Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made effective as of January 31, 1996 by and
between McKESSON CORPORATION (the "Company"), a Delaware
corporation with its principal office at One Post Street, San
Francisco, California, and __________________ ("Executive").
R E C I T A L S
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
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
employment hereunder, Executive agrees to serve the Company, and
the Company shall employ Executive, as Vice President of Company
and President of McKesson Health Systems 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.
(a) Term of Employment. The period of Executive's
employment under this Agreement shall be deemed to have commenced
on the date of this Agreement and shall continue until January 30,
1999.
(b) Duties. During the period of his employment
hereunder and 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 approval of the Chief Executive Officer of
the Company, Executive may serve, or continue to serve, on the
boards of directors of, or 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 the State of 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; Other
Benefits.
(a) Compensation. During the period of employment under
this Agreement, Executive shall be paid a salary, in biweekly
installments, at the rate of Three Hundred Fifty Thousand Dollars
($350,000.00) 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 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 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 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 initial incentive awards specified in subparagraphs (a)
through (d) below:
(a) Replacement Bonus. Company shall pay Executive a
special, one-time employment bonus of Two Hundred Twenty Five
Thousand Dollars ($225,000) in order to compensate Executive for
the bonus he would otherwise have received from his previous
employer. Company shall pay this bonus to Executive as soon as
practicable following commencement of his employment.
(b) Stock Options. Subject to the terms and conditions
of Company's 1994 Stock Option and Restricted Stock Plan (the
"Plan"), Executive shall receive an initial grant of 40,000 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.
(c) Restricted Stock. Subject to the terms and
conditions of the Plan, Executive shall receive an initial grant of
20,000 shares of Company's restricted stock. The restrictions with
respect to said stock shall lapse on the fourth (4th) anniversary
of the date of grant.
(d) LTIP Cash Award. Executive is hereby designated as
a participant in Company's Long Term Incentive Plan. Subject to the
terms of the Plan, the following target awards are specified for
Executive for the incentive periods indicated: (i) $17,500 for the
Company's fiscal year ending March 31, 1997; (ii) $35,000 for
Company's fiscal year ending March 31, 1998; (iii) $52,500 for
Company's fiscal year ending March 31, 1999, and (iv) $70,000 for
Company's fiscal year ending March 31, 2000. Executive acknowledges
that payment of awards under the Plan are subject to achievement by
the Company of the financial targets specified pursuant thereto.
6. Housing Loan and Assistance.
(a) Company agrees to make a housing loan (the "Housing
Loan") to Executive in the sum of Five Hundred Thousand Dollars
($500,000). The Housing Loan shall be evidenced by a promissory
note (the "Note") in form approved by the Company, and shall be
secured by a deed of trust on Executive's principal residence (the
"Property"). The Housing Loan shall be without interest prior to
"Maturity" (as defined in the Note) and shall be repaid to Company
in full upon the earliest to occur of any of the following events
(i) (x) sixty (60) days after termination of Executive's full-time,
active employment by the Company on account of death, retirement,
resignation without Good Reason (as defined in that certain
Termination Agreement, dated as of January 31, 1996, by and between
Executive and Company), involuntary termination for cause, or
long-term disability, or, (y) one (1) year after involuntary
termination by the Company without cause or resignation with Good
Reason (ii) sale or other transfer of ownership of the Property
(iii) use of the Property other than as principal residence, or
(iv) ten (10) years from the date of the Housing Loan.
(b) So long as Executive remains in its continuous
employ, Company shall credit for the account of Executive in its
Deferred Compensation Administration Plan ("DCAP II") the amount of
Fifty Thousand Dollars ($50,000) per annum commencing February 1,
1996 and continuing for the duration of Executive's employment
through February 1, 2005, or a pro-rata portion of such amount if
the employment of Executive terminates during the course of any
such year. The DCAP II account will bear interest each year at the
rate established by Company's Board of Directors (or any duly
authorized committee thereof); and the balance of the DCAP II
account shall be released to Executive (or, at Company's sole
election, applied against the balance, if any of the Housing Loan)
upon the earlier of (i) the Maturity of the Housing Loan following
Executive's termination of employment with Company, or (ii) ten
years from the date of the first credit to the DCAP II account. So
long as Executive remains in Company's employ, the obligation of
Company to credit the DCAP II account as provided in this
subparagraph (b) shall survive the expiration of this Employment
Agreement.
(c) Should (i) Executive's employment be terminated by
Company for reasons other than "cause" (as defined herein) prior to
January 30, 2006, and (ii) Executive incur a loss on the sale of
the Property as a result of a decline in its market value, then
Company shall reimburse Executive to the extent of any such loss up
to a maximum amount equal to (x) the principal amount of the
Housing Loan, less (y) the balance of the DCAP II account
established pursuant to subparagraph (b) above. Company also agrees
to reimburse Executive for any reasonable relocation expenses
(similar to those set forth in subparagraph (e) below) that
Executive may incur to the extent such expenses are not reimbursed
by Executive's subsequent employer. The obligations of Company set
forth in this subparagraph (c) shall survive expiration or
termination of this Employment Agreement.
(d) Company shall provide Executive with its third party
home buying service. If and to the extent the proceeds from the
sale of Executive's current residence are less than Nine Hundred
Thousand Dollars ($900,000) then Company shall reimburse Executive
for the amount of such shortfall.
(e) Company shall reimburse Executive, in accordance
with its existing policies, for the following reasonable expenses
incurred in connection with sale of his current residence and
purchase of suitable housing in the San Francisco Bay Area: real
estate brokerage fees, pest control inspections, 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.
7. Benefits Payable Upon Disability or Death.
(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 During and After Employment.
(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.
(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 travelling 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.
(a) For Cause. Notwithstanding anything herein to the
contrary, the 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, 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.
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, 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,
(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 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;
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 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 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 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.
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. For purposes of clarification, Company and Executive
agree that the term "good reason" as used in the Executive Benefit
Retirement Plan, shall have the same meaning as "Good Reason" as
defined in the Termination Agreement.
10. General Provisions.
(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 January 15, 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
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Vice President
ATTEST:
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Secretary Executive
By the Authority of the
Compensation Committee
of the Board of Directors
of McKesson Corporation
on January 31, 1996.