the
Holder until the Expiration Date (as defined in the Employment
Agreement between the Maker and the Holder dated as of April
21, 1994 (the "Employment Agreement"), as amended by the
Agreement between the Maker and the Holder dated as of August
23, 1997 (the "Supplemental Agreement")) or (B) the Maker's
employment with the Holder is terminated before such
expiration by the Holder without Cause or by the Maker with
Good Reason or as a result of the Maker's death or disability
(as those terms are defined in the Employment Agreement as
amended by the Supplemental Agreement), then upon the
Expiration Date or the date of such termination, as
applicable, the entire unpaid principal balance of the Loan
shall be automatically forgiven and cancelled with no interest
due and without any further action required on the part of the
Holder or its Board of Directors, and the Holder shall
thereafter take such steps as the Maker may reasonably request
in order to evidence such forgiveness and cancellation of the
Loan and the immediate release of the collateral securing the
Loan.
3. From and after the date of this Agreement, the
-------------------------------------------------------
Severance Agreement dated as of April 21, 1994, by and between the Company and
--------------------------------------------------------------------------------
the Executive shall terminate and shall be null and void and of no further force
--------------------------------------------------------------------------------
or effect, and the Executive shall not be entitled to any payments or benefits
--------------------------------------------------------------------------------
thereunder.
----------
4. (a) In consideration for the addition of Section 20
-------------------------------------------------------
to the Employment Agreement pursuant to Section 1(l) above and the loan
--------------------------------------------------------------------------------
forgiveness provided pursuant to Section 2 above, during the Noncompetition
--------------------------------------------------------------------------------
Period (as defined below), the Executive shall not, without the prior written
--------------------------------------------------------------------------------
consent of the Board, engage in or become associated with a Competitive
--------------------------------------------------------------------------------
Activity. For purposes of this Section 4: (i) the "Noncompetition Period" means
--------------------------------------------------------------------------------
(A) the period during which the Executive is employed by the Company or any of
--------------------------------------------------------------------------------
its affiliates, plus (B) the Continuation Period (if any) pursuant to Section 13
--------------------------------------------------------------------------------
of the Employment Agreement, as amended by Section 1 of this Agreement; (ii) a
--------------------------------------------------------------------------------
"Competitive Activity" means any
--------------------------------
EXH 10(n) - Page 7
business or other endeavor, in any county of any state of the United States of a
--------------------------------------------------------------------------------
kind being conducted by the Company or any of its affiliates (the "Affiliated
--------------------------------------------------------------------------------
Companies") in such jurisdiction as of the Effective Time or at any time
--------------------------------------------------------------------------------
thereafter through such date of termination, if and only if the Executive
--------------------------------------------------------------------------------
performed services in such business or endeavor during the Executive's
--------------------------------------------------------------------------------
employment by the Company; provided, that no business or endeavor shall be
--------------------------------------------------------------------------------
deemed to be a Competitive Activity if it is not a Competitive Activity at the
--------------------------------------------------------------------------------
time the Executive begins participating in such business or endeavor; and (iii)
--------------------------------------------------------------------------------
the Executive shall be considered to have become "associated with a Competitive
--------------------------------------------------------------------------------
Activity" if the Executive becomes directly or indirectly involved as an owner,
--------------------------------------------------------------------------------
principal, employee, officer, director, independent contractor, representative,
--------------------------------------------------------------------------------
stockholder, financial backer, agent, partner, advisor, lender, or in any other
--------------------------------------------------------------------------------
individual or representative capacity with any individual, partnership,
--------------------------------------------------------------------------------
corporation or other organization that is engaged in a Competitive Activity.
--------------------------------------------------------------------------------
Notwithstanding the foregoing, the Executive may make and retain investments
--------------------------------------------------------------------------------
during the Noncompetition Period in less than four and nine-tenths percent
--------------------------------------------------------------------------------
(4.9%) of the equity of any entity engaged in a Competitive Activity, if such
--------------------------------------------------------------------------------
equity is listed on a national securities exchange or regularly traded in an
--------------------------------------------------------------------------------
over-the-counter market.
