EXHIBIT 10.3
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated March 26, 1999, by and between McKesson HBOC, Inc. (the
"Company"), a Delaware corporation with its principal office at One Post Street,
San Francisco, California, and _____________ ("Executive").
RECITALS
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A. Company (previously named McKesson Corporation) and Executive are currently
parties to a contract of employment, dated as of May 20, 1996 (the "Prior
Agreement");
B. Company and Executive now desire to amend and also to restate the Prior
Agreement so as to (i) extend the term thereof, and (ii) make certain other
modifications to reflect changes which have occurred since the date of the
Prior Agreement;
C. The Company, in its business, develops and uses certain trade secrets,
pricing and marketing strategies, customer lists and other confidential and
proprietary business information and data (as hereinafter defined,
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"Confidential Information"). Such Confidential Information has been, and
will necessarily continue to 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
D. The Company desires to assure the continued services and employment of
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 continue
in the employment of 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:
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1. Employment. Subject to the terms and conditions of this Agreement, the
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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
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hereunder, Executive agrees to serve the Company, and the Company shall
employ Executive, as President and Chief Executive Officer, or in such
other senior corporate executive capacity or capacities as may be mutually
agreed upon by Executive and the Board of Directors of the Company.
3. Term and Duties.
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(a) Term of Employment. The period of Executive's employment under this
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Agreement shall be deemed to have commenced on the date hereof and
shall continue until March 31, 2004.
(b) Duties. During the period of his employment hereunder and except for
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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 Board of
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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 Board'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 at One Post
Street in San Francisco, California. Unless and until otherwise
mutually agreed between the Company and the Executive, the Executive
shall be at liberty to maintain his residence in the San Francisco Bay
Area,
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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;
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(a) Compensation. During the period of employment under this Agreement,
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Executive shall be paid a salary, in biweekly installments, at the
rate of not less than Eight Hundred Fifty Thousand Dollars
($850,000.00) 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). For Company's
fiscal year which commenced on April 1, 1998, any incentive
compensation awarded to Executive pursuant to the provisions of the
Company's 1989 Management Incentive Plan ("MIP") shall be calculated
using an Individual Target Award (as defined in the MIP) of 85% of
Executive's base salary. For Company's fiscal years commencing on and
after April 1, 1999, Executive's Individual Target Award shall be 100%
of base salary for the applicable Year (as defined in the MIP).
Executive shall also receive an automobile allowance from the Company
of One Thousand Dollars ($1,000) 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 Agreement,
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Executive shall be entitled to receive all other benefits of
employment generally available to other members of the Company's
senior 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
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Plan, Executive Medical Plan, 1989 Management Incentive Plan, Long
Term Incentive Plan, 1984 Executive Benefit Retirement Plan, 1988
Executive Survivor Benefits Plan, Deferred Compensation Administration
Plan II, Stock Purchase Plan and 1994 Restricted Stock and Stock
Option Plan (or any similar plan or arrangement), and the Company
agrees that none of such benefits shall be altered in any manner in
such a way as to reduce any existing entitlement of Executive
thereunder as of the date hereof without Executive's prior written
consent.
5. 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 5 shall not affect any rights of
Executive's heirs, administrators, executors, legatees, beneficiaries
or assigns under the Company's Profit-Sharing Investment Plan,
Executive Benefit Retirement Plan, Long Term Incentive Plan, Executive
Survivor Benefits Plan, any Stock Purchase, Restricted Stock and Stock
Option Plan (or any similar plan or arrangement), or any other
employee benefit plan of the Company, and any such rights shall be
governed solely by the terms of the respective plans.
6. Obligations of Executive During and After Employment.
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(a) No Competition During Term. Executive agrees that during the term of
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his employment under this Agreement, he will engage in no other
business activities, directly or
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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 Board of Directors
of the Company.
(b) Unauthorized Use of Confidential Information. Executive acknowledges
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and agrees that (i) during the course of his employment, Executive
will have produced and/or have access to Confidential Information (as
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hereinafter defined) as well as records, notebooks, data, formulae,
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specifications, 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, knowingly or
intentionally disclose, use, copy or make lists of any such
information, except to the extent expressly required to perform his
obligations to Company hereunder. 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 6(b) shall
survive the termination or expiration of this Agreement.
