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Exhibit 10.1
CVS CORPORATION
Employment Agreement for David B.
Rickard
CVS CORPORATION
Employment Agreement for David B.
Rickard
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Page
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1.
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Definitions
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3
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2.
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Term of Employment
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4
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3.
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Position, Duties and Responsibilities
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4
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4.
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Base Salary
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5
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5.
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Annual Incentive Awards
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5
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6.
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Long-Term Stock Incentive Programs
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5
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7.
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Employee Benefit Programs
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5
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8.
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Disability
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6
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9.
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Reimbursement of Business and Other
Expenses
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7
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10.
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Termination of Employment
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7
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11
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Confidentiality; Cooperation with Regard to
Litigation; Non-disparagement
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16
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12.
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Non-competition
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17
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13.
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Non-solicitation
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18
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14.
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Remedies
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19
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15.
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Resolution of Disputes
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19
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16.
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Indemnification
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19
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17.
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Excise Tax Gross-Up
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20
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18.
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Effect of Agreement on Other Benefits
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22
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19.
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Assignability; Binding Nature
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22
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20.
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Representation
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22
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21.
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Entire Agreement
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22
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22.
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Amendment or Waiver
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23
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23.
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Severability
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23
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24.
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Survivorship
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23
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25.
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Beneficiaries/References
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23
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26.
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Governing Law/Jurisdiction
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23
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27.
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Notices
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24
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28.
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Headings
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25
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29.
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Counterparts
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- 2 -
EMPLOYMENT
AGREEMENT
AGREEMENT, made and entered into as of the
day of
, 1999 by and between CVS Corporation, a Delaware corporation
(together with its successors and assigns, the "Company"), and
David B. Rickard (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive pursuant to
an agreement embodying the terms of such employment (this
"Agreement") and the Executive desires to enter into this Agreement
and to accept such employment, subject to the terms and provisions
of this Agreement;
NOW, THEREFORE, in consideration of the promises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt of which is mutually acknowledged, the
Company and the Executive (individually a "Party" and together the
"Parties") agree as follows:
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(a)
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"Approved Early Retirement" shall have the
meaning set forth in Section 10(f) below.
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(b)
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"Base Salary" shall have the meaning set forth in
Section 4 below.
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(c)
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"Board" shall have the meaning set forth in
Section 3(a) below.
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(d)
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"Cause" shall have the meaning set forth in
Section 10(b) below.
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(e)
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"Change in Control" shall have the meaning set
forth in Section 10(c) below.
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(f)
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"Committee" shall have the meaning set forth in
Section 4 below.
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(g)
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"Confidential Information" shall have the meaning
set forth in Section 11(c) below.
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(h)
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"Constructive Termination Without Cause" shall
have the meaning set forth in Section 10(c) below.
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(i)
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"Effective Date" shall have the meaning set forth
in Section 2(a) below.
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(j)
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"Normal Retirement" shall have the meaning set
forth in Section 10(f) below.
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(k)
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"Original Term of Employment" shall have the
meaning set forth in Section 2(a) below.
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(l)
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"Renewal Term" shall have the meaning set forth
in Section 2(a) below.
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(m)
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"Restriction Period" shall have the meaning set
forth in Section 12(b) below.
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(n)
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"Severance Period" shall have the meaning set
forth in Section 10(c)(ii) below, except as provided otherwise
in Section 10(e) below.
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(o)
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"Subsidiary" shall have the meaning set forth in
Section 11(d) below.
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(p)
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"Term of Employment" shall have the meaning set
forth in Section 2(a) below.
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(q)
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"Termination Without Cause" shall have the
meaning set forth in Section 10(c) below.
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(a) The term of the Executive’s employment
under this Agreement shall commence on the date of this Agreement
(the "Effective Date") and end on the third anniversary of such
date (the "Original Term of Employment"), unless terminated earlier
in accordance herewith. The Original Term of Employment shall be
automatically renewed for successive one-year terms (the "Renewal
Terms") unless at least 180 days prior to the expiration of the
Original Term of Employment or any Renewal Term, either Party
notifies the other Party in writing that he or it is electing to
terminate this Agreement at the expiration of the then current Term
of Employment. "Term of Employment" shall mean the Original Term of
Employment and all Renewal Terms. If a Change in Control shall have
occurred during the Term of Employment, notwithstanding any other
provision of this Section 2(a), the Term of Employment shall
not expire earlier than two years after such Change in
Control.