------------------------
(b) The Executive acknowledges and agrees that: (i) the
purpose of the noncompetition covenant of this Section 4 is to protect the
goodwill, trade secrets and other confidential information of the Company being
acquired by Cardinal; (ii) because of the nature of the business in which
Cardinal, the Company and the Affiliated Companies are engaged and because of
the nature of the Confidential Information to which the Executive has access, it
would be impractical and excessively difficult to determine the actual damages
of Cardinal, the Company and the Affiliated Companies in the event the Executive
breached the noncompetition covenant of this Section 4; and (iii) remedies at
law (such as monetary damages) for any breach of the Executive's obligations
under this Section 4 would be inadequate. The Executive therefore agrees and
consents that if the Executive commits any material breach of the noncompetition
covenant of this Section 4, and the Executive fails to cure such breach within
15 days after receiving notice from the Company thereof, the Executive shall
forfeit all of the Executive's rights to any unpaid pay or benefits pursuant to
Section 13 of the Employment Agreement, as amended by Section 1 of this
Agreement, other than the Executive's rights with respect to the Accounts
pursuant to Section 20 thereof, and 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. With respect to any provision of this
Section 4 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 the noncompetition covenant of this
Section 4 is determined to be wholly or partially unenforceable in any
jurisdiction, such determination shall not be
EXH 10(n) - Page 8
a bar to or in any way diminish the Company's right to enforce such covenant in
any other jurisdiction.
5. The Executive acknowledges and agrees that each of
-------------------------------------------------------
the Bergen Xxxxxxxx Amended and Restated Supplemental Executive Retirement Plan
--------------------------------------------------------------------------------
(the "SERP") and the Amended and Restated Bergen Xxxxxxxx Capital Accumulation
--------------------------------------------------------------------------------
Plan (the "CAP") has been amended, and the Company has executed an amendment to
--------------------------------------------------------------------------------
the Master Trust Agreement for Bergen Xxxxxxxx Corporation Executive Deferral
--------------------------------------------------------------------------------
Plans dated as of December 27, 1994, between the Company and Wachovia Bank of
--------------------------------------------------------------------------------
North Carolina, N.A., which amendment the Company intends to have executed by
--------------------------------------------------------------------------------
the Trustee. Such amendments provide that, except as set forth in the
--------------------------------------------------------------------------------
immediately following sentence, (i) the consummation of the Merger shall not
--------------------------------------------------------------------------------
effectuate a "Change in Control" within the meaning thereof, and (ii) effective
--------------------------------------------------------------------------------
as of the Effective Time, all provisions thereof that relate to a "Change in
--------------------------------------------------------------------------------
Control" shall be null and void and of no further effect, as if deleted.
--------------------------------------------------------------------------------
Notwithstanding the foregoing, the consummation of the Merger shall effectuate a
--------------------------------------------------------------------------------
"Change in Control" solely for purposes of giving effect to (A) the provisions
--------------------------------------------------------------------------------
of Section 5.1(b)(i) of the SERP that call for full vesting of the "Accrued
--------------------------------------------------------------------------------
Benefit" of each "Participant" upon a "Change in Control" (as those terms are
--------------------------------------------------------------------------------
defined in the SERP, as amended to exclude from participation, contingent upon
--------------------------------------------------------------------------------
consummation of the Merger, the Executive and certain other executives who
--------------------------------------------------------------------------------
previously participated therein), and (B) the provisions of Section 5.4(a)(F) of
--------------------------------------------------------------------------------
the CAP that call for the benefit of a "Participant" that is "Accrued" as of a
--------------------------------------------------------------------------------
"Change in Control" (without giving effect to clauses (A)-(E) of Section 5.4(a))
--------------------------------------------------------------------------------
to become fully "Vested" as of a "Change in Control" (as those terms are defined
--------------------------------------------------------------------------------
in the CAP, as similarly amended to exclude from participation, contingent upon
--------------------------------------------------------------------------------
consummation of the Merger, the Executive and certain other executives who
--------------------------------------------------------------------------------
previously participated therein). The Executive hereby irrevocably waives any
--------------------------------------------------------------------------------
rights the Executive may have to require the Company to fund or pre-fund, upon a
--------------------------------------------------------------------------------
change in control, future benefits under the Retired Officers Medical Plan.
--------------------------------------------------------------------------------
6. Effective as of the Effective Time of the Merger,
-------------------------------------------------------
Cardinal hereby irrevocably, absolutely and unconditionally guarantees the
--------------------------------------------------------------------------------
payment by the Company of all compensation that the Company is obligated to pay
--------------------------------------------------------------------------------
to the Executive pursuant to the Employment Agreement and this Agreement,
--------------------------------------------------------------------------------
including without limitation the amount payable pursuant to Section 20 of the
--------------------------------------------------------------------------------
Employment Agreement, subject to the terms and conditions of said Section 20.
