1
Exhibit 10.01
EMPLOYMENT AGREEMENT
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AGREEMENT by and among Whitmire Distribution Corporation, a
Delaware corporation (the "Company"), the undersigned executive (the
"Executive"), and Cardinal Distribution, Inc. ("Cardinal"), dated as
of the 11th day of October, 1993.
WHEREAS, the Company has entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") whereby Cardinal will acquire
all of the outstanding common stock of the Company (the
"Transaction"); and
WHEREAS, it is a condition to the consummation of the
Transaction that the Company enter into employment agreements with key
executives of the Company, including the Executive; and
WHEREAS, Cardinal desires to obtain for itself, through its
future ownership of the Company, the benefit of the Executive's
services as set forth in this Agreement; and
WHEREAS, the Company and the Executive desire to set forth in a
written agreement the terms and conditions under which the Executive
will continue to be employed by the Company after the Transaction;
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NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. EMPLOYMENT PERIOD. The Company shall employ the Executive,
and the Executive shall serve the Company, on the terms and conditions
set forth in this Agreement, for the period commencing on the
Effective Time (as that term is defined in the Merger Agreement) and
ending on the third anniversary of the Effective Time (the "Employment
Period").
2. POSITION AND DUTIES. (a) During the Employment Period, the
Executive shall be employed by the Company with such responsibilities
of an executive nature as may be determined from time to time by the
Company's Board of Directors or its lawfully designated representative
(the "Board").
(b) During the Employment Period, and excluding any periods
of vacation and sick leave to which the Executive is entitled, the
Executive shall devote full business attention and time to the
business and affairs of the Company, using the Executive's best
efforts to carry out faithfully and efficiently the responsibilities
assigned to the Executive under this Agreement. It shall not be
considered a violation of the foregoing for the Executive to (i)
serve on corporate boards with the approval of Cardinal, (ii) serve on
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civic or charitable boards or committees, (iii) deliver lectures or
fulfill speaking engagements and (iv) manage personal investments, so
long as such activities do not interfere with the performance of the
Executive's responsibilities under this Agreement.
(c) The Executive's services shall be performed primarily
at the location specified on Schedule A or any other location within
30 miles thereof, except as may be otherwise provided on Schedule A.
Travel in connection with the business of the Company may be
reasonably requested from time to time by the Board.
3. COMPENSATION. (a) BASE SALARY. During the Employment Period,
the Executive shall receive an annual base salary (the "Annual Base
Salary") in an amount not less than the amount specified on Schedule
A, payable in accordance with the Company's payroll practices for
executives, as in effect from time to time. During the Employment
Period, the Annual Base Salary shall be reviewed for possible increase
at least annually. Any increase in the Annual Base Salary shall not
limit or reduce any other obligation of the Company under this
Agreement. The Annual Base Salary shall not be reduced after any such
increase, unless the annual base salaries of all executives of
Cardinal and Company are proportionately reduced, and in any event
shall not be reduced below
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the amount specified on Schedule A. After any such increase
(or decrease), the term "Annual Base Salary" shall refer to the
Annual Base Salary as so increased (or decreased).
(b) ANNUAL BONUS. In addition to the Annual Base Salary,
the Executive shall be eligible to receive annual bonuses (each, an
"Annual Bonus") as follows. The Executive shall be eligible to
receive an Annual Bonus (including, to the extent earned, both a
"base bonus" and a "flex bonus") for the plan year ending June 30,
1994 under the Company's Management Incentive Plan (calculated as
provided in the Merger Agreement) on terms and conditions consistent
with the Executive's participation in that plan immediately before the
beginning of the Employment Period (the "Company Bonus").
Thereafter, the Executive shall participate in the annual bonus plan
in which executives of Cardinal participate from time to time (each, a
"Cardinal Bonus Plan") with an initial target bonus under such plan as
set forth on Schedule A; PROVIDED, that with respect to any plan year
under a Cardinal Bonus Plan that begins before July 1, 1994 and ends
after June 30, 1994, the Executive shall receive a pro-rata amount
based on the portion of such plan year that occurs after June 30, 1994
and with respect to any plan year under a Cardinal Bonus Plan that
begins before and ends after the end of the Employment Period,
the Executive shall receive a pro-rata amount based on the portion of
such plan year that occurs
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before the end of the Employment Period, payable at such time
as other bonuses are paid under the Cardinal Bonus Plan (but without
regard to any requirement that the recipient be employed by Cardinal
or any of the Affiliated Companies at the time of such payment).