(b) Notwithstanding anything in this Agreement to the contrary,
at least one year prior to the expiration of the Original Term of
Employment, upon the written request of the Company or the
Executive, the Parties shall meet to discuss this Agreement and may
agree in writing to modify any of the terms of this Agreement.
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3.
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Position, Duties and Responsibilities
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(a) Generally . Executive shall serve as a
senior officer of the Company. Executive shall have and perform
such duties, responsibilities, and authorities as shall be
specified by the Company from time to time and as are customary for
a senior officer of a publicly held corporation of the size, type,
and nature of the Company as they may exist from time to time and
as are consistent with such position and status. Executive shall
devote substantially all of his business time and attention (except
for periods of vacation or absence due to illness), and his best
efforts, abilities, experience, and talent to his position and the
businesses of the Company.
(b) Other Activities . Anything herein to the contrary
notwithstanding, nothing in this Agreement shall preclude the
Executive from (i) serving on the boards of directors of a
reasonable number of other corporations or the boards of a
reasonable number of trade associations and/or charitable
organizations, (ii) engaging in charitable activities and
community affairs, and (iii) managing his personal investments
and affairs, provided that such activities do not materially
interfere with the proper performance of his duties and
responsibilities under this Agreement.
(c) Place of Employment. Executive’s principal
place of employment shall be the corporate offices of the
Company.
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The Executive shall be paid an annualized salary
("Base Salary"), payable in accordance with the regular payroll
practices of the Company, of not less than $575,000, subject to
review for increase at the discretion of the Compensation Committee
(the "Committee") of the Company’s Board of Directors (the
"Board").
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5.
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Annual Incentive Awards .
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The Executive shall participate in the
Company’s annual incentive compensation plan with a target
annual incentive award opportunity of no less than 90% of Base
Salary. Payment of annual incentive awards shall be made at the
same time that other senior-level executives receive their
incentive awards.
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6.
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Long-Term Incentive Programs .
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The Executive shall be eligible to participate in
the Company’s long-term incentive compensation programs
(including stock options and stock grants).
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7.
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Employee Benefit Programs .
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(a) General Benefits. During the Term of
Employment, the Executive shall be entitled to participate in such
employee pension and welfare benefit plans and programs of the
Company as are made available to the Company’s senior-level
executives or to its employees generally, as such plans or programs
may be in effect from time to time, including, without limitation,
health, medical, dental, long-term disability, travel accident and
life insurance plans.
(b) Deferral of Compensation . The Company shall
implement deferral arrangements, reasonably acceptable to Executive
and the Company, permitting Executive to elect to defer receipt,
pursuant to written deferral election terms and forms (the
"Deferral Election Forms"), of all or a specified portion of
(i) his annual Base Salary and annual incentive compensation
under Sections 4 and 5, (ii) long term incentive compensation
under Section 6 and (iii) shares acquired upon exercise
of options to purchase Company common stock that are acquired in an
exercise in which Executive pays the exercise price by the
surrender of previously acquired shares, to the extent of the net
additional shares otherwise issuable to Executive in such exercise;
provided , however, that such deferrals shall not
reduce Executive’s total cash compensation in any calendar
year below the sum of (i) the FICA maximum taxable wage base
plus (ii) the amount needed, on an after-tax basis, to enable
Executive to pay the 1.45% Medicare tax imposed on his wages in
excess of such FICA maximum taxable wage base.
In accordance with such duly executed Deferral Election Forms,
the Company shall credit to a bookkeeping account (the "Deferred
Compensation Account") maintained for Executive on the respective
payment date or dates, amounts equal to the compensation subject to
deferral, such credits to be denominated in cash if the
compensation would have been paid in cash but for the deferral or
in shares if the compensation would have been paid in shares but
for the deferral. An amount of cash equal in value to all
cash-denominated amounts credited to Executive’s account and
a number of shares of Company common stock equal to the number of
shares credited to Executive’s account pursuant to this
Section 7(b) shall be transferred as soon as practicable
following such crediting by the Company to, and shall be held and
invested by, an independent trustee selected by the Company and
reasonably acceptable to Executive (a "Trustee") pursuant to a
"rabbi trust" established by the Company in connection with
such
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deferral arrangement and as to which the Trustee
shall make investments based on Executive’s investment
objectives (including possible investment in publicly traded stocks
and bonds, mutual funds, and insurance vehicles). Thereafter,
Executive’s deferral accounts will be valued by reference to
the value of the assets of the "rabbi trust". The Company shall pay
all costs of administration or maintenance of the deferral
arrangement, without deduction or reimbursement from the assets of
the "rabbi trust."
