AMENDED AND RESTATED EMPLOYMENT
AGREEMENT
This AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (the “Agreement”),
effective as of November 1, 2008 (the “Effective
Date”), is by and between McKesson Corporation (the
“Company”), a Delaware corporation with its principal
office at One Post Street, San Francisco, California, and Paul C.
Julian (“Executive”).
A. WHEREAS,
Executive and the Company have previously entered into that certain
Employment Agreement dated as of April 1, 2004 (the
“Prior Employment Agreement”);
B. WHEREAS,
Executive and the Company have previously amended and restated the
terms of the Prior Employment Agreement, effective as of
November 1, 2006;
C. WHEREAS,
the Company, in its business, develops and uses certain
Confidential Information (as defined in Paragraph 7(c) below). 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;
D. WHEREAS,
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; and
E. WHEREAS,
Executive and the Company wish to amend and restate the terms of
the Agreement to comply with the final regulations promulgated
under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and preserve deductibility of
certain compensation under Section 162(m) of the Code in accordance
with Revenue Ruling 2008-13.
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
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 below.
2. Position
and Responsibilities . During the period of his employment
hereunder, Executive agrees to serve the Company, and the Company
shall employ Executive, as Executive Vice President and Group
President 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 (the “Chief Executive
Officer”).
(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 the third (3
rd ) anniversary of the Effective Date; unless
terminated earlier in accordance with Paragraphs 6-9 below;
provided, however, that the term of this Agreement shall
automatically be extended for one (1) additional year on each
anniversary of the Effective Date, unless terminated earlier in
accordance with Paragraphs 6-9 below (the
“Term”).
(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 and skill 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 (the “Board”); provided,
however, that, with the approval of the Chief Executive Officer,
Executive may serve, or continue to serve, on the boards of
directors of, hold any other offices or positions in, companies or
organizations which, in such officer’s judgment, will not
present any conflict of interest with the Company or any of its
subsidiaries or affiliates or divisions, or materially adversely
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,
but are to be rendered primarily at the headquarters of the Company
in San Francisco, California.
4.
Compensation and Reimbursement of Expenses .
(a)
Compensation . During the period of his employment
hereunder, Executive shall be paid a salary, in monthly or
semi-monthly installments (in accordance with the Company’s
normal payroll practices for senior executive officers), at the
rate of Nine Hundred Eighty-Six Thousand Dollars ($986,000) per
year, or such higher salary as may be from time to time approved by
the Board (or any duly authorized Committee thereof) (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 awarded
to him yearly by the Board (or any duly authorized Committee
thereof). For purposes of the MIP (as defined in Paragraph 5
below), for each of the Company’s fiscal years ending during
the Term of this Agreement, Executive’s Individual Target
Award (as defined in the MIP) shall be 100% during fiscal year 2007
and 110% thereafter of his base salary for the applicable Year (as
defined in the MIP).
(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 hereunder; provided,
however, any such expenses eligible for reimbursement that are
taxable to Executive and incurred during the course of
Executive’s employment may not affect the expenses eligible
for reimbursement in any other taxable year.
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5. Other
Benefits . During the period of his employment hereunder,
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 therefore, including without limitation, group health and
life insurance benefits, short and long-term disability plans,
deferred compensation plans, and participation in the
Company’s Profit-Sharing Investment Plan, Company-sponsored
medical plan, Executive Medical Plan, Management Incentive Plan
(“MIP”), Executive Benefit Retirement Plan
(“EBRP”), Executive Survivor Benefits Plan
(“ESBP”), Long-Term Incentive Plan, Employee Stock
Purchase Plan and the 1994 Stock Option and Restricted Stock Plan,
the 2005 Stock Plan, and any other similar plan or arrangement
(collectively, the “Stock Incentive Plans”).
6. Benefits
Payable Upon Disability or Death .
(a)
Disability Benefits . If, during the term of this Agreement,
Executive sustains a disability, as defined in Treasury Regulation
section 1.409A-3(i)(4)(i) or -3(i)(4)(iii), the Company shall
continue to pay Executive his then current salary hereunder at the
time of the regular payroll schedule during the period of such
disability or, if less, for a period of twelve (12) calendar
months, at which time the Company’s obligations hereunder
shall cease and terminate.
(b) Death
Benefits . 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) at the time of the regular
payroll schedule through the six-month period following the end of
the calendar month in which Executive’s death occurs.
Thereafter, all of the Company’s obligations hereunder shall
cease and terminate.
(c) Other
Plans . The provisions of this Paragraph 6 shall not
affect any rights of Executive’s heirs, administrators,
executors, legatees, beneficiaries or assigns under the
Company’s Profit-Sharing Investment Plan, EBRP, ESBP, Stock
Incentive Plans, any Employee Stock Purchase Plan (or any other
similar plan or arrangement), any stock purchase plan or any other
employee benefit plan of the Company, and any such rights shall be
governed by the terms of the respective plans.
7.
Obligations of Executive During and After Employment
.