(c) OTHER BENEFITS. During the Employment Period: (i) Prior to
July 1, 1994, the Company shall continue, and the Executive (and/or
the Executive's family to the extent so provided under the applicable
terms of such plans) shall be eligible to participate in and to
receive benefits under those welfare benefit, incentive, deferred
compensation, savings and retirement, and vacation plans of the
Company in effect on the date of this Agreement and listed in the
Whitmire Disclosure Schedule delivered under the Merger Agreement as
applying to Company executives; and (ii) thereafter, the Executive
shall be entitled to participate in the group health, life, disability
insurance, retirement savings and other employee benefit plans
(collectively, "Group Plans") generally offered to the Company's
employees in accordance with the standard terms and conditions of such
plans as in effect from time to time, which plans shall be
substantially equivalent in the aggregate to either (A) the Company's
Group Plans as in effect on the date of this Agreement or (B) the
Group Plans maintained from time to time by Cardinal and in which the
executives of Cardinal participate. In addition,
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the Executive shall be eligible to participate in Cardinal's
Stock Incentive Plan, although actual awards and benefits, if any, to
be granted to the Executive thereunder shall be in the sole discretion
of Cardinal's Board of Directors.
(d) EXPENSES. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all normal
and customary expenses incurred by the Executive's duties under
this Agreement, provided that the Executive complies with the policies,
practices and procedures of the Company for submission of expense
reports, receipts, or similar documentation of such expenses.
(e) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to the fringe benefits set forth on
Schedule B to this Agreement.
(f) VACATION. (i) During the Employment Period, (A) prior
to July 1, 1994, the Executive shall be entitled to annual paid
vacations based upon completed years of service with the Company and
its predecessors as provided in the vacation policy of the Company
in effect on the date hereof and (B) thereafter the Executive shall be
entitled to annual paid vacations as provided in the Company's
vacation policy in effect from time to time; PROVIDED, however, that
the annual vacations shall not in the aggregate be less than three
weeks
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and that all of Executive's completed years of service with the
Company and its predecessors, and with Cardinal and any Affiliated
Companies, shall be used to determine the vacation to which the
Executive is from time to time entitled.
(ii) At the Effective Time (as defined in the Merger
Agreement), the Company shall pay the Executive in full for all
vacations accrued in calendar years prior to calendar 1993 and not yet
taken as of the Effective Time.
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. The Company shall be
entitled to terminate the Executive's employment because of the
Executive's Disability during the Employment Period. "Disability"
means that (i) the Executive has failed, over a period of 180
consecutive days, to perform the Executive's duties under this
Agreement, as a result of physical or mental illness or injury, and
(ii) a physician selected by the Company or its insurers, and
reasonably acceptable to the Executive or the Executive's legal
representative, has determined that the Executive's incapacity
constitutes a disability for purposes of the Company's long-term
disability insurance coverage. A termination of the Executive's
employment by the Company for Disability shall be communicated to the
Executive by written notice, and
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shall be effective upon receipt of such notice by the Executive (the
"Disability Effective Date").
(b) BY THE COMPANY. (i) The Company may terminate the Executive's
employment during the Employment Period for Cause or without Cause. "Cause"
shall mean (A) fraud, misappropriation, embezzlement or willful misconduct
materially injurious to the Company, Cardinal or any of the Affiliated
Companies on the part of the Executive, (B) the Executive's (x) persistent and
continued failure to substantially perform his duties for the Company when and
to the extent reasonably requested by the Board to do so and (y) failure to
correct same within twenty (20) days after notice from the Board requesting the
Executive to do so (it being understood that this standard is intended to
assure the Company of the reasonable attendance, efforts and good faith
business attention of the Executive to his duties on behalf of the Company, but
may not be relied upon by the Company to terminate the Executive based upon the
operating performance of the Company), or (C) the Executive's breach of any
material provision of this Agreement, which breach has not been cured in all
material respects within 20 days after notice of such breach is given to the
Executive by the Company. No act or failure to act on the part of the Executive
shall be considered "willful" unless it is done, or omitted to be done, by the
Executive in bad faith or without reasonable belief that
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the Executive's action or omission was in the best interests of the Company.
Any act or failure to act that is based upon authority given pursuant to a
resolution duly adopted by the Board, the instructions of the Chief Executive
Officer or any other officer of the Company who is senior to the Executive, or
the advice of counsel for the Company, shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. The Executive shall not be deemed to have been
terminated for Cause unless such notice is accompanied by a copy of a
resolution duly adopted by the Board to such effect.