Except as otherwise provided under Section 10, in the event
of Executive’s termination of employment with the Company or
as otherwise determined by the Committee in the event of hardship
on the part of Executive, upon such date(s) or event(s) set forth
in the Deferral Election Forms (including forms filed after
deferral but before settlement in which Executive may elect to
further defer settlement), the Company shall promptly pay to
Executive cash equal to the value of the assets then credited to
Executive’s deferral accounts, less applicable withholding
taxes, and such distribution shall be deemed to fully settle such
accounts; provided, however , that the Company may instead
settle such accounts by directing the Trustee to distribute Company
common stock and/or other assets of the "rabbi trust." The Company
and Executive agree that compensation deferred pursuant to this
Section 7(b) shall be fully vested and nonforfeitable;
however , Executive acknowledges that his rights to the
deferred compensation provided for in this Section 7(b) shall
be no greater than those of a general unsecured creditor of the
Company, and that such rights may not be pledged, collateralized,
encumbered, hypothecated, or liable for or subject to any lien,
obligation, or liability of Executive, or be assignable or
transferable by Executive, otherwise than by will or the laws of
descent and distribution, provided that Executive may designate one
or more beneficiaries to receive any payment of such amounts in the
event of his death.
(a) During the Term of Employment, as well as
during the Severance Period, the Executive shall be entitled to
disability coverage as described in this Section 8(a). In the
event the Executive becomes disabled, as that term is defined under
the Company’s Long-Term Disability Plan, the Executive shall
be entitled to receive pursuant to the Company’s Long-Term
Disability Plan or otherwise, and in place of his Base Salary, an
amount equal to 60% of his Base Salary, at the annual rate in
effect on the commencement date of his eligibility for the
Company’s long-term disability benefits ("Commencement Date")
for a period beginning on the Commencement Date and ending with the
earlier to occur of (A) the Executive’s attainment of
age 65 or (B) the Executive’s commencement of retirement
benefits from the Company in accordance with Section 10(f)
below. If (i) the Executive ceases to be disabled during the
Term of Employment (as determined in accordance with the terms of
the Long-Term Disability Plan), (ii) his position or another
senior executive position is then vacant and (iii) the Company
requests in writing that he resume such position, he may elect to
resume such position by written notice to the Company within 15
days after the Company delivers its request. If he resumes such
position, he shall thereafter be entitled to his Base Salary at the
annual rate in effect on the Commencement Date and, for the year he
resumes his position, a pro rata annual incentive award. If he
ceases to be disabled during the Term of Employment and does not
resume his position in accordance with the preceding sentence, he
shall be treated as if he voluntarily terminated his employment
pursuant to Section 10(d) as of the date the Executive ceases
to be disabled. If the Executive is not offered his position or
another senior executive position after he ceases to be disabled
during the Term of Employment, he shall be treated as if his
employment was terminated Without Cause pursuant to
Section 10(c) as of the date the Executive ceases to be
disabled ; provided , however , that if a Change in
Control shall have occurred during the period of the
Executive’s disability, he shall be treated as if his
employment was terminated Without Cause following a Change in
Control pursuant to Section 10(e) as of the date the Executive
ceases to be disabled.
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(b) The Executive shall be entitled to a pro rata
annual incentive award for the year in which the Commencement Date
occurs based on 90% of Base Salary paid to him during such year
prior to the Commencement Date, payable in a lump sum not later
than 15 days after the Commencement Date. The Executive shall not
be entitled to any annual incentive award with respect to the
period following the Commencement Date. If the Executive
recommences his position in accordance with Section 8(a), he
shall be entitled to a pro rata annual incentive award for the year
he resumes such position and shall thereafter be entitled to annual
incentive awards in accordance with Section 5
hereof.