(c) Confidential Information Defined. For purposes of this Agreement
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"Confidential Information" means all information (whether reduced to
written, electronic, magnetic or other tangible form) acquired in any
way by Executive during the course of his employment with the Company
concerning the products, projects, activities, business or affairs of
the Company or the Company's customers, including, without limitation,
(i) all information concerning trade secrets of the Company, including
computer programs, systems documentation, special hardware, product
hardware, related software development, manuals, formulae, processes,
methods, machines, compositions, ideas, improvements or inventions of
Company and its affiliated companies, (ii) all sales and financial
information concerning the Company, (iii) all customer and supplier
lists, (iv)
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all information concerning products under development or marketing
plans for any of those products or projects, and (v) all information
in any way concerning the products, projects, activities, business or
affairs of customers of the Company which was furnished to him by the
Company or any of its agents or customers; provided, however, that
Confidential Information does not include information which (A)
becomes available to the public other than as a result of a disclosure
by Executive, (B) was available to him on a non-confidential basis
outside of his employment with the Company, or (C) becomes available
to him on a non-confidential basis from a source other than the
Company or any of its agents, creditors, suppliers, lessors, lessees
or customers. "Company" as used herein includes all subsidiaries and
affiliates of the Company.
(d) Nonsolicitation. Executive recognizes and acknowledges that it is
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essential for the proper protection of the business of the Company
that Executive be restrained for a reasonable period following the
termination of Executive's employment with the Company from: (1)
soliciting or inducing any employee of the Company to leave the employ
of the Company; (2) hiring or attempting to hire any employee of the
Company; or (3) soliciting the trade of or trading with the customers
of the Company for any competitive business purpose. Accordingly,
Executive agrees that during the term of his employment under this
Agreement, and for the Restricted Period thereafter following the
termination of Executive's employment with the Company for any reason,
Executive shall not, directly or indirectly, (i) hire, solicit, aid in
or encourage the hiring and/or solicitation of, contract with, aid in
or encourage the contracting with, or induce or encourage to leave the
employment of the Company, any employee of the Company; and (ii)
solicit, aid in or encourage the solicitation of, contract with, aid
in or encourage the contracting with, service, or contact any person
or entity which is, or was, within three years prior to the
termination of Executive's employment with the Company, a customer or
client of the Company, for the purpose of offering or selling a
product or service competitive with any of those offered by the
Company. For purposes of this Paragraph 6(d), the "Restricted Period"
shall be deemed to be two (2) years. This Paragraph 6(d) shall survive
the termination or expiration of this Agreement.
(e) Remedy for Breach. Executive agrees that in the event of a breach or
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threatened breach of any of the covenants contained in this Paragraph
6, the Company shall have the right and remedy to have such covenants
specifically enforced by any court having jurisdiction, it being
acknowledged and agreed than any material breach of any of the
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covenants will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.
7. 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, that such written notice shall not
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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 willful misconduct,
habitual neglect, dishonesty, or other intentional actions (or
failures to act) which are materially and demonstrably injurious to
the Company, or (ii) a material breach by Executive of one or more
terms of this Agreement.
(b) Arbitration Required to Confirm Cause. In the event of a termination
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for cause pursuant to subparagraph (a) above, the Company shall
continue to pay Executive's then current compensation as specified in
this Agreement until the issuance of an arbitration award affirming
the Company's action. Such arbitration shall be held in accordance
with the provisions of Paragraph 8(d) below. In the event the award
upholds the action of the Company, Executive shall promptly repay to
the Company any sums received pursuant to this subparagraph 7(b),
following termination of employment.
(c) Other than for Cause: Performance. Notwithstanding anything herein to
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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
Executive fail to perform his duties hereunder in a manner
satisfactory to the Board of Directors of the 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 Board.
(d) Obligations of Company on Termination of Employment.