(ii) A termination of the Executive's employment by the Company without
Cause shall be effected by giving the Executive written notice of the
termination.
(c) GOOD REASON. (i) The Executive may terminate employment for Good
Reason or without Good Reason. "Good Reason" means:
(A) the assignment to the Executive of duties inconsistent in any
material respect with paragraph (a) of Section 2 of this Agreement, other
than actions that are not taken in bad faith and are remedied by the
Company promptly after receipt of notice thereof from the Executive;
(B) any failure by the Company to comply with any provision of
Section 3 of this Agreement other than failures that are not taken in bad
faith and are remedied by the Company promptly after receipt of notice
thereof from the Executive;
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(C) any requirement by the Company that the Executive's services
be rendered primarily at a location or locations not complying with
the provisions of paragraph (c) of Section 2 of this Agreement; or
(D) any failure by the Company to require any successor (whether
direct or indirect by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company
or Cardinal expressly to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company or Cardinal, as
the case may be, would have been required to perform if no such succession
had taken place.
(ii) A termination of employment by the Executive for Good Reason shall be
effectuated by giving the Company written notice ("Notice of Termination for
Good Reason") of the termination, setting forth in reasonable detail the
specific conduct of the Company that constitutes Good Reason and the specific
provision(s) of this Agreement on which the Executive relies. A termination of
employment by the Executive for Good Reason shall be effective on the tenth
business day following the date when the Notice of Termination for Good Reason
is given, unless the notice sets forth a later date (which date shall in no
event by later than 30 days after the notice is given); PROVIDED, that such a
termination of employment shall not become effective if the Company shall have
previously corrected to the reasonable satisfaction of the Executive the
circumstance giving rise to the Notice of Termination.
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(iii) A termination of the Executive's employment by the Executive without
Good Reason shall be effected by giving the Company written notice of the
termination.
(d) DATE OF TERMINATION. The "Date of Termination" means the date of the
Executive's death, the Disability Effective Date, the date on which the
termination of the Executive's employment by the Company for Cause or by the
Executive for Good Reason is effective, the date on which the Company gives the
Executive notice of termination of employment without Cause, or the date on
which the Executive gives the Company notice of a termination of employment
without Good Reason, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) DEATH, DISABILITY,
CAUSE; WITHOUT GOOD REASON. If, during the Employment Period, the Executive's
employment is terminated because of death, disability, for Cause, or as a
result of the Executive's termination of his employment without Good Reason,
then except as provided in Section 8, the Executive shall not be entitled to
any compensation provided for under this Agreement, other than Annual Base
Salary through the effective date of any such termination or resignation,
benefits under the long-term disability insurance coverage in the case of
termination because of Disability, and (without
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limiting the provisions of Section 6 hereof) vested benefits, if any, required
to be paid or provided by law.
(b) WITHOUT CAUSE; GOOD REASON. If, during the Employment Period, the
Executive's employment is terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall not be entitled to any
compensation provided for under this Agreement except as set forth in the
following sentence. The Company (i) shall continue to pay the Executive for and
with resepct to the unexpired portion of the Employment Period (in the same
manner as specified herein) (A) his Annual Base Salary and (B) an amount equal
to seventy-five percent (75%) of the Executive's Imputed Annual Bonuses and
(ii) shall continue during the unexpired portion of the Employment Period the
welfare benefits set forth in Section 3 (in the same manner as specified
herein); PROVIDED that (x) if any such benefits cannot be provided to
nonemployees under the terms of the applicable plans or applicable law, the
Company shall provide the Executive with substitute benefits that are
comparable and equal 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, the benefits provided by the Company under this
paragraph may be made secondary to those provided under such other plan. As
used herein, "Imputed Annual Bonuses" shall mean the Company Bonus and the
"target"
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bonuses or similar amounts under Cardinal Bonus Plans that the Executive would
have received had received had he remained an employee of the Company and
achieved targeted performance with respect to any personal goals under the
Company's Management Incentive Plan and the Cardinal Bonus Plan, as applicable,
taking into account the actual performance with respect to any applicable goals
relating to the performance of the Company, Cardinal, any of the Affiliated
Companies, or any of their divisions.
6. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by Cardinal or any of the Affiliated Companies for
which the Executive may qualify, nor, subject to paragraph (f) of Section 10,
shall anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any contract or agreement with Cardinal or any of the
Affiliated Companies. Vested benefits and other amounts that the Executive is
otherwise entitled to receive under any plan, policy, practice or program of,
or any contract or agreement with, Cardinal or any the Affiliated Companies on
or after the Date of Termination whall be payable in accordance with such plan,
policy, practice, program, contract or agreement, as the case may be, except as
explicitly modified by this Agreement.