(a)
Noncompetition . Executive agrees that during the term of
his employment hereunder, and for the “Noncompetition
Period” (as hereinafter defined) thereafter following the
termination of Executive’s employment with the Company for
any reason, he will not, within the United States, participate,
engage or have any interest in, directly or indirectly, any person,
firm, corporation, or business (where as an employee, officer,
director, agent, creditor, or consultant or in any capacity which
calls for the rendering of personal services, advice, acts of
management, operation or control) which carries on any business or
activity competitive with the Company or any affiliated company
(including, without limitation, any products or services sold,
investigated, developed or otherwise pursued by the Company or any
affiliated company at any time or from time to time) without the
prior written consent of the Chief Executive Officer. For purposes
of this Paragraph 7 (a), the “Noncompetition
Period” shall be deemed to be the period during
which
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Executive is
receiving salary continuation payments hereunder. Should Executive
violate his obligations under this Paragraph 7(a), any further
salary continuation payments or other severance benefits shall
immediately cease. This Paragraph 7(a) shall survive the
termination or expiration of this Agreement.
(b)
Unauthorized Use of Confidential Information . Executive
acknowledges and agrees that (i) during the course of his
employment Executive will have produced and/or have access to
Confidential Information (as defined in subparagraph
(c) hereof), of the Company and its affiliated companies, and
(ii) the unauthorized use or sale of any of such confidential
or proprietary information at any time would harm the Company and
would constitute unfair competition with the Company either during
or after the term of this Agreement. Therefore, during and
subsequent to his employment by the Company and its affiliated
companies, 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 the
Company in writing or as required by law. All records, files,
drawings, documents, equipment, and the like, or copies thereof,
relating to the Company’s business, or the business of any of
its affiliated companies, which Executive shall prepare, use, or
come into contact with, shall be and remain the sole property of
the 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 the
Company upon termination of employment with the Company and its
affiliated companies. This Paragraph 7 (b) shall survive the
termination or expiration of this Agreement.
(c)
Confidential Information Defined . For purposes of this
Agreement, “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 or any of its affiliated
companies concerning the products, projects, activities, business
or affairs of the Company and its affiliated companies, or the
Company’s or any of its affiliated company’s customers,
including without limitation, (i) all information concerning
trade secrets of the Company and its affiliated companies,
including computer programs, system documentation, special
hardware, product hardware, related software development, manuals,
formulae, processes, methods, machines, compositions, ideas,
improvements or inventions of the Company and its affiliated
companies, (ii) all sales and financial information concerning
the Company and its affiliated companies, (iii) all customer
and supplier lists of the Company and its affiliated companies,
(iv) all information concerning products or projects under
development by the Company or any of its affiliated companies 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 or any
of its affiliated companies 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.
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(d)
Nonsolicitation of Employees . Executive recognizes and
acknowledges that it is essential for the proper protection of the
business of the Company and its affiliated companies that Executive
be restrained for a reasonable period following the termination of
Executive’s employment with the Company and its affiliated
companies from (i) soliciting or inducing any employee of the
Company or any of its affiliated companies to leave the employ of
the Company or any of its affiliated companies, and
(ii) hiring or attempting to hire any employee of the Company
or any of its affiliated companies. Accordingly, Executive agrees
that during the term of his employment hereunder, and for the
Nonsolicitation Period thereafter following the termination of
Executive’s employment with the Company and its affiliated
companies for any reason, Executive shall not, directly or
indirectly, 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
or any its affiliated companies any employee of the Company or any
of its affiliated Companies. For purposes of this
Paragraph 7(d), the “Nonsolicitation Period” shall
be deemed to be the longer of (i) two (2) years following
termination of Executive’s employment for any reason, or
(ii) the period during which Executive is receiving salary
continuation payments hereunder. Should Executive violate his
obligations under this Paragraph 7(d), any further salary
continuation payments or other severance benefits shall immediately
cease. This Paragraph 7(d) shall survive the termination or
expiration of this Agreement.
(e)
Nonsolicitation of Customers . Executive recognizes and
acknowledges that it is essential for the proper protection of the
business of the Company and its affiliated companies that Executive
be restrained for a reasonable period following the termination of
Executive’s employment with the Company and its affiliated
companies from soliciting the trade of or trading with the
customers of the Company or any of its affiliated companies for any
competitive business purpose. Accordingly, Executive agrees that
during the term of his employment hereunder, and for the
Nonsolicitation Period thereafter following the termination of
Executive’s employment with the Company and its affiliated
companies for any reason, Executive shall not, directly or
indirectly, 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 and its affiliated companies, a customer or client of
the Company or any of its affiliated companies for the purpose of
offering or selling a product or service competitive with any of
those offered by the Company or any of its affiliated companies.
For purposes of this Paragraph 7(e), the
“Nonsolicitation Period” shall be deemed to be the
longer of (i) two (2) years following termination of
Executive’s employment for any reason, or (ii) the
period during which Executive is receiving salary continuation
payments hereunder. Should Executive violate his obligations under
this Paragraph 7(e), any further salary continuation payments
or other severance benefits shall immediately cease. This Paragraph
7(e) shall survive the termination or expiration of this
Agreement.
(f)
Remedy for Breach . Executive agrees that in the event of a
breach or threatened breach of any of the covenants contained in
this Paragraph 7, the Company shall have the right and remedy
to have such covenants specifically enforced by any court having
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