(c) During the period the Executive is receiving disability
benefits pursuant to Section 8(a) above, he shall continue to
be treated as an employee for purposes of all employee benefits and
entitlements in which he was participating on the Commencement
Date, including without limitation, the benefits and entitlements
referred to in Sections 6 and 7 above, except that the Executive
shall not be entitled to receive any annual salary increases or any
new long-term incentive plan grants following the Commencement
Date.
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9.
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Reimbursement of Business and Other
Expenses .
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The Executive is authorized to incur reasonable
expenses in carrying out his duties and responsibilities under this
Agreement, and the Company shall promptly reimburse him for all
business expenses incurred in connection therewith, subject to
documentation in accordance with the Company’s policy. During
the Term of Employment, the Company shall reimburse the Executive,
upon demand, for out-of-pocket expenses incurred in connection with
personal financial and tax planning up to a maximum of $15,000 per
annum. The Company shall pay or reimburse the Executive for the
expenses (including, without limitation, reasonable
attorneys’ fees and expenses) incurred by him in conjunction
with preparation and negotiation of this Agreement and any related
documents up to a maximum of $10,000.
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10.
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Termination of Employment .
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(a) Termination Due to Death. In the event
the Executive’s employment with the Company is terminated due
to his death, his estate or his beneficiaries, as the case may be,
shall be entitled to and their sole remedies under this Agreement
shall be:
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(i)
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Base Salary through the date of death, which
shall be paid in a cash lump sum not later than 15 days following
the Executive’s death;
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(ii)
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pro rata annual incentive award for the year in
which the Executive’s death occurs assuming that the
Executive would have received an award equal to 90% of Base Salary
for such year, which shall be payable in a cash lump sum promptly
(but in no event later than 15 days) after his death;
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(iii)
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elimination of all restrictions on any restricted
or deferred stock awards outstanding at the time of his death
(other than awards under the Company’s Partnership Equity
Program, which shall be governed by the terms of such
awards);
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(iv)
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immediate vesting of all outstanding stock
options and the right to exercise such stock options for a period
of one year following death or for the remainder of the exercise
period, if less (other than awards under the Company’s
Partnership Equity Program, which shall be governed by the terms of
such awards);
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(v)
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the balance of any incentive awards earned as of
December 31 of the prior year (but not yet paid), which shall
be paid in a cash lump sum not later than 15 days following the
Executive’s death;
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(vi)
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settlement of all deferred compensation
arrangements in accordance with any then applicable deferred
compensation plan or election form; and
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(vii)
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other or additional benefits then due or earned
in accordance with applicable plans and programs of the
Company.
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(b)
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Termination by the Company for Cause
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(A)
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the Executive’s willful and material breach
of Sections 11, 12 or 13 of this Agreement;
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(B)
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the Executive is convicted of a felony involving
moral turpitude; or
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(C)
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the Executive engages in conduct that constitutes
willful gross neglect or willful gross misconduct in carrying out
his duties under this Agreement, resulting, in either case, in
material harm to the financial condition or reputation of the
Company.
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For purposes of this Agreement, an act or failure
to act on Executive’s part shall be considered "willful" if
it was done or omitted to be done by him not in good faith, and
shall not include any act or failure to act resulting from any
incapacity of Executive.
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(ii)
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A termination for Cause shall not take effect
unless the provisions of this paragraph (ii) are complied
with. The Executive shall be given written notice by the Company of
its intention to terminate him for Cause, such notice (A) to
state in detail the particular act or acts or failure or failures
to act that constitute the grounds on which the proposed
termination for Cause is based and (B) to be given within 90
days of the Company’s learning of such act or acts or failure
or failures to act. The Executive shall have 20 days after the date
that such written notice has been given to him in which to cure
such conduct, to the extent such cure is possible. If he fails to
cure such conduct, the Executive shall then be entitled to a
hearing before the Committee of the Board at which the Executive is
entitled to appear. Such hearing shall be held within 25 days of
such notice to the Executive, provided he requests such hearing
within 10 days of the written notice from the Company of the
intention to terminate him for Cause. If, within five days
following such hearing, the Executive is furnished written notice
by the Board confirming that, in its judgment, grounds for Cause on
the basis of the original notice exist, he shall thereupon be
terminated for Cause.