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7. NO MITIGATION OR REDUCTION. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions
of this Agreement and such amounts shall not be reduced, regardless of whether
the Executive obtains other employment.
8. CONFIDENTIAL INFORMATION; NONCOMPETITION. (a) The Executive shall hold
in a fiduciary capacity for the benefit of the Company, Cardinal and the
Affiliated Companies all secret or confidential information, knowledge or data
relating to the Company, Cardinal or any of the Affiliated Companies and their
respective businesses that the Executive obtains during the Executive's
employment by the Company and that is not public knowledge (other than as a
result of the Executive's violation of this paragraph (a) of Section 8)
("Confidential Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the
Executive's employment with the Company, except with the prior written consent
of the Company or as otherwise required by law or legal process.
(b) During the Noncompetition Period (as defined below), except as
otherwise provided in paragraph (d) of this Section 8, the Executive shall not,
without the prior written consent of the Board, engage in or become associated
with a
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Competitive Activity. For purposes of this paragraph (b) of Section 8: (i) the
"Noncompetition Period" means (A) the period during which the Executive is
employed by the Company, plus (B) if the Executive's employment terminates
before the end of the Employment Period, the remainder of the Employment
Period, plus (C) any Extension Periods (as defined in paragraph (e) of this
Section 8), to the extent provided in paragraph (e); (ii) a "Competitive
Activity" means any business or other endeavor that engages in the wholesale
drug distribution business or other healthcare distribution business in which
the Company, Cardinal or any of the Affiliated Companies is at the date hereof,
or at the time Executive's employment terminates, engaged in the United States
(including Puerto Rico); and (iii) except as provided on Schedule A, the
Executive shall be considered to have become "associated with a Competitive
Activity" if he becomes directly or indirectly involved as an owner, employee,
officer, director, independent contractor, agent, partner, advisor, lender, or
in any other capacity with any individual, partnership, corporation or other
organization that is engaged in a Competitive Activity. Notwithstanding the
foregoing: (i) the Executive may make and retain investments during the
Employment Period in not more than five percent 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
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over-the-counter market; and (ii) if the Executive's employment is terminated
because of Disability, the provisions of this paragraph (b) or Section 8 shall
only apply if, following notice from Executive that his disability has ended
and that he intends to seek employment in a Competitive Activity, the Company
(A) promptly provides Executive with a lump-sum cash amount equal in value to
the compensation and benefits set forth in Section 5(b) that would have been
paid from the Disability Effective Date through the date such lump sum payment
is made if the Executive's employment had been terminated by the Company
without Cause on the Disability Effective Date, less any amounts the Executive
has received under any long-term disability plans sponsored by the Company,
Cardinal or any of the Affiliated Companies (to the extent coverage under such
plans was provided without cost to the Executive) and (B) continues such
compensation and benefits throughout the remainder of the Employment Period.
(c) The Executive agrees that he will not, for a period of one (1) year
after the expiration or termination of the Executive's employment with the
Company, Cardinal or any of the Affiliated Companies, without the prior
written consent of the Company, whether directly or indirectly, employ, whether
as an employee, officer, director, agent, consultant or independent contractor,
or solicit the employment of, any person who was or is at any time during the
previous twelve
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(12) months an employee, representative, officer or director of the Company,
Cardinal or any of the Affiliated Companies.
(d) The Executive acknowledges and agrees that the Company's remedy at
law for any breach of the Executive's obligations under this Section 8 would be
inadequate and agrees and consents that temporary and permanent injunctive
relief may be granted in any proceeding which may be brought to enforce any
provision of such Section without the necessity of proof of actual damage. With
respect to any provision of this Section 8 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.
(e) The Company shall have the right to elect to have the provisions of
paragraph (b) of this Section 8 apply for the period (the "First Extension
Period") beginning on the later of (i) the day the Executive's employment with
the Company terminates and (ii) the first day after the end of the Employment
Period and ending on the earlier of (x) the first anniversary of the first day
of the First Extension Period and (y) the death of the Executive; and if the
Company
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does so elect, it shall also have the right to elect to have the
provisions of paragraph (b) of this Section 8 apply for the period (the "Second
Extension Period") beginning on the day after the last day of the First
Extension Period and ending on the earlier of (x) the first anniversary of the
first day of the Second Extension Period and (y) the death of the Executive.