--------------------------------------------------------------------------------
7. (a) (i) In addition to any other payment required
-------------------------------------------------------
pursuant to this Agreement and the Employment Agreement as amended hereby, the
--------------------------------------------------------------------------------
Company shall pay the Executive the amount (the "Gross-up Bonus") necessary to
--------------------------------------------------------------------------------
provide the Executive, on an After-Tax Basis, with the amount equal to the 4999
--------------------------------------------------------------------------------
Amount. As an advance against the Company's obligation to pay the Gross-up
--------------------------------------------------------------------------------
Bonus, the Company shall pay to the Executive, within ten (10) days of the
--------------------------------------------------------------------------------
receipt of Tax Counsel's opinion described in Section 7(b) below, a cash lump
--------------------------------------------------------------------------------
sum payment
-----------
EXH 10(n) - Page 9
(the "Gross-Up Advance") equal to the Gross-up Bonus (if any) as determined by
--------------------------------------------------------------------------------
Tax Counsel and set forth in Tax Counsel's opinion, along with a copy of Tax
--------------------------------------------------------------------------------
Counsel's opinion.
-----------------
(b) (i) If the Company or the Executive believes that
Code Section 4999 will apply to the Executive, such party shall notify the other
party. Within three (3) days of such notice, the Company shall request the
Company's independent auditors to select Tax Counsel to calculate the 4999
Amount and the Gross-up Bonus. Such Tax Counsel shall be retained by the Company
within ten (10) days of the notice described in the first sentence of this
Section 7(a). Tax Counsel's fees and other costs shall be paid by the Company.
(ii) Within thirty (30) days of retention, Tax Counsel
shall prepare a written opinion addressed to both the Company and the Executive,
setting forth his or her determination of the 4999 Amount and the Gross-up Bonus
applicable to the Executive. Tax Counsel's opinion shall set forth his or her
calculations and factual assumptions used in arriving at his or her opinion.
(iii) For purposes of Tax Counsel's opinion, Tax
Counsel may take into account such facts and circumstances as he or she deems
relevant. Tax Counsel also may take into account such authorities as he or she
deems relevant, and shall not be limited to those items that constitute
"substantial authority" under Section 6661 of the Code.
(c) As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the determination of the 4999 Amount
and the Gross-up Bonus by Tax Counsel, it is possible that the actual Gross-Up
Bonus will exceed the sum of the Gross-Up Advance plus any amounts advanced to
the Executive pursuant to Section 7(d) below (such excess, an "Underpayment"),
or that the sum of the Gross-up Advance plus any amounts advanced to the
Executive pursuant to Section 7(d) below will exceed the actual Gross-Up Bonus
(such excess, an "Overpayment"). In the event of an Underpayment, after the
Company exhausts its remedies pursuant to Section 7(d) below, such Underpayment
shall be promptly paid by the Company to or for the benefit of the Executive,
together with an amount equal to any interest actually paid by the Executive
with respect to such underpayment pursuant to Section 6601 of the Code. In the
event that it is finally determined, pursuant to Section 7(d) below or
otherwise, that an Overpayment has occurred, the Executive shall repay to the
Company the amount of the Overpayment, together with an amount equal to any
interest actually received by the Executive with respect to such Overpayment
pursuant to Section 6611 of the Code.
(d) The Executive shall notify the Company in writing
of any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company to the Executive of a Gross-Up Bonus or Underpayment.
Such notification shall be given as soon as practicable but no later than ten
EXH 10(n) - Page 10
business days after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Executive gives
such notice to the Company (or such shorter period ending on the date that is
five days before the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, or if the
Company notifies the Executive that it desires the Executive to bring a claim
for refund that, if successful, would result in an Overpayment, the Executive
shall:
(i) give the Company any information reasonably
requested by the Company relating to such claim,
(ii) take such action in connection with contesting or
pursuing such claim (as applicable) as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest or pursue such claim (as applicable),
(iv) and permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly, on an After-Tax
Basis with respect to the Executive, all costs and expenses (including
additional interest and penalties) incurred in connection with the contest or
pursuit (as applicable) of such claim. Without limiting the foregoing provisions
of this Section 7(d), the Company shall control all proceedings taken in
connection with such claim and, at its sole option, may pursue or forgo any and
all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay any tax claimed and xxx for a refund or contest the
claim in any permissible manner, and the Executive agrees to contest or pursue
such claim to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and on an After-Tax Basis
with respect to the Executive.
(e) For purposes of this Section 7, the following terms
shall have the meanings set forth below:
(i) "4999 Amount" shall mean the amount of excise tax
for which the Executive is liable under Section 4999 of the Internal
EXH 10(n) - Page 11
Revenue Code of 1986, as amended (the "Code"), or any successor provision, after
taking into consideration all compensation includable in the computation under
Section 280G of the Code (or its successor), other than compensation or benefits
specifically contractually excluded from this computation under terms set forth
in the applicable benefit plan or other written agreement between the Company
and the Executive. Without limiting the foregoing, such computation shall take
into account all Gross-up Bonus and Gross-up Advance payments received or to be
received by the Executive under this Agreement.