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(iii)
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In the event the Company terminates the
Executive’s employment for Cause, he shall be entitled to and
his sole remedies under this Agreement shall be:
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(A)
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Base Salary through the date of the termination
of his employment for Cause, which shall be paid in a cash lump sum
not later than 15 days following the Executive’s termination
of employment;
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(B)
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any incentive awards earned as of
December 31 of the prior year (but not yet paid), which shall
be paid in a cash lump sum not later than 15 days following the
Executive’s termination of employment;
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(C)
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settlement of all deferred compensation
arrangements in accordance with any then applicable deferred
compensation plan or election form; and
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(D)
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other or additional benefits then due or earned
in accordance with applicable plans or programs of the
Company.
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(c) Termination Without Cause or Constructive
Termination Without Cause Prior to Change in Control . In the
event the Executive’s employment with the Company is
terminated without Cause (which termination shall be effective as
of the date specified by the Company in a written notice to the
Executive), other than due to death, or in the event there is a
Constructive Termination Without Cause (as defined below), in
either case prior to a Change in Control (as defined below) the
Executive shall be entitled to and his sole remedies under this
Agreement shall be:
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(i)
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Base Salary through the date of termination of
the Executive’s employment, which shall be paid in a cash
lump sum not later than 15 days following the Executive’s
termination of employment;
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(ii)
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Base Salary, at the annualized rate in effect on
the date of termination of the Executive’s employment (or in
the event a reduction in Base Salary is a basis for a Constructive
Termination Without Cause, then the Base Salary in effect
immediately prior to such reduction), for a period of 24 months
(the "Severance Period");
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(iii)
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pro rata annual incentive award for the year in
which termination occurs equal to 90% of Base Salary (determined in
accordance with Section 10(c)(ii) above) for such year,
payable in a cash lump sum promptly (but in no event later than 15
days) following termination;
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(iv)
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an amount equal to 90% of Base Salary (determined
in accordance with Section 10(c)(ii) above) multiplied by two,
payable in equal monthly payments over the Severance
Period;
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(v)
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elimination of all restrictions on any restricted
or deferred stock awards outstanding at the time of termination of
employment (other than awards under the Company’s Partnership
Equity Program, which shall be governed by the terms of such
awards);
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(vi)
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any outstanding stock options which are unvested
shall vest and the Executive shall have the right to exercise any
vested stock options during the Severance Period or for the
remainder of the exercise period, if less (other than awards under
the Company’s Partnership Equity Program, which shall be
governed by the terms of such awards);
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(vii)
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the balance of any incentive awards earned as of
December 31 of the prior year (but not yet paid), which shall
be paid in a cash lump sum not later than 15 days following the
Executive’s termination of employment;
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(viii)
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settlement of all deferred compensation
arrangements in accordance with any then applicable deferred
compensation plan or election form;
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(ix)
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continued participation in all medical, health
and life insurance plans at the same benefit level at which he was
participating on the date of the termination of his employment
until the earlier of:
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(A)
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the end of the Severance Period; or
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(B)
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the date, or dates, he receives equivalent
coverage and benefits under the plans and programs of a subsequent
employer (such coverage and benefits to be determined on a
coverage-by-coverage, or benefit-by-benefit, basis); provided that
(1) if the Executive is precluded from continuing his
participation in any employee benefit plan or program as provided
in this clause (ix) of this Section 10(c), he shall
receive cash payments equal on an after-tax basis to the cost to
him of obtaining the benefits provided under the plan or program in
which he is unable to participate for the period specified in this
clause (ix) of this Section 10(c), (2) such cost
shall be deemed to be the lowest reasonable cost that would be
incurred by the Executive in obtaining such benefit himself on an
individual basis, and (3) payment of such amounts shall be
made quarterly in advance; and
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(x)
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other or additional benefits then due or earned
in accordance with applicable plans and programs of the
Company.
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"Termination Without Cause" shall mean the
Executive’s employment is terminated by the Company for any
reason other than Cause (as defined in Section 10(b)) or due
to death.
"Constructive Termination Without Cause" shall mean a
termination of the Executive’s employment at his initiative
as provided in this Section 10(c) following the occurrence,
without the Executive’s written consent, of one or more of
the following events (except as a result
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