(The First Extension Period together with the Second Extension Period are
referred to as the "Extension Periods"). The election to extend for the First
Election Period shall be made by giving the Executive notice of such election
(A) in the case of a termination of the Executive's employment by reason of the
expiration of the Employment Period, no later than sixty days before the end of
the Employment Period, and (B) in the case of any other termination, within
thirty days after such termination. The election to extend for the Second
Election Period shall be made by giving the Executive notice of such election
no later than sixty days before the expiration of the First Extension Period.
(The elections described in the preceding two sentences are referred to as the
"Extension Elections.")
(f) During any Extension Period with respect to which the Company has
made an Extension Election, the Company shall provide the compensation and
benefits set forth in Section 5(b) as if (i) the Executive had been terminated
without Cause and (ii) the Employment Period had extended through the
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last day of such Extension Period; PROVIDED, that in lieu of receiving an
amount equal to seventy-five percent (75%) of the Executive's Imputed Annual
Bonus, the Executive shall receive an amount equal to fifty percent (50%) of
such Imputed Annual Bonus. Notwithstanding any other provision of this
Agreement, the Extension Periods shall end, and the Executive's obligations
under paragraph (b) of this Section 8 shall cease and be of no further effect,
if the Company fails to provide any of the compensation and benefits required
by the preceding sentence or by paragraph (a) of Section 5 and such failure
continues for ten (10) days after notice from the Executive to the Company of
such failure.
9. SUCCESSORS. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by
the Executive. This Agreement shall inure to the benefit of and be enforceable
by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
10. MISCELLANEOUS. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without
reference to principles of conflict of laws. The captions of this Agreement
are not
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part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications under this Agreement shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Executive:
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To the address set forth on Schedule A
If to the Company:
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Whitmire Distribution Corporation
81 Blue Ravine Road
Folsom, California 95630
Attention: General Counsel
(with a copy to Cardinal)
If to Cardinal:
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Cardinal Distribution, Inc.
655 Metro Place South, Suite 925
Dublin, Ohio 43017
Attention: General Counsel
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of
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Section 10. Notices and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) Notwithstanding any other provision of this Agreement, the Company may
withhold from amounts payable under this Agreement all federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
(including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to paragraph (c) of Section 4 of this
Agreement) shall not be deemed to be a waiver of such provision or right or of
any other provision of or right under this Agreement except to the extent any
other party hereto is materially prejudiced by such failure.
(f) The Executive and the Company acknowledge that this Agreement
supersedes any other agreement between them concerning the subject matter
hereof.
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(g) The term "Affiliated Companies" means all companies controlled by,
controlling or under common control with Cardinal, including, without
limitation, the Company.
11. GUARANTEE. Cardinal hereby irrevocably, absolutely and unconditionally
guarantees the payment by the Company of all compensation and benefits (the
"Payments") that the Company is obligated to provide to the Executive under
Sections 3, 6 and 8 of this Agreement. This is a guarantee of payment and not
of collection, and is the primary obligation of Cardinal, and the Executive may
enforce this guarantee against Cardinal without any prior enforcement of the
obligation to make the Payments against the Company.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization of their respective Boards of Directors,
each of the Company and Cardinal has caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.
/s/ James Clare
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James Clare
WHITMIRE DISTRIBUTION CORPORATION
By: /s/ Gary E. Close
_____________________________
CARDINAL DISTRIBUTION, INC.
By:
_____________________________
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IN WITNESS HEREOF, the Executive has hereunto set the Executive's hand
and, pursuant tot he authorization of their respective Boards of Directors,
each of the Company and Cardinal has caused this Agreement to be executed in
its name on its befalf, all as of the day and year first above written.
--------------------------------
James Clare
WHITMIRE DISTRIBUTION CORPORATION
By:
_____________________________
CARDINAL DISTRIBUTION, INC.
By: /s/ Robert D. Walter
_____________________________
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SCHEDULE A
Name: James Clare
Address:
Location: Executive has agreed to move to a new location at the
request of the Company, provided that the Company
provides relocation benefits equal to those available
to executives of the Company under Cardinal's
relocation policy as in effect on the date hereof.
Annual Base Salary: $98,400, as adjusted after the date of this
Agreement in accordance with the Company's usual
compensation review policies
Initial Target $39,360
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SCHEDULE B
(a) Category I automobile policy for executives (see Whitmire Disclosure
Schedule)
(b) Annual physical examinations (see Whitmire Disclosure Schedule)
(c) Estate planning (see Whitmire Disclosure Schedule)
(d) Tax planning and return preparation (see Whitmire Disclosure Schedule)
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