(ii) "After-Tax Basis" shall mean on a basis
taking into account all federal, state and local income and
employment taxes, based upon the highest marginal rates of
such taxes actually applicable to the Executive in the
relevant year or years.
(iii) "Tax Counsel" shall mean an attorney
at law or certified public account who (A) is a partner at a
law firm of at least 25 attorneys or at a "Big 6" national
accounting firm, which firm has not provided services to the
Company or any affiliate of the Company within the last year,
(B) is experienced in matters concerning Section 280G of the
Code, and (C) is retained pursuant to Section 7(a) above.
(f) In consideration of the foregoing provisions of
this Section 7, the Executive agrees to use reasonable efforts at no cost to the
Executive to minimize the 4999 Amount.
8. If the Executive remains employed by the Company
-------------------------------------------------------
from the date hereof through December 31, 1997, then on December 31, 1997, the
--------------------------------------------------------------------------------
entire unpaid principal balance of each loan to the Executive that is then
--------------------------------------------------------------------------------
outstanding under the Company's Executive Loan Program shall be automatically
--------------------------------------------------------------------------------
forgiven and cancelled with no interest due and without any further action
--------------------------------------------------------------------------------
required on the part of the Company or its Board of Directors, and the Company
--------------------------------------------------------------------------------
shall thereafter take such steps as the Executive may reasonably request in
--------------------------------------------------------------------------------
order to evidence such forgiveness and cancellation of the loan and the
--------------------------------------------------------------------------------
immediate release of the collateral securing such loan.
------------------------------------------------------
9. From and after the date of this Agreement, any
-------------------------------------------------------
reference to "this Agreement" in the Employment Agreement shall mean the
--------------------------------------------------------------------------------
Employment Agreement as amended by this Supplemental Agreement.
--------------------------------------------------------------
10. Nothing in this Agreement or in the Employment
-------------------------------------------------------
Agreement as amended hereby shall be construed to limit the rights of the
--------------------------------------------------------------------------------
Company to monetary damages or any other remedy against the Executive for any
--------------------------------------------------------------------------------
breach of any of the Executive's obligations under this Agreement or the
--------------------------------------------------------------------------------
Employment Agreement as amended hereby; provided, that any such monetary damages
--------------------------------------------------------------------------------
for a breach of
---------------
EXH 10(n) - Page 12
Section 4 of this Agreement shall be reduced (but not below zero) by any amounts
--------------------------------------------------------------------------------
that the Executive forfeits pursuant to the second sentence of said Section
--------------------------------------------------------------------------------
4(b).
----
11. All references in this Agreement to sections,
-------------------------------------------------------
subsections and clauses of the Employment Agreement are based upon the form of
--------------------------------------------------------------------------------
employment agreement filed by the Company with the Securities Exchange
--------------------------------------------------------------------------------
Commission. To the extent that the actual references in the Employment Agreement
--------------------------------------------------------------------------------
differ from such form, the references herein shall be deemed to refer to the
--------------------------------------------------------------------------------
correct corresponding sections, subsections and clauses in the Employment
--------------------------------------------------------------------------------
Agreement.
---------
12. Notwithstanding any other provision of this
-------------------------------------------------------
Agreement, all provisions of this Agreement other than Section 8 and this
--------------------------------------------------------------------------------
Section 12 shall terminate and be null and void ab initio after any termination
--------------------------------------------------------------------------------
of the Merger Agreement without consummation of the Merger.
----------------------------------------------------------
EXH 10(n) - Page 13
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
"The Company"
BERGEN XXXXXXXX CORPORATION,
a New Jersey corporation
By_____________________________
Its
"The Executive"
________________________________
Milan A. Sawdei
Solely for purposes of
Section 6 of this
Agreement:
"CARDINAL"
CARDINAL HEALTH, INC., an Ohio
corporation
By_____________________________
Its
EXH 10(n) - Page 14
SCHEDULE 10(n)
The Company has entered into supplemental agreements (the
"Supplemental Agreements"), a form of which is set forth as Exhibit 10(n), with
eight senior management employees - Xxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxx
X. Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx, Xxxxx X.
Sawdei and Xxxxx X. Xxxxxxxx. The Supplemental Agreements amend and supplement
existing employment agreements and terminate existing severance agreements;
however, if the Company's pending merger agreement with Cardinal Health, Inc.
terminates for any reason, the Supplemental Agreement will, with certain
exceptions, be void ab initio and the employment agreements and severance
agreements will be fully reinstated. The Supplemental Agreements are
substantially identical, except that the relocation and retiree medical benefits
provisions vary from employee to employee.
EXH 10(n) - Page 15