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i) If Company terminates Executive's employment pursuant to subparagraph
7(a) above, and the Company's action is affirmed as specified in
subparagraph 7(b) 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;
ii) If (x) Company terminates Executive's employment pursuant to
subparagraph 7(c) above, or (y) Executive, in his sole discretion,
resigns or otherwise voluntarily leaves his employment with Company
(for any reason whatsoever) prior to the expiration of this Agreement,
then, in either case, in complete satisfaction and discharge of all of
its obligations to Executive hereunder, Company shall, except as
provided in Section 8(c) below, (a) continue Executive's then base
salary, without increase or decrease, for the remainder of the term of
this Agreement (it being understood, subject to subparagraph 7(d)(iii)
below, that Executive shall have no obligation to seek other
employment during such term, and that Company shall not reduce its
payments hereunder or have the right of offset as a result of any
compensation Executive may receive from a subsequent employer during
such term), (b) continue Executive's incentive award compensation
under the terms of Company's MIP for each fiscal year ending within
the term of this Agreement, such MIP awards to be equal, in each case,
to 100% of Executive's Individual Target Award existing at the time of
his termination of employment, (c) provide Executive with lifetime (i)
coverage under Company's Executive Medical Plan and financial
counseling program and, (ii) office space and secretarial support
services as may be suitable and adequate for Executive's needs, (d)
continue Executive's participation in the Deferred Compensation
Administration Plan II, and Executive's automobile allowance for the
term of this Agreement, (e) continue the accrual and vesting of
Executive's rights, and benefits for the remainder of the term of this
Agreement for purposes of the Executive Survivor Benefit Plan and the
Executive Benefit Retirement Plan (with Executive's benefits, for
purposes of those two plans only, calculated on the basis of Executive
receiving (i) Approved Retirement commencing on the expiration of this
Agreement and, (ii) with respect to the
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Executive Benefit Retirement Plan, a benefit calculated on the basis
of the greater of 60% or the maximum percentage of Average Final
Compensation then specified in the Plan without any reduction for
early retirement), (f) continue the vesting of all of Executive's
awards for the remainder of the term of this Agreement (but not
thereafter) for purposes of the Company's Stock Option and Restricted
Stock Plan (or any similar plan or arrangement) and the Long Term
Incentive Plan, provided, however, that (unless the Board of
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Directors, or any duly authorized Committee, in its sole discretion,
determines otherwise) Executive shall in no event be entitled to or
receive additional grants or awards subsequent to the date of his
termination of employment and, provided, further, that, with respect
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to the Long Term Incentive Plan, Executive shall receive pro-rata
payouts on the expiration date of this Agreement for all then pending
performance periods but Executive shall not participate in any way in
any performance period commencing subsequent to the date of his
termination of employment, and (g) deem Executive's termination to
have occurred as if the sum of his age and years of service to Company
is at least 65 for purposes of both the Deferred Compensation
Administration Plan II and the Stock Option and Restricted Stock Plan
(or any similar plan or arrangement), and (h) terminate Executive's
participation in Company's tax-qualified profit-sharing plan, pursuant
to the terms of said plan, as of the date of Executive's termination
of employment.
iii) Notwithstanding any contrary language or provision in paragraph 7(d)
(ii) above, or elsewhere in this Agreement, Executive expressly
acknowledges and agrees that:
(x) Company shall have the right to cease all payments otherwise due
Executive pursuant to paragraphs 7(d) (ii)(a) and 7(d)(ii)(b) above in
the event that, prior to the expiration of date of this Agreement,
Executive accepts employment with, advises, consults with or otherwise
renders services to, any business which competes with the business
then being conducted by Company or its affiliates,
and
(y) any and all of Executive's grants, awards, or benefits received
(or to be received) pursuant to the Company's Stock Option and
Restricted Stock Plan (or any similar plan or arrangement), Long Term
Incentive Plan and Executive Benefit Retirement Plan (collectively,
the "Plans") remain subject to the special
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forfeiture and repayment rules set forth in the Plans (or the
Statement of Terms and Conditions applicable thereto).
8. 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 May 20, 1996) 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 the Prior Agreement (whether or not fully performed by
Executive prior to the date hereof) which shall be of no further force
or effect.
(c) In the event Executive's employment with Company shall terminate under
circumstances otherwise providing Executive with a right to
compensation and benefits under both Section 5 of the Termination
Agreement and Section 7(d)(ii) of this Agreement, Executive shall be
entitled to receive the greater of the compensation and benefits
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provided therein, calculated individually, without duplication.
(d) 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
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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.
(e) 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.
(f) This Agreement may not be amended or modified except by a written
instrument executed by Company and Executive.
(g) 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 Amended and Restated
Employment Agreement as of the date first above written.
McKESSON HBOC, Inc.
a Delaware Corporation
By:__________________________
Senior Vice President
ATTEST:
_______________________________________ __________________________
Senior Vice President and Secretary Executive
By the Authority of the
Board of Directors of McKesson HBOC, Inc.
on January 27, 1999.
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